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C O N F I D E N T I A L SECTION 01 OF 02 TEGUCIGALPA 000908 
 
SIPDIS 
 
STATE FOR EXIM/MICHELE WILKINS 
 
E.O. 12958: DECL: 09/09/2019 
TAGS: EFIN ECON PGOV PREL PHUM KDEM IMF HO
SUBJECT: TFHO1: IMF REPRESENTATIVE OUTLINES PLAN FOR 
HONDURAS RECOGNITION VOTE 
 
REF: TEGUCIGALPA 883 
 
Classified By: Ambassador Hugo Llorens, E.O. 12958, 1.4(d). 
 
THIS CABLE CONTAINS AN ACTION REQUEST.  SEE PARAS 2 AND 8. 
 
¶1. (C) Summary:  In a September 9 meeting with EconCouns, 
International Monetary Fund (IMF) representative Mario Garza 
said that the IMF is conducting a vote of its members on what 
government to recognize in Honduras.  The vote count will 
probably take place on September 18.  If there is no quorum, 
a decision will be delayed.  Two immediate issues are at 
stake: access to Honduras's allotment of Special Drawing 
Rights (SDRs) and representation at the IMF/World Bank fall 
meetings.  If the Zelaya government prevails in the 
recognition vote, it may still be blocked from accessing the 
funds (but not from attending the meetings) by a requirement 
that the government be in control of its country's territory. 
 Garza said that he believes there is unlikely to be a quorum 
by September 18 "unless one member pushes the issue." 
 
¶2. (C) Summary continued: If a quorum can be achieved, the 
Zelaya government is likely to win, given existing support by 
the U.S., the Organization of American States (OAS), and 
others.  A prompt endorsement of the Zelaya government would 
have an importance beyond the specific IMF issues at stake, 
since it would represent the first time that the 
international community as a whole weighed in on the 
recognition question.  Embassy recommends that the Department 
instruct embassies in IMF member countries to demarche host 
governments pressing them to vote to recognize the Zelaya 
government in time for the voting deadline.  End summary. 
 
¶3. (SBU) During a September 9 introductory call by EconCouns, 
IMF representative Mario Garza explained the IMF's recently 
instituted process for deciding what government to recognize 
in Honduras.  The issue gained increased urgency when the de 
facto Honduran regime portrayed the country's new allocation 
of Special Drawing Rights, part of a worldwide effort to 
inject liquidity into the world economy, as a sign of 
recognition by the organization (reftel).  (Note: The SDR, 
the IMF's accounting unit, is convertible into dollars or 
other currencies.  End note.)  IMF headquarters in Washington 
later clarified that Honduras would be blocked from accessing 
the funds pending a decision on recognition. 
 
¶4. (C) Garza said that the IMF has asked member countries to 
vote on which government to recognize in Honduras (i.e. the 
Zelaya government or the de facto regime).  At the same time, 
members are to vote on recognition for three other countries 
with leadership disputes, Madagascar, Mauritania, and Fiji. 
Voting is through the normal IMF weighted voting mechanism. 
Garza said that it currently appears that the vote count will 
take place on September 18, though this could change.  In the 
meantime, the IMF has implemented a no-contact policy with 
both the de facto regime and officials of the Zelaya 
government. 
 
¶5. (C) In the unlikely event that the de facto regime 
prevails in the recognition vote, the regime will gain access 
to the SDRs.  If the Zelaya government wins, it will face 
another hurdle: an IMF requirement that, in order to access 
funds, a government must be in control of its country's 
territory and administration.  The Zelaya government is 
clearly unable to meet this requirement under current 
circumstances.  However, there is a precedent in the Zelaya 
government's favor; the IMF entered into a financial 
relationship with Haiti's deposed Aristide government in 
¶1992.  Garza said that, if the Zelaya government wins the 
membership vote, the IMF will have to undertake a legal 
review to determine whether it can access the funds. 
 
¶6. (C) Also in question is the issue of who is entitled to 
send representatives to the IMF/World Bank fall meetings, 
scheduled for October 6-7.  In this case, Garza said, control 
of territory is not an issue; the Zelaya government will be 
entitled to send representatives if it prevails in the 
membership vote. 
 
TEGUCIGALP 00000908  002 OF 002 
 
 
 
¶7. (C) If not enough members vote by September 18 to achieve 
a quorum, the announcement of the result will be postponed. 
Garza said that, in his opinion, there is unlikely to be a 
quorum by that time "unless one member pushes the issue."  He 
said that any member state has the right to call a meeting to 
force a vote, but members retain the right not to vote at the 
meeting, so there could still be a failure to achieve a 
quorum. 
 
¶8. (C) Garza said that the Zelaya government's finance 
minister, Rebeca Santos, and the government's central bank 
president, Edwin Araque, were briefed about the upcoming 
recognition vote during a recent meeting at the IMF.  They 
initially met with the IMF executive director from Spain, who 
serves as regional representative for Honduras.  At the 
executive director's suggestion, IMF staff members, including 
members of the legal department, joined the meeting to 
explain the recognition process.  Garza said that he himself, 
acting on instruction from IMF headquarters, had informed 
representatives of the de facto regime of the upcoming vote 
by telephone on September 6. 
 
¶9. (C) Comment and action request:  If a quorum in the 
membership vote can be achieved, the Zelaya government is 
highly likely to prevail, given existing support by the U.S., 
the OAS, and others.  Since this will be the first time that 
the international community as a whole weighs in on the issue 
of recognition, a quick and decisive endorsement of the 
Zelaya government would have symbolic importance beyond the 
specific IMF issues at stake.  A delay in obtaining a quorum 
would, by contrast, be seen as a victory by the de facto 
regime, particularly if it prevented Zelaya government 
representatives from attending the IMF/World Bank meetings. 
Embassy requests that the Department instruct embassies in 
IMF member countries to demarche host countries urging them 
to vote in favor of recognition of the Zelaya government in 
time for the voting deadline. 
LLORENS