VZCZCXRO0632
OO RUEHLMC
DE RUEHTG #0618/01 1982309
ZNR UUUUU ZZH
O 172309Z JUL 09
FM AMEMBASSY TEGUCIGALPA
TO RUEHC/SECSTATE WASHDC IMMEDIATE 0169
INFO RUEHZA/WHA CENTRAL AMERICAN COLLECTIVE IMMEDIATE
RUEATRS/DEPT OF TREASURY WASHDC IMMEDIATE
RUEHRC/DEPT OF AGRICULTURE USD WASHDC IMMEDIATE
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RUEHLMC/MILLENNIUM CHALLENGE CORP WASHINGTON DC IMMEDIATE 1116
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UNCLAS SECTION 01 OF 02 TEGUCIGALPA 000618 
 
SIPDIS 
 
STATE FOR WHA 
 
E.O. 12958: N/A 
TAGS: EAID EFIN KDEM HO
SUBJECT: TFH01: HONDURAN COUP: DONORS EVALUATING ASSISTANCE 
 
REF: SECSTATE 69222 
 
¶1. (SBU) Summary: Donors are evaluating their assistance to 
Honduras in the wake of the June 28 coup and subsequent 
suspension of Honduras from the OAS.  All members of the G-16 
group of official donors to Honduras, with one exception, 
have suspended communication with the de facto interim 
government; some continue exchanges at the technical level. 
But so far only Sweden and the U.S. have officially announced 
suspension of most direct assistance to the GOH.  The World 
Bank, Central American Bank for Economic Integration and 
Inter-American Development Bank have suspended disbursements 
and new loans.  IMF assistance had already been suspended 
for technical reasons.  All donors providing assistance for 
elections appear to be committed to continuing that 
assistance.  End Summary. 
 
¶2. (U) Local representatives of members of the G-16 donor 
group contacted by Embassy -- Canada, Spain, Sweden, France, 
Germany, Switzerland, Italy and Japan -- all reported they 
are reviewing the status of their assistance programs to 
Honduras in light of the June 28 coup that removed President 
Manuel "Mel" Zelaya.  Only Sweden has cut off any funding to 
date, and none has made a final decision regarding its aid 
programs.  Germany and Switzerland have suspended planning 
and development of new projects. 
 
¶3. (U) Canada, Spain, Sweden, France, Germany, Switzerland, 
Italy and Japan have all suspended communication with the 
interim government.  Spain and France recalled their 
ambassadors (though Spain is considering allowing its 
ambassador to return), and Sweden has restricted the travel 
of its regional ambassador to Honduras.  The Italian and 
German ambassadors have departed because their terms ended, 
and in both cases arrival of replacements is being delayed. 
Japan has not recalled its ambassador. 
 
¶4. (U) Sweden suspended USD 572,000 of direct budget support 
to the GOH.  Swedish support focused on human rights and good 
governance will continue as usual for the time being.  Status 
of those programs will depend in part on what other donors do. 
 
¶5. (U) Canada had programmed USD 24 million for fiscal 2009 
(March 2009 to March 2010), covering health, education, and 
rural development.  Spai had planned to provide USD 16.8 
million,  mainlyhumanitarian aid.  Germany had committed USD 
¶61. million for 2009-2011 and planned to provide abou USD 7 
million of that in 2009.  German programscover basic 
education, environmental policy, proection and sustainable 
use of natural resources ad sustainable development.  Japan 
had budgeted UD 20 million for 2009, for disaster 
mitigation, ducation, health, climate change, poverty 
reducton, agriculture, energy, security and justice, 
dcentralization, water and  sanitation and other 
ifrastructure development. 
 
¶6. (U) The United Natons is continuing ongoing projects with 
non-cental governmental partners (including civil society 
and municipalities) and assistance to the Honduran Elections 
Tribunal (TSE) and the National Registry of Persons (RNP). 
Distributions that had already been planned will continue, 
but there will be no new agreements with or new payments 
scheduled to the central government.  While all communication 
with the de facto government has been suspended, the UN 
Resident Representative will remain in-country. 
 
¶7. (U) The European Commission will continue project 
assistance, but budget support, which was suspended months 
ago because Zelaya would not submit a 2009 budget, remains on 
hold and is under review.  Minister-level contact with the de 
facto government has been suspended, but contact with 
everyone from Vice Minister-level and below is permitted. 
The Resident Representative will remain in country, and 
contact continues at the technical level.  EC assistance in 
2009 was to total about USD 49 million, including 
approximately USD 8.4 million in budget support and project 
funding for local development, education, health, poverty 
reduction, renewable energy, justice and security, 
microfinance, natural resource management and youth. 
 
¶8. (U) The World Bank has put approximately USD 40 million of 
disbursements for the rest of 2009 on hold, and no new 
projects are being presented to the Board of Directors at 
this time.  Affected sectors include transportation 
 
TEGUCIGALP 00000618  002 OF 002 
 
 
infrastructure, rural health, school feeding, rural 
infrastructure and disaster mitigation.  Additionally, the 
suspension will cause the GOH to breach many contracts with 
large and small businesses, which will lead to legal 
complaints and the bankruptcy of many of these businesses. 
All communication with the de facto government has been 
suspended. 
 
¶9. (U) The Central American Bank for Economic Integration 
(CABEI) has suspended all loans to Honduras following 
instructions from the Central American Integration System 
(SICA).  CABEI had anticipated disbursing USD 58.6 million 
for the balance of 2009, going to infrastructure and 
construction, social services and health and renewable 
energy.  An additional USD 23.5 million was to be disbursed 
this year from trust fund activities, including on behalf of 
the European Union, the Global Environment Facility (GEF) and 
Spain. 
 
¶10. (U) The Inter-American Development Bank (IDB) has 
suspended all loans following the OAS decision to suspend 
Honduras.  All communication with the de facto government has 
been halted, but resident representative will stay for the 
time being.  IDB's main projects include roads, ports, 
conditional cash transfers, tourism and energy. 
 
¶11. (U) The International Monetary Fund (IMF) had already 
suspended assistance to the GOH because the GOH was not in 
compliance with terms of eligibility for financing.  All 
communication with the de facto government has been 
suspended. 
 
¶12. (SBU) Comment:  Major Western donors are showing 
solidarity in the wake of the June 28 coup by evaluating 
their portfolios and holding off on new non-humanitarian 
disbursements.  Most EU countries have withdrawn their 
ambassadors, though the EC maintains high-level contact with 
the de facto regime.  How long they will be able to maintain 
this stance if the de facto regime establishes itself for the 
long haul is another question.  The EU country 
representatives and the EC representative are meeting July 16 
to arrive at a common stance among member countries and all 
are aware of the urgency of maintaining pressure on the 
Micheletti regime to negotiate in good faith.  End Comment. 
LLORENS