POLITICS BEHIND RUSH TO COMMERCIALIZE SOTO CANO

C O N F I D E N T I A L TEGUCIGALPA 000583 MONTREAL FOR USREP ICAO E.O. 12958: DECL: 06/06/2018 TAGS: EAIR PGOV PREL MARR HO SUBJECT: POLITICS BEHIND RUSH TO COMMERCIALIZE SOTO CANO AIR BASE REF: A. TEGUCIGALPA 541 B. TEGUCIGALPA 527 C. TEGUCIGALPA 526 Classified By: Amb. Charles Ford, E.O. 12958 Reasons 1.4(d) ¶1. (C) Summary: President Zelaya's rush decision to ban large aircraft from Tegucigalpa's Toncontin Airport and prepare the Soto Cano military airfield at Palmerola for commercial passenger flights appears to be motivated by a complex web of political considerations of which the safety and convenience of the traveling public or the economic interests of the country do not seem to rank very high. Although Zelaya came to an agreement with civic and business leaders June 16 that may allow normal air traffic to resume at Toncontin next week, his actions since indicate he will continue to politicize the issue and to push for rapid commercialization of Soto Cano. The USG, while continuing to maintain a low public profile on this issue, needs to understand the factors motivating Zelaya's actions and to be actively engaged behind the scenes both to protect U.S. security interests at Soto Cano as well as the interests of our commercial airlines. End Summary. -------------- An Impetuous Decision -------------- ¶2. (C) As reftels reported, Zelaya acted to suspend flights into and out of Toncontin of aircraft with capacity exceeding 42 passengers within an hour after a Taca Airlines Airbus 320 skidded off the end of the runway May 30, killing three passengers aboard the plane and two people in passing vehicles. Embassy sources report Zelaya did this without consulting any expert opinion, but following a phone conversation with Salvadoran President Antonio Saca. In the same phone call Zelaya apparently also put El Salvador in charge of the crash investigation. Taca is headquartered in El Salvador. ¶3. (C) Zelaya announced within hours of the crash that commercial air traffic would be diverted from Toncontin to the U.S.-Honduran military airfield at Soto Cano, about 45 miles north of Tegucigalpa over a bad, heavily traveled two-lane road. Following a meeting the next day with military and civil aviation advisers at the base, Zelaya announced Soto Cano would be opened for commercial passenger flights within 60 days (ref A). He issued a decree declaring a state of emergency and asserting that Toncontin was unsafe for large aircraft. -------------- �00A;Sticking to His Guns -------------- ¶4. (C) Zelaya has since stubbornly held to these positions despite broad and intensifying public opposition and preliminary indications strongly suggesting pilot error as the cause of the crash (the pilot landed in poor visibility, with a 10-20 knot wind at his back and touched down a third of the way down the runway). After protest marches in support of reopening Toncontin, backed by the Mayor of Tegucigalpa -- Ricardo Alvarez of the opposition National Party -- and mounting complaints that the airport closure was crippling the capital's economy, Zelaya met with Alvarez and representatives of the Tegucigalpa Chamber of Commerce June ¶16. The meeting, which ended after 8 p.m., produced the following agreement: -- The International Civil Aviation Organization (ICAO) would be asked to send a team to inspect Toncontin and evaluate its suitability for large commercial aircraft. -- Following receipt of the ICAO report, a commission comprising President Zelaya, Mayor Alvarez and representatives of the Tegucigalpa Chamber and the Honduran Confederation of Private Enterprise (COHEP) will study its findings and determine whether large aircraft may once again land at Toncontin. -- The entire process was to be completed within eight days. ¶5. (C) However, immediately following the meeting, Zelaya's "Citizen Power" movement began running television ads calling Toncontin unsafe and calling for the immediate commercialization of Soto Cano. Zelaya then showed up at Soto Cano, media in train, June 17 and asserted that work was underway to begin receiving commercial airliners there in the near future. He claimed, falsely, that U.S. Forces had agreed to share the control tower (which has room for three people) and that construction equipment that by coincidence was working on the runway was there under his orders to prepare for commercial operations. On June 18 Zelaya sent drilling equipment to begin digging a well to supply water to a commercial passenger terminal. -------------- Method to This Madness? -------------- ¶6. (C) The above actions indicate to us that it is by no means certain that Zelaya, who will have a veto on the commission established under the June 16 agreement, will allow normal service to resume at Toncontin next week and that in any case he will continue to push for immediate commercialization of Soto Cano. Based on conversations with numerous sources, Embassy suspects that Zelaya's erratic and puzzling behavior on this issue is explained by an interplay of multiple political and parochial considerations as detailed below. -------------- The Chavez-Ortega Angle -------------- ¶7. (C) Embassy does not believe it was a coincidence that Nicaraguan President Daniel Ortega flew into Soto Cano for a surprise visit the weekend after the crash or that the first shipload of Petrocaribe fuel from Venezuela arrived in Puerto Cortes the following week. It is no secret that Ortega and Venezuelan President Hugo Chavez, with whom Zelaya is personally and politically close, would like to see U.S. Forces leave Soto Cano. We have heard rumors from well connected sources that Chavez has offered to finance the construction of a commercial airport at Soto Cano if U.S. Forces leave. Participants at the June 16 meeting between Zelaya and Tegucigalpa civic and business leaders told us that Zelaya's left-leaning adviser, Liberal Party leader Patricia Rodas, made a long and impassioned speech about "sovereignty," strongly implying that Honduras should use the May 30 accident as a pretext to remove "imperialist" forces from Honduran soil (Zelaya reportedly distanced himself from her remarks). ¶8. (C) Although