ANALYSIS-Honduras coup leaders hunker down for isolation
(For full coverage of Honduras, click on [nN28343997])
* Government, businesses say can hold out for months
* OAS wants deal on Zelaya before any new election
By Mica Rosenberg
TEGUCIGALPA, Aug 3 (Reuters) - A month after President Manuel Zelaya was toppled in a coup, the Honduran politicians and business leaders behind his ouster insist they would rather take months of international isolation than let him back.
The June 28 coup, when soldiers seized Zelaya and sent him into exile on an army plane, has been roundly condemned. Foreign governments and multinational lenders have frozen some aid programs, and pro-Zelaya protests at home have disrupted cargo shipments, straining the impoverished country's economy.
Despite indications last week that a deal to let Zelaya back and pacify Washington might be possible, the de facto government headed by Roberto Micheletti, the former head of Congress, now appears to be digging in for the long haul.
A clutch of wealthy families who control much of the small textile, banana and coffee producing economy say they will do what it takes to keep Honduras running even if it is not recognized by any foreign governments.
"It doesn't matter what limitations and hardships we have to go through in these six months ... it's better than spending years with governments that are on the fringes of the law with people that threaten our democracy, our values, our principles and even our laws," Rafael Pineda, the No. 2 in the de facto government, said this week.
Talks to end the crisis, mediated by Costa Rican President Oscar Arias, have stalled as Micheletti refuses to let Zelaya return to power. Last week a source close to Micheletti's administration said there might be a deal to let Zelaya back as long as tougher limits were placed on him to prevent him derailing democracy in the final months of his term.
But the coup leaders say they can hold out until presidential elections in November and beyond, even though the Organization of American States says it will not recognize any new government without a negotiated agreement first with Zelaya.
Micheletti says private companies have agreed to freeze basic food prices for as long as necessary.
"We don't care about what the world thinks and eventually the world will understand," Adolfo Facusse, head of Honduras' private industry association and one of the most influential businessmen in the country, told Reuters.
Facusse said the de facto government could lift a ban on open-pit mining to attract investment, and issue debt to ease the strain on state coffers.
"If the government needs money, we say: 'Issue bonds, we'll buy them right away,'" he said in an interview in the garden of his sprawling private compound in the capital.
BIDING TIME
Zelaya was ousted after he angered many in Honduras by veering to the left and allying with Venezuela's socialist President Hugo Chavez. The Supreme Court, Congress, the army and a tight-knit group of economic power brokers lined up against him after he pushed for a public vote on changing the constitution to allow presidents to seek re-election.
The United States, Honduras' longtime ally and top trading partner, has cut $16.5 million in military aid and withdrawn diplomatic visas from key members of the de facto government in a bid to force Zelaya's reinstatement.
But Washington has stopped short of harsher sanctions and Micheletti says his government can resist any extra pressure. "We can perfectly survive the current situation," he said this week.
Economists say Honduras' economy is already in recession and that the political crisis, Central America's worst in nearly 20 years, could this year cut two more percentage points off economic growth as it disrupts the flow of cargo, puts off tourists, and threatens to drag into the next coffee harvest.
Exporters say they do not fear a trade blockade, however, because of the country's strategic position in the middle of Central America. Helped by a free trade pact, Honduras exports cloth to the region's textile industry and freight trucks run cargo up through the country to the major Atlantic port of Cortes that ships to the United States.
Central American governments imposed a 48-hour blockade shortly after the coup but have not tried the strategy again.
"They closed the border with Honduras and you know what they realized right away? That they screwed themselves," said Facusse. "Private companies in the region jumped up and said 'Don't mess with the economy for political reasons.'"
Zelaya, a logging magnate and friend of Facusse, came to power with the blessing of the country's conservative business class but alienated them by moving closer to Chavez.
In his month in exile, emboldened by widespread foreign backing, Zelaya has encouraged supporters to camp out near the border with Nicaragua and keep up near daily protests.
Two demonstrators have been killed in skirmishes with security forces, but most Hondurans hope the country can avoid worse levels of violence.
