IT IS, OF COURSE, absurd, Who can help but giggle at the specter of two-thirds of the British navy steaming toward the South Atlantic to defend a remote, treeless string of islands, smaller than Connecticut, and populated by 1300 sheep farmers? The gallant sailor-boys (including, we are told, the ever-so-dashing Prince Andrew) are off to fight a brutal military regime, most famous for its human rights violations, whose invasion of the Falkland islands last week was clearly a ploy to distract its citizens' attention away from a serious domestic economic and political crisis. The dimensions of the situation which has developed over the last week, parody a time gone by when there were good guys and bad guys, a glory in fighting for Queen and country, and a chance to triumph decisively and righteously after doing battle.

Despite its old-time movie aspects, this international confrontation has no easy, predictable solution. Nationalistic fervor runs high in both countries and two embattled governments, each badly needing a clear-cut victory, are heading quickly toward a clash. Ideally, the two nations will capitalize on the lag-time provided as the British fleet moves southward by resurrecting a proposal made last year. Argentina sovereignty over the Falklands, but allow Britain to lease them for some years until a permanent solution is negotiated. During this leasehold, the two nations would share the oil and mineral revenues from the islands and surrounding waters. The Falklanders--98 percent of whom are of British descent--rejected this solution in 1981 insisting that the islands remain a British possession. Probably, the islanders' experiences last week have caused them to look upon nominal Argentine sovereignty more favorably. Now they can doubt neither the seriousness of Argentina's desire for the Falklands, nor their own vulnerability to attack.

HOWEVER, THE CHANCES of reaching such an agreement and avoiding war do not depend on the will of the Falklanders but on the flexibility of the Argentine leaders as initiators of the conflict, and, perhaps, on Secretary of State Alexander Haig's diplomatic skill. Haig flew to London on Thursday and will arrive in Buenos Aires this weekend to help resolve the dispute. As the conflict escalates, the British have an advantage for they can afford to back down last in this international game of chicken. Not only are they in a strong position morally because they were attacked, but they have a military edge over Argentina. Most experts attest to British superiority, despite the great distance between the Falklands and Britain and despite the defensive position the Argentinians now hold on the islands. The British used their advantage well when they declared a 200 mile war zone around the Falklands and threatened to sink any Argentine ship to cross the invisible line in the sea after dawn on Monday. Given the circumstances, and Britain's aggressive response, the Argentines will have to act.

What the Argentine government will do next surely depends on how much political mileage they believe they can get out of fighting a war for the Falklands. The leaders in Buenos Aires watched a dramatic turnabout last week as a mass anti-government protest on Wednesday became a wild celebration on Saturday after the invasion. Since then the government has used the Falkland crisis to carefully cultivate national unity, and soothe political and labor opposition leaders. But how much celebrating and unity can letters expect if lives ad ships are lost in battles against a superior Britain force?

Economic analysis also doubt that the shaky Argentine economy could support a full-scale war. Recent reports indicate the Falkland invasion has already taken its toll in higher interest rates and greater stock market instability. Britain has frozen crucial Argentine assets, and the Argentinians can no longer turn to British banks for massive loans as they have in the past. Buenos Aires must also expect a widespread international response, especially from Common Market countries, if they wage war or try to hold the Falklanders hostage until their demands are met. Britain's allies in Europe have already banned the sale of arms and military equipment to Argentian. And although the allies balked this week on Britain's call for a ban on all Argentinian imports, a heightened crisis will certainly bring with it harsher and more economically damaging members against Argentina.

The most feasible and satisfactory solution for both countries will only come about if Argentine leaders are convinced of the inadvisability on international and domestic grounds of allowing the crisis to escalate. The British promise that they will fight if the Argentine occupying troops remain in the Falklands. so Haig's best bet this weekend in Buenos Aires is persuading the Argentines could be promised sovereignty of the islands in accordance with the 1981 proposal. This arrangement presupposes that the British will be willing, despite last week's use of force, to grant Argentina sovereignty. Convincing the British of the expediency of agreeing, once more, to nominal Argentine authority, will have to be Haig's other task.

BUT THE BRITISH will only go so far, Margaret Thatcher's government has suffered in the Falkland crisis, receiving harsh criticism for not warning the public of the chances of an Argentine invasion. Lord Carrington, the able statesman who led the transfer of power in Rhodesia, was forced to resign along with several lower-level officials. Clearly, the British felt shamed and enraged by the Argentine take-over. Thatcher, bitterly attacked for her supply-side economic policy, is now determined to win big in the Falklands and rally support around the Tory government. In the several days since the fortilla set sail, though, public opinion has calmed in England. Most British subjects could accept nominal Argentine sovereignty in exchange for the evacuation of troops and restoration of the status quo of the islands. Even the determined "Iron Lady" prime minister must now realize the untenability of defending the Falklands indefinitely against an Argentine attack. Setting the crisis peacefully would indeed be a win for the British government.

We can now await the results of Haig's shuttle diplomacy, circa 1982. In a situation where the adversaries are both trying to save face, he can hopefully negotiate an ego-soothing out for each side. This would be a fitting happy-ever-after end to a crisis that at first seemed more comic opera than heavy drama. The Argentines hold the key to reaching this desirable resolution, for they can afford to be more flexible than the British. Certainly, the fleet won't return to Portsmouth without some kind of victory in pocket. The bottom line is that Britain cannot back down. And so, Argentina must.