Identifier
Created
Classification
Origin
06TEGUCIGALPA1179
2006-06-30 18:46:00
SECRET//NOFORN
Embassy Tegucigalpa
Cable title:  

HONDURAN POPULIST PRESIDENT ZELAYA: MELISTAS PUSH

Tags:  PREL PGOV ECON ETRD KCRM SMIG SNAR PINR VZ HO 
pdf how-to read a cable
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OO RUEHAO RUEHCD RUEHGA RUEHGD RUEHHA RUEHHO RUEHMC RUEHNG RUEHNL
RUEHQU RUEHRD RUEHRG RUEHRS RUEHTM RUEHVC
DE RUEHTG #1179/01 1811846
ZNY SSSSS ZZH
O 301846Z JUN 06
FM AMEMBASSY TEGUCIGALPA
TO RUEHC/SECSTATE WASHDC IMMEDIATE 2554
INFO RUEHWH/WESTERN HEMISPHERIC AFFAIRS DIPL POSTS PRIORITY
RUCNDT/USMISSION USUN NEW YORK PRIORITY 0110
RUEAHLC/HOMELAND SECURITY CENTER WASHDC PRIORITY
RHMFISS/DIRJIATF SOUTH PRIORITY
RUEPWJF/HQ BICE WASHDC PRIORITY
RUEKJCS/SECDEF WASHDC PRIORITY
RUEHLMC/MILLENNIUM CHALLENGE CORP PRIORITY
RHEHNSC/NSC WASHDC PRIORITY
RUEAIIA/CIA WASHDC PRIORITY
RHEFDIA/DIA WASHINGTON DC PRIORITY
RUMIAAA/CDR USSOUTHCOM MIAMI FL//CINC/POLAD// PRIORITY
RUEAHND/CDRJTFB SOTO CANO HO PRIORITY
S E C R E T SECTION 01 OF 05 TEGUCIGALPA 001179 

SIPDIS

NOFORN
SIPDIS

STATE FOR D, P, AND E
STATE FOR WHA, WHA/PPC, WHA/EPSC, WHA/AND, AND WHA/CEN
STATE FOR EB, INL/LP, AND INR/B
STATE PASS AID FOR LAC/CAM
NSC FOR DAN FISK
TREASURY FOR JHOEL

E.O. 12958: DECL: 06/30/2036
TAGS: PREL PGOV ECON ETRD KCRM SMIG SNAR PINR VZ HO
SUBJECT: HONDURAN POPULIST PRESIDENT ZELAYA: MELISTAS PUSH
PETROCARIBE AND MISSTEP; ANGST GROWING AMONG ELITE

REF: A. TEGUCIGALPA 1124

B. TEGUCIGALPA 1131

C. TEGUCIGALPA 1102 AND PREVIOUS

D. TEGUCIGALPA 872

E. TEGUCIGALPA 853

F. TEGUCIGALPA 526

TEGUCIGALP 00001179 001.2 OF 005


Classified By: Ambassador Charles A. Ford;
Reasons 1.4 (b) and (d).

S E C R E T SECTION 01 OF 05 TEGUCIGALPA 001179

SIPDIS

NOFORN
SIPDIS

STATE FOR D, P, AND E
STATE FOR WHA, WHA/PPC, WHA/EPSC, WHA/AND, AND WHA/CEN
STATE FOR EB, INL/LP, AND INR/B
STATE PASS AID FOR LAC/CAM
NSC FOR DAN FISK
TREASURY FOR JHOEL

E.O. 12958: DECL: 06/30/2036
TAGS: PREL PGOV ECON ETRD KCRM SMIG SNAR PINR VZ HO
SUBJECT: HONDURAN POPULIST PRESIDENT ZELAYA: MELISTAS PUSH
PETROCARIBE AND MISSTEP; ANGST GROWING AMONG ELITE

REF: A. TEGUCIGALPA 1124

B. TEGUCIGALPA 1131

C. TEGUCIGALPA 1102 AND PREVIOUS

D. TEGUCIGALPA 872

E. TEGUCIGALPA 853

F. TEGUCIGALPA 526

TEGUCIGALP 00001179 001.2 OF 005


Classified By: Ambassador Charles A. Ford;
Reasons 1.4 (b) and (d).