"Politically, the country is quiet. Of course there are external pressures, but what's most important for the country is its internal calm," Carlos Lopez, foreign minister in the de facto government, told Reuters this week. (Editing by Catherine Bremer and Kieran Murray)
* Government, businesses say can hold out for months
* OAS wants deal on Zelaya before any new election
By Mica Rosenberg
TEGUCIGALPA, Aug 3 (Reuters) - A month after President Manuel Zelaya was toppled in a coup, the Honduran politicians and business leaders behind his ouster insist they would rather take months of international isolation than let him back.
The June 28 coup, when soldiers seized Zelaya and sent him into exile on an army plane, has been roundly condemned. Foreign governments and multinational lenders have frozen some aid programs, and pro-Zelaya protests at home have disrupted cargo shipments, straining the impoverished country's economy.
Despite indications last week that a deal to let Zelaya back and pacify Washington might be possible, the de facto government headed by Roberto Micheletti, the former head of Congress, now appears to be digging in for the long haul.
A clutch of wealthy families who control much of the small textile, banana and coffee producing economy say they will do what it takes to keep Honduras running even if it is not recognized by any foreign governments.
"It doesn't matter what limitations and hardships we have to go through in these six months ... it's better than spending years with governments that are on the fringes of the law with people that threaten our democracy, our values, our principles and even our laws," Rafael Pineda, the No. 2 in the de facto government, said this week.
Talks to end the crisis, mediated by Costa Rican President Oscar Arias, have stalled as Micheletti refuses to let Zelaya return to power. Last week a source close to Micheletti's administration said there might be a deal to let Zelaya back as long as tougher limits were placed on him to prevent him derailing democracy in the final months of his term.
But the coup leaders say they can hold out until presidential elections in November and beyond, even though the Organization of American States says it will not recognize any new government without a negotiated agreement first with Zelaya.
Micheletti says private companies have agreed to freeze basic food prices for as long as necessary.
"We don't care about what the world thinks and eventually the world will understand," Adolfo Facusse, head of Honduras' private industry association and one of the most influential businessmen in the country, told Reuters.
Facusse said the de facto government could lift a ban on open-pit mining to attract investment, and issue debt to ease the strain on state coffers.
"If the government needs money, we say: 'Issue bonds, we'll buy them right away,'" he said in an interview in the garden of his sprawling private compound in the capital.
BIDING TIME
Zelaya was ousted after he angered many in Honduras by veering to the left and allying with Venezuela's socialist President Hugo Chavez. The Supreme Court, Congress, the army and a tight-knit group of economic power brokers lined up against him after he pushed for a public vote on changing the constitution to allow presidents to seek re-election.
The United States, Honduras' longtime ally and top trading partner, has cut $16.5 million in military aid and withdrawn diplomatic visas from key members of the de facto government in a bid to force Zelaya's reinstatement.
But Washington has stopped short of harsher sanctions and Micheletti says his government can resist any extra pressure. "We can perfectly survive the current situation," he said this week.
Economists say Honduras' economy is already in recession and that the political crisis, Central America's worst in nearly 20 years, could this year cut two more percentage points off economic growth as it disrupts the flow of cargo, puts off tourists, and threatens to drag into the next coffee harvest.
Exporters say they do not fear a trade blockade, however, because of the country's strategic position in the middle of Central America. Helped by a free trade pact, Honduras exports cloth to the region's textile industry and freight trucks run cargo up through the country to the major Atlantic port of Cortes that ships to the United States.
Central American governments imposed a 48-hour blockade shortly after the coup but have not tried the strategy again.
"They closed the border with Honduras and you know what they realized right away? That they screwed themselves," said Facusse. "Private companies in the region jumped up and said 'Don't mess with the economy for political reasons.'"
Zelaya, a logging magnate and friend of Facusse, came to power with the blessing of the country's conservative business class but alienated them by moving closer to Chavez.
In his month in exile, emboldened by widespread foreign backing, Zelaya has encouraged supporters to camp out near the border with Nicaragua and keep up near daily protests.
Two demonstrators have been killed in skirmishes with security forces, but most Hondurans hope the country can avoid worse levels of violence.
"Politically, the country is quiet. Of course there are external pressures, but what's most important for the country is its internal calm," Carlos Lopez, foreign minister in the de facto government, told Reuters this week. (Editing by Catherine Bremer and Kieran Murray)
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