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                  ------------------8B734B  132132Z /38    
O 132122Z JUL 09
FM AMEMBASSY TEGUCIGALPA
TO SECSTATE WASHDC IMMEDIATE 0113
INFO DEPT OF TREASURY WASHDC IMMEDIATE
CIA WASHDC IMMEDIATE
DEPT OF AGRICULTURE USD WASHDC IMMEDIATE
USSOUTHCOM MIAMI FL IMMEDIATE
DIA WASHINGTON DC IMMEDIATE
NATIONAL SECURITY COUNCIL WASHINGTON DC IMMEDIATE
WESTERN HEMISPHERIC AFFAIRS DIPL POSTS PRIORITY
DEPT OF COMMERCE WASHDC PRIORITY

UNCLAS TEGUCIGALPA 000586 
 
 
SENSITIVE 
 
E.O. 12958: N/A 
TAGS: PGOV KDEM ECON EINV EAID ETRD HO
 
SUBJECT: HONDURAN BUSINESS COMMUNITY VIEWS ON COUP 
 
REF: A. TEGUCIGALPA 579 
     ¶B. TEGUCIGALPA 577 AND PREVIOUS 
     ¶C. TEGUCIGALPA 576 
     ¶D. TEGUCIGALPA 568 
     ¶E. TEGUCIGALPA 566 
     ¶F. TEGUCIGALPA 565 
 
¶1. (SBU) SUMMARY: The vast majority of the Honduran business 
community both publicly and privately supports the removal of 
President Manuel "Mel" Zelaya from office June 28.  Major 
business organizations have published full-page ads over the 
past week supporting the coup and recognizing the legitimacy 
of the Micheletti regime.  In private, some business leaders 
concede that the way Zelaya was removed was illegal, but they 
are universally adamant that he should not be brought back. 
Post has consistently and faithfully relayed the USG position 
to all these contacts. END SUMMARY. 
 
¶2. (U) Embassy has conducted outreach to the business 
community, both Honduran and American (ref F), since the June 
28 coup to explain the USG position -- condemning the coup 
and seeking a restoration of the constitutional order as soon 
as possible.  We have also made clear how the cutting off of 
economic assistance will impact on the economy and the 
investment climate.  We have also solicited their views on 
the recent events.  The views expressed in public and to us 
by the leading business organizations are summarized below. 
We in turn have stressed that we do not accept the legitimacy 
of the June 28 coup or of the regime that was installed as a 
result. 
 
----------------------------- 
What They're Saying in Public 
----------------------------- 
 
¶3. (U) The overwhelming opinion of the Honduran business 
community is that the actions taken against Zelaya were legal 
and justified and the Micheletti regime is legitimate.  The 
major business organizations regret the postion taken by the 
international community with respect to the events of June 28 
and believe the international condemnation was based on a 
lack of information about and understanding of the events 
that preceded Zelaya's removal. 
 
¶4.  (U) The Honduran Private Enterprise Council (COHEP) 
published a full-page ad giving its full support to the de 
facto government and the institutions it says acted in 
defense of the law.  COHEP argues the imposition of 
international sanctions would worsen the crisis. 
 
¶5. (U) The Honduran Banking Association (AHIBA) supports 
COHEP's position and hopes that respecting the rule of law 
will contribute to the restoration of a positive business 
climate.  AHIBA encourages the de facto government to 
promptly commence managing public finances prudently, 
transparently, and efficiently. 
 
¶6. (U) The Honduran Association of Private Universities 
supports the removal of Zelaya, which it says followed 
constitutional procedures, and believes that the 
international community prematurely condemned the action. 
They encourage the Honduran Armed Forces to continue 
upholding the constitution. 
 
¶7. (U) The Cortes Chamber of Commerce (CCIC) has pledged its 
full support to the civil and military authorities and 
invites the Honduran people to join it in standing firm in 
defense of democracy.  It reassured the public that 
Honduras's public and private institutions, most notably the 
national financial system, are solidly established and 
operating normally. 
 
¶8. (U) The Honduran Petroleum Industry Council (COHPETROL) 
assured the public in a statement of the continued supply of 
fuel and confirmed that affiliated importers and 
corresponding service stations were operating without 
interruption. 
 
------------------------------ 
What They're Saying in Private 
------------------------------ 
 
¶9. (SBU) Econoff spoke with executives of several Honduran 
business associations July 6-7.  The leaders reiterated 
points made in the press releases but provided a bit more 
 
detail about their views of the political crisis.  They all 
seemed to agree that Zelaya needed to be removed from office, 
that his removal was legal and in accordance with the 
Honduran constitution, and that the political crisis has not 
led to any significant disruptions of business.  Some of 
these same representatives, in previous conversations with 
EconCouns reported in sitreps (ref B), acknowledged the coup 
may have been illegal and inappropriate.  But they were 
nonetheless pleased with Zelaya's removal and thought 
restoring him to power would be disastrous. 
 
