OAS hopes to mediate settlement in Honduras

NEW YORK (Reuters) - The head of the Organization of American States said on Tuesday the group will continue to seek to broker a settlement in Honduras after ousted President Manuel Zelaya snuck back into the country this week.

"We are going to try and have a dialogue and mediate because those are the tools that we have. We don't have an army to get there and we would not use it for something like this," the Secretary General of the OAS, Jose Miguel Insulza, told reporters in New York.

Zelaya took refuge at the Brazilian embassy this week after slipping back into the country in a bid to return to power, after Honduras's military expelled him in a June 28 coup.

Earlier in the day troops and police clashed with hundreds of Zelaya supporters outside the embassy.

Insulza said both sides -- the de facto administration and Zelaya's government -- should negotiate an agreement based on a proposal supported by Costa Rican President Oscar Arias.

Arias proposed that Zelaya return to office to serve out the remainder of his term, while coup participants would be given amnesty.

"It's a proposal that would bring back democracy and for the legitimate president to take back his role, and at the same time to calm worries from those who disagree with him," Insulza said, adding that the proposal was "balanced and unifying."

Honduras' Foreign Minister Patricia Rodas told reporters in New York earlier on Tuesday she had asked all ambassadors who were recalled from Tegucigalpa to return to their missions now that Zelaya was in the country.

(Reporting by Manuela Badawy; Editing by Cynthia Osterman)