Republic of Honduras
Area: 112,100 sq.
km. (43,270 sq. mi.); about the size of Louisiana.
Economy (1997 preliminary data)
GDP: $4.68 billion.
About 90% of the population is mestizo. There also are small minorities of European, African, Asian, Arab, and indigenous Indian descent. Most Hondurans are Roman Catholic, but Protestant proselytization has resulted in significant numbers of converts. Spanish is the predominant language, although some English is spoken along the northern coast and on the Caribbean Bay Islands. Indigenous Indian dialects and the Garifuna dialect also are spoken.
The restored Mayan ruins near the Guatemalan border in Copan reflect the great Mayan culture that flourished there for hundreds of years until the early 9th century. Mayan artifacts also can be found at the National Museum in Tegucigalpa. Columbus landed at mainland Honduras (Trujillo) in 1502. He named it "Honduras" (meaning "depths") for the deep water off the coast. Spaniard Hernan Cortes arrived in 1524. The Spanish began founding settlements along the coast, and Honduras came under the control of the Captaincy General of Guatemala. The cities of Comayagua and Tegucigalpa developed as early mining centers.
Honduras, along with the other Central American provinces, gained independence from Spain in 1821; it then briefly was annexed to the Mexican Empire. In 1823, Honduras joined the newly formed United Provinces of Central America. Before long, social and economic differences between Honduras and its regional neighbors exacerbated harsh partisan strife among Central American leaders and brought on the federation's collapse in 1838. Gen. Francisco Morazan--a Honduran national hero--led unsuccessful efforts to maintain the federation, and restoring Central American unity remained the chief aim of Honduran foreign policy until after World War I.
Since independence, Honduras has been plagued with nearly 300 internal rebellions, civil wars, and changes of government, more than half occurring during this century. The country traditionally lacked both an economic infrastructure and social and political integration. Its agriculturally based economy came to be dominated in this century by U.S. companies that established vast banana plantations along the north coast. Foreign capital, plantation life, and conservative politics held sway in Honduras from the late 19th until the mid-20th century.
During the relatively stable years of the Great Depression, Honduras was controlled by authoritarian Gen. Tiburcio Carias Andino. His ties to dictators in neighboring countries and to U.S. banana companies helped him maintain power until 1948. By then, provincial military leaders had begun to gain control of the two major parties, the Nationalists and the Liberals.
From Military to Civilian Rule
In October 1955--after two authoritarian administrations and a general strike by banana workers on the north coast in 1954--young military reformists staged a palace coup that installed a provisional junta and paved the way for constituent assembly elections in 1957. This assembly appointed Dr. Ramon Villeda Morales as president and transformed itself into a national legislature with a six-year term. The Liberal Party ruled during 1957-63. At the same time, the military took its first steps to become a professional institution independent of leadership from any one political party, and the newly created military academy graduated its first class in 1960.
In October 1963, conservative military officers preempted constitutional elections and deposed Villeda in a bloody coup. These officers exiled Liberal Party members and took control of the national police. The armed forces, led by Gen. Lopez Arellano, governed until 1970.
A civilian president--Ramon Cruz of the National Party--took power briefly in 1970, but proved unable to manage the government. Popular discontent had continued to rise after a 1969 border war with El Salvador; in December 1972, General Lopez staged another coup. Lopez adopted more progressive policies, including land reform, but his regime was brought down in the mid-1970s by scandals.
General Lopez' successors continued armed forces modernization programs, building army and security forces, and concentrating on Honduran air force superiority over its neighbors. The regimes of General Melgar Castro (1975-78) and General Paz Garcia (1978-83) largely built the current physical infrastructure and telecommunications system of Honduras. The country also enjoyed its most rapid economic growth during this period, due to greater international demand for its products and the availability of foreign commercial lending.
Following the overthrow of Anastasio Somoza in Nicaragua in 1979 and general instability in El Salvador at the time, the Honduran military accelerated plans to return the country to civilian rule. A constituent assembly was popularly elected in April 1980, and general elections were held in November 1981. A new constitution was approved in 1982, and the Liberal Party government of President Roberto Suazo Cordoba assumed power.
Suazo relied on U.S. support to help with a severe economic recession and with the threat posed by the revolutionary Sandinista Government in Nicaragua and a brutal civil war in El Salvador. Close cooperation on political and military issues with the United States was complemented by ambitious social and economic development projects sponsored by USAID. Honduras became host to the largest Peace Corps mission in the world, and non-governmental and international voluntary agencies proliferated.
