The big loser in the Honduras political crisis? The economy.
Honduran businesses have taken a beating since President Manuel Zelaya was ousted in June. One official estimates that GDP will fall 4 percent this year.
| Tegucigalpa, Honduras
Doris Midence, a snack bar employee at La Tigra National Park outside the Honduran capital, Tegucigalpa, has the empty gaze of someone with too much time on her hands.
"Customers are down by half," she says, reorganizing gum and candy bars. "Between curfews and protests, people are not leaving their homes."
The Honduran political crisis – at four months and counting, after ousted President Manuel Zelaya was arrested and deposed by the military June 28 – could finally be coming to an end. Both sides have signed a deal that calls on Congress to decide whether Mr. Zelaya gets to return to office. But even if the curfews are being lifted, the economic ramifications of Latin America's worst crisis for decades could endure much longer.
Tourists who typically visit the northern Bay Islands, for example, are opting for other places in the Caribbean to scuba dive. Foreign investment has dropped. Cuts in aid have stalled construction of roads. And the nation's consumers, some facing their own unemployment or simply saving in the face of political instability, are no longer buying shoes or furniture or other non-essentials.
"Since June 28 demand has declined dramatically," says Jose Enrique Nuñez, the president of the country's national association of small and medium-sized businesses. "It has created chaos, and that chaos is causing us to collapse."
No quick fix for the economy
Hours after Zelaya was kicked out of Honduras for allegedly pushing for a constitutional change to relax presidential term limits – a charge he denies – a new government led by Roberto Micheletti took over. Since then, the two men – Mr. Zelaya in the Brazilian embassy, where he sought refuge after sneaking back into the country Sept. 21, and Mr. Micheletti in the presidential palace – have battled over who should be governing the country. Now they have left the decision up to the Congress, but their resolution will be no quick fix to the economy.
In September, the London-based polling company Consensus Economics reported that Honduras's GDP would decline by 2.6 percent this year, readjusted from a .7 percent decline forecast made just months earlier. Rebeca Patricia Santos Rivera, the finance minister for Zelaya who continues to represent Honduras on the international stage, has said that GDP this year could fall by 4 percent or more. And by some estimates the economy has lost $200 million in investment since June 28 alone.
By and large, despite intermittent protests, life on the streets of Tegucigalpa continues on, as it hums on in San Pedro Sula, the industrial center of Honduras, and the rest of the nation. It is a sense of "normalcy" that Micheletti supporters like to point out. But life is far from normal for many sectors of society.
Anna Rossivel Cruz, head of statistics for the acting Tourism Ministry, says the government cannot precisely estimate how much the political crisis has hurt tourism, but that the numbers of those visiting is down since July after increasing by 7 percent in the first half of the year.
"It has affected us negatively, but we think this drop-off will stop at the end of the year," Ms. Rossivel Cruz says. She adds that this time of year doesn't coincide with a regular drop-off in tourism. "It's not normal to see this."
Indeed, Ms. Midence is not the only person with spare time these days. Angelica Rodriguez, a clerk at Hotel Granada in downtown Tegucigalpa, says occupancy is down by 30 percent – what she attributes to both the global economy and the political crisis. Jorge Montoya, the manager of Hotel Plaza Real, a popular backpacker hotel near the international bus terminals in Tegucigalpa, says the hotel has lost about 80 percent of its business since June 28.
Most of his guests are Europeans and North Americans, he says, which might explain the dramatic dip in demand. The US State Department, in the days following Zelaya's ouster, issued a travel alert recommending American citizens to defer unnecessary travel to the country.
The importance of US business ties
Yet dependence on the US does not just come in the form of sun-lotion-lathered tourists. Since the days of dominance in the 1900s of the United Fruit Company and others that turned Honduras into the cliché "banana republic," the nation has depended on and fed US business interests. The majority of Honduran exports today head to the US; factories throughout the country churn out garments for American consumers. And ties have only grown in recent years. The Central America Free Trade Agreement known as DR-CAFTA accounted for $46 billion in trade last year, an increase of 30 percent in three years. Exports from the US to the region increased 55 percent in the same time period, according to the Honduran American Chamber of Commerce.
In September, US trade associations sent a letter to US Secretary of State Hillary Clinton urging the US to work to bring stability to Honduras, as the crisis has the potential to disrupt billions of dollars in trade and tens of thousands of jobs. Central America had already lost $1 billion in textile and apparel orders since January, due to the global economic crisis. The Honduran political crisis has confounded the problem.
"The crisis has caused commercial traffic to falter dramatically and textile and apparel plants in United States and Honduras are already being idled and workers told to go home," stated the letter, signed by such groups as the American Apparel and Footwear Association (AAFA) and National Council of Textile Organizations (NCTO).
"The country is paralyzed," Mario Canahuati, a businessman and strategist for presidential contender Porfirio Lobo, said last month. He says that the poorest Hondurans suffer most. "The big companies will survive," he says.
The smaller ones might not. Mr. Nuñez says his business association generates about 30,000 jobs but since June 28, according to a survey of its members nationwide, 35 percent of those jobs have been lost. He says that intermittent curfews that force people into their homes, unemployment, and general anxiety are keeping people away from stores, which is having a ripple impact all the way down the chain. "No one is paying more for the crisis than small companies," he says.