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UNCLAS SECTION 01 OF 08 TEGUCIGALPA 000872 
 
SIPDIS 
 
SENSITIVE 
SIPDIS 
 
STATE FOR WHA, WHA/PPC, WHA/EPSC, AND WHA/CEN 
STATE FOR EB, INL, PM, OES, CA, PRM, AND DRL 
STATE PASS USAID FOR LAC/CAM, LAC/RSD, AND EGAT 
NSC FOR DAN FISK 
 
E.O. 12958: N/A 
TAGS: PREL ECON PGOV EPET SNAR EAID SENV KJUS HO
SUBJECT: POTUS Meeting June 5 With Honduran President Mel 
Zelaya: Themes, Issues, and Areas of Bilateral Assistance 
 
¶1. (SBU) SUMMARY: One hundred days into his term, President 
Mel Zelaya remains somewhat of an enigma.  On the positive 
side, he has strongly supported CAFTA; cooperated fully with 
the DHS/ICE deportation of illegal immigrants (nearly 200 
daily); acted - with limited resources - to combat the 
exploding drug and security problems; engaged in successful 
negotiations with El Salvador (a traditional enemy) to 
resolve the land border dispute (sea demarcation remains a 
problem); and he voices strong support for the U.S.-Honduran 
relationship.  In addition, from the very first day of his 
election, President Zelaya has relished the opportunity to 
meet with President Bush, and he eagerly awaits the June 5 
White House meeting.  He made a point of receiving Attorney 
General Gonzales at his first official meeting after the 
inauguration - with Mexican President Vicente Fox and other 
leaders waiting in the wings.  President Zelaya has visited 
the Embassy and the Ambassador's residence and his senior 
advisors tell us that his meetings with the Ambassador have 
priority over all other business.  On May 4, he visited the 
USS Underwood, the first U.S. Navy vessel to visit mainland 
Honduras in twenty years.  His words underscored his strong 
affinity for the United States. 
 
¶2. (SBU) On the not so positive side, Zelaya is seen by many 
observers as disorganized, distrustful of many of his own 
advisors/cabinet officials, prone to populism, and 
influenced by divided counsel - including some with definite 
leftist leanings.  Because he made so many campaign 
promises, the future is uncertain.  It appears to Post that 
Zelaya and a few key advisors believe that the only way 
Zelaya can fulfill his promise to lower gasoline prices in 
the short term is to strike a deal with Venezuela, 
particularly with PetroCaribe.  Although he claims this 
would be an economic deal only, Zelaya is in a position to 
be influenced by the political pressure that Chavez could 
bring if/when Honduras becomes dependent on Venezuelan oil. 
Zelaya has done little thus far to stem the rampant 
corruption in Honduras, though there are bright signs in 
reforming the tax system and actually collecting large sums 
of tax money from elite economic interests paying little or 
no taxes.  END SUMMARY. 
 
--------------------------------------------- --- 
Key Strategic Themes in Bilateral Relationship 
--------------------------------------------- - 
 
¶3. (SBU) The key strategic themes in our bilateral 
diplomatic efforts in Honduras are: the rule of law 
(including democratic institutions), regional security 
(including transnational crime), economic development to 
reduce poverty (through trade and investment, and investment 
in human resources), and assistance to American citizens and 
businesses.  Overarching these goals is an emphasis on good 
governance and attacking corruption, a focus that Zelaya 
says he shares, as fraud/waste/abuse and the ineffective 
administration of justice hampers progress in all these 
areas.  U.S. goals coincide with Zelaya's emphasis on public 
security/rule of law, economic development, and natural 
resources/environment (including the prevention insomuch as 
possible of natural disasters). 
 
