IHS Global Insight Perspective | |
Significance | Any remaining hopes that the Organization of American States (OAS)'s ultimatum would ease the return of Manuel Zelaya as Honduras's president, or at least open the way for a national dialogue, were properly dashed yesterday as interim president Roberto Micheletti claimed that Zelaya would never return to power. |
Implications | The coup leaders re-asserted that the ousted Zelaya would be arrested upon his return to Honduras, and offered a united front of resistance to international pressures. |
Outlook | Immunity to international efforts to return democratically elected Zelaya to power may not be total, as the interim finance minister Gabriela Nunez warned of a potential US$285-million loss in international loans and aid by the end of the year as a result of global retaliation. |
Risk Ratings | The determination of the coup leaders amid growing international isolation, combined with the approval of new constitutional restrictions on individuals' rights, are warranting a further political downgrade from 3.25 to 3.75. While IHS Global Insight confirms that the situation in Honduras is peaceful overall, the general state of political uncertainty from both a national and international perspective justifies a downgrade. |
Defiance
Honduras's interim president Roberto Micheletti dashed extremely low hopes of national reconciliation yesterday as he affirmed that Zelaya will "never return to power" (see Honduras: 1 July 2009: International Community Increases Pressure for Reinstatement of Honduran President). The leader rejected any possibility of an agreement, reiterating that Zelaya would be arrested if he were to set foot on Honduran soil. Micheletti stood firm on the ousting of the democratically elected president, shrugging off pressures from the international community. He was keen to reassert the sovereign nature of the administration and its commitment to the Honduran people alone, while downplaying threats of international aid cutbacks by the European Union (EU) and the United States. He went on to call on Ecuador's President Rafael Correa and Argentine leader Cristina Fernández de Kirchner to reconsider their intentions to accompany the deposed president on a trip back to his country and not to meddle in domestic matters.
Liberties Suspended
The situation remained calm in the capital, Tegucigalpa, yesterday as the Congress approved a new decree restricting constitutional guarantees during the 10 p.m.–5 a.m. curfew. Liberties affected include the rights of assembly, and freedom to circulate (including across the border). Individuals may also be arrested for more than 24 hours without charge and without appearing in front of a judge or relevant judicial authority. The move has fuelled concerns amongst human right organisations over alleged random arrests of social and leftist leaders, though clear reports on the human rights situation are sorely lacking at present.
International Pressures Maintained
As the coup leaders appear determined not to budge on Zelaya's return, the international community is maintaining isolationist pressures, hoping to force a change from the Honduran leadership. The EU went ahead yesterday with suspending any contacts with the unrecognised interim organisation, while Italy followed in the steps of France and Spain and recalled its ambassadors. U.S. President Barack Obama has condemned the coup and refrained from recognising the new regime, leaving the OAS to take up the limelight in terms of ultimatums and sanctions. As for international funding, both the World Bank and the Inter-American Development Bank have proceeded to suspend loans, and the United States announced that it would review its stance on aid next Monday (6 July). Honduras's interim finance minister Gabriela Nunez argues that the country stands to lose some US$285 million in international loans and aid by the end of the year, emphasising the impoverished country's dependence on international funds. Amid global economic deceleration threatening tourism and trade, dwindling remittances, and high levels of poverty, Honduras is ill placed to bear the turning-off of the international funding tap. The economy is expected barely to grow this year. The new minister is committed to presenting a new budget in September, a comment that yet again denotes the leadership's commitment to remaining in power and carrying on policymaking business as usual.
Outlook and Implications
The anticipated dismissal of the OAS ultimatum is reinforcing the state of political uncertainty for the country—yet it should be noted that domestic affairs are apparently largely unperturbed by the event. Most businesses are operating as usual in the capital, though schools are closed. As for the suspension of constitutional rights, this is aimed at minimising domestic risks to the interim administration—perceived as low given Zelaya's unpopularity—and follows the traditional post-coup "emergency situation" pattern. The administration's determination is likely to lead to an impasse when the 72-hour ultimatum is up this weekend, leaving the international community to consider other avenues of pressure. It is also uncertain whether Zelaya is going to go ahead with his plan to return to the country at the end of the three-day deadline. The main threat to the interim regime is the reduction in international funding. While an expulsion from the OAS seems inevitable, the coup leaders have emerged as unconcerned about the situation. Yet a reduction in revenues from international sources will prove harder to manage. It is not clear, however, how either the EU or the United States will approach the issue of retaliation through aid withdrawal; fears of the adverse impact on the already-poor population and a beleaguered economy may indeed discourage them.