Honduras disarray spurs lobbying

By Kevin Bogardus,, July 28, 2009

Trade associations and companies both inside and outside of Honduras have stepped up their lobbying efforts in Washington as the nation’s political crisis remains unresolved in the wake of President Manuel Zelaya’s ouster.

A review of lobbying disclosure records by The Hill show that U.S. companies have worked to protect their operations in Honduras while more business groups from the Central American nation have turned to Washington lobbyists in order to keep Zelaya out of power.

The continuing focus by pro- and anti-Zelaya forces on Congress and the Obama administration is evidence of the United States’ sway with Honduras as the nation’s largest trading partner.

“We don’t want to see this political situation expand into an economic crisis. We want to see this resolved through peaceful dialogue,” said Stephanie Lester, vice president for international trade at the Retail Industry Leaders Association (RILA).

RILA and six other trade associations, including the U.S. Chamber of Commerce, wrote to President Obama in a July 9 letter, urging to him maintain “economic stability” in Honduras.

“Predictability and stability are absolutely critical to U.S. companies, especially in these difficult economic times. Key to that predictability is that the United States maintain a secure bilateral and regional economic relationship with Honduras,” said the letter to Obama.

As the de facto government and Zelaya struggle to reach a resolution to the crisis, the U.S. government has suspended some aid with Honduras after the president’s exile June 28.

More than $20 million in aid to Honduras, including military assistance and certain development programs that go to the country’s government, have been suspended, according to a State Department spokeswoman.

In addition, there is an operational hold on $11 million worth of contracts under the Millennium Challenge compact with Honduras — a $215 million, five-year agreement signed in 2005 — that have not been authorized yet.

There have also been threats of harsher action by the U.S. government in the near future though if the crisis is prolonged.

The Millennium Challenge Corp. (MCC), which oversees the compact, sent a July 17 letter to the de facto government expressing concern over recent unrest in Honduras and encouraging the authorities to take immediate steps to re-establish democratic order.

Further, Sen. John Kerry (D-Mass.), chairman of the Senate Foreign Relations Committee, said in a July 15 Miami Herald op-ed that if progress is not made, more cuts in foreign aid should be made, along with targeted sanctions against individuals involved in the plot to overthrow Zelaya.

In jeopardy is more than $50 million in U.S. foreign aid slated for Honduras in 2009 and $130 million remaining in the compact between the MCC and Honduras. Others have gone further, such as the Organization of American States, which has suspended Honduras’s membership in the group.

A congressional aide who is working on U.S. policy toward Latin America said the administration has not gone further because it wants to provide room for the negotiations being mediated by Costa Rican President Oscar Arias to take their natural course.

“If there is a political benefit in going slow, it is that you give a face-saving timeline for the de facto government to exit and let Zelaya come back in. If you hammer them again and again, you don’t allow them that grace,” said the aide. The de facto government “should be under no illusion that time is not on their side and that a waiting game will not succeed.”

Aid to Honduras is “very important because it affects poor people in so many ways. Many poor people, for example, while I was there — USAID inaugurated many projects just for potable water,” said Larry Palmer, a former U.S. ambassador to Honduras. But Palmer also said U.S. trade is just as important as aid to the country.

Honduras is one of the largest recipients of direct foreign investment in Central America, taking in about $517 million in U.S. investment by the end of 2006. U.S. exports to Honduras totaled $5 billion in 2008, and it is the third largest market for U.S. textile mill products.

That explains why business leaders in both Honduras and the United States have taken an interest in U.S. policy toward the de facto government, hiring lobbyists here in Washington to make their views known. Palmer explained American businesses’ interest in the crisis because “any type of sanction that would slow up trade with Honduras could have a detrimental effect on their businesses.”

Honduras, however, is a signatory to the Central American Free Trade Agreement (CAFTA), which makes it tough to impose sanctions on the country. U.S. officials could look to see if Honduras violated any provisions of the agreement but the de facto government would likely argue any trade sanctions violate CAFTA.

Other than the letter by the seven trade associations, U.S. companies have also lobbied on the political crisis in Honduras, according to lobbying disclosure reports filed this quarter.

For example, Kimberly-Clark Corp., a health and hygiene company, had a contract lobbyist work Capitol Hill to oppose border restrictions and roadway blockades in Honduras, according to records. The company has a healthcare products facility in the country.

In addition, in-house lobbyists for Seaboard Corp., an agribusiness and transportation firm, lobbied on “agricultural, economic and political issues” regarding a list of countries, including Honduras, last quarter. Seaboard has at least four subsidiaries based in Honduras, according to records filed with the Securities Exchange Commission.

More Honduran business leaders have also hired help in Washington. For example, Asociacion Hondurena de Maquiladores registered two firms to lobby on its behalf — the Cormac Group and Vison Americas.

At Vison Americas, two former State Department officials from the Bush administration, Roger Noriega and Jose Cardenas, are lobbying for the association to “support the efforts of the Honduran private sector to consolidate the democratic transition in their country,” according to lobbying records.

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