1. (C) Summary: Honduran President Jose Manuel "Mel" Zelaya
and his Administration have now been in office approximately
five months. Zelaya is acting more and more like a populist,
and has stumbled through a series of missteps ever since his
meeting with POTUS June 5. His willful mis-characterizations
of the USG position on a possible PetroCaribe deal, his
overreaction to the Embassy's one-week suspension of
scheduling new visa appointments, and other gaffes have all
served to take the shine off bilateral relations, which is
something the "Melistas" have milked. The Minister of
Finance's surprise resignation announcement fed a growing
sense of disarray within the Zelaya Administration, which,
combined with palpable stiffness in the bilateral
relationship, led many outside Zelaya's inner circle to
express concern to the Embassy. Post sees a distinct
possibility that Zelaya may be seeking to supplant the fiscal
disciplines of an IMF program with the relatively easy money
that the financing conditions of PetroCaribe would provide.
U.S. public and private statements questioning the wisdom of
such a deal and noting the lack of transparency appear to be
the major factor in slowing down a rush to PetroCaribe.
While no irreversible decisions have been made, some could be

made in July/August, and so Post will continue to reach out
to the Zelaya Administration and encourage a responsible
response by non-Melistas, in and out of the Liberal Party.
End Summary.

Zelaya and the "Melistas"
--------------


2. (C) Honduran President Jose Manuel "Mel" Zelaya Rosales is
acting more like a populist as his Administration reaches
five months of age, despite his protestations to the contrary
to EmbOffs. The Embassy has tried repeatedly to establish a
closer relationship with Zelaya, but whether due to his
outdated Latin American "caudillo" style, his instinctive
negative reaction to what he perceives as dependency on the
U.S. (which on its own would probably be a good reaction),
the influence of key left-leaning Melistas (particularly
Liberal Party President Patricia Rodas, Foreign Minister
Milton Jimenez, and Zelaya legal advisor Enrique Flores
Lanza),or a combination of all three, Zelaya has not truly
reciprocated. While professing his willingness to have an
honest, open dialogue with the Embassy, and numerous
meetings, Zelaya and his Melista advisors repeatedly fail to
level with EmbOffs, ignoring former President Carlos Flores'
(Liberal Party) advice to Zelaya not to try to fool the U.S.
Embassy. This failure to be frank with the Embassy causes
unnecessary friction that benefits no one (except perhaps key
Melistas, who, according to some observers, may be seeking to
have Zelaya "stand up" to the U.S.).


3. (C) As reported extensively, Zelaya and the Melistas seem
dead-set on a PetroCaribe deal or something similar, though
perhaps cloaked in the respectability of a "commercial" deal
with PDVSA or its U.S. affiliate CITGO (ref C and previous).
Despite statements to the contrary, Zelaya appears to be
willing not to have an IMF agreement as a
PetroCaribe-inspired deal appears to give Zelaya an alternate
source of funding for populist spending measures (which will
not actually lower the price of gas at the pump).
Nationalists have recently renewed their claim that Zelaya

TEGUCIGALP 00001179 002.2 OF 005


received campaign funding from Venezuelan President Hugo
Chavez, and claim that a PetroCaribe deal flows from Chavez's
surreptitious electoral support. (Note: Others claim Zelaya
(perhaps unwittingly) received campaign financing from
narco-money, and claim that Zelaya is under intense pressure
from narcos. If this allegation is true, Zelaya to his
credit has not given narcos an inch. End Note.) Post
attempted to run down various campaign financing rumors in
fall 2005 but could neither prove, nor disprove, any of the
allegations.

False Statements and Overreaction
--------------


4. (C) Zelaya has repeatedly misstated U.S. positions since
his June 5 meeting with POTUS at the White House:
- Zelaya falsely claimed that POTUS had said the USG had no
problem with a GOH PetroCaribe deal with Venezuela, a false
perception that the Ambassador quickly corrected.
- Zelaya falsely claimed that POTUS had said the GOH's
request to commercialize Soto Cano Air Base was "rational."
- After Zelaya met with U.S. oil companies in Washington, DC
June 5, the Honduran Embassy announced that U.S. oil
companies had decided to participate in the fuel bid;
likewise, Flores Lanza made a similar announcement after the
GOH met in Tegucigalpa with oil companies, including U.S. oil
companies. Both statements were false.
- FM Jimenez announced that the USG had granted a one-month
extension of the registration deadline for Temporary
Protected Status (TPS),when in fact the GOH had only
requested such an extension from DHS/CIS but no extension was
granted.


5. (C) Zelaya sharply overreacted to the Embassy's one-week
suspension of scheduling new visa appointments (ref A). The
reaction came after effectively putting on the back burner
repeated Embassy requests for high-level action by the GOH to
reform Honduran Immigration. While Zelaya did finally
appoint German Espinal, a respected former Executive Director
of the National Anti-Corruption Council, as Immigration
Director, he had done nothing to make good on his repeated
promise to move Immigration out of the Ministry of Government
and Justice (led by Minister Jorge Arturo Reina, who had his
U.S. visa revoked for ties to terrorist activities years
ago). After the GOH quickly responded to the Embassy's
action by briefing the Embassy on actions it had taken or
would soon take to reform Immigration (and the National
Registry of Persons),the Embassy reinstated scheduling visa
appointments. Since then, Zelaya's rhetoric has cooled
considerably, and the growing sense of trouble in bilateral
relations has leveled off.

