Honduras: trying democracy again

Imagine being handed the reins of a neighborhood that has been red-lined by the banks whose loans had previously kept it going. Next month Roberto Suazo Cordova will take the reins of a whole country, Honduras, which is in that situation. It is but one of the challenges accompanying the welcome return of Honduras to democratic civilian government. To forestall another of the country's traditional military takeovers, these challenges need to be met through a combination of outside aid and the internal measures to make that aid effective. Though Honduras is distinctive in various ways, its example could offer lessons to other developing countries in Central America or elsewhere that have some of the same problems.

Mr. Suazo Cordova begins with a decisive victory for himself as President and his right-of-center Liberal Party in the legislature. Sunday's voting followed last year's elections for a constitutional assembly, and the military leadership appears to have supported the restoration of democratic processes. In the past, civilian governments have tended to give way quietly to the military when unable to attain national consensus for solving difficult problems.

Inevitably the United States is looked to for help in making the latest restoration of democracy work. And Hondurans can expect some economic support funds to address their crying need for capital to support productive growth. But there will be limits under a US administration and Congress that are cutting aid for their own people and institutions. Honduras will have to undertake steps that will help itself with or without US support.

Which brings us back to the red-lining of Honduras by many foreign banks. They have seized on a Honduras banking scandal to hold up on loans that might seem risky anyway. They consider themselves let down by the action of the Honduras central bank in placing itself at an advantage and foreign lenders at a disadvantage when it allowed a major domestic bank to go bankrupt last year. With Honduras suffering from rising prices for imported oil and falling prices for exported coffee, it has to move toward creditworthiness.

One step might be to provide the kind of careful supervision of the local banking system which outsiders have found lacking. Others might be to reconsider the price controls on refined oil products that distort the workings of the marketplace; and to ensure the proper use of whatever aid is available through better technical application of it than in the past.

For all its problems, this poorest, least developed country in Central America has been an island of relative stability surrounded by the turmoil in Nicaragua, El Salvador, and Guatemala. The turmoil has set back the local trade of Honduras in the region. The government has been the target of charges of repression. But Honduras suffers less difference between the extremes of wealth and poverty than some countries. It has pioneered in agrarian reform and free trade unions.

Now, as Honduras tries democracy once more, best wishes are in order.

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