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Wednesday, July 20, 2011

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, assuming 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 has enabled the Administration to pass much of its policy agenda, Lobo has made only limited progress in addressing the challenges inherited as a result of the political crisis. Several efforts to foster political reconciliation have helped Honduras secure international recognition but have done little to lesson domestic polarization. Likewise, human rights abuses—which increased significantly in the aftermath of Zelaya’s ouster—have continued, and the citizen security situation has deteriorated. In June 2011, 45% of Hondurans approved of Lobo’s performance in office.

In addition to the political problems inherited as a result of the 2009 ouster, Lobo has had to contend with a weak economy. Honduras suffered an economic contraction of 2.1% in 2009 as the global financial crisis, together with the domestic political crisis, led to significant declines in tourism, remittances, export earnings, and foreign investment. Lobo has pushed a number of reforms through Congress designed to restore macroeconomic stability, strengthen public finances, and encourage sustained economic growth. Although these reforms have generated considerable opposition from some sectors of Honduran society, they have the support of the international financial institutions, which are now providing Honduras with access to much needed development financing. The economy began to recover in 2010, with estimated growth of 2.8%, and is expected to grow by 3.8% in 2011. Nonetheless, significant development challenges remain. Approximately 60% of Honduras’ eight million citizens live below the poverty line and the country performs poorly on a number of social indicators.

Although relations were strained during the political crisis, the United States has traditionally had a close relationship with Honduras. Broad U.S. policy goals in the country 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 ($50.2 million in FY2010) and maintaining significant military and economic ties, the United States cooperates with Honduras on transnational issues such as migration, crime, narcotics trafficking, trafficking in persons, and port security.

The 111
th Congress expressed considerable interest in Honduras as a result of the 2009 political crisis and its aftermath. Several resolutions were introduced and multiple hearings were held. Issues such as human rights abuses, the state of democracy, security challenges, and the treatment of U.S. businesses have continued to be of interest to the 112th Congress. On June 15, 2011, a bill (H.R. 2200) was introduced in the House to limit U.S. assistance to Honduras unless the President certifies that the Government of Honduras has settled all outstanding expropriation claims brought by U.S. companies.

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: July 14, 2011
Number of Pages: 30
Order Number: RL34027
Price: $29.95

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