Ousted Honduran president riled old guard, business

By Patrick Markey

TEGUCIGALPA (Reuters) - Honduran rancher Santiago Ruiz has no doubt about the day President Manuel Zelaya finally detonated the crisis that led to his ouster -- the moment he signed a trade pact with Venezuela's socialist government.

Zelaya had edged traditional U.S. ally Honduras closer to President Hugo Chavez before he was ousted in a bloodless coup on Sunday when troops snatched him at gunpoint from his home and spirited him to Costa Rica still in his pajamas.

In a country that has long seen Washington as its political north, Zelaya's cozy ties with U.S. foe Chavez and his moves to lift presidential term limits put him on course to clash with the political old guard and business leaders who once backed him.

"We were going to become a carbon copy of Venezuela," Ruiz said at the business center in capital. "You can't replicate what is happening Venezuela in this country."

Zelaya, a timber magnate fond of wearing cowboy hats and boots, has vowed to return as international condemnation of his ouster grows and the Organization of American States tries to resolve Central America's worst political crisis in decades.

But the fierce reaction from lawmakers and businessmen shows the challenge Zelaya would face returning to power in an impoverished coffee and textile exporter where U.S. banana companies were once the powerbrokers in local politics.

Zelaya, nicknamed 'Mel', won praise from poor supporters who say he raised the minimum wages and reduced gas prices. But business leaders say he fueled social tensions by espousing class rhetoric, mismanaging the economy and weakening investor confidence.

Last year Zelaya told Reuters he had no plans to follow a Chavez model. Critics say he later ratcheted up his leftist tone after joining the ALBA alternative trade bloc Chavez established to counter U.S. free-market proposals.

That may have been more for pragmatic financing benefits from Chavez, but the agreement rattled his opponents.

"The United States has been the best ally in our history. The Honduran people identify with the United States and of course so does the private sector," said Agenor Navaz, a farm owner and former soldier.

"When Mel Zelaya said from today Honduras will swing to the left, it caused fear," he said.

NOT VENEZUELA OR ECUADOR

The third poorest country in the Americas after Haiti and Nicaragua, Honduras suffered its share of turmoil and military intervention until democracy was restored in the 1980s.

But while neighbors Nicaragua, Guatemala and El Salvador were roiled by civil wars or rebellions, Honduras became a bastion of moderate politics and was a Cold War ally of the United States. U.S.-backed Contra rebels were based in Honduras for their conflict against neighboring Nicaragua.

Nearly 600 U.S. troops are still stationed in the country.