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RHEHAAA/NATIONAL SECURITY COUNCIL WASHINGTON DC PRIORITY
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UNCLAS SECTION 01 OF 05 TEGUCIGALPA 000066 
 
SENSITIVE 
SIPDIS 
 
FOR ASSISTANT SECRETARY ARTURO VALENZUELA FROM AMBASSADOR 
HUGO LLORENS 
 
E.O. 12958: N/A 
TAGS: PGOV PREL PHUM ASEC CASC ECON EAID MARR KCRM
KDEM, HO 
SUBJECT: SCENESETTER FOR USG DELEGATION TO PRESIDENTIAL 
INAUGURATION 
 
¶1.  (SBU) We warmly welcome you and the delegation to 
Tegucigalpa January 26-27 to attend the January 27 inaugural 
ceremonies of the newly-elected Porfirio "Pepe" Lobo.  The 
inauguration is an historical event, bringing back democratic 
and constitutional rule after a seven-month hiatus.  The 
coming to power of a democratically-elected government, along 
with the planned completion of the remaining aspects of the 
Tegucigalpa-San Jose Accord, will send a strong signal to the 
hemisphere on the importance of democratic rule, and U.S. 
support for that rule.  The U.S. maintained a consistently 
principled policy with regard to 
Honduras since the June 28 coup d'etat.  The U.S. joined 
other nations in supporting UN and OAS resolutions 
condemning the coup and demanding the restoration of 
constitutional order.  We suspended military and 
non-humanitarian aid to Honduras and for the most part 
maintained a no-contact policy with the de facto regime.  The 
U.S. took an equally principled stand on human rights.  While 
not Castro's Cuba or Pinochet's Chile, there was a 
significant deterioration in Honduras' human rights 
situation, investigating scores of cases, raising concerns 
about violations, and urging authorities to hold those 
responsible accountable. 
 
¶2. (SBU) Our policy has also been practical.  We have 
carefully avoided the motion that we had to destroy 
Honduras in order to save it and avoided imposing devastating 
trade, investment or financial sanctions.  We were always 
mindful of the complexity of the situation leading to the 
coup and President Zelaya's own significant role in 
contributing to the crisis.  Secretary Clinton's wise support 
for the Arias mediation beginning in July, eventually led to 
the Tegucigalpa-San Jose Accord, which was signed on October 
¶28.  The U.S. and OAS played a critical and successful role 
in promoting the Accord. We successfully supported the 
creation of the Verification Commission; the international 
representation of President Lagos and Secretary Solis 
underscored the importance of the commission.  While the 
accord faced implementation difficulties shortly after its 
inception, the U.S. and many other countries continued to 
rightly see it as continuing the appropriate and consensual 
elements for the restoration of constitutional and democratic 
order. 
 
¶3. (SBU) Support for the November 29 elections was the 
complementary track of U.S. policy.  We believed in the 
legitimacy of the election process, a democratic mechanism 
that had been launched and established well before the coup, 
and included the holding of OAS-monitored primaries.  We 
maintained our technical elections assistance program, which 
included support for a quick count.  That count, and the work 
of other international organizations, including NDI and IRI, 
confirmed Lobo's overwhelming victory, high rates of vote 
participation and the fairness and transparency of the 
results. 
 
¶4. (SBU) Honduras faces challenges in its way ahead.  Many in 
the international community are not yet willing to  recognize 
the new government, waiting for it to demonstrate its 
commitment to the rule of law and human rights.  The Honduran 
economy is in terrible shape thanks to both the global 
financial crisis and the political crisis resulting from the 
coup.  Honduras is also facing a major assault on its 
sovereignty from Mexican and Colombian drug cartels that use 
if for the trafficking of drugs to the U.S.  Our challenge is 
to reengage with the new government, encourage other 
governments to do the same, and begin to confront these 
problems.  However, we need to reengage in a manner which 
reevaluates our past interaction with Honduras, working to 
make sure that the country is not again threatened by a coup 
d'etat. 
 
------------------ 
Political Overview 
------------------ 
 
¶5.  (SBU) Honduras, which has an estimated population of 
almost 8 million, considered itself the foremost U.S. ally in 
Central America.  This close bilateral relationship was 
 
TEGUCIGALP 00000066  002 OF 005 
 
 
fractured in the aftermath of the coup d'etat that took place 
on June 28, 2009.  This was a coup d'etat with a difference, 
shrouded in its advocates' claims of adherence to the 
Honduran constitution and body of law.  The actions of 
President Jose Manuel "Mel" Zelaya before June 28 had 
polarized Honduran society and placed the institutions of 
governance under great stress.  The Honduran elite lacked 
sufficient confidence in the ability of their governments' 
institutions to address any illegal actions that President 
Zelaya might have taken and resorted to a coup d'etat.  Like 
every other country in the world, the United States did not 
recognize the de facto regime, led by Roberto Micheletti, 
which assumed power after the coup.  The Honduran elite was 
surprised by the implacable condemnation of the coup by the 
U.S.; they failed to understand that for the U.S. its 
commitment to democracy took precedence over its bilateral 
relationship with Honduras.  The Department of State 
suspended its assistance to the Government of Honduras 
immediately following the coup and announced the termination 
of a broad range of assistance on September 3. 
 
