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C O N F I D E N T I A L TEGUCIGALPA 000161 
 
SIPDIS 
 
DEPARTMENT PASS TO USTR 
 
E.O. 12958: DECL: 02/21/2020 
TAGS: PGOV PREL ECON ETRD ELAB SCUL EAID KJUS HO
SUBJECT: AMBASSADOR'S VISIT TO SAN PEDRO SULA 
 
REF: A. 1995 TEGUCIGALPA 6892 
     ¶B. 1996 TEGUCIGALPA 2663 
     ¶C. 1997 TEGUCIGALPA 2858 
 
Classified By: Ambassador Hugo Llorens for reasons 1.4 b and d. 
 
¶1.  (SBU)  Summary:  The Ambassador visited San Pedro Sula, 
Honduras' commercial capital, February 4-6.  This was the 
Ambassador's first high-profile series of public events since 
the June 28 coup d'tat.  He met with the mayor, the maquila 
association, the Chamber of Commerce, and the editors of El 
Tiempo, a national newspaper based in the city.  In addition, 
he visited a youth education program and delivered a speech 
at the Rotary Club.  The newly elected mayor presented a 
concrete list of priorities for the financially troubled 
city.  While some members of the business community expressed 
disagreement with the U.S. government's strong opposition to 
the coup d'tat, all were focused on the future and were 
eager for opportunities for engagement with the U.S. and a 
more favorable trade and investment climate.  Residents were 
enthusiastic about the Ambassador's return to their city, and 
his visit received positive press coverage.  End summary. 
 
Chamber of Commerce 
------------------- 
 
¶2.  (SBU)  At a breakfast with the Cortes Chamber of Industry 
and Commerce, the Ambassador provided background on the USG's 
policy towards Honduras in the wake of the June 28 coup 
d'tat.  The Ambassador explained that the US approach was 
both principled and pragmatic. Several of the participants 
expressed differences with the U.S. position.  Nevertheless, 
all were very much focused on the future and the discussion 
was substantive based on developing a working agenda to 
strengthen U.S.-Honduran trade and investment ties.  Issues 
covered included the need for the Honduras government to 
adopt a combination of policies in support of free markets, 
but designed to help the poorest and most marginalized 
Hondurans.  All supported common efforts to provide 
assistance to small farmers as a means to reduce poverty in 
rural areas.  The Ambassador discussed prospects for 
organizing a trade and investment missions organized by the 
Denver-based Chamber of the Americas in late July.  Chamber 
members expressed support for past Embassy efforts to promote 
renewable energy and to seek to develop mechanisms to channel 
remittance resources for investment purposes.  The poultry 
producers raised their interest in complying with USDA 
requirements to be able to be certified to export to the U.S. 
market. 
 
Maquila Association 
------------------- 
 
¶3.  (SBU)  Representatives of the Honduras Maquila 
Association (AHM), led by association president Daniel 
Facusse, told the Ambassador that the companies within the 
association, 40 percent of which are American-owned, had lost 
30,000 jobs due to the economic downturn and political 
crisis.  He expressed concern about rules of origin under the 
Central American-Dominican Republic Free Trade Agreement 
(CAFTA-DR) that require materials to be sourced from CAFTA 
countries.  This, they said, is hurting their 
competitiveness, particularly since Nicaragua has an 
exemption from the sourcing requirements.  (Following the 
meeting, the Embassy provided information on how to apply for 
modifications to the sourcing requirements.) 
 
¶4.  (C)  The maquila representatives expressed concern about 
rules that allow unions to represent workers, including for 
the purpose of collective bargaining, if 30 or more employees 
of the company belong to the union.  This, they said, allows 
unions supported by only a small minority of workers to 
dictate the terms of the employer-employee relationship, 
often against other employees' wishes.  The maquila owners 
said that they are pressing for a change that would allow for 
a majority vote among workers on whether a union has the 
right to represent them.  A draft government regulation to 
this effect was in the works, they said.  They told the 
Ambassador that this was a sensitive matter and requested 
that he not discuss it with other Hondurans.  Asked by the 
Ambassador what percentage of maquilas are unionized, the 
maquila owners acknowledged that it was low.  The Ambassador 
agreed to look into the issue.  (Note: Though the AHM 
representatives described these rules as originating with a 
1995 labor-management agreement facilitated by then-A/USTR 
Jon Rosenbaum, that agreement contains no such provision. 
Instead, it urges movement toward an agreement allowing union 
representation if a majority of a company's employees are in 
favor (reftels).  End note.) 
 
¶5.  (SBU)  Jesus Canahuati, who preceded Facusse as AHM's 
president, told the Ambassador that the macroeconomic 
environment is also damaging the Honduran maquilas' 
competitiveness.  As a result of the increasingly overvalued 
Lempira, he said, Honduras is finding it harder to compete 
with other countries in the region, including Mexico, 
Colombia, and Brazil.  He said that he was pleased about the 
appointment of Minister of Labor Felicito Avila. Canahuati 
urged the Ambassador to encourage President Lobo to create a 
stable macroeconomic environment.  "Without that, we're not 
going to succeed," he concluded. 
 
