VZCZCXYZ0022
OO RUEHWEB

DE RUEHTG #0572/01 1691422
ZNR UUUUU ZZH
O 171422Z JUN 08
FM AMEMBASSY TEGUCIGALPA
TO RUEHC/SECSTATE WASHDC IMMEDIATE 8327
INFO RUEHMU/AMEMBASSY MANAGUA IMMEDIATE 2814
RUEHSN/AMEMBASSY SAN SALVADOR IMMEDIATE 1726

UNCLAS TEGUCIGALPA 000572 
 
SENSITIVE 
SIPDIS 
 
STATE FOR WHA/CAN AND PRM/PIM 
 
E.O. 12958: N/A 
TAGS: PREF SMIG HO
SUBJECT: HONDURAS: EXTENSION OF TEMPORARY PROTECTIVE STATUS 
 
REF: A. STATE 60473 
     ¶B. 07 TEGUCIGALPA 183 
 
¶1.  (U) Summary:  Despite comparatively strong economic 
growth for the last four years, Honduras remains unprepared 
to reassimilate 80,000 of its citizens living in the United 
States on Temporary Protective Status (TPS).  Job growth 
remains slow, and poverty, despite some measured declines the 
past two years, remains prevalent.  The economic slowdown in 
the United States -- Honduras's principal market -- and 
exogenous fuel and food price shocks are likely to slow 
economic growth considerably this year and next.  More than a 
third of the population still lives in extreme poverty, 
defined as unable to afford 2,200 calories per day, and more 
than 40 percent of the workforce is considered either 
unemployed or underemployed.  The growth of remittances from 
Hondurans living in the United States, which amount to about 
a quarter of GDP and sustain consumption in poor rural 
households, has slowed considerably in the last two years and 
may slow further if the U.S. economy enters a recession.  The 
Department of Homeland Security deported over 40,000 Honduran 
citizens in 2007 who had attempted to enter the United States 
illegally (a rate of about 110 per day), and we estimate 
about 100 additional Hondurans a day succeed in 
crossing the border undetected.  Although the lion's share of 
Hurricane Mitch-related assistance was completed by 2001, the 
program officially ended on September 30, 2007, when the last 
cash disbursement was allocated to a water sanitation 
program.  Nevertheless, the government and people of Honduras 
continue to rely heavily on U.S. and other international 
assistance.  End Summary. 
 
¶2. (U) In response to reftel A, para. 6: 
 
--  Although USAID and U.S. Army Corps of Engineers Programs 
targeted at rebuilding Honduran communities 
affected by loss or dislocation of thousands of lives, and 
collapse of physical infrastructure are long since completed, 
Honduras remains under social and economic stress.  Honduran 
education, health, and business sectors fail to adquately 
address societal needs.  As long as poverty rates remain so 
high, the 
threat of civil unrest remains significant. 
 
--  The Millennium Challenge Account (MCA), the Central 
American Free Trade Agreement (CAFTA-DR), and roughly USD 4 
billion in recent international debt forgiveness, combined 
with other international assistance, have improved the 
Honduran macroeconomic environment and contributed to 
economic growth of more than 6.5 percent a year over the last 
two years.  Although Honduras signed an MCA Compact in 2005 
and CAFTA-DR entered into force in 2006, it could be several 
years before significant effects of these programs will be 
felt by the average Honduran. CAFTA, for example, has already 
helped Honduras boost its exports by 6 percent in 2007, with 
the strongest increases coming in labor-intensive 
agricultural products.  But much work remains to be done to 
prepare Hondurans to benefit fully from the treaty.  The 
energy and telecommunication sectors are in desperate need of 
reforms which would significantly improve the investment in 
Honduras.  Millennium Challenge Corporation (MCC) projects 
are designed to help poor rural Hondurans expand market 
opportunities, reduce transportation costs and increase their 
incomes so as to result in genuine poverty reduction. 
Technical capacity programs for farmers are already boosting 
agricultural output, but construction on expansion of the 
CA-5 highway will not start until October 2008.  This 
project, part of the so-called "Dry Canal" that will 
eventually link the Caribbean coast of Honduras to the 
Pacific coast of El Salvador by (relatively) high-speed road. 
 It will be at least two more years before the project is 
complete. 
 
--  Hondurans represent one of the largest illegal migrant 
groups entering the U.S.  The United States remains the 
prefered destination of Hondurans seeking better economic 
opportunities, at an estimated rate of over 200 attempted 
illegal entries per day.  Deportation flights arrive daily in 
Tegucigalpa. 
 
--  USAID assistance programs continue to focus on watershed, 
irrigation, forestry, and protective 
infrastructure projects to both rebuild areas damaged during 
several hurricanes and severe storms since Mitch and to 
mitigate the potential impact of inevitable future storms. 
 
--  Honduras requires massive infrastructure investment. OPIC 
has proposed programs to address severe housing needs.  MCC, 
as detailed above, is investing heavily in road construction. 
 But, these investments will require time to produce results 
and will require continued influxes of foreign assistance. 
 
¶4.  (U)  The Honduran economy remains fragile and is unable 
to provide adequate numbers of stable jobs at acceptable 
wages for its growing population.  Honduras would be unable 
to absorb the return of 80,000 
citizens who have lived legally in the U.S. for the past nine 
years on TPS status. 
FORD