As the November 1985 election approached, the Liberal Party had difficulty settling on a candidate and interpreted election law as permitting multiple presidential candidates from one party. The Liberal Party claimed victory when its presidential candidates collectively outpolled the National Party candidate, Rafael Leonardo Callejas, who received 42% of the vote. Jose Azcona Hoyo, the candidate receiving the most votes (27%) among the Liberals, assumed the presidency in January 1986. With strong endorsement and support from the Honduran military, the Suazo Administration had ushered in the first peaceful transfer of power between civilian presidents in more than 30 years.
Four years later, Rafael Callejas won the presidential election, taking office in January 1990. Callejas concentrated on economic reform, reducing the deficit, and taking steps to deal with an overvalued exchange rate and major structural barriers to investment. He began the movement to place the military under civilian control and laid the groundwork for the creation of the public ministry (Attorney General's office).
Despite the Callejas Administration's economic reforms, growing public dissatisfaction with the rising cost of living and with seemingly widespread government corruption led voters in 1993 to elect Liberal Party candidate Carlos Roberto Reina over National Party contender Oswaldo Ramos Soto, with Reina winning 56% of the vote.
President Reina, elected on a platform calling for a "Moral Revolution," actively prosecuted corruption and pursued those responsible for human rights abuses in the 1980s. He created a modern attorney general's office and an investigative police force, and reduced Honduras' historic and endemic corruption and elite impunity. As a result, a notable start has been made in institutionalizing the rule of law in Honduras.
A hallmark of the Reina Administration was his successful efforts to increase civilian control over the armed forces, making his time in office a period of fundamental change in civil-military relations in Honduras. Important achievements--including the abolition of the military draft and passage of legislation transferring the national police from military to civilian authority--have brought civil-military relations closer to the kind of balance normal in a constitutional democracy. Additionally, President Reina in 1996 named his own defense minister, breaking the precedent of accepting the nominee of the armed forces leadership.
Reina restored national fiscal health. After a rough start in 1994-95, the Reina Administration substantially increased Central Bank net international reserves, reduced inflation to 12.8% a year, restored a healthy pace of economic growth (about 5% in 1997), and, perhaps most important, held down spending to achieve a 1.1% non-financial public sector deficit in 1997.
Carlos Roberto Flores Facusse took office on January 27, 1998, as Honduras' fifth democratically elected President since free elections were restored in 1981. Like three of his four predecessors, including his immediate predecessor, Flores is a member of the Liberal Party. He was elected with a 10% margin over his main opponent, National Party nominee, Nora de Melgar, in free, fair, and peaceful elections on November 30, 1997. These elections, probably the cleanest in Honduran history, reflected the maturing of Honduras' democratic institutions. On the eve of his electoral victory, Flores presented a platform that is a blueprint for reform and modernization of the Honduran Government and economy, with emphasis on helping Honduras' poorest citizens while maintaining the country's fiscal health and improving international competitiveness.
The 1982 constitution provides for a strong executive, a unicameral National Congress, and a judiciary appointed by the National Congress. The president is directly elected to a four-year term by popular vote. The congress also serves a four-year term; congressional seats are assigned the parties' candidates in proportion to the number of votes each party receives.
The judiciary includes a Supreme Court of Justice, courts of appeal, and several courts of original jurisdiction, such as labor, tax, and criminal courts. For administrative purposes, Honduras is divided into 18 departments, with departmental and municipal officials selected for two-year terms.
Events during the 1980s in El Salvador and Nicaragua led Honduras, with U.S. assistance, to expand its armed forces considerably, laying particular emphasis on its air force, which came to include a squadron of U.S.-provided F-5s. The resolution of the civil wars in El Salvador and Nicaragua, and across-the-board budget cuts made in all ministries have brought reduced funding for the Honduran armed forces. The abolition of the draft has created staffing gaps in the now all volunteer armed forces. The military now is far below its authorized strength and further reductions are expected.
Reinforced by the media and several political watchdog organizations, human rights and civil liberties are reasonably well protected. There are no known political prisoners in Honduras, and the privately owned media frequently exercises its right to criticize without fear of reprisals. Organized labor now represents less than 15% of the work force, and its economic and political influence have declined.
Honduras held its fifth consecutive democratic elections in November 1997, to elect a new president, unicameral Congress and mayors; for the first time, voters were able to cast separate ballots for each office.
