WNU #1002: Honduran Economy Could “Quickly Buckle”

Weekly News Update on the Americas
Issue #1002, August 30, 2009

1. Honduras: Economy Could “Quickly Buckle”
2. Honduras: Business Sector Gets Nervous
3. Honduras: Resistance Debates Next Steps
4. Links to alternative sources on: Argentina, Chile, Bolivia, Peru, Colombia, Honduras, Mexico, Environment, US

ISSN#: 1084‑922X. Weekly News Update on the Americas covers news from Latin America and the Caribbean, compiled and written from a progressive perspective. It has been published weekly by the Nicaragua Solidarity Network of Greater New York since 1990. For a subscription, write to weeklynewsupdate@gmail.com . It is archived at http://weeklynewsupdate.blogspot.com/

*1. Honduras: Economy Could “Quickly Buckle”
The Central American Bank for Economic Integration (BCIE) announced on Aug. 26 that it was freezing credits to Honduras as a result of a coup that removed Honduran president José Manuel Zelaya Rosales from power two months earlier, on June 28. The move is provisional, since the banks' governors are still considering whether to join the many multilateral agencies and foreign governments that have suspended financing for aid projects until Zelaya is returned to office. The BCIE has provided about $971 million in financing for Honduras over the last five years. (Associated Press 8/27/09)

The Honduran economy, with an annual gross domestic product (GDP) of about $14.1 billion, was already shrinking before the coup. According to the Banco Central de Honduras (BCH), economic activity declined by 3% during the first six months of the year as a result of the world recession; the economy had grown by 3.5% during the same period in 2008. Exports dropped 13% from the first six months of 2008, to $1.37 billion, while remittances from Hondurans living abroad fell by 10%, to $1.19 billion. The recession especially affected the maquiladora sector—the tax-exempt plants that assemble products chiefly for export, employing about 140,000 people out of a population of 7.6 million. Textile and apparel production, the main activity in the maquilas, fell by 17.9% compared to the same period last year.

The decline in international aid and commerce after the coup--combined with investor uncertainty and strikes against the de facto government by the labor movement—has added to the country’s economic problems. As of Aug. 28, the BCH reported that liquid reserves of international currency were at $2.064 billion, reportedly down by about $400 million since the coup. Alcides Hernández, director of the economics program at the National Autonomous University (UNAH) in Tegucigalpa, told the Bloomberg news services that the political crisis was probably costing the country about $20 million a day in lost trade, aid, tourism and investment.

Edwin Araque, the president of the BCH in Zelaya’s government, told the Tegucigalpa daily La Tribuna, which supported the coup, that the economic problems are created by Honduras’ isolation from the international community. “This won’t be resolved with economic policies,” he said. “It will be resolved with a political solution.” Araque was removed from office by the administration of de facto president Roberto Micheletti; he was one of five officials from Zelaya’s government that a Honduran court charged with corruption on Aug. 12. But the BCH president appointed by the de facto regime, Sandra Midence, largely agreed with Araque. “If this political situation keeps up into next year, we’ll have problems,” she told the Bloomberg news service. “It’s intensifying the economic crisis.”

“I don’t know how long the Micheletti government can resist international pressure,” UNAH economist Hernández said. “If they start blocking trade too, a country as poor as ours would quickly buckle.” (Bloomberg 8/7/09; La Tribuna 8/20/09; La Prensa (Honduras) 8/13/09, 8/27/09; Honduras Coup 2009 blog 8/28/09)

*2. Honduras: Business Sector Gets Nervous
On Aug. 25 the US State Department announced that it had temporarily stopped issuing visas to Hondurans in an effort to pressure the de facto Honduran government to allow President Zelaya’s return to office; there will be exceptions for emergencies and for people who are immigrating to the US. On Aug. 26 US deputy assistant secretary for Andean, Brazilian and Southern Cone affairs Christopher McMullen indicated that the US might apply additional sanctions. More than half of Honduras’ trade is with the US.

Honduran business leaders, who generally backed the coup, started worrying about economic damage from the political crisis as early as July 5 [see Update #997]. The visa suspension has increased their concern. “This visa thing has a very big negative effect, especially because it affects the purchase of raw materials, which are necessary for the production processes of small and medium industry,” Enrique Núñez, president of the National Association of the Medium and Small Industry of Honduras (ANMPIH), told the Agence France Presse news service. He called for a political solution to the crisis.