¶10. (SBU) The Executive Secretary of the CCIC said the 
general sentiment among members was that Hugo Chavez, not 
Zelaya, was the enemy.  Chavez is considered to be 
manipulating the situation and the international press. 
Business and labor are divided over which side they support. 
But despite this division, businesses are operating as usual. 
 Some radical labor leaders are promoting strikes to show 
support for Zelaya, but few rank and file members are heeding 
the call.  According to the CCIC representative, the San 
Pedro Sula business community is more concerned with 
potential economic sanctions than with the direct effects of 
the politcal crisis.  Specifically, they worry that the USG, 
IMF, and IDB will cut off funding for programs in Honduras. 
 
¶11. (SBU) A representative of the National Association of 
Industries (ANDI) said what occurred was not a coup but 
rather the culmination of a legal process to remove Zelaya 
from office for committing illegal acts.  He said taking 
Zelaya out of the country rather than placing him in jail was 
best for the security of Hondurans and prevented Hugo Chavez 
from ruling Honduras by proxy.  He said the current situation 
might have been averted if the international press had 
reported more about the state of affairs in Honduras for the 
three months leading up to the coup. He thought the social 
polarization caused by Zelaya contributed to the crisis.  The 
ANDI representative said Zelaya alienated the business 
community and the population at large by neglecting to 
address the impact of the global financial crisis. 
Specifically, Zelaya did not enact an anti-crisis plan and 
failed to present a budget to congress.  ANDI estimates 
Zelaya's policies caused 180,000 job losses over the past six 
months. 
 
¶12. (SBU) The president of the National Federation of Farmers 
and Ranchers (FENAGH) said politics and economics should be 
kept separate.  He said Zelaya's actions were detrimental to 
the government as an institution and were in violation of the 
law, and therefore he needed to be removed.  However, he 
thought it was a mistake to send Zelaya out of the country 
instead of putting him on trial.  FENAGH wants peace and 
stability and does not expect the current political situation 
to have any impact on agriculture. 
 
--------------- 
Economic Impact 
--------------- 
 
¶13. (SBU) The CCIC reported that investors in 
export-processing ("maquila") operations, which are the core 
of the regional economy, are more confident now that Zelaya 
is not in power.  They previously feared his tendency to 
issue erratic, populist decrees that damaged the industry, 
such as the sharp increase in wages he mandated last 
December.  Some investors are actually increasing investment 
and implementing projects that had been on the backburner 
while Zelaya was in control. 
 
¶14. (SBU) FENAGH said the agricultural sector continued to 
move forward with no changes in investment or export levels. 
The representative said the global economic crisis had had 
more of an impact than the current political crisis. 
 
¶15. (SBU) The ANDI official did not think the current 
situation would have long-lasting economic consequences as 
long as the borders remain open for international trade.  He 
said the recent temporary border closure by SICA countries 
served only to foster hate.  However, he said the nightly 
curfews imposed by the de facto regime(lifted July 12) were 
hurting restaurants and nightclubs. 
 
------------------------------ 
Views about November Elections 
------------------------------ 
 
¶16. (SBU) CCIC supports advancing the date of the November 
general elections but is concerned about the feasibility of 
doing that and worries that losers might contest the results 
on the grounds of lack of time to prepare and campaign. 
 
¶17.  (SBU) ANDI hopes the upcoming elections will spur action 
to address the country's social and economic problems.  ANDI 
encourages people to respect the electoral process and to 
vote on the issues. 
 
------- 
Comment 
------- 
 
¶18. (SBU) The business associations are firmly within the 
White Camp (ref D) -- those who rationalize the June 28 coup 
and oppose Zelaya's return.  They made that case strongly to 
the U.S. Congress in Washington last week.  Privately, many 
acknowledge the coup may have been rash and illegal.  But 
they are pleased with the results and do not want to see 
Zelaya return, at least not in a capacity to pursue the 
polices and political brinksmanship he displayed over the 
past six months.  However, our sense is that the postition of 
the business community is essentially a pragmatic one.  They 
see Zelaya's removal as having removed what they saw as the 
number one threat to the country's business climate.  They 
are less concerned with the legal sophistry being deployed by 
other coup-backers from the political and legal realms.  Once 
they realize what the long-term economic consequences could 
be of failing to restore constitutional legitimacy (several 
contacts were surprised to learn from us that expulsion from 
the OAS meant ineligibility for IDB loans), there is a good 
chance that at least some of them can be brought around to 
supporting a negotiated solution to the crisis that restores 
Zelaya in some form.  End Comment. 
LLORENS