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No recovery in sight
Gilda Silvestrucci
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Experts warn of tough economic scenario, regardless of political outcome.

Even if Honduras resolves its ongoing political crisis, the economic outlook for the coming years is bleak, economists warn.

While the Inter-American Development Bank froze US$350 million in funds for Honduras on June 28 because of the country´s political turmoil, economic instability is awaiting the nation.

“Honduras will be hit in the coming months by a wave of unemployment, a significant drop in remittances, small businesses, manufacturing, exports and tourism, pillars of the Honduran economy,” said economist Martín Barahona. Remittances this year are expected to fall by $400 million, as emigrants in the United States send less money home because of that country´s economic crisis.

The political instability erupted on June 28, when soldiers physically removed President Manuel Zelaya from office, on orders from Congress and the Supreme Court, who said he violated the constitution by trying to hold an unauthorized referendum. Congress later installed Roberto Micheletti to the country´s highest office.

Barahona said companies such as Adidas, Nike and the Gap, which operate large maquila factories here, will leave the country if the political situation is not resolved.

Progress reversed
Honduras was one of the 12 Latin American countries that had reduced poverty by 1.5 percent since 2006, according to the Economic Commission for Latin America and the Caribbean. Nevertheless, inflation had reached 11.2 percent last year, the highest rate since the 10.1 percent registered in 2000. He planned to use funds from agreements with Venezuela, including PetroCaribe, and the cancellation of $3.8 billion in foreign debt in 2004 from foreign governments and multinational lenders.

Historic turn
But since the June 28 political turmoil, Honduras´ democratic, social and economic future has been in question.

Should constitutional order be restored, the country will have to repair its image to restore foreign investment, trade, tourism and aid.

For as many tax breaks as they can offer, it will be difficult for Honduras´ government to improve its image that has been damaged in the last two months, Barahona said.

The ruling government says despite losses of just $110 million in the first month since the crisis began, the economic situation is not as bad as it seems.

“With the number of problems, we have an enormous challenge, but we have the will and ability that President Roberto Micheletti has asked for,” said Finance Minister Gabriela Núñez.

But others think political stability is necessary to overcome the economic crisis.

Analyst Ernesto Gálvez says the only way out is to sign the San José Agreement, a proposal of Costa Rican President Óscar Arias that outlines an amnesty for those responsible for the coup and pushes up presidential elections from Nov. 29 to Oct. 28.

“I side with Óscar Arias´ proposal,” he said. “We shouldn´t satanize Mel Zelaya.”

Zelaya had tried to hold a non-binding referendum on constitutional reform that could have changed term limits. Arias´ proposal calls for him to cancel any plans for such a vote or reform.

Protests led by the pro-Zelaya Popular Resistance Front have destroyed property, which included setting fire to a fast-food restaurant in the capital, and how fragile order has been.

Political bodies, the media, civil society organizations, religious and business leaders and government authorities have been questioned by thousands of demonstrators who protest every day for the return to constitutional order.

Sociologist Leticia Salomón says the situation looks grim for the Liberal Party, the political party of both Zelaya and Micheletti, which has been violently divided.

According to Salomón, all sectors that supported the coup should reflect in their role in these months, starting with the Catholic and Evangelic Churches, many of whose leaders are accused of supporting the army and Micheletti.

Some of the media needs to do the same since it is continuing censor information on the protests and human rights violations allegedly committed by state security agents against the civilian population.
—Latinamerica Press.


Graffiti in Tegucigalpa quotes Honduran Constitution´s Art. 3: “No one owes obedience to a usurper government.” (Photo: Gilda Silvestrucci)
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