¶4. (SBU) Over the weekend of May 5-7, the U.S. Center for 
Hemispheric Defense Studies, with support from the U.S. 
Military Group and other EmbOffs, held a National Security 
Strategy workshop for GOH, opened by Vice President Santos, 
presided by Minister of Defense Aristides Mejia, Chief of 
Honduran Defense General Romeo Vasquez Velasquez, and 
 
TEGUCIGALP 00000872  002 OF 008 
 
 
leading members of military and police, as well as other 
government officials.  The workshop was a success, but 
development of the full strategy and implementation will 
take time and resources.  Nevertheless, it is a critical 
step and the foundation toward achieving success in regional 
security and stability. 
 
----------------------------------- 
Regional Issues, Venezuela Included 
----------------------------------- 
 
¶5. (SBU) Zelaya is very sensitive to any appearance of U.S. 
favoritism toward El Salvador.  He is aware from press 
reports of President Saca's push for major non-NATO ally 
status for El Salvador and is very suspicious of how such a 
determination could upset the balance of forces in the 
region. 
 
¶6. (SBU) The Zelaya Administration has pledged to support 
Guatemala over Venezuela for the seat on the United Nations 
Security Council. 
 
¶7. (SBU) Post is working with Embassy Managua to see what 
might be the most useful thing the Hondurans could do in 
relation to the Nicaraguan elections.  Due to the long 
standing Caribbean maritime border dispute between the two 
countries, Zelaya is unlikely to take significant action. 
Nevertheless, having recently held elections, the GOH should 
agree in principal and publicly to the importance of free, 
fair, and transparent elections for the promotion of 
democracy. 
 
¶8. (SBU) USG officials should continue to underscore the 
concern Washington places on Chavez-run Venezuela, 
suggesting that there are possible consequences in terms of 
getting sympathetic responses to problems when a country 
expands its relationship with the Chavez government. 
 
------------------------------------------ 
Immigration: Reform, TPS, and Deportations 
------------------------------------------ 
 
¶9. (SBU) Immigration Reform: GOH immigration reform remains 
a major problem - no change from the Maduro Administration. 
Just recently a new Immigration Director was appointed. 
Reform to immigration moves at a painstakingly tedious pace 
despite best USG diplomatic efforts.  DHS/CIS Office of 
Refugee, Asylum and International Relations has discussed 
providing possible technical assistance to assist Honduran 
immigration reform. 
 
¶10. (SBU) Temporary Protective Status (TPS): Honduras' 
number one earner of foreign exchange is remittances from 
the U.S. (about USD 1.5 billion in 2005).  Given the 
difficult economic conditions in Honduras, the government 
wants TPS to continue indefinitely.  The program allows 
about 80,000 Hondurans who were in the U.S. at the time of 
Hurricane Mitch in 1998 to remain in the U.S. temporarily. 
The authorization has been renewed annually and currently 
runs out in 2007.  Interestingly, according to recent 
Honduran press reports, fewer than 5,000 Hondurans have re- 
subscribed to TPS.  Some argue that under TPS Honduras 
enjoys privileged status that other deserving countries do 
not.  The GOH is hopeful that possible U.S. immigration 
reform will include expanded temporary work visas. 
 
¶11. (SBU) Deportation: Honduras has fully cooperated, but 
 
TEGUCIGALP 00000872  003 OF 008 
 
 
the U.S. is still seeking to increase the number and size of 
flights to Honduras, mainly by opening the San Pedro Sula 
airport to Justice Prisoner and Alien Transportation System 
(JPATS) aircraft (the San Pedro Sula airport can accommodate 
larger airplanes).  Working with the International 
Organization for Migration (IOM), Post has engaged the GOH 
by urging them to permit JPATS flights into the northern 
city of San Pedro Sula and to open a Center for Returned 
Migrants there.  All JPATS flights now must use 
Tegucigalpa's very difficult airport, which can not land the 
largest JPATS planes and is closed more often by weather 
than is San Pedro Sula's airport. 
 
