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

UNCLAS SECTION 01 OF 05 TEGUCIGALPA 000734 
 
SIPDIS 
 
SENSITIVE 
 
STATE FOR H PASS TO CODEL BALLENGER 
STATE FOR WHA/CEN, INL/LP, DRL/PHD, EB, AND CA 
STATE PASS AID FOR LAC/CEN 
 
E.O. 12958: N/A 
TAGS: OREP PREL PGOV PHUM ECON SNAR HO
SUBJECT: SCENESETTER FOR CODEL BALLENGER'S VISIT TO 
HONDURAS, APRIL 12-13 
 
 
¶1. (SBU) Summary:  Post welcomes the visit of CODEL Cass 
Ballenger (R-NC, Chairman, House International Relations, 
Western Hemisphere Subcommittee) to Honduras April 12-13. 
Honduran President Ricardo Maduro, a little over half way 
through his constitutionally mandated single four-year term, 
faces a difficult task leading a highly indebted poor country 
with numerous challenges.  Bilateral relations between the 
U.S. and Honduras are excellent; Honduras was the first 
country in the Western Hemisphere to sign and ratify an ICC 
Article 98 Agreement with the United States.  Honduras' 
support for the Global War on Terrorism (GWOT) is steadfast 
and the Government of Honduras (GOH) has sent troops to Iraq 
in support of Operation Iraqi Freedom.  End Summary. 
 
---------------------------- 
Counterterrorism Cooperation 
---------------------------- 
 
¶2. (SBU) Maduro is a solid supporter of the U.S. on GWOT. 
The GOH has responded quickly to all USG requests regarding 
terrorist threats and financing, although to date, no 
terrorist assets have been found in Honduran financial 
institutions.  Honduras is also the only country in the 
region, apart from Panama, to have signed and ratified all UN 
and OAS counterterrorism conventions and protocols.  Honduras 
has also been aggressive in upgrading port security and 
appears to be on track to comply with port certification 
requirements in the U.S.'s Maritime Transportation Security 
Act by July 1, 2004. 
 
--------------------------------------- 
Iraq and Other Key Foreign Policy Goals 
--------------------------------------- 
 
¶3. (SBU) The GOH is very supportive of USG foreign policy 
goals, including the reconstruction of Iraq.  In support of 
Operation Iraqi Freedom (OIF), the GOH deployed some 370 
troops to the vicinity of An Najaf as part of the Spanish 
Brigade operating under the Polish Division.  These troops 
are currently scheduled to return to Honduras this July when 
Honduras' formal commitment to OIF ends.  President Maduro 
announced on March 16 that he would not seek to extend this 
costly deployment for another year.  Central American units 
from El Salvador and the Dominican Republic are also serving 
under Spanish command.  In August 2003, CJCS GEN Myers and 
Secretary Rumsfeld visited Honduras, and in November 2003, 
 
SIPDIS 
Secretary Powell visited, to thank the GOH for its support of 
 
SIPDIS 
OIF.  Their visits were well received and provided important 
political support for Maduro's Iraq policy.  As in most of 
the region, the general public overwhelmingly opposes the 
Honduran deployment.  Honduras is also very supportive at the 
UN, sharing our views on resolutions covering such key issues 
as human rights, human cloning, and the Middle East. 
 
----------------------------------- 
Bilateral Political/Military Issues 
----------------------------------- 
 
¶4. (U) Honduras was the first country in the Western 
Hemisphere to sign and ratify an Article 98 Agreement with 
the United States.  Honduras now has a civilian Minister of 
Defense (MOD) and a Chief of the Joint Staff who heads the 
Honduran Armed Forces (HOAF). In January of 1999, the 
constitution was amended to abolish the position of military 
commander in chief of HOAF, thus codifying civilian authority 
over the military.  Civilian control over the HOAF is 
complete and civil/military relations are good.  This 
transition has resulted in greater transparency and fiscal 
accountability. The HOAF has a new focus on trans-national 
threats, including counterterrorism, narcotrafficking, and 
combating international criminal organizations.  The HOAF is 
interested in establishing an ability to further increase its 
participation in international peacekeeping operations. 
Honduras also stands ready to participate in a regional arms 
"rationalization" process, but has announced that it will not 
negotiate on a bilateral basis. 
 
