OAS set to suspend Honduras after coup

By Jim Wolf

WASHINGTON (Reuters) - The Organization of American States was likely to suspend Honduras on Saturday after a caretaker government refused to restore President Manuel Zelaya who was toppled in a military coup last weekend.

Honduras' interim rulers who took power after the coup have rejected an OAS demand to restore Zelaya, and defiantly renounced the OAS charter in an apparent preemptive move.

But an OAS official said such a renunciation was not valid, since the Honduras authorities were not a legitimate government, while OAS Secretary-General Jose Miguel Insulza said there were few options other than to suspend Honduras.

"The suspension is complicated by the effects it will have, above all, from the economic point of view in times of crisis," Insulza told Chilean radio. "It is not something to be undertaken lightly, but there is not much alternative."

The Washington-based OAS was set to meet in an extraordinary session. The meeting was due to begin at 1 p.m. (1700 GMT) but was pushed back to later in the day, possibly until after 5 p.m. (2100 GMT), an OAS official said.

Zelaya, a leftist, was ousted by troops and exiled to Costa Rica, creating Central America's gravest political crisis since the U.S. invasion of Panama in 1989.

He had upset the ruling elite, including members of his own Liberal Party, with what his critics say was an illegal attempt to lift presidential term limits and by establishing closer ties with leftist Venezuelan President Hugo Chavez, a U.S. adversary.

Honduras, an impoverished coffee and textile exporter, would be only the second country suspended by the Western Hemisphere's top diplomatic body after Cuba, which was barred in 1962 as Fidel Castro took the island toward communism.

An OAS suspension could complicate access to multilateral loans and credits for Honduras, the third poorest country in the Americas after Nicaragua and Haiti.

Insulza said after talks in Honduras on Friday the interim government showed no willingness to reinstate Zelaya.

"There is a rupture of constitutional order and those who did this have no intention for the moment of changing this situation," Insulza told reporters in Tegucigalpa, the capital of the nation of 7 million.

MARCHERS BACK ZELAYA

The Obama administration, European governments and Zelaya's left-wing allies have condemned his ouster as a military coup. The caretaker government has said it legally removed a president who violated the constitution.

The interim government remained defiant and announced it would renounce the OAS charter, a possible step toward quitting the organization.

"It is better to pay this high price ... than live undignified and bow the our heads to the demands of foreign governments," said Roberto Micheletti, named caretaker president by the Honduran Congress after Zelaya's ouster.

But Albert Ramdin, the OAS assistant secretary-general, said that the interim government did not have any right to reject the OAS charter as it was not a legitimate government.

"Only legitimate governments can withdraw from an entity such as the OAS," he told reporters.

In Tegucigalpa, several thousand Zelaya supporters marched toward the presidential palace on Saturday, observed by troops posted in strategic spots and a military helicopter overhead.

Some of Zelaya's left-wing allies have said they would travel with the exiled leader to Honduras on Sunday, but that plan seemed to be in doubt.

The crisis has become a test for U.S. President Barack Obama in a region where he is trying to restore the battered U.S. image and Chavez is spreading an anti-Washington message.

The United States has criticized the coup and will decide next week whether to cut economic aid to Honduras. But the Obama administration has let the OAS take the lead in trying to resolve the crisis.

The upheaval has not affected coffee supplies, although Central American neighbors staged a two-day trade blockade of Honduras to protest against the coup.

(Additional reporting by Patrick Markey, Gustavo Palencia in Tegucigalpa and Antonio de la Jara in Chile; Writing by Frances Kerry, Editing by Jackie Frank)