MinFinance Resigns - More Cabinet Changes?
--------------


6. (C) Minister of Finance Hugo Noe Pino announced June 16 he
was stepping down effective in July (ref B). While he moves
to Washington to be the Central American Representative to
the Inter-American Development Bank, he was widely seen to be
fleeing the disorderly Zelaya Administration, and the
possible impending fiscal crisis if the GOH cannot pass the
IMF review. Rumors are swirling of other possible cabinet
changes, including predictably Minister of Health Orison
Velasquez (who is mired in allegations of corruption and
incompetence),but also disappointingly Minister of Public
Security Alvaro Romero, who after a slow start and press
criticism appears to be making real headway in his plan to
reform the notoriously corrupt and ineffective police force,
now that President Zelaya at long last agreed to his request
and appointed Jorge Rodas Gamero as Vice Minister. Another
rumor has Minister of the Presidency Yani Rosenthal being
sacked. Rosenthal, a stand-in for his powerful

TEGUCIGALP 00001179 003.2 OF 005


businessman/politician father Jaime Rosenthal, is seen by
many observers as compromised by his family business
interests. He appears alternatively close to and estranged
from the Melistas.

Non-Melista Establishment Reacts
--------------


7. (C) The Embassy has received private messages from key
National Party figures, including Zelaya's 2005 opponent
Porfirio "Pepe" Lobo, former President Ricardo Maduro, former
Tegucigalpa Mayor Miguel Pastor (who is keeping a low
profile) and his political strategist brother Sebastian, and
current Tegucigalpa Mayor Ricardo Alvarez, expressing concern
over the damage Zelaya and his team have done in what they
see as a bungled managing of Honduras' most important
bilateral relationship. Some ascribe this to the
inexperience of FM Jimenez (who was not Zelaya's original
choice as FM, but chosen without Embassy input after the
Embassy objected to Reina's infamous past). Others see it is
a conscious policy to cause friction that will burnish Mel's
image as a nationalist/populist. Key media owners Rafael
Ferrari, Jorge Canahuati, and Carlos Flores warned the
Ambassador that the recent negative exchange in the press
between the Embassy and Zelaya could make the U.S. look like
the bad guy. Taking a different view, Lobo told the
Ambassador that the average Honduran will side with the USG
over the GOH in any rhetorical squabble when a Honduran
politician such as Zelaya potentially puts at risk good
relations that allow record levels of remittances from
relatives in the U.S.


8. (C) Non-Melistas in the Liberal Party have also expressed
concern, including Vice President Elvin Santos and the Flores
camp, which includes President of Congress Roberto
Micheletti. Ambassador met with Flores and Micheletti
together recently and Flores voiced his frustration with the
way Zelaya had handled the White House visit. Using a
baseball metaphor, Flores said the U.S. had teed up a
softball and instead of hitting it out of the park, Zelaya
had thrown his bat down and yelled "Chavez!" Flores has not
talked with Zelaya since his POTUS meeting, and fears that
the Melistas may be seeking an economic crisis, which will
then lead to a political crisis, which suits the Melistas
view of a failed system that warrants new solutions, such as
the controversial "citizen power" initiative.


9. (C) VP Santos has been extremely candid with the
Ambassador in expressing his frustration with Zelaya and the
Melistas, while at the same time urging the Embassy to
continue to help prod Zelaya to take decisions that are in
the best interests of Honduras, not those that the Melistas
want him to take to promote their agenda. Santos is close to
Alvarez (the two are godparents to at least one of each
other's children),and appears to reflect the centrist
establishment's hope that continued engagement with Zelaya
will ward off irreversible policy mistakes. Likewise,
Catholic Church Cardinal Oscar Rodriguez told the Ambassador
that he is concerned about potential political ramifications
of a PetroCaribe deal, and wants to help lead the fervently
Catholic Zelaya to more responsible policy decisions and a
focus on poverty reduction.