There are fears that that the US may even suspend Honduras’ participation in the Dominican Republic-Central America Free Trade Agreement (DR-CAFTA), which especially benefits the maquiladora sector. Jorge Canahuati Larach, a major figure in the industry, told AFP: "The best thing for the country is for us to find a middle point between the two positions” of the coup supporters and the coup opponents.

Adolfo Facussé, president of the National Association of Industries of Honduras (ANDI), dismissed the threat of a suspension of DR-CAFTA. "[W]e’re ready to resist,” he said, “because it’s better to eat tortillas and beans for year than to return to the situation we were in before, under the influence of Mr. Chávez”—Venezuela’s leftist president Hugo Chávez FrÍas, an ally of Zelaya. But an Aug. 27 editorial in El Tiempo—a major daily based in San Pedro Sula, the center of maquiladora production in the country—took the threat of further US sanctions very seriously, warning Micheletti that “it’s not possible that the entire world could be wrong, including the great majority of Hondurans, and that only a sector of the economic and political elite, allied with the military command, is the arbiter of what’s right.” (AFP 8/27/09; El Tiempo 8/27/09)

El Tiempo’s owner, Jaime Rosenthal Oliva, is himself a member of the “economic and political elite” and a good example of the interconnections between politics, business and the media in Honduras. One of the country’s richest people, Rosenthal has fought to keep unions out of his maquiladoras, and his Promotur tourism company has been accused of trying to seize land belonging to communities of the Garífuna ethnic group. He is a powerful politician in the Liberal Party (PL), and his son, Yani Rosenthal Hidalgo, was presidency minister under President Zelaya in 2007. [See Updates #485, 491, 531, 858.]

In addition to his maquiladora connection, Jorge Canahuati is the majority owner of two of Honduras’ largest newspapers, La Prensa and El Heraldo. Also in the Canahuati family are Honduran Maquiladora Association head Jesús Canahuati and his brother Mario Canahuati, a former ambassador to the US who ran for vice president in 2005 for the National Party (PN). (NACLA Report on the Americas January-February 2009; NACLA website 8/3/09) ANDI president Adoflo Facussé is a cousin of former president Carlos Flores Facussé (1998-2002), owner of La Tribuna, another of the country’s main newspapers. (Atlanta Journal-Constitution 8/6/09 from AP)

*3. Honduras: Resistance Debates Next Steps
Before the June 28 coup, some in the Honduran left and grassroots movements had looked to the scheduled Nov. 29 general elections as a chance to break the monopoly on power held for decades by the Liberal Party (PL) and National Party (PN). Currently the two parties control 95% of electoral posts and government positions; of the 15 Supreme Court justices, eight are from the PL and seven from the PN. But the social movement was divided: union leader Carlos Humberto Reyes was registered as independent presidential candidate, while legislative deputy César Ham was running as the candidate of the small leftist Democratic Unification (UD) party.

Now the opposition also has to confront the possibility that the elections will be held under the de facto government, which is considered illegitimate by both the international community and the domestic opposition. But the UD has been strengthened by the defection of some politicians from the PL—both the PL and the PN supported the coup, even though Zelaya was a PL member. A number of former PL politicians are now registered as UD candidates for legislative or municipal positions, and UD leaders are hopeful that the party could win a strong representation in the National Congress. “We have to participate,” Ham has said. “Otherwise what will happen to us is what happened to the reactionary right wing in Venezuela, which didn’t run in the elections…and left Hugo Chávez alone in the National Assembly.”

But Juan Almendares, former rector of the National Autonomous University of Honduras (UNAH), says “the two traditional parties are the masters of the electoral machinery… It is difficult for the left to win, even if international observers come.” According to Almendares, both parties have a history of fraud and Zelaya’s narrow win over PN candidate Porfirio Pepe Lobo in 2005 may have been fraudulent, since at that time the business community and the US embassy preferred Zelaya.

