This record is a partial extract of the original cable. The full text of the original cable is not available.

UNCLAS SECTION 01 OF 02 TEGUCIGALPA 000442 
 
SIPDIS 
 
SENSITIVE 
 
DEPT. FOR WHA, WHA/CEN, AND PRM/PRP 
 
E.O. 12958: N/A 
TAGS: SMIG PREL HO
SUBJECT: EMBASSY TEGUCIGALPA RECOMMENDS EXTENSION OF TPS, 
WITH PLANNING FOR THE END GAME 
 
REF: A. STATE 27320 
 
     ¶B. 02 TEGUCIGALPA 620 
     ¶C. 01 TEGUCIGALPA 719 (AND PREVIOUS) 
 
¶1. (SBU) Summary:  Honduras remains an extremely poor 
country, still trying to recover from the devastation of 
Hurricane Mitch.  While most USG-funded post-Mitch 
reconstruction efforts are complete, serious long-term 
challenges make the situation extremely difficult for the 
average Honduran.  Honduras is struggling to provide economic 
opportunities, health care, housing, and schooling for its 
current residents, and possibly another approximately 87,000 
that might return if Temporary Protected Status (TPS) is not 
extended.  A decision not to extend TPS would be seen as a 
serious blow to the Maduro administration and would make 
achieving USG goals in Honduras on a range of issues much 
more difficult.  Therefore, the State/AID country team 
members unanimously endorse a Department recommendation to 
the Attorney General that TPS be extended.  Post also 
recommends that Washington give consideration to the desired 
end game of TPS, since what was designed as a temporary 
program is now viewed by Hondurans as an annual process in 
which a decision not to extend TPS would be a shock.  The 
eventual ending of the program, without some final 
clarification of TPS beneficiaries' immigration status, could 
put a large category of people into legal no-man's land and 
undermine USG efforts to better control our borders.  End 
Summary. 
 
¶2. (U) With the help of the international donor community (of 
which USAID is the largest bilateral contributor), Honduras 
has largely recovered from the physical devastation of 
Hurricane Mitch and has begun to focus its efforts on the 
country's long-term development.  USAID's two-and-a-half 
year, USD 300 million recovery program focused on a wide 
variety of reconstruction interventions in the areas of 
education, housing, water and sanitation, rural roads and 
bridges, disaster mitigation, health, agriculture 
reactivation, credit, accountability, and transparency. 
Although the majority of this program has been brought to 
completion, two ongoing programs remain to be completed: one 
dealing with transparency and accountability, and the other 
the reconstruction of damaged urban water and sanitation 
systems - both of which are scheduled to be fully completed 
in FY04.  Despite the gains made in post-Mitch recovery, 
Honduras continues to face daunting long-term development 
challenges that will continue to stress its limited resources. 
 
¶3. (SBU) President Ricardo Maduro, upon assuming office in 
January 2002, inherited a stagnating economy and seriously 
deteriorated government finances from the previous 
government.  One year into his Administration, the economic 
situation is still bleak, with the GOH struggling to reach a 
deal with the IMF.  The necessary, but difficult, measures 
that the GOH is planning to take to achieve an IMF agreement 
will likely result in economic and political problems in the 
short-term, although they are necessary for long-term 
macroeconomic stability.  The economy is growing slowly 
(estimated real GDP growth of two percent in 2002), and 
Honduras is a Highly Indebted Poor Country (HIPC), with a per 
capita income of only USD 922 per year.  Low world coffee 
prices continue to undermine the economy in rural areas. 
Given this bleak economic situation, the GOH has been unable 
to provide sufficient economic opportunities, health care, 
housing, and schooling for the people of Honduras.  The 
result can be seen in high crime rates and the slow 
unraveling of the social fabric of the nation.  Maduro's team 
is hoping that a U.S.-Central American Free Trade Agreement 
(CAFTA) will serve as a catalyst to regional economic 
cooperation, foreign investment, and economic growth. 
 
¶4. (U) Remittances from Hondurans living overseas continue to 
grow rapidly (up 38 percent in the first six months of 2002) 
and have become the country's most important source of 
foreign exchange.  Post estimates that Hondurans in the U.S. 
sent approximately USD 550-600 million in 2002 in remittances 
to Honduras.  Any significant drop in remittance income, 
something likely to happen if Temporary Protected Status 
(TPS) is not extended, would cut the country's largest source 
of foreign exchange. 
 
¶5. (SBU) Post estimates that Honduras is currently receiving 
upwards of 10,400 deportees a year via the INS/JPATS 
deportation program, a manageable number.  In addition, the 
GOH receives assistance from the International Organization 
of Migration (IOM) for a reinsertion program.  Post suspects 
that many of these deportees attempt to return to the U.S. 
again illegally and thus it is unclear how many are actually 
remaining in Honduras.  An increase from what is currently 
the second highest number of deportees in Central America 
(after El Salvador) to a much higher number would be 
difficult for Honduras to handle. 
 
¶6. (SBU) There is deep appreciation in Honduras, especially 
among members of the Maduro administration, for the USG's 
2002 extension of TPS, and continual interest in possible 
U.S. congressional action on the pending Nicaraguan 
Adjustment and Central American Relief Act (NACARA), which 
would give immigration parity for Hondurans.  The wait for a 
possible extension of TPS, and GOH advocacy for such a step, 
has become an annual event, and TPS extension is supported 
equally by both the National and Liberal Parties. 
 
¶7. (SBU) President Ricardo Maduro's government is engaged on 
the key issues of improving the administration of justice and 
rule of law, and is seeking to transform Honduras so that law 
and order can be restored and economic growth ignited. 
Maduro has spoken out strongly on tackling corruption, but 
has yet to deliver concrete results.  He faces formidable 
challenges from entrenched economic and political interests 
in moving his agenda forward.  Notably, the President's 
popularity has remained stalled at a low point since June 
¶2002.  A decision by the USG not to extend TPS could be 
interpreted here by many as a sign of U.S. withdrawal of 
support which would be a serious blow to the Maduro 
administration.  In any case, it would make achieving USG 
goals in Honduras, including Honduran congressional passage 
of CAFTA next year, on a range of issues much more difficult. 
 
¶8. (SBU) In sum, Post believes the following three problems 
are the most serious difficulties Honduras would face if TPS 
is not extended and a substantial number of Hondurans 
previously on TPS were to return to Honduras: 
-- great difficulty providing jobs, housing, schooling, and 
health care for those who return, resulting in additional 
crime and social instability, 
-- a significant loss of remittances, and 
-- a loss of political support for President Maduro, which 
would hurt USG goals in Honduras. 
 
Recommendation: Extend TPS and Plan for the End Game 
--------------------------------------------- ------- 
 
¶9. (SBU) Because of the situation outlined above, State/AID 
Country Team members unanimously endorse a Department 
recommendation to the Attorney General that TPS be extended. 
Post also recommends that Washington give consideration to 
the end game of TPS, since what was designed as a temporary 
program is currently seen by Hondurans as anything but 
temporary.  Given the high levels of poverty and slow 
economic growth in Honduras, there are likely to be good 
reasons to argue for the extension of TPS for the foreseeable 
future.  Whether it is an Executive Branch policy, such as 
Deferred Enforced Departure (ref c), Congressional action on 
NACARA-parity legislation, or some other solution, the USG 
should plan for an ordered end to TPS.  The alternative, in 
which TPS eventually ends and 87,000 people are suddenly 
illegally in the U.S., could provide serious challenges to 
the USG. 
Palmer