TFH01: INVESTMENT FOUNDATION LEADER DISCUSSES

C O N F I D E N T I A L TEGUCIGALPA 001081 SIPDIS E.O. 12958: DECL: 10/21/2019 TAGS: BEXP BTIO ECON EINV ETRD KDEM HO SUBJECT: TFH01: INVESTMENT FOUNDATION LEADER DISCUSSES POST-COUP CHALLENGES Classified By: Ambassador Hugo Llorens for reason 1.4(b) and (d). ¶1. (C) SUMMARY: The Foundation for Investment and Development of Exports (FIDE),Honduras's leading business foundation, is grappling with the challenge of how to market Honduras to investors in light of the ongoing political crisis. FIDE's Executive President, Vilma Sierra de Fonseca, told the Economic Counselor and Economic Officer on October 16 that the organization has retooled its message to potential investors in the wake of the June 28 coup d'etat. Core points include that, despite political turbulence, business and commerce have continued with minimal interruptions, there have been no changes to investment laws, and political stability is likely to return following the November 29 elections. Sierra noted ruefully that the first line in a glossy business promotion publication that FIDE recently published highlighted Hondruas's "political and social stability since 1980." FIDE has refrained from making any public statements either for or against the June 28 coup d'etat and the Micheletti de facto regime. Speaking personally, Sierra expressed doubts about the ongoing Guaymuras Accord negotiating process; she feels that a return to power by President Zelaya might be too risky and that the scheduled November 29 elections are the solution. She is focusing her efforts on developing FIDE's long-term goals, which include repairing Honduras' tainted image as a good place to invest. END SUMMARY. -------------- BACKGROUND -------------- ¶2. (SBU) The Foundation for Investment and Development of Exports (FIDE) is a private non-profit organization to promote investment in Honduras, support export development, and work closely with the government and other private organizations to promote and design new legislation aimed at improving Honduras' business climate. EconCouns and EconOff met with FIDE's Executive President, Vilma Sierra de Fonseca, on October 16. -------------- PROMOTING HONDURAS IN THE POST-COUP ERA -------------- ¶3. (C) Sierra said that FIDE has retooled its message to potential investors in the wake of the June 28 coup d'etat. Core points include that business and commerce have continued with minimal interruptions throughout the political crisis, that there have been no changes to investment laws, and that political stability is likely to return following the November 29 elections. FIDE is not only trying to disseminate this message to the Honduran public but is also sending representatives to spread this message at international conventions. One FIDE representative recently attended a trade convention in Chicago for this purpose. However, Sierra acknowledged that the crisis has severely damaged Honduras's reputation as a stable investment environment. She showed us a glossy promotional document that FIDE had recently prepared, noting ruefully that the very first line highlights Honduras's "political and social stability since 1980". ¶4. (C) Emphasizing that FIDE had not taken a position on the ongoing political crisis, Sierra said that she personally was doubtful about whether negotiations on the Guaymuras Accord represented the best path to stability. Like many members of the business community, she expressed concern that President Zelaya's return to power would be highly risky. She advocated elections as the resolution to the political crisis, noting that the presidential primaries were conducted under Zelaya and were internationally recognized. EconOffs pointed out that the restoration of the political order prior to the November 29 elections would be the best way to ensure free and fair elections and international recognition of the results. ¶5. (C) Sierra acknowledged that the next government will face huge challenges, including trying to heal the polarization that will likely persist. Additionally, the government will have to restart suspended programs, invest in social development, reestablish economic growth, and increase macro-economic transparency. Sierra said that she has preferred to focus her own attention on civil society efforts to achieve these goals rather than on the ongoing political conflict. -------------- FIDE'S INVESTMENT PLATFORM -------------- ¶6. (U) Sierra outlined FIDE's long-term goals and challenges. These include promoting transportation infrastructure maintenance and capacity-building. With regard to infrastructure, FIDE will advocate the expansion of Puerto Cortes to remove bottlenecks and improvement of the Inter-Oceanic Highway Corridor that connects Puerto Cortes to El Salvador and Nicaragua. ¶7. (SBU) FIDE, Sierra said, is campaigning to make Honduras a hub for international call-center operations. Sierra pointed out that Honduras has the largest number of bilingual schools in Central America and a higher percentage of English-speakers than Nicaragua (where some companies have already located call-centers),and that the GOH has pledged to continue investing in backup systems for communications equipment. FIDE is also considering linking up with the National Industrialists Association (ANDI) to propose a law that would help develop export-oriented farming by providing tax incentives and benefits to farmers similar to those enjoyed by the maquilas. -------------- COMMENT -------------- ¶8. (C) Unlike some of the other business organizations that also claim to be apolitical, FIDE has refrained from making any public statements either for or against the June 28 coup d'etat and the Micheletti de facto regime. Sierra acknowledged that she was well aware of the USG position but was hesitant to discuss the political crisis beyond its detrimental impact on Honduras' image as a good place to invest. She seems to consider the current situation beyond repair, instead focusing her efforts on developing FIDE's long-term goals after a new government is elected and installed. Like many Hondurans, she is unable to fathom that the international community might not automatically recognize the elections. LLORENS