AMCHAM VIEWS ON HONDURAN COUP

UNCLAS TEGUCIGALPA 000565

SENSITIVE

E.O. 12958: N/A
TAGS: ECON PGOV BBSR EINV HO
SUBJECT: AMCHAM VIEWS ON HONDURAN COUP


1. (U) SUMMARY: On July 2, the Ambassador, Consul General,
and the Econ section met with the executive directors of the
Honduran AmCham to convey the USG position in the wake of the
coup. The Ambassador condemned the coup, informed them that
the U.S. only recognized President Zelaya as the legitimate
democratically elected leader of Honduras, and that we
supported the restoration of the democratic and
constitutional order. The Ambassador stated that while we
had a no-contact policy with the de facto regime, he assured
them that the USG will continue to strongly support U.S.
business. American businesses had different views on the
events of June 28, but most believed that the removal of
President Manuel "Mel" Zelaya was the best for Honduras and
that enduring potential international sanctions over the next
six-months until a new democratically elected president is
sworn into office was a price worth paying. They said they
had all experienced immediate impacts on their businesses as
a result of the political crisis and border closures (since
lifted) and foresaw long-term repercussions. Most disagreed
with the USG position and expressed the hope that the U.S.
would not abandon Honduras. Several executives requested
that the U.S. and international community declare support for
the Honduran people and send a commission to Honduras. END
SUMMARY.

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USG MESSAGE TO AMCHAM
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2. (U) On July 2, the Ambassador, Consul General, and the
Econ section met with the executive directors of the Honduran
AmCham to convey the USG position in the wake of the coup.
The Ambassador condemned the coup of June 28 and forceful
removal of President Zelaya by the military. The Ambassador
stressed that the U.S. recognized Manuel Zelaya as the only
legitimate President of Honduras. He said we had no
relations with the de facto regime. He stressed that the
U.S. was committed to restoring the constitutional and
democratic order. The Ambassador acknowledged that both
sides made mistakes but expressed that negotiating a
resolution was still possible. The Ambassador advised the
group of our current no contact policy with government
officials, but assured them that the Embassy will stay in
close touch with the U.S. business community, and maintain an
official presence. The CG acknowledged that Hondurans needed
to travel to the U.S. to attend trade shows and meetings and
confirmed that there would be no change in our visa policy
for private individuals.

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POLITICAL OPINIONS
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3. (U) The U.S. company executives (most of them Honduran
nationals) expressed different opinions about the June 28
forcible removal and exile of President Zelaya. Some agreed
there was a coup but said Zelaya violated the law and needed
to be held accountable. Others said there was no coup,
rather Zelaya's removal was legal and necessary to restore
stability. One person said that the removal of Zelaya was
conducted with dignity, since he was sent to Costa Rica and
not placed in a Honduran jail.


4. (U) Various members criticized the way Zelaya was
removed; but there was no alternative to removing him from
office. The Congress had to do something or Honduras would
have ended up like Venezuela. According to them, it is
preferable to endure six months of sanctions rather than to
be under a Zelaya regime for 20 years. Additionally, some
believed that the actions taken on June 28 mitigated
potential future civil unrest and loss of Honduran lives.

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WORRIES ABOUT THE ECONOMIC FUTURE
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5. (U) Various U.S. executives expressed concern about the
impact of recent events on the economic future of Honduras.
They have already experienced immediate impacts on their
businesses and foresee long-term repercussions.


6. (SBU) Citibank and BAC-Bamer (GE) both said that they are
seeing immediate effects on investment and cash flows.
Investments are down, people are transferring money out of
the banks, and the rate of decline of economic activity is
accelerating. Both bankers said they are concerned that
Honduras' image is tainted and that international investment
will continue to decrease in the near future. They fear that
the lack of support from the international community will
hinder economic development and hoped for a short-term

agreement to stem the hemorrhaging.


7. (SBU) The General Manager of the Marriott had to close
its hotel in Tegucigalpa because of its proximity to the
Presidential Palace, where protests have been centered the
past week. It is concerned that USG advice for AmCits to
defer travel to Honduras will represent potential future loss
of revenue once the hotel reopens. The representative
expressed that Marriott will recuperate in the long-term, but
is unsure how long it will take.

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BORDER CLOSURE
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8. (U) AmCham Honduras has been in communication with the
other Central American AmChams regarding the border closure
following a decision by SICA (since lifted). They estimated
that the closure represented a major economic loss to the
entire region.


9. (SBU) Crowley Maritime Corporation moves cargo bound for
Honduras, Nicaragua, Guatemala, and El Salvador through
Puerto Cortes and 100 percent of its Nicaragua-bound cargo
passes through Honduras. Because Puerto Cortes is a regional
hub, the majority of Crowley's clients are U.S. companies
that invest or sub-contract to the export-processing
operations (maquilas). The Crowley representative stated
that they had experienced more complications during the past
three years than in the previous 20, including
double-taxation (now resolved),customs clearance
deficiencies, and now a coup that triggered border closures.
They are hoping that the USG will show support and ensure
that the CAFTA-DR agreement is enforced.

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PLEA FOR USG SUPPORT
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10. (U) Over the past three days, the AmCham has received
many calls and emails from the U.S. business community in
Honduras. Many oppose the U.S. policy approach in support of
Zelaya. Companies are reporting that measures need to be
taken to protect U.S. investments and they are concerned
about capital flight. Executives reported concern that local
employees may turn against U.S. companies in solidarity with
Zelaya if he returns.
LLORENS