Rotary Club Address 
------------------- 
 
¶6.  (SBU)  During an address to the Rotary Club, the 
Ambassador articulated U.S. policy toward Honduras during and 
beyond the crisis.  He praised President Lobo for taking 
steps to restore democracy and for placing an emphasis on 
national reconciliation, including through the planned 
establishment of a truth commission.  The Ambassador noted 
that President Obama had called in his State of the Union 
Address for greater cooperation between Republicans and 
Democrats, and noted that this approach is needed in Honduras 
as well.  Several American Rotarians were in the audience, 
and the Ambassador praised the charitable work that they and 
their fellow American Rotarians have carried out in Honduras 
over the years. 
 
Meeting with Mayor 
------------------ 
 
¶7.  (SBU)  The Ambassador met with newly elected San Pedro 
Sula mayor Juan Carlos Zuniga, whose administration faces 
financial difficulties due to poor fiscal policies under his 
predecessor.  Zuniga outlined a concrete list of priorities. 
He told the Ambassador that he is seeking dignified 
resettlement for 4,800 families who are living in unsanitary 
conditions on a riverbank in the city.  He has only 10 
million Lempiras (about USD 526,000) budgeted for the 
construction of 4,000 homes (i.e., about USD 130 per house). 
Another major problem is overcrowding in the city's prison; 
there are 4,500 prisoners in a building designed for 800. 
The most dangerous prisoners are not segregated from the rest 
of the prison population.  Rehabilitation under these 
conditions is impossible.  "You leave with a master's degree 
in crime," an aide to Zuniga commented.  The Ambassador 
agreed to send the Tegucigalpa-based Regional Correctional 
Advisor to visit the prison and provide suggestions on 
low-cost improvements.  (Note: This visit has been scheduled. 
 End note.) 
 
¶8.  (SBU)  Zuniga expressed concern about security in the 
city.  An aide noted that a Mexican report had recently named 
San Pedro Sula the second most dangerous city in the world, 
after Ciudad Juarez.  (Note: The study, which was reported in 
the Honduran newspaper El Heraldo, was based on official 
murder rates, with San Pedro Sula, as Zuniga noted, in second 
place, with 119 murders per 100,000 of population and 
Tegucigalpa in seventh place, with 69 per 100,000.  However, 
there are probably a number of other cities around the world 
with higher murder rates but less accurate crime statistics. 
End note.)  The aide said that the city is trying to develop 
a community policing system but lacks manpower, 
communication, and vehicles.  Of 22 municipal vehicles, only 
one works.  The Ambassador said that he understood what a 
difficult fiscal situation the city was in and said that the 
USG was committed to supporting Honduras's reengagement with 
the international community, which would lead to renewed 
donor funding.  He suggested that the mayor ask the business 
community to donate vehicles to the municipality. 
 
Microscholarship Event and Book Donations 
----------------------------------------- 
 
¶9.  (U)  The Ambassador met with participants in the English 
Access Microscholarship Program at the San Pedro Sula 
Binational Center.  About 70 participants in the program, 
which provides English instruction to gifted high school 
students from disadvantaged backgrounds, attended, along with 
local community leaders.  The Ambassador congratulated the 
students for excelling academically in spite of the 
challenges of living in disadvantaged and dangerous areas and 
urged them to use their talents to contribute to Honduras's 
development.  In response to questions from the students, the 
Ambassador provided advice on subjects ranging from 
professional development to avoiding drugs.  The Ambassador 
made a donation of books to the center.  The event received 
positive press coverage.  Separately, the Ambassador's wife 
donated books to two local organizations.  The wives of Mayor 
Zuniga and Minister of Foreign Affairs Mario Canahuati also 
participated.  The donations also received positive press 
coverage. 
 
Visit to El Tiempo Newspaper 
------------------------------ 
 
¶10.  (U)  The Ambassador met with the owner and staff of the 
San Pedro Sula newspaper El Tiempo, which has nation-wide 
circulation.  Participants included owner Carlos Rosenthal, 
editor German Quintanilla, and several journalists.  During 
the off-the-record session, the Ambassador explained U.S. 
policy in Honduras.  The Ambassador stressed the importance 
of fully implementing the Tegucigalpa-San Jose Accord.  He 
praised President Lobo's success in creating a government of 
national unity and his efforts to establish a Truth 
Commission. 
 
¶11.  (SBU)  Comment:  The Ambassador's trip to San Pedro Sula 
was intended to demonstrate U.S. reengagement in Honduras 
following the restoration of democracy.  The enthusiasm among 
the Ambassador's interlocutors and among members of the 
public he encountered demonstrated that local residents saw 
the visit this way as well.  A newspaper cartoon, a framed 
copy of which Mayor Zuniga presented to the Ambassador, 
showed the mayor presenting the Ambassador with the keys to 
the city.  Honduras' diplomatic isolation following the coup 
d'tat was keenly felt even in this business-oriented city, 
and residents, regardless of their views on U.S. policy, are 
relieved that it is coming to an end.  End comment. 
 
LLORENS