------------------------------------------- 
Soto Cano Air Base - Joint Task Force Bravo 
------------------------------------------- 
 
¶5. (SBU) About six hundred U.S. service men and women and 
fourteen civilian DOD employees are currently stationed at 
Honduras' Soto Cano Air Base under the command of the 
Combatant Commander, U.S. Southern Command (SOUTHCOM) as 
Joint Task Force Bravo.  In 1954, the USG and GOH signed a 
Bilateral Military Assistance Agreement that set forth their 
intention to work closely together to foster peace and 
security in the Western Hemisphere.  The ICC Article 98 
Agreement with Honduras is therefore a particularly important 
accomplishment and enables our military forces to continue to 
work together in such areas as disaster relief, joint 
training exercises, and counternarcotics missions. 
 
---------------- 
Counternarcotics 
---------------- 
 
¶6. (U) Honduras' geography places it squarely in the middle 
of a major illegal drug trans-shipment zone, and the 
trans-shipment of cocaine through Honduras by air, land, and 
maritime routes continues.  However, this trade has now begun 
to face significant disruptions.  In 2003, overall seizures 
in Honduras were higher than the past five years combined and 
in 2004 Honduras has already seized over 1,500 kilos of 
cocaine. 
 
¶7. (SBU)  Corruption within the police, Public Ministry, and 
the judiciary remain a primary impediment to successful law 
enforcement cooperation.  However, the GOH has moved forward 
with the implementation of new units in support of the 
strengthened Money Laundering Law, which was passed in 2002. 
The National Council for the Fight Against Drug Trafficking 
(CNCN) has renewed its commitment to lead the country's 
counternarcotics efforts.  Available funds to implement a 
government approved master counternarcotics plan, though, 
remain severely limited. 
 
---------------- 
Border Relations 
------------------ 
 
¶8. (SBU) Honduras has border disputes with its three Central 
American land neighbors and its seven maritime neighbors. 
Maduro is personally engaged with his Presidential 
counterparts to address these issues.  Its land and maritime 
disputes with El Salvador and Nicaragua are the most heated. 
The Gulf of Fonseca on the Pacific coast has been a 
particularly difficult point.  A 1992 International Court of 
Justice (ICJ) ruling laid out a shared area of control in the 
Gulf of Fonseca and established the land border between 
Honduras and El Salvador, although El Salvador has been slow 
to implement the ruling.  In September 2002, El Salvador 
requested a revision of the 1992 ICJ ruling.  In December 
2003, the ICJ ruled against the Salvadoran appeal, bringing 
an end to the case.  The Organization of American States (as 
a neutral third party) is providing both nations technical 
assistance to help them implement the non-disputed elements 
of the ICJ's ruling. 
 
¶9. (SBU) On the Caribbean coast, Honduras and Nicaragua have 
a long-standing maritime border dispute over the 15th 
parallel.  In the past, the dispute has threatened to derail 
trilateral counternarcotics operations.  In 1999, Honduras 
provoked Nicaraguan retaliation when it signed a maritime 
treaty with Colombia recognizing the 15th parallel as its 
maritime border.  Nicaragua subsequently filed an ICJ case 
over the maritime border and more importantly in 1999 slapped 
a punitive 35 per cent tariff on Honduran goods.  This tariff 
remained in place until April 2003 despite a Central American 
Court of Justice ruling that it was illegal.  Only after 
Honduras responded with a retaliatory tariff, threatening 
Nicaraguan exports, did Managua rescind the tax. 
 
