SCENARIOS: Talks may give peace a chance in Honduras crisis

TEGUCIGALPA (Reuters) - Ousted Honduran leader Manuel Zelaya and the interim government that replaced him have agreed to talks nine days after troops toppled him in a coup that has presented Central America with its worst crisis in two decades.

The agreement to negotiate under the mediation of Costa Rican President Oscar Arias came after Zelaya met U.S. Secretary of State Hillary Clinton in Washington.

Here are possible scenarios in the Honduras crisis.

THE NEGOTIATIONS BREAK THE STALEMATE:

Both sides will go into Thursday's talks entrenched in their positions. Zelaya says the "coup-mongers" must allow him be fully reinstated, while interim President Roberto Micheletti's says Zelaya's return as president is "not negotiable" and that he should be arrested and face charges if he sets foot in Honduras.

Opponents of Zelaya accuse the wealthy businessman of shifting to the left, bringing Honduras too close to firebrand Venezuelan President Hugo Chavez, an ally of Cuba who is challenging traditional U.S. dominance with a message of socialist revolution.

But a road map to a solution could be found under the auspices of Arias, a Nobel Peace Prize winner. Should Zelaya renounce his plan to lift presidential term limits and distance himself from Chavez's rhetoric, the two sides could reach a deal for an amnesty for all involved and bring Zelaya back to the presidency.

Zelaya would however be in a weak position, lined up against the congress, the courts, business interests, the military and a large sector of the population.

Rather than simply returning to the presidency though, Zelaya would more likely have to enter into a form of power-sharing until elections were held, said Kevin Casas-Zamora, a former Costa Rican vice president and now a senior fellow at the Brookings Institution think tank in Washington.

"Some kind of arrangement like that is possible on paper," Casas-Zamora said. "The making of a political deal has been clear all along."

THE TALKS FAIL, HONDURAS DEFIES PRESSURE:

Should the two sides fail to reach a middle ground and the talks fall apart, Honduras will likely face increasing international isolation and possible sanctions from the United States and others. The OAS has already suspended Honduras and the coup was widely condemned by governments from Washington to Zelaya's left-wing allies in the region.

The longer a solution takes, the more entrenched the interim government may become. But the Inter-American Development Bank and the World Bank have already put a hold on new credits for the impoverished Central American coffee and textile exporter.

Honduran private sector representatives have began reaching out to U.S. lawmakers and officials to lobby on behalf of the interim government and to make the case Zelaya's ouster was legal.

The caretaker government has suggested early elections could be held as a way to end the crisis. But Zelaya would likely reject that proposal and OAS' chief has said it would not be enough to resolve the crisis. A vote without a prior accord would likely be rejected internationally.

Heather Berkman, an analyst with U.S.-based Eurasia Group risk consultancy, said the interim government would face pressure from tighter restrictions and sanctions while domestically struggling to control possible social unrest as the poor sectors of the population suffer.

"More international pressure and sanctions will be applied. There will be more polarization and clashes on the streets," said Jennifer McCoy, an analyst at the Carter Center. "The country would become more divided."

ZELAYA ABANDONS TALKS, TRIES TO RETURN TO HONDURAS:

It is perhaps less likely now that Zelaya will make another attempt to return home, even without an agreement.

Clinton on Tuesday warned him against becoming confrontational after the army foiled his bid to fly into Tegucigalpa's main airport on Sunday. Clashes between soldiers and his supporters killed one person. His trying to return to Honduras would certainly stoke tensions between supporters and opponents and the military could take tougher measures beyond an existing curfew.

Before his Washington trip, Zelaya had said he could try to cross into Honduras by sea, air or land. An attempt to sneak into Honduras across the border from a country such as Nicaragua would risk fueling tensions in a region. Honduras has warned Nicaragua's President Daniel Ortega, a leftist ally of Chavez, against moving troops near the border. Ortega has dismissed talk of troop movements as false.

A failure by Arias and the OAS to forge an agreement would also be an opportunity for Chavez to become more involved in the crisis. He has said he will do all he can to help Zelaya be reinstated to the presidency.

(Editing by Pascal Fletcher and Mohammad Zargham)