EMBASSY TEGUCIGALPA RECOMMENDS EXTENSION OF TPS,

UNCLAS SECTION 01 OF 02 TEGUCIGALPA 000442

SIPDIS

SENSITIVE

DEPT. FOR WHA, WHA/CEN, AND PRM/PRP

E.O. 12958: N/A
TAGS: SMIG PREL HO
SUBJECT: EMBASSY TEGUCIGALPA RECOMMENDS EXTENSION OF TPS,
WITH PLANNING FOR THE END GAME

REF: A. STATE 27320


B. 02 TEGUCIGALPA 620

C. 01 TEGUCIGALPA 719 (AND PREVIOUS)


1. (SBU) Summary: Honduras remains an extremely poor
country, still trying to recover from the devastation of
Hurricane Mitch. While most USG-funded post-Mitch
reconstruction efforts are complete, serious long-term
challenges make the situation extremely difficult for the
average Honduran. Honduras is struggling to provide economic
opportunities, health care, housing, and schooling for its
current residents, and possibly another approximately 87,000
that might return if Temporary Protected Status (TPS) is not
extended. A decision not to extend TPS would be seen as a
serious blow to the Maduro administration and would make
achieving USG goals in Honduras on a range of issues much
more difficult. Therefore, the State/AID country team
members unanimously endorse a Department recommendation to
the Attorney General that TPS be extended. Post also
recommends that Washington give consideration to the desired
end game of TPS, since what was designed as a temporary
program is now viewed by Hondurans as an annual process in
which a decision not to extend TPS would be a shock. The
eventual ending of the program, without some final
clarification of TPS beneficiaries' immigration status, could
put a large category of people into legal no-man's land and
undermine USG efforts to better control our borders. End
Summary.


2. (U) With the help of the international donor community (of
which USAID is the largest bilateral contributor),Honduras
has largely recovered from the physical devastation of
Hurricane Mitch and has begun to focus its efforts on the
country's long-term development. USAID's two-and-a-half
year, USD 300 million recovery program focused on a wide
variety of reconstruction interventions in the areas of
education, housing, water and sanitation, rural roads and
bridges, disaster mitigation, health, agriculture
reactivation, credit, accountability, and transparency.
Although the majority of this program has been brought to
completion, two ongoing programs remain to be completed: one
dealing with transparency and accountability, and the other
the reconstruction of damaged urban water and sanitation
systems - both of which are scheduled to be fully completed
in FY04. Despite the gains made in post-Mitch recovery,
Honduras continues to face daunting long-term development
challenges that will continue to stress its limited resources.


3. (SBU) President Ricardo Maduro, upon assuming office in
January 2002, inherited a stagnating economy and seriously
deteriorated government finances from the previous
government. One year into his Administration, the economic
situation is still bleak, with the GOH struggling to reach a
deal with the IMF. The necessary, but difficult, measures
that the GOH is planning to take to achieve an IMF agreement
will likely result in economic and political problems in the
short-term, although they are necessary for long-term
macroeconomic stability. The economy is growing slowly
(estimated real GDP growth of two percent in 2002),and
Honduras is a Highly Indebted Poor Country (HIPC),with a per
capita income of only USD 922 per year. Low world coffee
prices continue to undermine the economy in rural areas.
Given this bleak economic situation, the GOH has been unable
to provide sufficient economic opportunities, health care,
housing, and schooling for the people of Honduras. The
result can be seen in high crime rates and the slow
unraveling of the social fabric of the nation. Maduro's team
is hoping that a U.S.-Central American Free Trade Agreement
(CAFTA) will serve as a catalyst to regional economic
cooperation, foreign investment, and economic growth.


4. (U) Remittances from Hondurans living overseas continue to
grow rapidly (up 38 percent in the first six months of 2002)
and have become the country's most important source of
foreign exchange. Post estimates that Hondurans in the U.S.
sent approximately USD 550-600 million in 2002 in remittances
to Honduras. Any significant drop in remittance income,
something likely to happen if Temporary Protected Status
(TPS) is not extended, would cut the country's largest source
of foreign exchange.


5. (SBU) Post estimates that Honduras is currently receiving
upwards of 10,400 deportees a year via the INS/JPATS
deportation program, a manageable number. In addition, the
GOH receives assistance from the International Organization
of Migration (IOM) for a reinsertion program. Post suspects
that many of these deportees attempt to return to the U.S.
again illegally and thus it is unclear how many are actually
remaining in Honduras. An increase from what is currently
the second highest number of deportees in Central America
(after El Salvador) to a much higher number would be
difficult for Honduras to handle.


6. (SBU) There is deep appreciation in Honduras, especially
among members of the Maduro administration, for the USG's
2002 extension of TPS, and continual interest in possible
U.S. congressional action on the pending Nicaraguan
Adjustment and Central American Relief Act (NACARA),which
would give immigration parity for Hondurans. The wait for a
possible extension of TPS, and GOH advocacy for such a step,
has become an annual event, and TPS extension is supported
equally by both the National and Liberal Parties.


7. (SBU) President Ricardo Maduro's government is engaged on
the key issues of improving the administration of justice and
rule of law, and is seeking to transform Honduras so that law
and order can be restored and economic growth ignited.
Maduro has spoken out strongly on tackling corruption, but
has yet to deliver concrete results. He faces formidable
challenges from entrenched economic and political interests
in moving his agenda forward. Notably, the President's
popularity has remained stalled at a low point since June

2002. A decision by the USG not to extend TPS could be
interpreted here by many as a sign of U.S. withdrawal of
support which would be a serious blow to the Maduro
administration. In any case, it would make achieving USG
goals in Honduras, including Honduran congressional passage
of CAFTA next year, on a range of issues much more difficult.


8. (SBU) In sum, Post believes the following three problems
are the most serious difficulties Honduras would face if TPS
is not extended and a substantial number of Hondurans
previously on TPS were to return to Honduras:
-- great difficulty providing jobs, housing, schooling, and
health care for those who return, resulting in additional
crime and social instability,
-- a significant loss of remittances, and
-- a loss of political support for President Maduro, which
would hurt USG goals in Honduras.

Recommendation: Extend TPS and Plan for the End Game
-------------- --------------


9. (SBU) Because of the situation outlined above, State/AID
Country Team members unanimously endorse a Department
recommendation to the Attorney General that TPS be extended.
Post also recommends that Washington give consideration to
the end game of TPS, since what was designed as a temporary
program is currently seen by Hondurans as anything but
temporary. Given the high levels of poverty and slow
economic growth in Honduras, there are likely to be good
reasons to argue for the extension of TPS for the foreseeable
future. Whether it is an Executive Branch policy, such as
Deferred Enforced Departure (ref c),Congressional action on
NACARA-parity legislation, or some other solution, the USG
should plan for an ordered end to TPS. The alternative, in
which TPS eventually ends and 87,000 people are suddenly
illegally in the U.S., could provide serious challenges to
the USG.
Palmer