The two major parties--the Liberal Party and the National Party--run active campaigns throughout the country. Their ideologies are mostly centrist, with diverse factions in each centered on personalities.
The three smaller registered parties, the Christian Democratic Party, the Innovation and Unity Party, and the Democratic Unification Party remain marginal, slightly left-of-center groupings with few campaign resources and little organization. Despite significant progress in training and installing more skillful advisers at the top of each party ladder, electoral politics in Honduras remain traditionalist and paternalistic.
Honduras will hold its next general elections--which will choose the nation's next president, Congress, and mayors--in November 2001.
Principal Government Officials
Roberto FLORES Facusse
Honduras maintains an embassy in the United States at 3007 Tilden Street NW, Washington, DC 20008 (tel. 202-966-7702).
Honduras is one of the poorest and least-developed countries in Latin America. The economy is based mostly on agriculture, which accounted for 24% of GDP in 1997. Coffee and bananas accounted for 37% of total Honduran export revenues in 1997. Honduras has extensive forest, marine, and mineral resources, although widespread slash-and-burn agricultural methods continue to destroy Honduran forests. Hondurans, however, are becoming more concerned about protecting their environmental patrimony. Unemployment is estimated at 15%, and combined unemployment and underemployment is about 40%.
Preliminary data show that the Honduran economy grew 4.9% in 1997, led by strong growth in the manufacturing, financial services, utilities, and mining sectors. The Honduran Government cut the inflation rate nearly in half in 1997, bringing it from 25.3% in 1996 down to 12.8%. The nation's balance of payments continued to strengthen in 1997, with gross international reserves approaching $500 million at the end of the year, equivalent to more than three months' imports. The government's non-financial public sector deficit was brought down to 1.1% of GDP, a significant improvement over the corresponding figure for 1996. A particularly bright spot in the Honduran economy in 1997 was the performance of the large and growing maquiladora sector. Maquiladoras provided employment to almost 100,000 Honduran workers in 1997 and generated more than $300 million in value added.
The economic outlook for Honduras in 1998 is positive. Government authorities expect real growth to exceed 5%, inflation to be no higher than the 12.8% recorded in 1997, and the government deficit to be in line with the figures recorded last year. The Honduran Government will be meeting in 1998 with the International Monetary Fund in an effort to agree on an Enhanced Structural Adjustment Facility, which could lead to foreign bilateral debt forgiveness in the Paris Club. Honduran public foreign debt is approximately $3.8 billion, and the service of that debt consumes more than 30% of government revenues.
Honduras is a member of the United Nations, the World Trade Organization (WTO), the Organization of American States (OAS), the Central American Parliament (PARLACEN), the Central American Integration System (SICA), and the Central American Security Commission (CASC). During 1995-96, Honduras, a founding member of the United Nations, for the first time served as a non-permanent member of the UN Security Council.
President Flores consults frequently with the other Central American presidents on issues of mutual interest. He has continued his predecessor's strong emphasis on Central American cooperation and integration, which resulted in an agreement easing border controls and tariffs among Honduras, Guatemala, Nicaragua, and El Salvador. Honduras also joined its six Central American neighbors at the 1994 Summit of the Americas in signing the Alliance for Sustainable Development, known as the Conjunta Centroamerica-USA, or CONCAUSA, to promote sustainable economic development in the region.
In 1969, El Salvador and Honduras fought the brief "Soccer War" over disputed border areas and friction resulting from the 300,000 Salvadorans who had emigrated to Honduras in search of land and employment. The catalyst was nationalistic feelings aroused by a series of soccer matches between the two countries. The two countries formally signed a peace treaty on October 30,1980, which put the border dispute before the International Court of Justice. In September 1992, the court awarded most of the disputed territory to Honduras. In January 1998, Honduras and El Salvador signed a border demarcation treaty that will implement the terms of the ICJ decree. The treaty awaits legal ratification in both countries. Honduras and El Salvador maintain normal diplomatic and trade relations.
At the 17th Central American Summit in 1995, hosted by Honduras in the northern city of San Pedro Sula, the region's six countries (excluding Belize) signed treaties creating confidence and security-building measures and combating the smuggling of stolen automobiles in the isthmus. In subsequent summits (held every six months), Honduras has continued to work with the other Central American countries on issues of common concern.
