Honduras: “mixed signals” on US aid

On Sept. 3 US secretary of state Hillary Clinton held a meeting in Washington, DC with Honduran president JosĂ© Manuel Zelaya Rosales, who was removed from office on June 28 in a military coup. Shortly after the meeting, the State Department announced that the US was taking three steps that would send a “very clear message” to the de facto regime: the cancellation of all non-humanitarian aid, the revocation of the visas of members of the de facto government, and a warning that the US would not recognize the results of the scheduled Nov. 29 general elections if they are held under the current conditions.

Also on Sept. 3, Brazil’s Foreign Relations Ministry announced it was suspending its agreements with Honduras on exemptions for diplomatic, official and service visas, along with an August 2004 agreement waiving visa requirements for citizens of Honduras. (La Jornada, Mexico, Sept. 4 from correspondent; Adital, Sept. 3)

On Sept. 5 the de facto Honduran foreign ministry announced that in “strict reciprocity” it was suspending visa exemptions for Brazilian citizens wishing to visit Honduras. On the same day de facto defense minister Adolfo Sevilla warned that the US suspension of aid for fighting narco trafficking would affect the US more than it would affect Honduras: “If we don’t have the support of the country that’s the world’s biggest consumer of drugs, more drugs will go to them. We don’t have the funds; therefore, it will definitely be more difficult for them.” (LJ, Sept. 6 from AFP, Prensa Latina)

The US aid suspended on Sept. 3 actually only amounts to some $31 million, part of which was informally suspended right after the coup took place. The affected aid includes $9.4 million distributed through the US Agency for International Development (USAID), $8.7 million in funds for security and the military, $1.7 million in funds for security, and $11 million distributed through the Millennium Challenge Corporation (although this suspension has to be approved officially in a meeting of the corporation the week of Sept. 7). Some $70 million in funds designated as “humanitarian assistance” will continue to go to Honduras, since the State Department is still calling Zelaya’s overthrow a “coup” rather than a “military coup”—a classification which would automatically end all aid. In contrast, another major donor, the European Union (EU), has blocked $90 million in aid. The US is also almost the only country that hasn’t withdrawn its ambassador from Honduras.

The State Department’s position has provoked criticism within the US. On Sept. 3 Rep. Howard Berman (D-CA), chair of the House Committee on Foreign Affairs, wrote in the Los Angeles Times that the US should use the “military coup” designation. “This one looks, walks and quacks like a duck,” he said. “It’s time to stop hedging and call this bird what it is. And if, for whatever reason, the State Department lawyers do not conclude that this was a [military] coup, Congress should examine other ways by which it can directly affect the flow of aid.” University of California, Santa Cruz historian Dana Frank told the Associated Press wire service that the US government is “sending mixed signals to [de facto president] Micheletti. Why haven’t they already frozen all bank accounts and funding? Why are we still at an Air Force base there?” (LJ, Sept. 4; Honduras Coup 2009, Sept. 4; Reuters, Sept. 3; AP, Sept. 2)

In what was apparently an effort to distract attention from the impending suspension of US aid, on Sept. 1 the Banco Central de Honduras (BCH) announced that the International Monetary Fund (IMF) had assigned Honduras $150.1 million in Special Drawing Rights (SDRs) on Aug. 28 and would assign another $13.8 million in a few days. BCH president Edwin Araque, who was removed from office by the de facto government, told the opposition Radio Globo from Washington on Sept. 2 that this was just an “accounting trick.” Araque said the IMF had set aside a special anti-crisis fund for members on Apr. 2, to be made available at the end of August, but that since it hadn’t recognized the coup regime, the current managers of the BCH couldn’t draw down the funds. On Sept. 4 IMF spokesperson Bill Murray indicated to the Washington-based Center for Economic and Policy Research (CEPR) that this was correct. “[Y]ou should go with what you were told” by the constitutional government of Honduras, he said. (Reuters, Sept. 1; Prensa Latina, Sept. 2; Upside Down World, Sept. 4 from CEPR)

The IMF agreed in April to issue its member countries a total of $250 billion in SDRs to counteract the effects of the world economic crisis. Nicaragua reported receiving $151 million in SDRs on Aug. 28; Mexico was expected to receive most of an assignment of $4 billion in SDRs on the same day, with more coming in September. (Reuters, Aug. 28)

From Weekly News Update on the Americas, Sept. 6

See our last posts on Honduras and Central America.

  1. out of date info
    The information in this story is way out of date. The IMF clarified on Sept. 6, and again on the 7th, that the de facto government of Honduras could not convert its SDR allocation into hard currency because the IMF didn’t recognize it as the legitimate government of Honduras. SDR can only be exchanged through the IMF for hard currency.