RAISING FUEL COSTS LEADS TO TRANSPORTATION STRIKE

UNCLAS TEGUCIGALPA 001837

SIPDIS

SENSITIVE

STATE FOR WHA/CEN, WHA/ EPSC, EB/ESC, DRL/IL, AND
CA/ACS/OCS/WHA
STATE FOR DS/IP/WHA - MFLYNN, DS/ITA - KHALL, DS/DSS/OSAC -
CMEDEIROS
TREASURY FOR DDOUGLAS
COMMERCE FOR MSEIGELMAN
ENERGY FOR IA
DOL FOR ILAB

E.O. 12958: N/A
TAGS: ASEC EPET ECON ELAB PGOV CASC KSAC HO
SUBJECT: RAISING FUEL COSTS LEADS TO TRANSPORTATION STRIKE
PARALYZING TEGUCIGALPA; GOH QUICKLY RETRACTS PART OF PRICE
RISE



1. (U) Summary. On Tuesday, September 6, 2005, both taxi and
bus drivers blocked intersections and several main arteries
leading in and out of Tegucigalpa to protest the raising cost
of gasoline in Honduras. There have been unconfirmed reports
of violence, including rocks being thrown at vehicles and
shots fired at protesters blocking key intersections. Over
the last several months, the public transportation sector has
been pushing for fare increases, but government officials
have not cooperated. After the 25 percent increase in
gasoline prices to 85 lempiras per gallon (USD 4.50) on
Saturday, September 3, the unrest in the public
transportation sector was once again front and center. Bowing
to "transportista" pressure, the GOH announced on the night
of September 6 that prices would be reduced by 7 lempira
(about 40 U.S. cents),which would yield a net increase of 10
lemprias (a 16 percent increase) over pre-hike prices, but
that offer has been insufficient to halt transport strikes
and road closings by angry taxi drivers. End Summary.


2. (U) Gasoline prices in Honduras, already the highest in
Central America, took another jump this past weekend with
price increases caused by Hurricane Katrina. By mid-morning
September 6, the public transportation sector was out in the
street blocking intersections and several routes in and out
of the city. By the afternoon, there were scattered reports
of rocks being thrown at taxi drivers who did not participate
in the strike. Windshields were broken and passengers were
taken out of the vehicles. During most of the day when these
incidents took place, the police were no where to be found.
Several reports of drivers angry with the traffic delays shot
at demonstrators blocking intersections. RSO is still trying
to confirm these reports. Yet, it appears a public, while not
happy with the increase in gasoline prices, is more focused
on the disruption of taxi and bus services.


3. (U) As of early September 7, there are reports of roads
into and out of Tegucigalpa being blocked, as well as several
areas in downtown being blocked by taxis. So far, there have
been reports of military and police located at several key
intersections/overpasses in an attempt to keep traffic
moving. Both international schools used by the Embassy are
closed today because of the strike, as well as most other
private schools and all public schools in the city. RSO is
keeping American and local employees informed of the changing
situation via radio reports and e-mails. All roads to/from
the international airport are apparently blocked. Most
protests organized by teachers' unions and the Popular Block
protest organization are planned for September 8.


4. (U) The security office will continue to monitor the
situation and report any new developments. Should you have
further questions please contact RSO Lizzi.


5. (SBU) Comment: The issue is already a hot potato
politically, with the opposition Liberal Party seizing on it
to lambaste the Nationalist government. The rising cost of
gas dovetails nicely with Liberal Party presidential
candidate Manuel "Mel" Zelaya's message that average
Hondurans have not benefited economically under the current
Maduro Administration due to a growing cost of living and a
lack of jobs. Meanwhile, National Party presidential
candidate Porfirio "Pepe" Lobo, current President of
Congress, has tried to distance himself from the Maduro
Administration by joining Zelaya and others (most notably
Catholic Church Cardinal Oscar Rodriguez) in calling for
reductions in the price of gas. Lobo has gone as far as to
threaten congressional action if the executive branch does
not act quickly enough. End Comment
Williard