Think Tanks and National Development Plans
--------------


10. (C) The Embassy has sought to encourage a positive
response to the frustration voiced by various members of the
elite about Zelaya and his Administration. The Embassy has
met with:
- Irma de Fortin, President of University Jose Cecilio del
Valle, who is seeking to set up a group of respected

TEGUCIGALP 00001179 004.2 OF 005


individuals (mostly Nationals),to perhaps develop a think
tank to speak out on and study key issues for the future of
Honduras; and
- FUNDEMOS, a new NGO akin to the GOH development
organization FIDE, led by Nationalist luminaries from the
Maduro Administration (among them former Minister of Defense
Fred Breve, former Minister of the Presidency Ramon Medina
Luna, and former President of the Central Bank Maria Elena
Mondragon),is focused on economic development.


11. (C) The National Party's 2005 Presidential ticket of Pepe
Lobo and VP candidate Mario Canahuati also professes to want
to help shape non-partisan consensus plans for the economic
and political development of Honduras. The two are
increasingly seen as rivals within the party, but hopefully
their rivalry and positioning for platforms for the 2009
presidential primary can help fuel real strategic thought
about Honduras' economic development, which failed when last
tried by UNDP in 2005 due to political rivalries between the
two major parties. Interestingly in hindsight, a key issue
cited by the Liberal Party in refusing to sign on to the UNDP
plan was the lack of focus on the high cost of energy.
- Canahuati, President of the private sector umbrella
organization COHEP, is conducting strategic planning on a
COHEP vision for the development of Honduras. Canahuati and
a group of leading businessmen, including wealthy mogul (and
Liberal Party supporter) Miguel "Uncle Mike" Facusse, met
with EmbOffs, and said that they sought to help the Zelaya
Administration set a more productive course. Members of the
group were clear that the private sector is "basically on
(the USG) side" and that they see no good coming of picking a
fight with the USG. They also recognized and (mildly)
objected to the leftward drift of the current administration.
However, they pointed out, any significant breech between
the USG and the GOH "only plays into Chavez's hands."
- Lobo, President of the National Party, said he is seeking
to bring together four out of the five political parties
(leaving the anti-globalist UD party on the sidelines),the
Catholic Church, COHEP (not clear if Canahuati supports this
plan),and the labor confederations to develop a national
development plan. Lobo is seeking to work with former
President Flores and Micheletti as his Liberal Party
counterparts; whether or not the Melistas and Zelaya will
embrace this idea is debatable. Lobo said that he plans to
have an impartial facilitator (although the name he
mentioned, Juan Ferrera, is linked in many people's eyes to
the National Party),and would have the G-16, led by the U.S.
beginning July 1, as key observers and supporters of this
effort. Cardinal Rodriguez told the Ambassador that he
supports Lobo's idea, and that he has talked to Micheletti
about it (an apparent warming of what had been a chilled
relationship between the two).

Zelaya and Rodas vs. Flores
--------------


12. (C) Comment: Zelaya is alleged to have grown further
apart from his wife, and reportedly the two are not currently
living together. Rumors persist that Zelaya is having an
affair with his longtime advisor Rodas, said to be the last
one to meet with him late at night. Whether or not the
rumors are true, what is clear is that Rodas is Zelaya's
closest advisor, and is seen by many as Zelaya's choice for
Liberal Party presidential candidate in 2009. Flores'
antipathy to the Melistas, who he calls the "Halloween
people," is widely known, and his newspaper's June house
editorials have criticized Zelaya's recent missteps. Flores
is the key counterweight to Zelaya within the party, and the
person he decides to back for the 2009 presidential race
might have Rodas as an opponent, if she can survive the
internal party struggle that has led to calls for her ouster
at a party conference this fall. (Besides Rodas, rumored

TEGUCIGALP 00001179 005.2 OF 005


Liberal Party candidates include Minister of Social
Investment Marlon Lara, Central Bank President Gabriela
Nunez, both candidates in 2005, Micheletti, and Flores'
daughter Mary Flores, second to Micheletti in Congress).


13. (C) Comment continued: U.S. public and private statements
questioning the wisdom of a PetroCaribe deal and noting the
lack of transparency in the fuel bid process appear to be the
major factor slowing down a rush to PetroCaribe. Zelaya's
emissaries have repeatedly asked the Embassy to back off on
the fuel issue, with Minister of Defense Aristedes Mejia
going so far as to say that Zelaya would forget about
commercialization of Soto Cano Air Base if the U.S. stopped
talking about PetroCaribe. While no irreversible decisions
have been made, some could be made in July/August (Congress
goes back in session July 4). Post will continue to reach
out to the Zelaya Administration in the hope they might see
the light, encourage a responsible response by non-Melistas,
in and out of the Liberal Party, and despite Zelaya's
requests, continue to speak publicly when necessary on
PetroCaribe, focusing on issues of transparency and policy
rather than Chavez. End Comment.
FORD