Honduras and the United States have close and friendly relations. In Costa Rica in May 1997, former Honduran President Reina met with President Clinton, his Central American counterparts, and the president of the Dominican Republic to celebrate the remarkable democratic transformation in the region and reaffirm support for strengthening democracy, good governance, and promoting prosperity through economic integration, free trade, and investment. The leaders also expressed their commitment to the continued development of just and equitable societies and responsible environmental policies as an integral element of sustainable development.
Honduras is supportive of U.S. policy in the UN and other fora. In 1996, Honduras' overall voting coincidence with the United States in the United Nations was 44.3%, and in 1997 it was 40.3%. As a non-permanent member of the UN Security Council, Honduras played a very helpful role in 1996, most notably in advancing the process of selecting a new UN Secretary General during its October presidency of the Council. The U.S. also continued to be able to count on Honduras' strong support against Iraq.
The U.S. favors stable, peaceful relations between Honduras and its Central American neighbors. During the 1980s, Honduras supported U.S. policy in Central America opposing a revolutionary Marxist Leninist government in Nicaragua and an active leftist insurgency in El Salvador. The Honduran Government also played a key role in negotiations that culminated in the 1990 Nicaraguan elections. Honduras contributed troops for the UN peacekeeping mission in Haiti, and continues to participate in the UN observers mission in the Western Sahara.
The U.S. works with Honduras for sustained economic, political, and social development and to combat drug trafficking in the region. Because of economic needs and security concerns, U.S. material assistance and political support are important to Honduras. USAID is active in Honduras, although official U.S. assistance to the country has been reduced--from $51 million in 1993 to $29 million in 1997--due to worldwide reductions in U.S. bilateral assistance.
The United States is Honduras' chief trading partner, supplying 43% of its imports and purchasing 53% of its exports. Leading Honduran exports to the United States include coffee, bananas, textile products, other fruits and vegetables, seafood, and beef.
The United States encourages U.S. investment that contributes to Honduran development and bilateral trade. The United States accounts for about 75% of total direct foreign investment in Honduras; this is worth about $675 million. The largest U.S. investments in Honduras are in fruit production--particularly banana and citrus--petroleum refining and marketing, and mining. In addition, U.S. corporations have invested in tobacco, apparel, shrimp culture, beef, poultry and animal-feed production, insurance, leasing, food processing, brewing, and furniture manufacturing. U.S. apparel facilities or maquilas are responsible for the majority of the approximately 100,000 jobs in that sector of Honduran businesses.
The U.S. maintains a small presence at a Honduran military base; the two countries conduct joint counternarcotics, humanitarian, and civic action exercises. U.S. troops conduct and provide logistics support for a variety of exercises (medical, engineering, peacekeeping, counternarcotics, and disaster relief) for the benefit of the Honduran people and their Central American neighbors. U.S. forces--regular, reserve, and national guard--benefit greatly from the training and exercises.
U.S. troops--in collaboration with counterparts from Brazil and Colombia--since 1994 have assisted Honduran soldiers in clearing land mines from the country's border with Nicaragua. As of early 1998, approximately 180,000 square meters had been cleared of mines and approximately 2,000 mines had been destroyed.
Principal U.S. Embassy Officials
The U.S. Embassy in Honduras is located on Avenida La Paz, Tegucigalpa (tel.: 011-504-236-9320; faxes: general--011-504-236-9037, USAID--011-504-236-7776, USIS--011-504-236-9309, Military Group--011-504-233-6171, Commercial Section--011-504-238-2888, Consulate--011-504-237-1792).
U.S. policy toward Honduras is aimed at consolidating stable democracy with a justice system that protects human rights and is fair and effective. We promote a healthy and more open economy capable of sustainable growth, improving the climate for business and investment while protecting U.S. citizen and corporate rights. The U.S. works with Honduras to meet transnational challenges, including the fight against narcotrafficking. We encourage and support Honduran efforts to protect the environment. The goals of strengthening democracy and promoting viable economic growth are especially important given the geographical proximity of Honduras to the United States. To the extent U.S. policy is successful in helping democracy and economic opportunity to flourish in Honduras, the pressures that compel many Hondurans to attempt to migrate illegally to the U.S. will be reduced while creating export markets for U.S. goods and services. U.S.-Honduran ties are further strengthened by numerous private sector contacts, with an average of 110,000 U.S. citizens visiting Honduras annually, and approximately 13,000 Americans residing there. More than 100 American companies operate in Honduras.