¶12. (SBU) The GOH has agreed in principle to this request, 
but seeks USG assistance to refurbish an old terminal for 
these purposes (USD 50,000) and to help cover operating 
costs of the two centers (USD 100,000 per year).  Post 
strongly believes meeting these requests would advance U.S. 
interests by permitting additional removals of Hondurans 
unlawfully present in the United States.  The GOH has been 
noticeably cooperative in documenting its own nationals who 
are illegally in the United States and Post believes 
providing support for the San Pedro Sula facility would also 
help to cement that support.  DHS/ICE/DRO has indicated a 
willingness to pay a processing fee for each Honduran 
documented by Honduran consuls in the United States so that 
they may be deported.  Post recognizes there may be legal 
limitations on the extent to which we can dictate how and 
where those fee monies should be spent, but also urges 
DHS/ICE/DRO to design a mechanism to permit money to flow to 
the opening and operation of the San Pedro Sula facility (as 
well as operating the Tegucigalpa center). 
 
-------------------------- 
Drugs, Gangs, and Security 
-------------------------- 
 
¶13. (SBU) Counternarcotics and Counterterrorism: POTUS may 
want to ask Zelaya what he plans to do about the nearly out 
of control narcotics problem in certain regions of his 
country.  This will likely result in Zelaya asking for 
desperately needed help.  What we need is a specific GOH 
plan of action and clearly identified requirements to 
consider.  The most pressing need for the GOH is maritime 
patrol aircraft, but the GOH also needs support for their 
response ability, intelligence capabilities, and continued 
State/INL funding (which is drying up) to strengthen the 
collection of evidence, investigative capacity on money 
laundering, and successful prosecutions.  SOUTHCOM has said 
it does not have any counternarcotics money available to 
Central American partners, although helicopters from Soto 
Cano air base have provided airlift support in counter-drug 
operations.  DHS/CBP and the Coast Guard have both assisted 
the GOH, but more help is needed to stem the massive flow of 
drugs through the Central American transit zone. 
 
¶14. (SBU) The GOH is a party to all 12 UN and two OAS 
counterterrorism conventions/protocols in effect.  USG 
agencies may have money available for assistance on 
counterterrorism issues.  For example, the Honduran Customs 
Service (DEI) is seeking support to install container 
scanning equipment at land borders.  This would extend the 
coverage of the highly-successful Container Security 
Initiative at the maritime port of Puerto Cortes to land 
entries, both facilitating trade and improving security. 
Another possible project could be to develop the facility at 
Mocoron to pursue narcotrafficers in the Mosquitia 
 
TEGUCIGALP 00000872  004 OF 008 
 
 
(northeastern region of Honduras most prevalent in narcotics 
operations); this concept could be expanded to go after arms 
smugglers involved in terrorism in the region.  In order for 
such projects to be successful, however, they must be 
preceded by real GOH military transformation. 
 
¶15. (SBU) Initiation of a Special Anti-Gang Unit: Currently 
the Narcotics Affairs Section (NAS) is in the process of 
initiating a Special Anti-Gang Unit to be comprised of 
Police Officers from various existing Gang Units as well as 
two prosecutors from the Public Ministry's Organized Crime 
Unit to specifically target gang activities.  The anti-gang 
proposal will address several aspects of this serious 
problem to include the following: education, prevention, 
interdiction, rehabilitation, and re-insertion into society. 
It is estimated that in order to properly address, manage, 
and maintain this Unit, it would take approximately USD 
500,000.  Just recently, USD 127,000 was repositioned for 
the new Special Anti-Gang Unit. In addition, beginning this 
month, NAS and the Public Affairs Section will lead Embassy 
efforts in assisting the San Pedro Sula community in an anti- 
gang pilot project.  This project will consist of a media 
campaign informing youth and others of the dangers of 
belonging to gangs, as well as help in avoiding membership 
and in successfully terminating gang affiliations. 
Unfortunately, INL may not have funds next year to continue 
the contract of the sole American in charge of the Embassy 
NAS office. 
 
