MEETING WITH A/S SHANNON: BUSINESS LEADERS EXPRESS

C O N F I D E N T I A L SECTION 01 OF 03 TEGUCIGALPA 001102

SIPDIS

STATE FOR WHA/CEN
THIS CABLE WAS CLEARED BY A/S TOM SHANNON

E.O. 12958: DECL: 11/03/2119
TAGS: PGOV KDEM PREL HO
SUBJECT: MEETING WITH A/S SHANNON: BUSINESS LEADERS EXPRESS
SUPPORT FOR NEGOTIATIONS

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Classified By: Ambassador Hugo Llorens, reasons 1.4 (b & d)


1. (C) Summary: At a breakfast with A/S Shannon and his
delegation, business leaders expressed support for a
negotiated political settlement. They said that Honduras had
been hard-hit by the global economic downturn and that the
crisis had exacerbated the situation. While the business
leaders had continuing concerns, including
reservations about some aspects of the draft accord and
worries that President Zelaya and Venezuelan President Hugo
Chavez will stir up trouble if Zelaya returns, they told the
delegation that an accord represented the best way out of the
crisis. They provided the delegation with a public statement
of support for the negotiation process. The business
community, initially supportive of the coup, has come a long
way in its thinking since June 28. End summary.


2. (SBU) A/S Shannon, P/DAS Kelly, and NSC advisor Restrepo
attended a breakfast for business leaders at the DCM's
residence on October 29. The Ambassador, Economic Counselor,
and Economic Officer were also present. Business community
representatives included Camilo Atala, president of the
Honduran chapter of the Business Council of Latin America
(CEAL); Amilcar Bulnes, president of the Honduran National
Business Council (COHEP),Luis Larach, President of the
Cortes Chamber of Commerce; Roque Rivera, Executive President
of the Honduran Association of Banking Institutions (AHIBA);
Juan Moya, President of the American Chamber of Commerce;
Norman Garcia, advisor to the president of COHEP; Emilio
Larach, general manager of Larach and Company, a large
hardware company; and Vilma Sierra de Fonseca, executive
president of the Foundation for Investment and Development
(FIDE).

Economic Concerns
--------------


3. (C) Atala told A/S Shannon that the world economic
downturn has had a serious effect on the Honduran economy.
Remittances are down and the maquila industry has lost 30,000
jobs. Bulnes added that Honduras has lost 250,000 jobs
across all sectors. Atala said that there is a lack of both
international and domestic confidence in Honduras. He
believes that a conclusion to the political crisis would help
the economy recover. For this reason, he said, the business
community supports the Guaymuras dialogue.


4. (C) Bulnes emphasized to A/S Shannon that the business
community is apolitical. However, he said, the events since
June 28 have been cast as a fight between the rich and the
poor and there have been numerous allegations that members of
the business community financed the coup. Bulnes denied that
this was the case and said that the USG's revocation of some
business leaders' visas was unfair.

Moving Toward an Accord
--------------


5. (C) A/S Shannon told the business leaders that the
purpose of the delegation's visit was to push for continued
dialogue. He said that the Secretary and the international
community want an agreement so that they can shift their
focus to providing election support, thus ensuring that the
November 29 elections are free, fair, and transparent. The
USG, he said, is prepared to unilaterally enforce guarantees
immediately after the accord is signed. He expressed concern
that President Zelaya and de facto regime head Micheletti are
more focused on June 28 (the date of the coup d'tat) than
January 27 (the date of next year's Presidential
inauguration) and stressed the need to focus on the future,
not the past. Atala responded that the group agreed with A/S
Shannon on the need to look forward, especially to January 27.


6. (C) A/S Shannon pointed out that Micheletti has no
credibility outside of Honduras and that the international
community sees him as "playing out the clock." He said that
the USG does not want to have to resort to Plan B (i.e. a
decision on recognition of the elections in the absence of an

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accord),saying that it would be detrimental to Honduras if
no accord were signed. The negative consequences would
include the lack of international observers on November 29,
the possibility of election-related violence, and the
continuation of the combined political and economic crises.


