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