¶6.  (U) Negotiators for President Jose Manuel "Mel" Zelaya 
and Micheletti signed the Tegucigalpa-San Jose Accord on 
October 29, 2009.  However, its implementation was derailed 
on November 6 when President Zelaya announced that Micheletti 
had violated the letter and spirit of the Accord and that it 
was defunct due to the failure to establish a government of 
national unity and reconciliation by November 5, as called 
for in the agreement.  The Accord provided that the Congress, 
in consultation with the bodies that it deemed relevant, such 
as the Supreme Court, should issue a pronouncement in 
accordance with law on the reversion of the situation of the 
Executive Branch to its condition prior to June 28, until the 
end of the current governmental term on January 27, 2010. 
The Congress voted 111-14 on December 2 against the 
restitution to office of President Zelaya.  The 
Tegucigalpa-San Jose Accord also provides for establishment 
of a Truth Commission. 
 
¶7.  (SBU) A general election was held on November 29, 2009, 
which was credible and transparent.  The United States, while 
never abandoning its principled stance of calling for the 
restoration of the democratic and constitutional order, did 
not terminate its technical electoral assistance.  The United 
States believed that Hondurans should not be deprived of the 
right to elect their future leaders since the electoral 
process had begun months before the coup and was not being 
conducted by the de facto regime, but by the Supreme 
Electoral Tribunal, an autonomous body. 
 
¶8.  (U) Porfirio "Pepe" Lobo, presidential candidate of the 
National Party, won a decisive victory, garnering 1,213,695 
votes out of a total of 2,146,012 valid votes cast, 56.56 
percent of the total.  There were 396,171 votes separating 
Lobo from Liberal Party presidential contender Elvin Santos 
who received 817,524 votes, 38.09 percent of the total.  The 
other three presidential candidates each received less than 
two percent of the vote. 
 
¶9.  (U) The two major parties are the slightly 
right-of-center National Party and the slightly 
left-of-center Liberal Party.  The three much smaller 
registered parties, the Christian Democratic Party, the 
Social Democratic Innovation and Unity Party (PINU), and the 
Democratic Unification Party have never come close to winning 
the presidency.   Lobo's National Party will hold a majority 
in the 128-seat one-chamber National Congress.  The National 
Party won 71 seats, the Liberal Party won 45 seats, the 
Christian Democratic Party won five seats, the Democratic 
Unification Party won four seats, and the Social Democratic 
Innovation and Unity Party (PINU) won three seats.  The 
National Party showing in the 298 mayoralty races was also 
strong, with victories in 191 of them.  The Liberal Party was 
victorious in 104 with the Christian Democratic Party winning 
in 2 and an independent candidate the victor in a third. 
 
¶10.  (U) President-elect Lobo's plan for his government aims 
to achieve sustainable development that will improve the 
lives of his fellow citizens.  His plan is based on three 
 
TEGUCIGALP 00000066  003 OF 005 
 
 
pillars: creating jobs and reducing poverty, expanding the 
reach and quality of education, and ensuring security. 
Lobo's foreign policy will be focused on the return of 
Honduras to the international community and will emphasize 
the country's development.  Lobo will seek to decentralize 
the government and improve access to quality education.  Lobo 
intends to introduce a new health care system based on 
universal coverage that will include the most vulnerable 
members of society who are currently excluded from health 
services.  Lobo pledges to fight crime while guaranteeing 
respect for the constitution and international standards 
regarding human rights.  Lobo proposes to strengthen the 
capacity of the police and support measures to improve the 
efficiency of the judicial system.  Lobo plans to adopt a 
policy for youth to increase their employment and educational 
opportunities.  He also proposes to promote initiatives to 
keep the elderly in productive activities and promote 
legislation to protect emigrants. 
 
