AMBASSADOR'S VISIT TO SAN PEDRO SULA

C O N F I D E N T I A L TEGUCIGALPA 000161

SIPDIS

DEPARTMENT PASS TO USTR

E.O. 12958: DECL: 02/21/2020
TAGS: PGOV PREL ECON ETRD ELAB SCUL EAID KJUS HO
SUBJECT: AMBASSADOR'S VISIT TO SAN PEDRO SULA

REF: A. 1995 TEGUCIGALPA 6892

B. 1996 TEGUCIGALPA 2663

C. 1997 TEGUCIGALPA 2858

Classified By: Ambassador Hugo Llorens for reasons 1.4 b and d.


1. (SBU) Summary: The Ambassador visited San Pedro Sula,
Honduras' commercial capital, February 4-6. This was the
Ambassador's first high-profile series of public events since
the June 28 coup d'tat. He met with the mayor, the maquila
association, the Chamber of Commerce, and the editors of El
Tiempo, a national newspaper based in the city. In addition,
he visited a youth education program and delivered a speech
at the Rotary Club. The newly elected mayor presented a
concrete list of priorities for the financially troubled
city. While some members of the business community expressed
disagreement with the U.S. government's strong opposition to
the coup d'tat, all were focused on the future and were
eager for opportunities for engagement with the U.S. and a
more favorable trade and investment climate. Residents were
enthusiastic about the Ambassador's return to their city, and
his visit received positive press coverage. End summary.

Chamber of Commerce
--------------


2. (SBU) At a breakfast with the Cortes Chamber of Industry
and Commerce, the Ambassador provided background on the USG's
policy towards Honduras in the wake of the June 28 coup
d'tat. The Ambassador explained that the US approach was
both principled and pragmatic. Several of the participants
expressed differences with the U.S. position. Nevertheless,
all were very much focused on the future and the discussion
was substantive based on developing a working agenda to
strengthen U.S.-Honduran trade and investment ties. Issues
covered included the need for the Honduras government to
adopt a combination of policies in support of free markets,
but designed to help the poorest and most marginalized
Hondurans. All supported common efforts to provide
assistance to small farmers as a means to reduce poverty in
rural areas. The Ambassador discussed prospects for
organizing a trade and investment missions organized by the
Denver-based Chamber of the Americas in late July. Chamber
members expressed support for past Embassy efforts to promote
renewable energy and to seek to develop mechanisms to channel
remittance resources for investment purposes. The poultry
producers raised their interest in complying with USDA
requirements to be able to be certified to export to the U.S.
market.

Maquila Association
--------------


3. (SBU) Representatives of the Honduras Maquila
Association (AHM),led by association president Daniel
Facusse, told the Ambassador that the companies within the
association, 40 percent of which are American-owned, had lost
30,000 jobs due to the economic downturn and political
crisis. He expressed concern about rules of origin under the
Central American-Dominican Republic Free Trade Agreement
(CAFTA-DR) that require materials to be sourced from CAFTA
countries. This, they said, is hurting their
competitiveness, particularly since Nicaragua has an
exemption from the sourcing requirements. (Following the
meeting, the Embassy provided information on how to apply for
modifications to the sourcing requirements.)


4. (C) The maquila representatives expressed concern about
rules that allow unions to represent workers, including for
the purpose of collective bargaining, if 30 or more employees
of the company belong to the union. This, they said, allows
unions supported by only a small minority of workers to
dictate the terms of the employer-employee relationship,
often against other employees' wishes. The maquila owners
said that they are pressing for a change that would allow for
a majority vote among workers on whether a union has the
right to represent them. A draft government regulation to
this effect was in the works, they said. They told the
Ambassador that this was a sensitive matter and requested
that he not discuss it with other Hondurans. Asked by the
Ambassador what percentage of maquilas are unionized, the
maquila owners acknowledged that it was low. The Ambassador
agreed to look into the issue. (Note: Though the AHM
representatives described these rules as originating with a
1995 labor-management agreement facilitated by then-A/USTR
Jon Rosenbaum, that agreement contains no such provision.
Instead, it urges movement toward an agreement allowing union
representation if a majority of a company's employees are in
favor (reftels). End note.)


5. (SBU) Jesus Canahuati, who preceded Facusse as AHM's
president, told the Ambassador that the macroeconomic
environment is also damaging the Honduran maquilas'
competitiveness. As a result of the increasingly overvalued
Lempira, he said, Honduras is finding it harder to compete
with other countries in the region, including Mexico,
Colombia, and Brazil. He said that he was pleased about the
appointment of Minister of Labor Felicito Avila. Canahuati
urged the Ambassador to encourage President Lobo to create a
stable macroeconomic environment. "Without that, we're not
going to succeed," he concluded.

