HONDURAS: EXTENSION OF TEMPORARY PROTECTIVE STATUS

UNCLAS TEGUCIGALPA 000572 SENSITIVE SIPDIS STATE FOR WHA/CAN AND PRM/PIM E.O. 12958: N/A TAGS: PREF SMIG HO SUBJECT: HONDURAS: EXTENSION OF TEMPORARY PROTECTIVE STATUS REF: A. STATE 60473 ¶B. 07 TEGUCIGALPA 183 ¶1. (U) Summary: Despite comparatively strong economic growth for the last four years, Honduras remains unprepared to reassimilate 80,000 of its citizens living in the United States on Temporary Protective Status (TPS). Job growth remains slow, and poverty, despite some measured declines the past two years, remains prevalent. The economic slowdown in the United States -- Honduras's principal market -- and exogenous fuel and food price shocks are likely to slow economic growth considerably this year and next. More than a third of the population still lives in extreme poverty, defined as unable to afford 2,200 calories per day, and more than 40 percent of the workforce is considered either unemployed or underemployed. The growth of remittances from Hondurans living in the United States, which amount to about a quarter of GDP and sustain consumption in poor rural households, has slowed considerably in the last two years and may slow further if the U.S. economy enters a recession. The Department of Homeland Security deported over 40,000 Honduran citizens in 2007 who had attempted to enter the United States illegally (a rate of about 110 per day),and we estimate about 100 additional Hondurans a day succeed in crossing the border undetected. Although the lion's share of Hurricane Mitch-related assistance was completed by 2001, the program officially ended on September 30, 2007, when the last cash disbursement was allocated to a water sanitation program. Nevertheless, the government and people of Honduras continue to rely heavily on U.S. and other international assistance. End Summary. ¶2. (U) In response to reftel A, para. 6: -- Although USAID and U.S. Army Corps of Engineers Programs targeted at rebuilding Honduran communities affected by loss or dislocation of thousands of lives, and collapse of physical infrastructure are long since completed, Honduras remains under social and economic stress. Honduran education, health, and business sectors fail to adquately address societal needs. As long as poverty rates remain so high, the threat of civil unrest remains significant. -- The Millennium Challenge Account (MCA),the Central American Free Trade Agreement (CAFTA-DR),and roughly USD 4 billion in recent international debt forgiveness, combined with other international assistance, have improved the Honduran macroeconomic environment and contributed to economic growth of more than 6.5 percent a year over the last two years. Although Honduras signed an MCA Compact in 2005 and CAFTA-DR entered into force in 2006, it could be several years before significant effects of these programs will be felt by the average Honduran. CAFTA, for example, has already helped Honduras boost its exports by 6 percent in 2007, with the strongest increases coming in labor-intensive agricultural products. But much work remains to be done to prepare Hondurans to benefit fully from the treaty. The energy and telecommunication sectors are in desperate need of reforms which would significantly improve the investment in Honduras. Millennium Challenge Corporation (MCC) projects are designed to help poor rural Hondurans expand market opportunities, reduce transportation costs and increase their incomes so as to result in genuine poverty reduction. Technical capacity programs for farmers are already boosting agricultural output, but construction on expansion of the CA-5 highway will not start until October 2008. This project, part of the so-called "Dry Canal" that will eventually link the Caribbean coast of Honduras to the Pacific coast of El Salvador by (relatively) high-speed road. It will be at least two more years before the project is complete. -- Hondurans represent one of the largest illegal migrant groups entering the U.S. The United States remains the prefered destination of Hondurans seeking better economic opportunities, at an estimated rate of over 200 attempted illegal entries per day. Deportation flights arrive daily in Tegucigalpa. -- USAID assistance programs continue to focus on watershed, irrigation, forestry, and protective infrastructure projects to both rebuild areas damaged during several hurricanes and severe storms since Mitch and to mitigate the potential impact of inevitable future storms. -- Honduras requires massive infrastructure investment. OPIC has proposed programs to address severe housing needs. MCC, as detailed above, is investing heavily in road construction. But, these investments will require time to produce results and will require continued influxes of foreign assistance. ¶4. (U) The Honduran economy remains fragile and is unable to provide adequate numbers of stable jobs at acceptable wages for its growing population. Honduras would be unable to absorb the return of 80,000 citizens who have lived legally in the U.S. for the past nine years on TPS status. FORD