------------ 
Human Rights 
------------ 
 
¶11.  (SBU) There has been a serious deterioration in the 
protection of human rights in Honduras since the coup d'etat. 
 Reported allegations of human rights abuses since June 28 
include arbitrary arrests; disproportionate use of force such 
as beatings and incidences that have resulted in the loss of 
life; an erosion in what little protection there was before 
June 28 for the human rights of vulnerable communities in 
Honduras, including women, gay and lesbian, the indigenous, 
and the afro-indigenous; infringements of freedom of 
expression by individuals and media; and threats against 
journalists and opponents by the de facto regime.  A 
particularly troubling development was the de facto regime's 
use of decrees to severely limit fundamental civil rights, 
such as freedom of speech and association.  The government of 
president-elect Lobo has pledged to respect human rights. 
 
----------------- 
Economic Overview 
----------------- 
 
¶12.  (U) Honduras, with a per capita Gross Domestic Product 
(GDP) of USD 1,845 in 2008, is one of the poorest countries 
in the Western Hemisphere, with about 70 percent of the 
population living in poverty.  The average adult Honduran has 
only a sixth-grade education.  GDP grew more than 6 percent a 
year 2004-2007 but slowed to about 4 percent in 2008.  GDP 
growth estimates for 2009 range from negative 2 percent to 
negative 4.4 percent.  Inflation surpassed 10 percent in 
2008, but fell to 3 percent in 2009 due to the fall in oil 
prices and a decline in consumption. 
 
¶13.  (U) Because of a strong commercial relationship with the 
U.S., Honduras has been feeling the effects of the recession, 
especially in the export-oriented maquila sector, where 
orders are estimated to be down about 40 percent and where 
about 30,000 have been laid off since August 2008 out of a 
pre-crisis workforce of about 145,000.  Commercial bank 
balance sheets remain healthy, but banks are being extremely 
conservative about lending, so businesses are 
credit-constrained. 
 
¶14.  (U) The Central American-Dominican Republic Free Trade 
Agreement (CAFTA-DR) entered into force for Honduras on April 
1, 2006.  Honduran imports from the U.S. have grown much 
faster under CAFTA-DR than Honduran exports to the U.S. 
Two-way trade with Honduras in 2008 was USD 8.9 billion, up 6 
percent from 8.4 billion in 2007.  Exports of non-traditional 
goods such as apparel and automobile parts now surpass 
traditional exports like coffee and bananas.  With the 
economic downturn, exports were down almost 14 percent in the 
first half of 2009.  From 2005 to 2008, the inflow of foreign 
direct investment to Honduras increased from USD 600 million 
to USD 877 million.  Foreign direct investment cash inflows 
for 2009 are estimated to have decreased by 6.3 percent 
compared to 2008.  According to business community 
representatives, new foreign investment came to a virtual 
 
TEGUCIGALP 00000066  004 OF 005 
 
 
halt following the coup d'etat. 
 
¶15.  (U) Roughly 200 U.S. companies operate in Honduras, and 
the U.S. is the largest principal investor, 
contributing almost 60 percent of total foreign direct 
investment.  In addition to the political crisis, obstacles 
to foreign investment include public insecurity, weak 
judicial protections of investor rights, corruption, and most 
recently, the political crisis. 
 
¶16. (U) About one-third of the Honduran workforce was 
considered either unemployed or underemployed in 2009. 
This does not include the roughly 1 million Hondurans who 
have migrated to the United States for lack of employment 
opportunities at home.  Remittance inflows from Hondurans 
living abroad, particularly in the U.S., are the largest 
source of foreign, totaling USD 2.41 billion in 2009, down 
11.1 percent from 2008 levels.  This is equivalent to about 
one-fifth of Honduras' GDP.  The Lobo administration will try 
to promote use of remittances into productive activities that 
will ensure the recipients a better future. 
 
¶17.  (U) The economic plan developed by president-elect 
Lobo's team during his campaign covers an ambitious agenda, 
including small business development, energy, infrastructure, 
transportation, land-use planning, and tourism.  Lobo pledges 
to strengthen development in micro, small, and medium-sized 
businesses and to cultivate public-private partnerships. 
Renewable energy and climate change mitigation are high 
priorities.  The plan calls for improvements to the 
investment climate and the development of Honduras' potential 
as a tourist destination.  On the macroeconomic side, it 
pledges improved tax collection and debt management.  This 
ambitious agenda faces considerable obstacles, lack of 
financial resources foremost among them.  The Lobo 
administration's most urgent priority will be to attempt to 
restart multilateral and bilateral assistance. 
 
-------------------- 
Bilateral Assistance 
-------------------- 
 
¶18.  (U) The United States has historically been the largest 
bilateral donor to Honduras.  The Department of State 
suspended its assistance to the Government of Honduras 
immediately following the coup and announced the termination 
of a broad range of assistance on September 3. 
 