--------------------------- 
Fuel Prices and PetroCaribe 
--------------------------- 
 
¶16. (SBU)  As reported in previous cables, Honduras 
continues to move towards a state-run fuel import regime, 
under which it proposes to establish a government body to 
select one company to supply all the nation's fuel demands 
by August 2006.  Awarding such a monopoly on importation of 
all fuel to a single company could require current 
importers, including U.S. companies ExxonMobil and 
ChevronTexaco, to break existing import contracts.  In 
addition, these two U.S. firms -- which are the owners of 
the majority of fuel storage capacity in Honduras -- might 
then face a GOH demand that they share use of those supply 
facilities.  Venezuelan national fuel company PDVSA has a 
clear advantage to winning the national bid through their 
plan PetroCaribe, which offers up to 40 percent financing, 
and may have an early in-road through reported deals with 
Honduran parastatal energy company ENEE and the Honduran 
private fuel importer and distributor DIPPSA.  Honduran 
actions stem from strong internal political demands to 
reduce gas prices.  The GOH has also expressed a strong 
interest in pursuing energy diversification, notably 
including alternative and renewable fuels such as sugar-cane 
ethanol, wind power, micro-hydro and full-scale 
hydroelectric projects, and biodiesel from African Palm 
plants. 
 
---------------------- 
Environmental Concerns 
---------------------- 
 
¶17. (SBU) Forestry/Illegal Logging Issues: Zelaya has a very 
strong personal attachment to the environment and wants to 
rid the country of illegal logging and damage to the forest. 
Zelaya has this policy despite, or perhaps, because of, his 
time as head of the Honduran Logging Association.  Forest 
 
TEGUCIGALP 00000872  005 OF 008 
 
 
sector monitoring and enforcement are difficult due to 
inadequate knowledge of forest resources and ambiguous 
ownership rights.  Illegal logging continues to flourish 
because of limited prosecution and lenient penalties for 
forest crimes.  He has not specifically asked for U.S. help, 
but he may do so.  The Embassy is seeking greater details on 
President Zelaya's plans for monitoring illegal logging so 
that State/OES can look into providing assistance through 
the POTUS Initiative Against Illegal Logging. 
 
¶18. (SBU) Illegal logging has been a persistent problem in 
Honduras for many years, particularly with precious 
hardwoods such as Mahogany, which is extracted by the 
truckload from isolated sites in the eastern part of the 
country.  The GOH owns the majority of the country's forests 
and is therefore ultimately responsible for their protection 
and at fault for the years of illegal logging that has 
occurred in Honduras.  The GOH has historically done very 
little in practical terms to stop illegal logging.  More 
recently, the Zelaya Administration has publicly declared 
that proper forestry practices is one of its highest 
priorities and has mobilized the Honduran Army to curb both 
illegal logging and forest fires. 
 
------------------------------------- 
USG Programs and Bilateral Assistance 
------------------------------------- 
 
¶19. (SBU) Central American Free Trade Agreement (CAFTA): 
CAFTA entered into force on April 1 for Honduras.  In 
Honduras, CAFTA is strongly supported by most of the private 
sector, especially the textile and apparel industry.  CAFTA 
was supported by not only the outgoing National Party, but 
also by the Liberal Party and two of the three smaller 
parties in Congress.  Only one small leftist political party 
(UD) voted against the agreement.  The agreement has also 
been opposed by some NGOs, labor unions, and rural 
(campesino) groups, who are concerned that small-scale 
Honduran farmers will be unable to compete with subsidized 
U.S. agricultural products. 
 
¶20. (SBU) Zelaya's team hopes that CAFTA will lead to faster 
economic growth and serve as a catalyst for regional 
economic cooperation and integration.  The agreement is 
absolutely vital to the survival of the textile and apparel 
sector in Honduras now that worldwide quotas have been 
eliminated.  It is estimated that in 2004 Honduras received 
at least USD 200 million in new foreign investment, most of 
it from the United States, as a result of the anticipated 
benefits of CAFTA.  The agreement's agricultural chapter 
will 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. 
 
