VZCZCXYZ0020
OO RUEHWEB

DE RUEHTG #0103/01 0491937
ZNR UUUUU ZZH
O 181937Z FEB 09
FM AMEMBASSY TEGUCIGALPA
TO RUEHC/SECSTATE WASHDC IMMEDIATE 9249
INFO RUEHZA/WHA CENTRAL AMERICAN COLLECTIVE PRIORITY
RUEHBO/AMEMBASSY BOGOTA PRIORITY 1321
RUEHBR/AMEMBASSY BRASILIA PRIORITY 0199
RUEHPE/AMEMBASSY LIMA PRIORITY 0439
RUEHME/AMEMBASSY MEXICO PRIORITY 8037
RUEHMN/AMEMBASSY MONTEVIDEO PRIORITY 0156
RUEHOT/AMEMBASSY OTTAWA PRIORITY 0445
RUEHZP/AMEMBASSY PANAMA PRIORITY 1496
RUEHQT/AMEMBASSY QUITO PRIORITY 0517
RUEHSG/AMEMBASSY SANTIAGO PRIORITY 0192
RUEHDG/AMEMBASSY SANTO DOMINGO PRIORITY 0440
RUEHRC/DEPT OF AGRICULTURE USD WASHDC PRIORITY
RUCPDOC/DEPT OF COMMERCE WASHDC PRIORITY

UNCLAS TEGUCIGALPA 000103 
 
SENSITIVE 
SIPDIS 
 
FOR WHA/EPSC AND EEB/BTA 
DEPT PASS USTR 
 
E.O. 12958: N/A 
TAGS: ETRD ECIN HO
SUBJECT: HONDURAN PREPARATIONS FOR PATHWAYS MINISTERIAL IN 
SAN SALVADOR 
 
REF: 08 TEGUCIGALPA 1090 
 
¶1. (U) Summary: The GOH now has a good understanding of the 
role of the the Pathways to Prosperty working group on 
spreading the benefits of trade that it agreed to coordinate. 
 Its proposal is to focus the Pillar I work plan on policies 
to assist small and medium enterprises, in order to highlight 
its recently adopted Honduran national strategy.  The GOH 
will likely need considerable help with logistics, 
coordinating with other Pathways governments and preparing a 
coherent final document to present to ministers in San 
Salvador in April.  It will also need our help and 
encouragement to think outside the Honduran national context 
and develop forward-looking proposals with region-wide 
relevance that do more than list existing programs.  End 
Summary. 
 
----------------------------------- 
Pathways Delegation Visits Honduras 
----------------------------------- 
 
¶2. (U) WHA/EPSC Director Matthew Rooney led a USG delegation 
to Tegucigalpa February 9-10 to coordinate with the GOH and 
the Honduran private sector and civil society on preparations 
for the Pathways Ministerial slated to take place in San 
Salvador in April.  Honduras volunteered at the first 
Pathways Ministerial in Panama last December to coordinate 
the working group on increasing opportunities for citizens to 
take advantage of trade (Pillar I).  Rooney was accompanied 
by WHA/EPSC trade officer Susan Garro, EEB/BTA Director Bob 
Manogue and USTR trade capacity building coordinator Fran 
Huegel.  The Ambassador accompanied the team in its meeting 
with the Minister of Trade and Industry. 
 
--------------------------- 
Ministry of Foreign Affairs 
--------------------------- 
 
¶3. (SBU) Vice Minister of Foreign Affairs Eduardo Rosales 
undertook to coordinate with the Ministry of Trade and 
Industry (SIC) to ensure that Honduran leadership of the 
working group would be successful.  He indicated that 
coordination between MFA and SIC had not always been good and 
expressed concern about SIC's capacity to manage the Pillar I 
portfolio effectively without assistance.  He assured USDEL 
that the MFA understood the eventual work plan would have to 
encompass broader strategic objectives rather than focus 
exclusively on technical trade issues.  Rosales said he would 
brief Foreign Minister Patricia Rodas on the importance of 
the Pathways initiative and ensure that SIC understood the 
seriousness of the undertaking.  He said he had put Pathways 
on the agenda for President Zelaya's meeting with Chilean 
President Bachelet for the following day.  (Comment: Bachelet 
arrived that evening; we have not been able to confirm 
whether the two presidents in fact discussed Pathways in 
their meeting. End Comment.)  He said Trade and Industry 
Minister Cerrato would be in the meeting, so having it 
discussed between the two presidents would impress on him the 
gravity of the responsibility he had undertaken.  Rosales 
also said he would encourage SIC to use Honduran Embassies in 
Pathways countries to convey information about the working 
group to counterparts there.  He suggested that an upcoming 
meeting of the Central American Integration System (SICA) 
would provide an opportunity to promote coordination among 
Central American countries on proposals for the Pillar work 
plans. 
 
