VZCZCXYZ0000
OO RUEHWEB

DE RUEHTG #0996/01 2732323
ZNR UUUUU ZZH
O 302323Z SEP 09
FM AMEMBASSY TEGUCIGALPA
TO RUEHC/SECSTATE WASHDC IMMEDIATE 0789
INFO RUEHZA/WHA CENTRAL AMERICAN COLLECTIVE IMMEDIATE
RUEAHND/CDR JTF-BRAVO  IMMEDIATE
RHMFISS/CDR USSOUTHCOM MIAMI FL IMMEDIATE
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RUCPDOC/DEPT OF COMMERCE WASHDC IMMEDIATE
RULSDMK/DEPT OF TRANSPORTATION WASHDC IMMEDIATE
RHEFDIA/DIA WASHINGTON DC IMMEDIATE
RUEIDN/DNI WASHINGTON DC IMMEDIATE
RHEHAAA/NATIONAL SECURITY COUNCIL WASHINGTON DC IMMEDIATE
RUEAORC/US CUSTOMS AND BORDER WASHDC IMMEDIATE
RUEHTG/USMILGP TEGUCIGALPA HO IMMEDIATE
RUMIAAA/USSOUTHCOM MIAMI FL IMMEDIATE

UNCLAS TEGUCIGALPA 000996 
 
SENSITIVE 
SIPDIS 
 
STATE FOR WHA/CEN 
 
E.O. 12958: N/A 
TAGS: ECON BBSR EIND EINV ELTN ETRD EWWT PGOV PINS
KDEM, HO 
SUBJECT: TFHO1: COMPANIES COMPLAIN CURFEWS CRUSH COMMERCE 
 
REF: A. TEGUCIGALPA 924 
     ¶B. TEGUCIGALPA 745 
     ¶C. TEGUCIGALPA 649 
     ¶D. TEGUCIGALPA 586 
 
¶1.  (SBU) SUMMARY:  The business community has urged de facto 
regime leader Roberto Micheletti to consider the negative 
impacts of curfews to business and provide exemptions for 
maquillas and commerce, according to Honduran Private 
Enterprise Council (COHEP) representatives.  A recent decree 
limiting civil liberties specifically exempts cargo 
transportation from curfew restrictions.  Curfews are not 
applicable in the Department of Cortes, where the majority of 
maquillas are located, or the Port of Cortes, Honduras' main 
port.  Businesses report that during curfews cargo containers 
and ships are moving through the port and that customs 
officials remain on the job.  COHEP said that uncertainty 
about the political future hinders investment and it feared 
international buyers will refrain from placing orders as 
political unrest might prevent delivery.  COHEP said that 
these economic losses were not limited to Honduras but will 
spillover to neighboring countries, from whom they purchase 
inputs.  COHEP believed that the best way for Honduras to 
protect its economic interests was for both sides to return 
to discussions with Arias.  Our discussion indicated that 
some business leaders are now beginning to realize the 
long-term economic consequences of failing to restore 
constitutional legitimacy and may be ready to support a 
negotiated solution to the crisis.  END SUMMARY. 
 
¶2.  (SBU) On September 28, EconCouns and EconOff met with 
representatives of the Honduran Private Enterprise Council 
(COHEP).  Present were Amilcar Bulnes (President), Armando 
Urtecho Lopez (Director of Legal Affairs), and Norman Garcia 
(Advisor to the President). 
 
------------------------------- 
COHEP speaks with Micheletti... 
------------------------------- 
 
¶3.  (U) COHEP leaders reported that de facto regime head 
Micheletti hosted an event for the Honduran private sector 
during the week of September 21.  It was meant to be an 
informal social event, but the leaders said that the business 
community availed themselves of the opportunity to urge the 
de facto regime to consider the negative impacts to business 
of some recently enacted measures. 
 
¶4.  (U) Those present were particularly concerned with the 
recent imposition of a two-day long nationwide daytime curfew 
as it prevented people from going to work and created a state 
of panic.  Additionally they complained that the evening 
curfews were especially harmful to the maquilla industry 
since many factories have graveyard shifts that have been 
prevented from working.  They requested that the de facto 
regime issue passes for busses to transport maquilla workers 
between their homes during curfew. 
 