¶21. (U) Millennium Challenge Account: In 2004, Honduras was 
chosen as one of sixteen countries eligible (out of 75 
considered) to apply for assistance from the Millennium 
Challenge Account.  In June 2005, the Millennium Challenge 
Corporation (MCC) approved $215 million in funding over five 
years for a Transportation Project and Rural Development 
Project in Honduras.  The Compact entered into force on 
September 29, 2005, and the first disbursement of USD 1.6 
million was made in February 2006.  MCA-Honduras is the 
government entity responsible for implementing the program. 
 
TEGUCIGALP 00000872  006 OF 008 
 
 
Three major procurements are currently in process: Farmer 
Training and Development, Procurement Supervisor, and the 
Transportation Project Manager.  The contract for the Farmer 
Training and Development is expected to be awarded in late 
summer and will be the first activity to show tangible 
results. 
 
¶22. (SBU) MCC Vice President for Operations John Hewko will 
visit Honduras May 15-17 to emphasize to President Zelaya 
that all Compact implementation must be transparent, 
competitive, and apolitical.  In addition, Hewko will stress 
that the Compact was designed to work in coordination with 
the efforts of the GOH and other donors to enable Honduras 
to take advantage of the opportunities presented by CAFTA. 
This requires GOH policies in agriculture and transportation 
to reinforce the projects being funded under the Compact. 
Unfortunately, initial policy statements indicate that GOH 
policies and budgets are not investing the necessary 
resources to complement the projects being funded by the 
Compact. 
 
¶23. (SBU) PL 480 Title II:  It appears that the Food For 
Progress program that has benefited a half million very poor 
Hondurans (two-thirds of the country is poor) will end in 
¶2008.  The Embassy is working with USAID headquarters on 
this, but the funds may not be available to continue the 
program.  Post has reason to believe that Zelaya intends to 
raise this subject with POTUS. 
 
¶24. (SBU) Seized assets as leverage for fishery and 
environmental issues: The USG will transfer USD 500,000, 
which represents 50 percent of the net forfeited assets from 
the McNab case regarding conspiracy, smuggling, and money 
laundering charges in connection with importing undersized 
lobsters into the U.S. in violation of Honduran law.  The 
GOH must ensure that all funds transferred under this 
agreement are used by the Fisheries Section of the 
Agriculture Ministry.  Another Post initiative is trying to 
get the GOH seized assets office to turn over a seized boat 
to the fisheries inspectors, further improving their 
inspection and monitoring capacity, while reinforcing their 
good behavior in becoming a functioning government entity. 
Both of these efforts could not only improve environmental 
protections and reduce the chance of violations by Honduran 
seafood and shellfish fishermen, but they could also send a 
strong signal of how doing the right thing (such as 
convicting smugglers, seizing criminal assets, and reforming 
law enforcement agencies) can lead to increased resources 
and therefore a better GOH ability to deliver services to 
its people. 
 
¶25. (SBU) Bird Flu prevention - USG provides USD 100,000: 
Since 2001, through SOUTHCOM's Humanitarian Assistance 
Program, the USG has been conducting a Disease Surveillance 
project in Honduras, Guatemala, and El Salvador, in 
conjunction with the U.S. Army Center for Health Promotion 
and Preventive Medicine - West, to precisely try to identify 
problems soon enough to act and hopefully prevent them from 
becoming bigger problems if they hit any of these countries. 
USD 100,000 has recently been allotted to assist public 
health personnel in Honduras to carry out diseases 
surveillance programs specifically on "Bird Flu". 
 