----------------- 
Economic Overview 
----------------- 
 
¶10. (SBU)  Honduras, with a per capita income of USD 950, is 
the third poorest country in the Western Hemisphere ahead of 
only Nicaragua and Haiti.  The economy is still growing 
(about 2.5 percent per year) but slower than the population 
growth.  Social indicators are improving, but two-thirds of 
all Hondurans live in poverty and average education levels 
are very low.  Historically, low world coffee prices have hit 
rural areas particularly hard (although they are now rising 
somewhat) forcing major cutbacks in planting, fertilizing, 
harvesting and investment.  Agriculture continues to 
contribute significantly to the economy, particularly the 
production of bananas, coffee, cultivated shrimp, melons and 
other fruits, vegetables, and grains. 
 
¶11. (SBU) The apparel assembly (maquila) sector grew 
dramatically in the 1990s, reaching peak employment in 2000 
of about 120,000 people.  Activity slowed after 2001 because 
of the U.S. economic slowdown in 2001-2002 and increased 
competition from Asia, but the sector appears to be 
rebounding since 2003.  While there has been some economic 
diversification (melons, cultivated shrimp, palm oil), there 
continues to be a large subsistence farmer population with 
few opportunities other than illegal immigration to the U.S. 
The Honduran government's desire to attract new types of 
foreign investment has been hindered by the stagnant economy 
and a wide range of investment climate/competitiveness 
problems. 
 
¶12. (SBU) Remittances from Hondurans abroad, particularly the 
U.S., continue to grow rapidly and have become the most 
important source of foreign exchange.  The U.S. is Honduras, 
largest trading partner.  The roughly 150 U.S. companies that 
do business in Honduras constitute the largest block of 
foreign direct investors.  After almost two years of 
negotiations, the Maduro Administration signed a Letter of 
Intent with the International Monetary Fund, which was 
approved by the IMF's Executive Board on February 26, for a 
new three-year arrangement for Honduras under the Poverty 
Reduction and Growth Facility (PRGF).  The IMF expects the 
GOH to reach its Heavily Indebted Poor Countries (HIPC) 
completion point by 2005 with good PRGF implementation.  The 
Paris Club needs to negotiate HIPC interim relief for 
Honduras in April (a cancellation of 90 percent of the GOH's 
debt payments falling due during the period until completion 
point).  The GOH, along with its four Central American 
neighbors (Costa Rica, El Salvador, Guatemala, and Nicaragua) 
also recently signed the U.S.-Central American Free Trade 
Agreement (CAFTA).  Maduro's team is hoping that CAFTA can 
serve as a catalyst to spur regional economic cooperation and 
integration. 
 
--------------------------------------------- -------- 
The Importance of CAFTA 
--------------------------------------------- -------- 
 
¶13. (SBU) The Honduran government, along with El Salvador, 
Guatemala and Nicaragua, reached agreement on the terms of 
the U.S.-Central American Free Trade Agreement (CAFTA) in 
December 2003; Costa Rica closed its negotiations in January 
and the Dominican Republic recently negotiated its market 
access chapters in March.  Honduras is hoping that the 
Central American countries will have a signing ceremony with 
President Bush in late May (once the required consultation 
period with the U.S. Congress is completed) and to begin 
national ratification shortly thereafter.  The Honduran 
government and private sector are concerned that election 
year politics in the United States may delay ratification by 
the U.S. Congress. 
 
¶14. (SBU) The CAFTA agreement is strongly supported by the 
Honduran private sector.  The CAFTA textile chapter is 
perceived as absolutely vital to the survival of the textile 
and apparel sector in Honduras after worldwide quotas are 
eliminated in 2005.  The CAFTA agricultural chapter is 
expected to liberalize agricultural trade gradually while 
protecting Honduran farmers from sudden disruptions caused by 
subsidized imports.  The agreement also will spur 
modernization in government procurement and services, and 
will help lock in the GOH's structural reforms in areas such 
as telecommunications.  Honduras is already seeing about $200 
million in new foreign investment as a result of CAFTA, just 
this year.  While the agreement will require some politically 
sensitive changes to legislation and there is a small, but 
vocal, leftist opposition led by the Popular Block, which 
includes NGOs, unions, and a leftist political party, 
Honduran ratification is expected to be relatively easy. 
 