¶5.  (U) COHEP representatives said that they felt Micheletti 
had listened to the business community's concerns, but that 
he had no immediate reaction and did not specially address 
their requests. 
 
-------------------------- 
 ...and he may have heard. 
-------------------------- 
 
¶6.  (U) COHEP representatives said that the latest measures 
taken by the de facto regime addressed some of the business 
community's requests.  The decree limiting personal liberties 
passed by the de facto regime on September 22 and published 
in the official registry on September 26 exempts the 
transport of goods to market and the port from the freedom of 
movement restrictions.  Recent curfew notices were not 
applicable in the Department of Cortes, where the majority of 
maquillas are located, or to the Port of Cortes.  Businesses 
report that cargo containers and ships have been able to move 
through the port in spite of the curfews and that customs 
officials have remained on the job to clear containers. 
 
--------------------------------------------- -- 
COHEP links bad business with political crisis 
--------------------------------------------- -- 
 
¶7.  (SBU) The representatives that we spoke with agreed that 
the current political crisis acerbated the effects of the 
global economic crisis.  They said that trade and businesses 
were paralyzed the week after June 28 and were finally 
starting to recover only to be dealt another blow with the 
unexpected return of Zelaya on September 21.  Garcia said 
that they felt they were "back to square one." 
 
¶8.  (U) The representatives lamented that it is expensive for 
a country to create a positive international investment 
climate, but its reputation can lost quickly.  They said that 
although many have confidence in the policies of the de facto 
regime, there remained uncertainty about the political future 
of Honduras, which was hindering both international and 
domestic investment.  Previously, plants were relocating to 
Honduras from as far away as Asia, but the political 
instability had dammed the flow of new jobs and investment. 
They also fear that Honduras will lose its reputation as a 
country that can deliver goods on time, expressing concern 
that international buyers would question whether to place an 
order with a Honduran factory since political unrest might 
prevent delivery. 
 
¶9.  (U) COHEP representatives said that these economic losses 
were not limited to Honduras but would spillover to 
neighboring countries since Honduras imports inputs and was 
the second largest market for Guatemalan and El Salvadoran 
goods after the U.S.  In 2008, Honduras exported USD 800 
million to neighboring countries and imported USD 1.7 billion 
from them. 
 
¶10.  (U) Business losses are not limited to the manufacturing 
industry.  As previously reported, tourism has been hit hard 
(ref B).  COHEP representatives pointed out that tourists 
would not want to spend their vacation in a locale where 
there was political upheaval, demonstrations, and curfews. 
Other businesses also suffered when they had to close their 
doors because demonstrators are in the vicinity.  Meanwhile, 
workers whose income was based on commission do not get paid 
for days that they were unable to work due to political 
unrest or curfews. 
 
---------------------------- 
COHEP supports Arias process 
---------------------------- 
 
¶11.  (SBU) COHEP leaders said that the best way for Honduras 
to protect its economic interests was for both sides to 
return to discussions with Arias.  They said that if the 
current version of the San Jose Accord was not acceptable to 
both sides, the parties should remember that it is not 
written in stone and could offer a counterproposal to keep 
the dialogue flowing.  COHEP leaders said that they believed 
a resolution would ensure that the elections would be 
transparent and fair.  However, they were concerned about 
measures to limit Zelaya if he were returned to office, with 
one of them stating, "the cage is not the problem, the monkey 
is the problem." 
 
------- 
Comment 
------- 
 
¶12.  (SBU) COHEP was initially supportive  of the coup and 
did not want to see Zelaya return.  They published a 
full-page newspaper ad after June 28 giving their full 
support to the de facto regime (ref D).  This was a 
reflection of the business community,s belief that Zelaya 
was the number one threat to the country's business and 
investment climate.  Our discussion with COHEP indicates that 
some are now beginning to realize the long-term economic 
consequences of failing to restore constitutional legitimacy 
and have been brought around to supporting a negotiated 
solution to the crisis. 
LLORENS