------------------------------ 
Ministry of Trade and Industry 
------------------------------ 
 
¶4. (U) Vice Minister of Trade and Industry Ana Murillo 
briefed the USDEL on the new GOH strategy to promote micro, 
small and medium enterprises (called MIPYMES in Spanish). 
The strategy emphasizes technical assistance and training, 
 
soft loans, leveraging foreign assistance and preferences for 
government contracts.  SIC's proposal for the Pathways Pillar 
I working group is to share this strategy with other Pathways 
countries as a model.  Rooney urged Murillo, who has the lead 
in SIC for the working group, to reach out to other 
interested Pathways governments to solicit information on 
their programs for promoting SMEs and other activities under 
Pillar I.  The working group could then compile the 
information into a best practices outline to be considered by 
the Ministers.  He suggested it would also be useful to 
consult with the private sector and civil society to obtain 
their input and encouraged the GOH to use Pathways both as a 
platform for maximizing public awareness of its programs and 
encouraging all Pathways governments to be looking ahead at 
additional reforms and programs that might be necessary. 
 
¶5. (U) Murillo said she could reach out through the El 
Salvador-based Cenpromype but did not know how she would 
coordinate with other Pathways governments outside Central 
America.  Rooney said El Salvador was willing to help out 
logistically, and the USG was also prepared to help in any 
way needed, including by relaying information through our 
embassies in Pathways countries. 
 
¶6. (U) At one point Murillo and her staff suggested hiring 
outside experts to help develop a strategy for the working 
group.  But Minister Fredis Cerrato said there had been 
enough workshops and studies done already and it was time to 
bring things down to earth.  When it was suggested that the 
working group, in addition to cataloguing what governments 
are doing to promote SMEs, also reach out to the SMEs and 
small farmers themselves to identify what they see as the 
obstacles to their greater participation in global commerce, 
both Cerrato and Murillo indicated they thought they had 
already conducted sufficient internal consultation with the 
private sector and no further such outreach was necessary. 
 
-------------------------------- 
Private Sector and Civil Society 
-------------------------------- 
 
¶7. (U) Embassy organized a roundtable with business 
representatives, a cocktail at the Ambassador's residence 
with major public intellectuals and a meeting with select 
NGOs that might be expected to take part in Pathways 
activities. 
 
¶8. (U) The business representatives welcomed the Pathways 
process as another channel to attempt to convey their views 
to their government.  They showed strong interest in 
participating in the Pathways Ministerial but less interest 
in providing input to the working group to be coordinated by 
the GOH.  They expressed frustration with the lack of 
effective communication with the GOH.  Rooney assured them 
the USG saw Pathways as a transparent process designed to 
encourage governments to design policies grounded in reality. 
 The Executive Director of the AmCham undertook to contact 
the AmCham in El Salvador to identify potential mechanisms 
for channeling private sector proposals for consideration by 
the Ministers and to coordinate with the local and national 
chambers of commerce in that effort. 
 
¶9. (SBU) The senior advisor of the Covelo microfinance 
foundation, which operates with funding from local sources 
and the Interamerican Development Bank, explained Covelo's 
experience channeling micro loans, averaging USD 1,000, to 
SMEs.  He said that while financing for SMEs existed, it did 
not reach far enough into rural pockets of poverty.  Small 
farmers' access to credit was constrained by the requirement 
that land titles be used as collateral.  Honduras lacked an 
effective mechanism for land titling; women in particular 
face difficulties with establishing land title in their own 
names.  In addition, most small businesses and farmers needed 
additional assistance to prepare for the export market, for 
example to be able to meet quality and certification 
 
 
standards, and how to market their products.  He said that 
Honduras lacked an effective mechanism for supporting micro 
businesses to help them grow beyond the micro level and that 
many Honduran micro-entrepreneurs in any case lacked the 
vision of a growing business.  SIC, he said, was a weak 
ministry that was unable to provide the kind of assistance 
that microindustry needed. 
¶10. (U) A representative from the Panamerican Agricultural 
School at Zamorano explained that institution's long history 
of training and providing extension services to small farmers 
throughout Latin America.  She stressed the importance of 
additional efforts to attract medium-sized foreign direct 
investment to Honduras and for increased focus on access to 
technical and entrepreneurial training for women to allow 
them to increase family incomes. 
¶11. (U) At the event at the Ambassador's residence, there was 
broad understanding among the political and intellectual 
leaders present, including the former President and Trade 
Minister who had negotiated CAFTA, of the strategic 
significance of the Pathways initiative.  Their comments 
indicated they understood the need for a democracy rooted in 
responsive institutions that could channel and facilitate the 
realization of the political, economic and social aspirations 
of the Honduran people.  Several asked whether there would be 
additional assistance funds available through Pathways. 
Former President Ricardo Maduro (2002-2006) asked whether 
Pathways was an attempt to renegotiate CAFTA.  USDEL 
responded negatively on both counts. 
HENSHAW