--------------------------------- 
Supreme Court and Judicial Reform 
--------------------------------- 
 
¶15. (SBU) In 2000, the GOH initiated substantial judicial 
reforms intended to allow the Supreme Court to develop into 
an independent branch of power, unlike any of its predecessor 
courts since democracy was restored in 1982.  While the new 
court is pro-reform in orientation and has fought for its 
prerogatives, its performance of late, under the leadership 
of its President, Vilma Morales, has been a disappointment. 
There continues to be a high level of political manipulation 
in the court's proceedings and the issue remains open as to 
whether or not it can become a fully independent and co-equal 
branch of political power, consistent with the separation of 
powers provision in the Honduran Constitution.  The 
established political order is fighting that prospect with 
vigor.  In fact, the National Congress seized the political 
opportunity to introduce legislation that would amend the 
constitution to give itself the power to interpret the 
constitutionality of the laws it passes.  The Supreme Court 
ruled in May 2003 that the proposed amendment was 
unconstitutional, which sparked a tense confrontation between 
the Supreme Court and Congress.  The issue receded until 
recently when Congress passed a new amendment to the 
Constitution again granting Congress the right to interpret 
the constitutionality of laws it passes.  A legal challenge 
to this amendment is expected in the near future, although 
the amendment has yet to be printed in the official register 
(La Gaceta) and therefore is not yet law.  Judicial 
corruption remains an ongoing problem and the President of 
the Court has not acted decisively to root out and punish bad 
judges. 
 
---------------------------- 
Public Security/Human Rights 
---------------------------- 
 
¶16. (SBU) Upon taking office on January 27, 2002, President 
Maduro's first act was to fulfill his main campaign promise 
-- a zero tolerance campaign against the country's 
intolerably high crime situation.  He deployed more than 
5,000 soldiers to the streets to support the police.  The 
public responded enthusiastically.  However, after initial 
success of establishing a visible police presence, violent 
crime, particularly homicides, continued at a high rate, 
although there is evidence that the murder rate has fallen in 
the last six months or so.  The U.S. is helping the Maduro 
government establish an anti-kidnapping unit, increase 
intake/training of police recruits, create a model tourist 
police force, boost its counternarcotics efforts, expand the 
frontier police, and improve prosecutional and forensic 
capacities.  The country's geographic position makes it an 
obvious strategic transit point for narcotics trafficking, 
alien smuggling operations, trafficking in persons, and other 
organized crime activities. 
 
¶17. (SBU) Extrajudicial killings, especially of 
children/young adults since 1998, have been a source of 
serious concern and only recently has the GOH begun to take 
steps to investigate the hundreds of unsolved cases.  Human 
rights groups regularly accuse former security force 
officials and the business community of colluding to organize 
"death squads" to commit these summary and arbitrary 
executions.  On April 5, 2003, 68 persons, 61 of them gang 
members, were killed in a violent incident at El Porvenir 
prison near La Ceiba.  Reports produced by the Public 
Ministry, a Special Commission of the Honduran National 
Council for Internal Security (CONASIN), and the Human Rights 
Commissioner put the blame for the vast majority of deaths on 
government security forces (police and military under police 
command) and nongang member inmate trusties. 
 
¶18. (SBU)  While Honduran labor law is deficient in some 
areas with respect to International Labor Organization core 
conventions, the main issue for the protection of labor 
rights, including freedom of association and collective 
bargaining, is the effective enforcement of existing laws. 
There are serious problems with child labor in several 
industries, particularly melon, coffee, and sugar cane (but 
not in the maquila sector), as well as in the informal 
economy, and trafficking in persons of women/children for 
commercial sexual exploitation in the U.S., Central America, 
and Mexico.  USAID and Peace Corps have both been involved in 
HIV/AIDS prevention. 
 
