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Tuesday, December 14, 2010

Honduran-U.S. Relations

Peter J. Meyer
Analyst in Latin American Affairs

On January 27, 2010, Porfirio “Pepe” Lobo Sosa was inaugurated President of Honduras. Lobo assumed power after seven months of domestic political crisis and international isolation that had resulted from the June 28, 2009, ouster of President Manuel Zelaya. While the strength of Lobo’s National Party in the legislature should help the government secure approval of its policy agenda, the political crisis left the new President with daunting challenges. The Lobo government faces significant challenges in fostering economic development in one of the hemisphere’s poorest countries; securing international recognition; and addressing the high level of domestic political polarization, ongoing human rights abuses, and the deteriorating citizen security situation.

The global financial crisis and domestic political crisis took a toll on the Honduran economy as significant declines in export earnings, remittances, and tourism led to a contraction of 2.1% in 2009. Although the economy has picked up in 2010, with expected growth of 2.7%, significant challenges remain. 60% of Honduras’ nearly 8 million citizens live under the poverty line and the country performs poorly on a number of social indicators. The government has little room to address these issues as the country’s fiscal balance has deteriorated in recent years despite benefiting from several debt relief initiatives over the past decade. The international financial institutions, which cut ties to Honduras in 2009, have normalized relations with the Lobo Administration and are providing the country with access to much needed multilateral development financing that should ensure short-term macroeconomic stability. Implementing the economic reforms necessary to improve the country’s long-term fiscal balance will be politically difficult, however, as business groups have opposed revenue enhancing tax reforms and labor unions are pushing for wage increases and against potential cuts to public sector spending.

Although relations were strained during the political crisis, the United States has traditionally had a close relationship with Honduras. Broad U.S. policy goals include a strengthened democracy with an effective justice system that protects human rights and promotes the rule of law, and the promotion of sustainable economic growth with a more open economy and improved living conditions. In addition to providing Honduras with substantial amounts of foreign assistance and maintaining significant military and economic ties, the United States cooperates with Honduras to deal with transnational issues such as illegal migration, crime, narcotics trafficking, trafficking in persons, and port security.

With respect to the political crisis, several resolutions were introduced during the first session of the 111
th Congress. These ranged from condemning Zelaya for his “unconstitutional and illegal” actions (H.Res. 619, Mack) to condemning the “coup d’état” in Honduras (H.Res. 630, Delahunt) and calling upon the Micheletti government to end its “illegal seizure of power” (H.Res. 620, Serrano). Another resolution (H.Res. 749, Ros-Lehtinen) called on the Obama Administration to recognize the November 2009 elections “as an important step in the consolidation of democracy and rule of law in Honduras.” In the second session, H.Res. 1197 (Rohrabacher) would express support for democracy in Honduras and call on nations to restore normal relations with the government of Honduras.

This report examines current political and economic conditions in Honduras as well as issues in Honduran-U.S. relations. For a more detailed examination of the Honduran political crisis, see CRS Report R41064, Honduran Political Crisis, June 2009-January 2010.

Date of Report: November 30, 2010
Number of Pages: 25
Order Number: RL34027
Price: $29.95

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