Rotary Club Address
--------------


6. (SBU) During an address to the Rotary Club, the
Ambassador articulated U.S. policy toward Honduras during and
beyond the crisis. He praised President Lobo for taking
steps to restore democracy and for placing an emphasis on
national reconciliation, including through the planned
establishment of a truth commission. The Ambassador noted
that President Obama had called in his State of the Union
Address for greater cooperation between Republicans and
Democrats, and noted that this approach is needed in Honduras
as well. Several American Rotarians were in the audience,
and the Ambassador praised the charitable work that they and
their fellow American Rotarians have carried out in Honduras
over the years.

Meeting with Mayor
--------------


7. (SBU) The Ambassador met with newly elected San Pedro
Sula mayor Juan Carlos Zuniga, whose administration faces
financial difficulties due to poor fiscal policies under his
predecessor. Zuniga outlined a concrete list of priorities.
He told the Ambassador that he is seeking dignified
resettlement for 4,800 families who are living in unsanitary
conditions on a riverbank in the city. He has only 10
million Lempiras (about USD 526,000) budgeted for the
construction of 4,000 homes (i.e., about USD 130 per house).
Another major problem is overcrowding in the city's prison;
there are 4,500 prisoners in a building designed for 800.
The most dangerous prisoners are not segregated from the rest
of the prison population. Rehabilitation under these
conditions is impossible. "You leave with a master's degree
in crime," an aide to Zuniga commented. The Ambassador
agreed to send the Tegucigalpa-based Regional Correctional
Advisor to visit the prison and provide suggestions on
low-cost improvements. (Note: This visit has been scheduled.
End note.)


8. (SBU) Zuniga expressed concern about security in the
city. An aide noted that a Mexican report had recently named
San Pedro Sula the second most dangerous city in the world,
after Ciudad Juarez. (Note: The study, which was reported in
the Honduran newspaper El Heraldo, was based on official
murder rates, with San Pedro Sula, as Zuniga noted, in second
place, with 119 murders per 100,000 of population and
Tegucigalpa in seventh place, with 69 per 100,000. However,
there are probably a number of other cities around the world
with higher murder rates but less accurate crime statistics.
End note.) The aide said that the city is trying to develop
a community policing system but lacks manpower,
communication, and vehicles. Of 22 municipal vehicles, only
one works. The Ambassador said that he understood what a
difficult fiscal situation the city was in and said that the
USG was committed to supporting Honduras's reengagement with
the international community, which would lead to renewed
donor funding. He suggested that the mayor ask the business
community to donate vehicles to the municipality.

Microscholarship Event and Book Donations
--------------


9. (U) The Ambassador met with participants in the English
Access Microscholarship Program at the San Pedro Sula
Binational Center. About 70 participants in the program,
which provides English instruction to gifted high school
students from disadvantaged backgrounds, attended, along with
local community leaders. The Ambassador congratulated the
students for excelling academically in spite of the
challenges of living in disadvantaged and dangerous areas and
urged them to use their talents to contribute to Honduras's
development. In response to questions from the students, the
Ambassador provided advice on subjects ranging from
professional development to avoiding drugs. The Ambassador
made a donation of books to the center. The event received
positive press coverage. Separately, the Ambassador's wife
donated books to two local organizations. The wives of Mayor
Zuniga and Minister of Foreign Affairs Mario Canahuati also
participated. The donations also received positive press
coverage.

Visit to El Tiempo Newspaper
--------------


10. (U) The Ambassador met with the owner and staff of the
San Pedro Sula newspaper El Tiempo, which has nation-wide
circulation. Participants included owner Carlos Rosenthal,
editor German Quintanilla, and several journalists. During
the off-the-record session, the Ambassador explained U.S.
policy in Honduras. The Ambassador stressed the importance
of fully implementing the Tegucigalpa-San Jose Accord. He
praised President Lobo's success in creating a government of
national unity and his efforts to establish a Truth
Commission.


11. (SBU) Comment: The Ambassador's trip to San Pedro Sula
was intended to demonstrate U.S. reengagement in Honduras
following the restoration of democracy. The enthusiasm among
the Ambassador's interlocutors and among members of the
public he encountered demonstrated that local residents saw
the visit this way as well. A newspaper cartoon, a framed
copy of which Mayor Zuniga presented to the Ambassador,
showed the mayor presenting the Ambassador with the keys to
the city. Honduras' diplomatic isolation following the coup
d'tat was keenly felt even in this business-oriented city,
and residents, regardless of their views on U.S. policy, are
relieved that it is coming to an end. End comment.

LLORENS