Zelaya averred to the Deputy Secretary June 4 that he wanted to keep the U.S. military base at Soto Cano, we think he is nonetheless exploiting the airport issue to appeal to his leftist supporters domestically and to keep subsidized Venezuelan oil flowing internationally. We note that following his private meeting with the Deputy Secretary, Zelaya used a public signing ceremony to make gratuitous comments about human rights abuses in the 1980s (when the Deputy Secretary was ambassador here),just two days before the first Venezuelan tanker arrived. -------------- The Taca/El Salvador Angle -------------- ¶9. (C) Some of Zelaya's actions in this case strike us as favoring more the interests of Taca than those of his own country. Taca is the only one of the four international carriers that previously served Toncontin to have endorsed the move to Soto Cano and expressed reluctance to return to Toncontin. We think Taca's interests in this matter are twofold: -- Limit its potential liability for the May 30 crash by demonstrating that Toncontin was inherently unsafe. -- Strenghthen its long-term commercial position in the region by turning Toncontin into a secondary airport receiving only feeder flights on small aircraft from San Salvador. ¶10. (C) Our sense is that Taca sees its long-term competion for regional hub not as Tegucigalpa but San Pedro Sula. San Pedro Sula sits in Honduras's principal manufacturing area near the northern terminus of the proposed "Dry Canal" linking the Caribbean coast of Honduras to the Pacific coast of El Salvador. However, San Pedro Sula's airport currently has limited capacity for international flights. The restriction on large aircraft at Toncontin has forced carriers normally serving Tegucigalpa to divert flights to San Pedro Sula, overwhelming its airport. We suspect that Taca has calculated that trying to force either San Pedro Sula or Palmerola to absorb the traffic from Toncontin before they have the capacity to do so will lead airlines and air travelers to permanently shift their business to San Salvador, where Taca is dominant. This will put Taca in a position to benefit most from the evolving multimodal transport corridor that aspires to compete with Panama for interoceanic commerce. ¶11. (C) Given the apparent interests of its carrier in this situation, it is odd to us that Zelaya put El Salvador in charge of the accident investigation. Odder still, he issued a decree attributing the accident to defects in the airport, despite strong evidence to the contrary. This in effect shifted liability for the accident from Taca to the GOH, as under the GOH contract with airport concessionaire InterAirports, the GOH and not InterAirports is responsible for the runway. Why Zelaya would be carrying the water for both Taca's short-term legal and long-term commercial interests is a mystery to us. -------------- The Robber Baron Angle -------------- ¶12. (C) As holder of the concession for all four Honduran international airports (Toncontin, San Pedro Sula, Roatan and La Ceiba),the interests of Honduran tycoon Freddy Nasser in the current situation are multifold. He is losing fees from the closure of Toncontin. But he would also likely get much of the business for commercializing Soto Cano, expanding San Pedro Sula or constructing a new airport closer to Tegucigalpa. Also, his father-in-law, Miguel Facusse, owns land surrounding the Soto Cano airbase, including fruit and vegetable farms, and he has long advocated opening the base for cargo flights to ship his produce to the U.S. market. Nasser also owns power plants that sell electricity to the National Electric Company (ENEE),which owes him roughly USD 100 million in back payments, as well as filling stations that were made the sole distribution channel for the first shipment of Venezuelan diesel fuel through Petrocaribe (ref C). ¶13. (C) Embassy sources have rumored that Zelaya's rush decision to restrict flights at Toncontin and commercialize Palmerola was at least in part influenced by a desire to get back at Nasser for driving a hard bargain on the Petrocaribe transaction and refusing to finance it up front (Nasser obtained the diesel on credit and suggested to the Ambassador that doing so gives him leverage in seeking repayment of what ENEE owes him). Nasser told us he is not interested in building a new airport for Tegucigalpa, since he considers the more lucrative transport market to be San Pedro Sula. Thus, marginalizing San Pedro Sula not only benefits Taca, it works against Nasser. -------------- Comment and Recommendations -------------- ¶14. (C) It appears to us that President Zelaya's decisions with respect Toncontin and Soto Cano are being driven by multiple considerations, which do not include the safety or convenience of the traveling public or the economic development needs of Honduras. That said, our primary interest in the matter is the continued viability of the military base at Soto Cano. We have long made clear that the base is Honduran, we are there as guests and we are prepared to sit down and discuss converting it for dual commercial/military use if that is what the GOH wants. Zelaya's current ill-conceived and politically driven approach is not consistent with that policy. To protect our interests in the base, Embassy recommends the following multi-pronged strategy in the current environment: -- Keep U.S. NTSB involved in the accident investigation to assure that it is managed transparently and does not serve as a whitewash for Taca or an excuse to rush Soto Cano into commercial use. -- Assure that ICAO does not wander into a media ambush down here, exploited by Zelaya to give credibility to his impetuous decisions. -- Continue to quietly but firmly explain to Honduran military and civilian officials what we can and cannot do in terms of facilitating commercialization of Soto Cano; without appearing to be deliberately obstructing the project. -- Urge other governments in the region to impress upon Zelaya the benefit they see to maintaining a U.S. military presence at Soto Cano --Engage the Government of El Salvador directly in order to discuss our joint interests in maintaining JTF-Bravo. End Comment. FORD