Much of the grassroots movement is threatening to boycott the election. On Aug. 28 the National Front Against the Coup d’Etat in Honduras (FNGE), the main grassroots coalition, announced that it wouldn’t recognize the campaign or the elections “if the constitutional order is not restored” and called on the UD and independent candidates to declare their positions on this. But Carlos Eduardo Reina, a PL leader close to Zelaya, noted that an electoral is boycott is difficult to manage. “Not even the [leftist rebel] Farabundo Martí Front for National Liberation [FMLN], armed in the mountains, was able to carry out a boycott of elections” during El Salvador’s civil war of the 1980s, he said. (La Jornada (Mexico) 8/29/09; FNGE statement 8/28/09)

*4. Links to alternative sources on: Argentina, Chile, Bolivia, Peru, Colombia, Honduras, Mexico, Environment, US

"Buddies" Ease Transgenders' Hospital Visits in Argentina
http://upsidedownworld.org/main/content/view/2080/68/

Change on the Pampas: Industrialized Farming Comes to Argentina
https://nacla.org/node/6079

Consequences of the "Chilean Miracle": The Salmon Farms and the Privatization of the Sea
http://americas.irc-online.org/am/6377?utm_source

Bolivia: Morales Leads Still Undefined Bolivian Presidential Race
http://upsidedownworld.org/main/content/view/2078/68/

Bolivia: Too Many Obligations, Too Few Rights for Aymara Women
http://upsidedownworld.org/main/content/view/2072/68

What is Behind the Bolivia-Islam Connection?
http://upsidedownworld.org/main/content/view/2073/1/

Peru's García accuses Bolivia of secret pact with Chile in maritime dispute
http://ww4report.com/node/7718

Peru: Amazon natives issue ultimatum to mining company
http://ww4report.com/node/7729

Peru: village revolts against copper company
http://ww4report.com/node/7728

Peru: controversy over "dirty war" truth commission
http://ww4report.com/node/7727

Peru: "narco-sendero" attack leaves six dead
http://ww4report.com/node/7726

Montesinos gets ten years on rights abuses
http://ww4report.com/node/7715#comment-317583

Peru demands Interpol arrest exiled indigenous leaders
http://ww4report.com/node/7725

Peru: demands grow for Amazon massacre truth commission
http://ww4report.com/node/7724

Arequipa, Peru: peasant cooperatives march for land and water
http://ww4report.com/node/7730

Colombia: Awá indigenous people massacred —again
http://ww4report.com/node/7723

South America: U.S. Military Bases in Colombia and the Dispute over Resources
http://americas.irc-online.org/am/6367?utm_source

Honduran resistance goes it alone
http://therealnews.com/t/index.php?option=com_content&task=view&id=31&Itemid=74&jumival=4149

Toppling a Coup, Part VI: Electoral, Armed, or Something Else
http://narcosphere.narconews.com/thefield/3384/toppling-coup-part-vi-electoral-armed-or-something-else

The Learning Curve of the Teachers vs. the Honduras Coup
http://narcosphere.narconews.com/thefield/3381/learning-curve-teachers-vs-honduras-coup

Coup Catalyzes Honduran Women's Movement
http://americas.irc-online.org/am/6369?utm_source

Honduran Constitutional Assembly Would Be a Step Toward the Emancipation of Women
http://americas.irc-online.org/am/6392?utm_source

U.S. Continues to Provide Honduran Regime With Millennium Challenge Corporation Aid Money
http://upsidedownworld.org/main/content/view/2077/68/

Honduran Crisis Necessitates New Sanctions
http://upsidedownworld.org/main/content/view/2081/1/

Spain Steps Down: Universal Jurisdiction and the Guatemalan Genocide Cases
https://nacla.org/node/6078

Troubled Waters in the Mexico-Canada Relationship
http://americas.irc-online.org/am/6372?utm_source

CIP Americas Program Criticizes State Department Report on Human Rights Under the Merida Initiative
http://americas.irc-online.org/am/6385?utm_source

Biodiversity Report from Americas Program of CIP—August 2009
http://americas.irc-online.org/am/6336?utm_source

US Escalates War Build-Up Against Latin American Revolution
http://upsidedownworld.org/main/content/view/2067/68/

Reclaiming a Continent: Latin American Experiments in Democracy
http://upsidedownworld.org/main/content/view/2070/1/

For more Latin America news stories from mainstream andalternative sources:
http://americas.irc-online.org/ http://nacla.org/articles
http://upsidedownworld.org/
http://ww4report.com/node/

For immigration updates and events:
http://thepoliticsofimmigration.blogspot.com/

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