¶19.  (SBU) In the aftermath of the June 28 coup, USAID is 
analyzing ways to increase the effectiveness of its efforts 
in the area of support for the development of democratic 
institutions with a particular focus on developing a sense 
among ordinary Hondurans that the country's institutions 
belong to and are accountable to them. 
 
¶20.  (SBU) USAID will continue to focus on engaging the most 
marginalized and poorest populations in Honduras in the 
country's development through programs including basic 
education and skills training for at-risk youth and adults, 
increasing food security for the poorest sectors of society, 
and diversifying the agricultural sector into higher value, 
entrepreneurial, export oriented, non-traditional crops. 
 
-------- 
Security 
-------- 
 
¶21.  (SBU) Honduras is a transit country for drug 
trafficking.  In 2009, narcotics trafficking through Honduras 
increased significantly compared to 2008; this trend had 
begun well before the coup d'etat.  There has been a marked 
increased in the murder rate and a number of high-profile 
assassinations, most recently the December 8 killing of the 
director of the anti-narcotics operations, which have raised 
concerns over the effects of trafficking groups on overall 
security.  The country's high level of crime affects rich and 
poor alike and has led to a public outcry; ensuring security 
is a fundamental pillar of the plan of government of 
president-elect Lobo.  While accurate crime statistics are 
 
TEGUCIGALP 00000066  005 OF 005 
 
 
difficult to come by, violent crime has increased 
dramatically since 2004.  At 56.5 murders per 100,000 
inhabitants, Honduras has one of the highest murder rates in 
the world.  The rate of kidnappings more than doubled from 
2007 to 2009.  Corruption is ingrained throughout society and 
weakens citizens' confidence in government institutions. 
 
¶22.  (SBU) Honduras is a critical threat post for crime, the 
highest level possible within the Department of State. 
Widespread poverty and unemployment, along with significant 
gang and narco-trafficking activities have all contributed to 
the incredibly high crime rate.  An undermanned, poorly 
trained and poorly equipped police force, easily susceptible 
to corruption, can do little to deter criminal activity.  The 
weak judicial system and lack of will to enforce existing 
laws for fear of reprisal allows criminals to act with near 
impunity.  Kidnappings have been on the rise in recent years 
with large ransom demands being paid out and only a fraction 
of the kidnappers being caught by the Honduran police. 
 
------------------------------ 
Military to Military Relations 
------------------------------ 
 
¶23.  (SBU) The U.S. and Honduran militaries worked together 
for many years until the June 28 coup when assistance was 
suspended and subsequently terminated on September 3.  Joint 
Task Force Bravo, located at Enrique Soto Cano Air Base in 
Comayagua, is comprised of approximately 1,200 assigned 
personnel, of whom about 575 are military while the remainder 
includes both locally employed staff (LES) and civilian 
contractors who provide base support, communications services 
and helicopter maintenance.  JTF-Bravo forces maintain and 
operate an all-weather C-5 capable airfield and provide the 
U.S. with an agile response capability in Central America. 
Recent humanitarian assistance/disaster relief operations 
include flooding relief in Honduras, Costa Rica and Panama in 
November 2008, earthquake relief in Costa Rica in January 
2009, and search and rescue operations for American citizens 
missing off the coast of Honduras.  JTF-Bravo operations were 
suspended after June 28.  The traditionally strong 
relationship between the military forces of the U.S. and 
Honduras cannot simply be resumed with a "business as usual" 
approach after the restoration of constitutional order. 
While we will need to cooperate in key areas such as 
combating narcotics trafficking, we will continue to signal 
our strong disapproval of the military's role in the removal 
of President Zelaya.  We will conduct a thorough review of 
our military programs to ensure that they advance our aim of 
developing a professional and non-political military in 
Honduras. 
 
------------------ 
American Citizens 
------------------ 
 
¶24. (SBU) There are an estimated 25,000 Americans resident in 
Honduras, of whom 15,000 are registered with the Embassy.  In 
addition, an estimated 100,000 tourists and missionaries 
visit Honduras each year.  The vast majority of the tourists 
arrive by cruise ship to the Bay Islands and spend only half 
a day in Honduras.  Crime is the biggest threat to the 
security of American citizens.  The Embassy's Consular 
Section works with the Public Ministry and police via a unit 
dedicated to crimes against foreigners to push for 
investigation and prosecution of crimes against Americans, 
while communicating with the American community via large 
town hall meetings, online web chats, and warden messages.2 
 
¶25. (SBU) In 2009, there were 180 Peace Corps Volunteers in 
Honduras working six types of projects including: municipal 
development, water and sanitation, protected area management, 
youth development, and health. 
LLORENS