--------------------------- 
Corruption and Rule of Law 
--------------------------- 
 
¶19. (SBU) Honduras remains one of the most corrupt countries 
in the Western Hemisphere and was recently ranked 106 out of 
133 counties surveyed by Transparency International, an NGO 
that tracks international corruption issues.  Only Ecuador, 
Haiti, and Paraguay scored lower in the Western Hemisphere. 
U.S. policy to combat endemic corruption has struck a nerve 
in Honduras, especially any mention of our visa revocation 
authorities.  Maduro has stated he is willing to address 
corruption, even if it will cost him political support within 
his party, but real achievements to date have been lacking. 
Of particular concern are individual judges and prosecutors 
who solicit and/or remain open to offers of bribes.  The 
Attorney General's office has been unwilling, or unable, to 
prosecute high-profile cases, with the notable exception of 
several sitting congressmen recently accused of drug 
trafficking and other offenses.  The selection of Ovidio 
Navarro as the new Attorney General was also a clear 
political move orchestrated by those with a direct interest 
in the status quo.  Given the scope of the problem, any 
public discussion about the country's pervasive corruption is 
a positive development. 
 
------------ 
USAID Programs 
-------------- 
 
¶20. The Central America and Mexico (CAM) Regional Strategy 
focuses bilateral and regional USAID investment on the three 
performance "arenas" of Ruling Justly, Economic Freedom, and 
Investing in People, and is closely aligned with the 
Millennium Challenge Account (MCA).  USAID supports the 
Ruling Justly objective by increasing the responsiveness and 
accountability of public institutions, while also building on 
successful municipal development programs to create better 
models for governance, justice reforms, and transparency and 
participation.  In the arena of Economic Freedom, there is a 
concerted focus on trade policy and preparations to ready 
Honduras' participation in the CAFTA and FTAA.  USAID strives 
to bridge agricultural production in rural areas with 
relatively higher value processing and marketing enterprises 
in urban centers.  The integrated natural resource management 
program emphasizes sustainable land and water-use, 
biodiversity, and reduced disaster vulnerability.  Also, to 
support the Investing in People objective, the health program 
aims toward improving reproductive health, family planning, 
child survival, prevention of HIV/AIDS and other infectious 
diseases, and household food security.  Seeking a 
better-educated Honduran work force through expanded access 
at the pre-school, middle school, and upper secondary levels 
(grades 10-11) is done using alternative delivery systems and 
implementing the Centers for Excellence in Teacher Training 
(CETT) Presidential Initiative.  USAID is also assisting GOH 
efforts to develop quality education standards, testing, and 
evaluation. 
 
------------- 
Consular Issues 
--------------- 
 
¶21. (SBU) Approximately 800,000 Hondurans, both legal and 
illegal, live in the U.S., a fact that places immigration 
issues high on the bilateral agenda.  (The population of 
Honduras is 6.5 million.)  There is deep appreciation for the 
U.S.'s extension of Temporary Protected Status (TPS) in the 
U.S. and interest in possible congressional action on the 
proposed Nicaraguan Adjustment and Central American Relief 
Act (NACARA), which would give immigration parity for 
Hondurans.  With approximately 11,000 American citizens 
residing in Honduras and many thousands visiting Honduras 
annually for tourism and business, American Citizen Services 
are a key part of the Embassy's work.  Since 1995, 35 
American Citizens have been murdered in Honduras.  There was 
not much progress on most of these cases until 2003, but 
there have now been 15 convictions in eight cases.  Some 
progress has been made on extradition cases involving 
American Citizens residing in Honduras who are wanted for 
felonies in the United States. 
 
------------------- 
Embassy Tegucigalpa 
------------------- 
 
¶22. (SBU) Embassy Tegucigalpa is a medium-sized post, 
employing 140 U.S. citizens and 300 Hondurans among 20 USG 
agencies.  The Peace Corps program, with more than 245 
volunteers, is one of the world's largest, and the USAID 
mission had a FY04 budget of USD 45 million.  The Mission 
maintains a Consular Agent in Honduras' second city and 
industrial center, San Pedro Sula. 
PALMER