¶26. (U) Global Peacekeeping Operations Initiative (GPOI): 
GPOI funds for Honduras, El Salvador, Nicaragua, and 
Guatemala will be used to provide peace support operations 
training and equipment for use in the Central American Armed 
 
TEGUCIGALP 00000872  007 OF 008 
 
 
Forces Confederation (CFAC) peacekeeping battalion such as, 
but not limited to, computers, audio/visual, and vehicles; 
transportation of personnel to the Coban Regional 
Peacekeeping Training Center in Guatemala; and for other 
related activities.  Honduras will receive $495,521 in 
individual soldier and communications equipment from the 
State contractor.  The State equipment includes helmets, 
flak jackets, billy clubs, whistles, GPSs, compasses, 
handheld radios, base stations, HF radios, etc.  This 
equipment is scheduled to arrive in Honduras in May, with a 
donation ceremony to be held at the end of May.  There is 
also an additional approximate USD 845,000 allotted for 
larger items at a later date. 
 
------------------------------------------ 
Pending issues for Bilateral Consideration 
------------------------------------------ 
 
¶27. (SBU) Mutual Legal Assistance Treaty (MLAT): The Embassy 
has encouraged the GOH to become a party to the OAS MLAT, as 
well as the Optional Protocol.  The Convention and Protocol 
provide a legal mechanism for providing mutual legal 
assistance between states parties in investigations, 
prosecutions, and proceedings that pertain to crimes over 
which the requesting state has jurisdiction.  The Convention 
provides, among other things, an obligation on the states 
parties to establish Central Authorities to facilitate the 
speedy execution of requests, and establishes procedures for 
the handling of witnesses and evidence.  The Protocol is an 
important adjunct to the Convention that enables the Parties 
to obtain cooperation for tax crimes, not just tax crimes 
involving proceeds from other crimes covered under the 
Convention.  Post has proposed to several GOH 
representatives, including high levels of the Foreign 
Ministry, Honduran Ambassador to the U.S. Flores Bermudez, 
and the Attorney General, that Honduras become a Party to 
the Convention.  All have expressed interest.  Post 
recommends the USG officials raise this matter with 
President Zelaya. 
 
¶28. (U) House Democracy Assistance Commission (HDAC): Post 
has strongly recommended that Honduras be selected for 
receiving the House Democracy Assistance Commission's (HDAC) 
assistance in 2007.  USAID proposed Honduras as a Western 
Hemisphere candidate country since the newly elected 
Honduran Congress would benefit substantially from 
legislative assistance, particularly with the provision of 
technical expertise improving its efficiency and 
transparency.  Honduras has a new Congress that was elected 
in November 2005.  Given more than an 80 percent turnover in 
the Congress as a result of landmark electoral reforms, the 
timing would be optimum for strengthening this critical 
branch of government.  This new, more independent Congress 
presents an opportunity for transforming it into a more 
responsive body to the people.  The assistance also would 
support the implementation of CAFTA by strengthening the 
capacity of the new Congress to support the new economic 
framework and opportunities. 
 
¶29. (SBU) Soto Cano Air Force Base: This joint Honduran Air 
Force/U.S. Air Force installation about an hour and 15 
minutes from Tegucigalpa is the home to about 10 U.S. 
helicopters and over 500 U.S. servicemen that serve U.S. 
policy goals in the region and help Honduras during times of 
natural disasters and various medical/humanitarian programs. 
The U.S. may want to expand the base in the future, 
including transferring Coronet Oak, a hub for four C-130 air 
 
TEGUCIGALP 00000872  008 OF 008 
 
 
cargo transport planes, to Soto Cano from Puerto Rico.  The 
Maduro Administration agreed to Coronet Oak.  Zelaya 
supports the base, has not yet been asked to formally commit 
to Coronet Oak, and wants to establish joint military and 
commercial use for export/import of goods under CAFTA. 
SOUTHCOM and the Embassy stand ready to discuss this 
proposal with the GOH, but there are significant costs and 
security considerations that must be met before joint use 
can happen. 
 
Ford