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C O N F I D E N T I A L SECTION 01 OF 02 TEGUCIGALPA 001345 
 
SIPDIS 
 
NOFORN 
SIPDIS 
 
STATE FOR D, P, AND E 
STATE FOR WHA, WHA/PPC, WHA/EPSC, WHA/AND, AND WHA/CEN 
STATE FOR EB, INL/LP, AND INR/B 
STATE PASS AID FOR LAC/CAM 
NSC FOR DAN FISK 
TREASURY FOR JHOEL 
 
E.O. 12958: DECL: 07/28/2036 
TAGS: PREL PGOV ECON ETRD KCRM SMIG SNAR PINR VZ HO
SUBJECT: HONDURAN PRESIDENT ZELAYA: JULY BETTER THAN JUNE, 
BUT WHAT LIES AHEAD FOR DISJOINTED ADMINISTRATION? 
 
REF: A. TEGUCIGALPA 1331 AND PREVIOUS 
     ¶B. TEGUCIGALPA 1329 
     ¶C. TEGUCIGALPA 1179 
 
TEGUCIGALP 00001345  001.4 OF 002 
 
 
Classified By: Ambassador Charles A. Ford; 
Reasons 1.4 (b) and (d). 
 
¶1. (C) Summary: Honduran President Jose Manuel "Mel" Zelaya 
and his Administration have now been in office six months. 
Zelaya continues to act like a populist, although he makes 
fewer obvious errors, fired his most incompetent minister 
(the Minister of Health), and has, since the Embassy's U.S. 
Independence Day reception, sought to improve the tone of the 
bilateral U.S. - Honduran relationship.  The energy issue 
writ large (including the petroleum bid whose terms of 
reference were finally announced for public comment on July 
25, the alleged sale of the Honduran gasoline distributor 
DIPPSA to a possible Venezuelan front company, and continuing 
grave problems at the parastatal electricity company, ENEE) 
has continued to dominate GOH and Embassy concerns.  The 
Embassy strategy has been to conduct an intense dialogue with 
senior GOH officials, while at the same time engaging with 
other power players.  We hope they can provide more moderate 
advice to Zelaya, and apply countervailing pressure on the 
more radical elements of the Administration, to encourage 
responsible behavior.  A private poll has shown that the 
Embassy is viewed more positively than the Zelaya 
Administration.  Miscellaneous protests this week have 
encouraged the belief that, as with the Maduro Administration 
that preceded it, if a group can mobilize enough protesters 
to block a major road, the GOH will grant it concessions with 
no attempt at dislodging them.  This does not bode well for 
continued Honduran compliance with IMF targets, given the 
likelihood that the GOH concessions to teachers will continue 
to stave off more protests from the powerful teachers unions. 
 End Summary. 
 
¶2. (C) Honduran President Jose Manuel "Mel" Zelaya and his 
Administration have now been in office six months.  Zelaya 
continues to act like a populist, but he has seemed to put 
his June stumbles behind him.  He fired his most obviously 
incompetent minister (the Minister of Health), in what 
appeared to virtually everyone except the minister's 
loyalists at the ministry as a long overdue step.  Zelaya 
forged a more positive relationship with the Embassy at the 
U.S. Independence Day reception when he broke with protocol 
and tradition and gave the GOH's remarks alongside the 
Ambassador, instead of the Foreign Minister as in years past. 
 His positive statement evoked the U.S. Founding Fathers and 
President Abraham Lincoln, and went a long way toward 
smoothing over the public disputes that had bedeviled the 
bilateral relationship since Zelaya's public 
misrepresentations of the results of his June 5 meeting with 
POTUS. 
 
¶3. (C) The energy issue writ large (including the petroleum 
bid whose terms of reference were finally announced for 
public comment on July 25, the alleged sale of the Honduran 
gasoline distributor DIPPSA to a possible Venezuelan front 
company, and continuing grave problems at the parastatal 
electricity company, ENEE) has continued to dominate GOH and 
Embassy concerns (see ref A and previous for extensive 
reporting on these issues).  In a reliable July 6 private 
poll, a small plurality said the GOH is responsible for fuel 
prices (not international forces or transnational oil 
companies).  A similar plurality approves of Zelaya's 
handling of the fuel issue, and a larger plurality believes 
the fuel bid will lead to lower pump prices.  Thus, Zelaya's 
public relations strategy of controlling pump prices through 
subsidies and tax breaks has succeeded in winning him 
popularity, but at a very high price: the public is now more 
likely than ever to blame him personally if the fuel bid 
 
TEGUCIGALP 00001345  002.4 OF 002 
 
 
fails to lower gas prices. 
 
¶4. (C) As discussed in ref C, the Embassy strategy has been 
to engage senior GOH officials and a wide range of key 
opposition politicians and civil society leaders to encourage 
responsible behavior that can positively affect the more 
radical elements of the Zelaya Administration.  Liberal Party 
President Patricia Rodas, Foreign Minister Milton Jimenez, 
and Zelaya legal advisor Enrique Flores Lanza, as well as 
Minister of Defense Aristedes Mejia, continue to be key 
players and the Embassy has established a regular dialogue 
with Jimenez/Mejia/Flores Lanza.  The Ambassador and DCM will 
continue to seek fairly regular meetings with Zelaya and FM 
Jimenez, to ensure that Zelaya is talking directly and openly 
to the Ambassador (see ref B for the latest meeting).  The 
Embassy has also engaged with Minister of the Presidency Yani 
Rosenthal, and Vice President Elvin Santos, who continues to 
assert his independence from the Melistas, much to their 
frustration.  Non-GOH meetings have included business, labor, 
the Cardinal, National Party, and Christian Democrat leaders, 
as well as Liberal Party leaders outside the executive 
branch.  The Embassy also continues to provide encouragement 
and expert advice to nascent think tanks seeking to grapple 
with major national issues. 
 
¶5. (C) Several disparate protests in recent days have 
encouraged the belief that, as with the Maduro Administration 
that preceded it, if a group can mobilize enough protesters 
to block a major road, the GOH will grant it concessions with 
no attempt at dislodging them.  This does not bode well for 
continued Honduran compliance with IMF targets, given the 
likelihood that the GOH will continue to resort to fiscally 
unsustainable concessions to stave off more protests from the 
powerful teachers unions.  The GOH does have limited 
capabilities to peacefully break up protests.  While they do 
have riot police and tear gas, administrations have rarely 
used this capability.  Post sees no reason to believe that 
Zelaya will choose to confront groups that his Administration 
may (a) sympathize with or (b) prefer to pander to than 
confront. 
 
¶6. (C) Comment: The Embassy is cautiously optimistic that 
Post's strategy to engage both the GOH and a wide array of 
countervailing powers could help keep the less responsible 
elements of the Zelaya Administration in check.  However, 
Post questions whether Zelaya can ever get his Administration 
on track as long as it is buffeted by ideological clashes 
from within, coupled with the probably unrealizable 
expectations created by his campaign promises.  While Zelaya 
maintains fairly positive ratings in a reliable July 6 
private poll, the Embassy was rated higher, two thirds of 
Hondurans want to strengthen bilateral relations, and 
Hondurans rated extremely high the importance of U.S. 
assistance to the country.  Zelaya appears to have realized 
that actions that threaten a good bilateral relationship 
create the public perception that his actions imperil renewed 
Temporary Protected Status (TPS) or even the massive 
remittances sent from Hondurans living in the U.S.  Either 
would hurt him much more than the U.S. in any public 
relations battle, as his vanquished opponent Pepe Lobo 
predicted to the Ambassador.  End Comment. 
FORD