7. (C) Bulnes told Shannon that the business community
supports the idea (agreed upon by Zelaya's and Micheletti's
negotiating teams) that Congress should decide whether to
reinstate Zelaya. Atala commented that, with legislative as
well as presidential elections coming up, many members of
Congress would be reluctant to vote for either Micheletti or
Zelaya. A/S Shannon reassured them that the USG understands
these complications. The Ambassador noted that the
presidential candidates represent the future and that they
have an interest in international recognition of the victor
in the elections.


8. (C) Atala told A/S Shannon that members of the private
sector recognize the importance of an accord. If the
negotiating parties come to agreement, they will support the
accord even if they do not agree with all of its clauses.
Atala expressed particular concern with the treatment of
amnesty in the agreement. He noted that the president-elect
will have significant influence over the Congress after
November 29. On behalf of the group, he thanked A/S Shannon
for his efforts and warned him that he will have to twist
some arms to get an accord signed.
Concerns about Chavez
--------------


9. (C) In a separate conversation with P/DAS Kelly and NSC
Senior Advisor Restrepo, business leaders Norman Garcia,
Wilma Sierra, and Emilio Larach said that they agreed with
the U.S. position that a negotiated settlement represents the
best way out of the crisis. The Honduran participants told
the delegation members that this was the only way to thwart
Venezuelan President Hugo Chavez's efforts to sow division in
Honduras and in the region. A failure to resolve Honduras's
political divisions would, Garcia said, fuel the type of
polarization that characterized the politics of the region in
the 1980s -- a situation that the others agreed must be
avoided. Restrepo said that, without a settlement, not only
Chavez and his allies but the leaders of more moderate
countries such as Brazil would find it difficult to recognize
the outcome of the November elections. P/DAS Kelly told the
business leaders that a center-right leader of a country in
the region had commented that what happened to Zelaya could
happen to him or any of his counterparts.


10. (C) Restrepo said that he understood the concerns among
many of Zelaya's critics that his return to office could be
dangerous and destabilizing, particularly given his close
relationship with Chavez. However, he pointed out that,
during the 120 days of the crisis, Chavez has failed to
unleash the type of unrest that would seriously destabilize
Honduran society.

11 (C) Garcia expressed concern about the divisions the
crisis has created in Honduran society, including
resentment against the business community. He noted that
graffiti reading "Be a patriot -- kill a Turk" has appeared
on walls in Tegucigalpa. (Note: The word "Turk" is a
reference to the many members of Honduras's business
community with Middle Eastern ancestry. End note.) He said
that, in this context, moving forward with the Pathways to
Prosperity initiative was more important than ever. Sierra
said she hoped that, if a settlement is reached, the
Organization of American States (OAS) will not be alone in
providing election observers. The OAS, she said, has lost
credibility during the crisis. Kelly and Restrepo assured
her that, if there is a settlement, the U.S. will participate
in the OAS effort.


12. (C) Garcia noted that a number of obstacles to a
negotiated settlement remain. He said that President
Zelaya has been instructed by Chavez not to sign an accord,
and that Micheletti can be very stubborn. P/DAS Kelly and

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Restrepo urged the business leaders to continue pressing
Micheletti to sign an accord. The business leaders agreed to
do so.

Business Community Statement
--------------


13. (U) The business leaders shared with the delegation a
joint statement that CEAL, COHEP, and the Tegucigalpa Chamber
of Commerce had issued on October 22. The statement
expresses support for the Guaymuras Dialogue and notes with
satisfaction that this stage of the negotiating process is
Honduran-led. It says that the fact that consensus has not
yet been reached on whether Congress or the Supreme Court
should decide on the issue of Zelaya's restitution does not
mean that the talks have failed. The statement calls on the
Honduran public to vote in the elections and on the
international community to recognize the results.
LLORENS