U.S. Economic and Development Assistance
In order to help strengthen Honduras' democratic institutions and improve living conditions, the U.S. has provided substantial economic assistance. The U.S. has historically been the largest bilateral donor to Honduras. Total aid from the U.S. to Honduras for the period 1991 to 1995 was $322 million. U.S. Agency for International Development (USAID) obligations to Honduras totaled $24.3 million for development assistance and $4.7 million for foodstuffs in 1997. Over the years, such appropriations have been used to achieve such objectives as fostering democratic institutions, increasing private sector employment and income, helping Honduras fund its arrears with international financial institutions, providing humanitarian aid, increasing agricultural production, and providing loans to micro-businesses. Of the $29 million in aid, more than $16 million is spent directly on goods and services from the United States. In addition, since about half of Honduras' imports come from the U.S., development assistance that stimulates growth of the Honduran economy indirectly stimulates U.S. exports and thus supports additional employment and growth in the U.S. economy.
Other forms of U.S. economic assistance to Honduras include the Caribbean Basin Economic Recovery Act, Overseas Private Investment Corporation financing and insurance against risks of war and expropriation, U.S. Trade Development Agency grant loans for pre-feasibility studies of projects with U.S. product and services export potential, and U.S. Export-Import Bank short- and medium-term financing for U.S. exports to Honduran importers. All of these provide greater economic opportunity for U.S. and Honduran businessmen and women.
The Peace Corps has been active in Honduras since 1962, and at one time the program there was the largest in the world. During that time some 5,000 American women and men, ranging in age from 22 to 65, have helped the people of Honduras. In 1997, there were 200 Peace Corps volunteers working in the poorest parts of Honduras.
The government of President Flores is committed to the full implementation of a civilian police force, and the congress has taken essential constitutional steps to effect that. The U.S. Government strongly supports this action. The American Embassy in Tegucigalpa provides specialized training to police officers through the International Criminal Training Assistance Program (ICITAP).
The role of the Honduran armed forces has changed significantly in recent years as many institutions formerly controlled by the military have been taken over by civilians. The defense and police budgets have hovered at around $30 million during the past few years. The abolition of conscription resulted in a decrease in the size of the armed forces. The volunteer system has helped to increase troop strength somewhat but many military units are still significantly below authorized strength levels. Formal security assistance has declined from over $500 million provided between 1982 and 1993 to $500,000 annually in International Military Education and Training (IMET) courses. Some residual credits are still available from previous military aid, but will be exhausted within the next few years.
In the absence of a large security assistance program, defense cooperation has taken the form of increased participation by the Honduran armed forces in military-to-military contact programs and bilateral and multilateral combined exercises oriented toward peacekeeping, disaster relief, humanitarian/civic assistance, and counternarcotics. The U.S. Joint Task Force stationed at the Honduran Soto Cano Air Base plays a vital role in supporting combined exercises in Honduras and in neighboring Central American countries. JTF-Bravo has been involved in several multilateral exercises and numerous smaller humanitarian deployments, providing medical services and construction of much-needed school and clinical facilities in remote areas of Honduras.
U.S. Business Opportunities
The United States has historically been, and remains today, Honduras' largest trading partner. Bilateral trade between the two nations totaled $2.29 billion in 1997. American business exported $1.1 billion worth of goods and services to Honduras in 1997.
U.S. investors account for nearly three-quarters of the estimated $900 million in foreign direct investment in Honduras, and more than 100 American companies operate there. The largest U.S. investment in Honduras is in the agribusiness sector. Other important sectors include petroleum products marketing, maquiladoras (in bond assembly plants), electric power generation, banking, insurance, and tobacco. U.S. franchises have taken off in recent years, mostly in the fast food sector.
Opportunities for U.S. business include agricultural machinery and equipment, automotive parts and service equipment, tourism, medical equipment, electrical power systems, and construction equipment and products. Best prospects for agricultural products are corn, milled rice, wheat, soybean meal, and consumer-ready products.
U.S. citizens contemplating investment in real estate in Honduras should proceed with caution, especially in coastal areas or on the Bay Islands, because of frequently conflicting legislation and problems with land titles. Such investors, or their attorneys, should check property titles not only with the property registry office having jurisdiction in the area in which the property is located (being especially observant of marginal annotations on the deed and that the property is located within the area covered by the original title), but also with the National Agrarian Institute (INA) and the National Forestry Administration (COHDEFOR).
This information is courtesy of the U.S. Department of State, March 1998
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