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ANALYSIS-Post-coup limbo weighs on Honduran economy, trade
July 31, 2009 / 10:07 PM / 8 years ago

ANALYSIS-Post-coup limbo weighs on Honduran economy, trade

* Political crisis seen cutting growth by 2 percent

* U.S., European Community cut aid, loans paused

* Tourism down, life disrupted by roadblocks, curfews

By Mica Rosenberg

LAS MANOS, Honduras, July 31 (Reuters) - Blockades on highways moving cargo, daily curfews, disruption at borders and fewer tourists are part of the new economic reality in Honduras after the president was toppled in a coup last month.

Sitting squarely in the middle of Central America, Honduras is a major corridor for trade in the region with products trucked up the Pan American highway to the Atlantic port of Cortes where they are exported to the United States.

When the army closed part of the southern border with Nicaragua last week to block the return of ousted President Manuel Zelaya, more than a hundred trucks were backed up for days, some carrying perishable goods like fruit and meat.

Economists say the political crisis, Central America’s worst in nearly 20 years, could cut economic growth by 2 percentage points in an already contracting Honduran economy in 2009 as it disrupts the flow of cargo, puts tourists off visiting its Mayan ruins and Caribbean islands, and threatens to drag into the next coffee harvest.

"All the countries (in Central America) are affected by this," Panamanian truck driver Amado Quiel, 51, said leaning against his trailer in the border town of Las Manos this week.

Zelaya had camped out in Nicaragua threatening to return even though Honduras’ de facto leaders said he would be arrested if he set foot across the border. Some cargo was detoured to other border crossings, wasting fuel and time.

"(The products) that are just passing through are being held up and business is hurting," said Quiel, who was on his fourth day of waiting in Las Manos.

The border was reopened to traffic after Zelaya returned to Nicaragua’s capital on Thursday, but trucks leaving the area still have to pass military checkpoints along the roads and face sporadic blockades by Zelaya supporters.

The 2008/09 coffee harvest is over and most beans have been shipped but producers have had trouble getting fertilizers to farms to nurture coffee trees before the next harvest begins in October, the national coffee institute says.

Industry groups estimate last week’s partial border closure cost impoverished Honduras and Nicaragua some $4 million and $8 million respectively in lost trade, said Manuel Bautista, head of Honduras’ chamber of economists.

DAILY PROTESTS

Zelaya was toppled in an army coup after he angered courts, Congress and business leaders by moving Honduras closer to Venezuela’s socialist President Hugo Chavez and seeking authorization to allow presidential re-election.

Analysts see economic disruption putting pressure on a widely condemned de facto government, headed by Roberto Micheletti, but the interim leaders say the country is mostly operating normally and they can survive international isolation until presidential elections scheduled for November.

The United States, Honduras’ top trading partner, cut $16.5 million in military aid but has stopped short of harsher economic sanctions. The European Union suspended 65.5 million euros ($93 million) in budgetary support payments and multinational lenders have paused all loans.

Apparel makers with factories in Honduras, Central America’s largest textile manufacturer, including Adidas ADSG.DE, Nike Inc (NKE.N) and Gap Inc (GPS.N), are being hit by the roadblocks. They wrote to Secretary of State Hillary Clinton calling for more U.S. pressure to reverse the coup.

Protests for and against Zelaya have disrupted daily life. Strikes by teachers have kept some schools shut all month.

July tourism data is not yet available but Ana Abarca, tourism minister in the de facto government, estimated hotel occupancy had dropped between 30 and 40 percent in the past three weeks and said some European charter flights to the country’s Caribbean islands had been cut.

Souvenir shop owners in towns like Valle de Angeles, near the capital, say fewer visitors are strolling the streets.

"Sales are down," said Omar Martinez, 22, working at a Dunkin’ Donuts outlet in the capital Tegucigalpa as a pro-Zelaya protest raged outside. "These franchises can move to another country like El Salvador; we’re the ones that lose out."

Heavily dependent on money sent by migrant workers in the United States, Honduras was already hurting from the global downturn. The finance ministry expects the economy to shrink between 1 and 2 percent in 2009 and Bautista said the contraction could reach 3 percent if the crisis drags on.

In areas along the Nicaraguan border there have been extended curfews since Zelaya tried his unsuccessful return.

The border town of Danli had to negotiate directly with the head of the armed forces to loosen the curfew, imposed for 24 hours a couple of days last week, hitting local businesses.

Danli’s mayor Luz Oliva said her town was hostage to both the army and pro-Zelaya protesters. "We are the victims of this controversy and I don’t see either side as capable of finding a way out," she said. (Additional reporting by Claudia Parsons; Editing by Eric Walsh)




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