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

UNCLAS SECTION 01 OF 04 TEGUCIGALPA 000344 
 
SIPDIS 
 
SENSITIVE 
 
STATE FOR IO/SHA (LLUM) PASS TO AMB SAUERBREY 
STATE FOR WHA AND WHA/CEN 
STATE PASS AID FOR LAC/CEN 
 
E.O. 12958: N/A 
TAGS: OVIP PREL PGOV PHUM ECON SNAR HO
SUBJECT: SCENESETTER FOR AMBASSADOR SAUERBREY'S VISIT TO 
HONDURAS, FEBRUARY 19-20 
 
¶1. (SBU) Summary:  Post welcomes the visit of Ambassador 
Sauerbrey to Honduras February 19-20.  Honduran President 
Ricardo Maduro, half way through his constitutionally 
mandated single four-year term, faces 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 
international counterterrorism effort 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 good and reliable friend of the U.S. on 
counterterrorism.  The GOH has responded quickly to all USG 
requests regarding terrorist threats and financing, and to 
date no terrorist assets have been found in Honduran 
financial institutions.  The Congress has recently approved 
two international counterterrorism (CT) conventions/protocols 
and two OAS CT conventions (1971 and 2002).  Once the 
president signs the decrees and they are published in La 
Gaceta (akin to the Federal Register), Honduras will have 
become party to all 12 international and two OAS CT 
conventions. 
 
--------------------------------------- 
Iraq and Other Key Foreign Policy Goals 
--------------------------------------- 
 
¶3. (SBU) The GOH is very supportive of USG foreign policy 
goals, including 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.  The troops are being rotated with a second 
contingent this month.  Central American units from El 
Salvador, Nicaragua, 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, Secretary Powell visited Honduras, to thank 
the GOH for its support of OIF.  Their visits were well 
received and provided important political support for 
Maduro's Iraq policy.  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 all the Western 
Hemisphere to sign and ratify an Article 98 Agreement with 
the United States.  In January of 1999, the constitution was 
amended to abolish the position of military commander in 
chief of the Honduran Armed Forces (HOAF), thus codifying 
civilian authority over the military.  Honduras now has a 
civilian Minister of Defense (MOD) and a Chief of the Joint 
Staff who heads the HOAF.  Civilian control over the HOAF is 
complete.  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 also interested in establishing 
an ability to participate in international peacekeeping 
operations. 
 
------------------------------------------- 
Soto Cano Air Base - Joint Task Force Bravo 
------------------------------------------- 
¶5. (SBU) Five hundred sixty-five U.S. service men and women 
and eleven civilian DOD employees are currently stationed at 
Honduras' Soto Cano Air Base under the auspices of 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 will enable our military forces to 
continue to work together in such areas as disaster relief, 
joint training exercises, and counternarcotics missions. 
 
---------------- 
Counternarcotics 
---------------- 
 
¶6. (SBU) Honduras' geography places it squarely in the middle 
of a major illegal drug trans-shipment zone.  Honduras' 
airspace is regularly violated by drug traffickers, who also 
use go-fast boats to transit their cocaine through the 
Western Caribbean region.  In 2003, Honduras seized 
approximately 5,700 kilos of cocaine.  This is significantly 
more than had been seized in the last seven years combined. 
 
---------------- 
Border Relations 
------------------ 
¶7. (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 shared areas 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. 
 
¶8. (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.  Honduras provoked 
Nicaraguan retaliation when it signed a maritime treaty with 
Colombia recognizing the 15th parallel as its maritime border 
in 1999.  Nicaragua 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 
----------------- 
 
¶9. (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 rate of 3.5 percent per year.  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. 
 The economy continues to be dominated by agriculture, 
particularly the production of bananas, coffee, cultivated 
shrimp, melons and other fruits, vegetables and grains. 
 
¶10. (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 this year.  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. 
 
¶11. (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. 
 
--------------------------------------------- -------- 
IMF Letter of Intent and CAFTA Positive Steps Forward 
--------------------------------------------- -------- 
 
¶12. (SBU) After almost two years of negotiations, the Maduro 
Administration recently signed a Letter of Intent with the 
International Monetary Fund for a three-year Poverty 
Reduction and Growth Facility Program (expected to be 
approved on February 18).  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. 
 
--------------------------------- 
Supreme Court and Judicial Reform 
--------------------------------- 
 
¶13. (SBU) The current Supreme Court is developing into an 
independent branch of power, unlike any of its predecessor 
courts since democracy was restored in 1982.  It is 
pro-reform in orientation and fighting for its prerogatives. 
A key emerging issue is whether 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 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. 
 
---------------------------- 
Public Security/Human Rights 
---------------------------- 
 
¶14. (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 
out-of-control 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 
several months.  The USG 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, and expand the frontier 
police.  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. 
 
¶15. (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.  There are also serious problems with child labor 
in several industries, particularly melon, coffee, and sugar 
cane (but not the maquila) sectors, 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. 
 
------------- 
Consular Issues 
--------------- 
 
¶16. (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 
USG'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 
------------------- 
 
¶17. (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 FY03 budget of USD 45 million.  The Mission 
maintains a Consular Agent in Honduras' second city and 
industrial center, San Pedro Sula. 
PALMER