(For a TAKE A LOOK on Honduras, click on [nN28343997])
* Honduras interim govt defies OAS, rejects Zelaya return
* OAS delivers 72-hour ultimatum
* U.S. backs off to allow OAS diplomacy
* Honduran Congress tightens curfew (Adds curfew tightened, U.S. quotes)
By Patrick Markey
TEGUCIGALPA, July 1 (Reuters) - The Honduran interim government defied international pressure on Wednesday and vowed there was “no chance at all” of ousted President Manuel Zelaya returning to office.
World leaders from U.S. President Barack Obama to Venezuelan President Hugo Chavez have told the new rulers of the Central American country to restore Zelaya, a leftist who was toppled by the army on Sunday and sent into exile after a dispute over presidential term limits.
The Organization of American States gave Honduras an ultimatum early on Wednesday to allow Zelaya back into office by this weekend or face suspension.
But the interim government’s response indicated there was little immediate hope of a negotiated solution to the crisis in Honduras, an impoverished coffee and textile producer.
Enrique Ortez, interim foreign minister, said Zelaya would be arrested if he came home and that the interim authorities were sure Zelaya had been removed in a legal process.
“We are not negotiating national sovereignty or the presidency,” he told Reuters in an interview. “There is no chance at all” of Zelaya coming back to power. [nN01401959]
The crisis in Honduras has spiraled into the worst political turmoil in Central America since the U.S. invasion of Panama in 1989, posing a test both for regional diplomacy and for Obama’s ability to improve the United States’ battered standing in Latin America.
The Honduran Congress has voted in a new government more favorable to the traditional business and ranching elite to replace Zelaya, who was toppled for trying to extend presidential term limits in power.
The president also upset the army, judiciary and members of his own Liberal Party for taking Honduras to the left.
In further signs of isolation of Honduras, the Inter-American Development Bank said it was pausing all new loans to the country until democracy is restored, while Spanish Foreign Minister Miguel Angel Moratinos said Europe will not talk to the new rulers if they attempt to get in touch.
“(The interim government) is going to try, but it’s better they don’t try, because they will not get an answer from us,” he told Spanish state radio.
Mindful of its history of intervention in Latin America and, at times, of backing coups, Washington is trying to play a limited, behind-the-scenes role to show support for democracy and Zelaya’s restoration without being accused of meddling.
The Honduran coup has quickly become a “stress test” for the U.S. government’s commitment to defending democracy in Latin America.
Washington, which has put off until next week a decision on whether to cut aid to Honduras, is letting the OAS take a leading role.
“We will wait until the (OAS) secretary-general has finished his diplomatic initiative and reports back ... on July 6 before we take any further action in relationship to assistance,” a senior Obama administration official said.
The U.S. military postponed activities with Honduran forces while the Obama administration reviewed the situation, the Pentagon said.
The United States has a task force of about 600 troops in Honduras, a U.S. ally in the 1980s when Washington helped Central American governments fight Marxist rebels.
The Honduran Congress approved a decree to crack down on opposition during a nightly curfew imposed after the coup. The decree allows security forces to hold suspects for more than 24 hours without charge and formalizes the prohibition of the right to free association at night.
Pro-Zelaya protesters clashed with security forces near the presidential palace on Monday and demonstrators applauding the coup that installed interim President Roberto Micheletti took to the streets on Tuesday. Protesters in favor of Zelaya marched again on Wednesday.
“Micheletti is a puppet of the powerful and we don’t want him as president,” said a masked student who identified himself as Ramon.
Zelaya, who took office in 2006 and had been due to leave power in January 2010, had become a divisive figure in Honduras, a coffee, textile and banana exporter of 7 million people, especially after he allied himself with a firebrand socialist Chavez.
Zelaya gave up a plan to return home on Thursday, accompanied by a group of foreign leaders, to serve out his term. He said he now did not expect to return before the weekend.
The crisis erupted as the country struggles with a sharp decline in remittances from Hondurans living in the United States and in vital textile exports. Thousands of jobs have already been lost due to the slowdown in exports.
But coffee producers say exports have not been affected even after protesters blocked major highways in the interior. (Additional reporting by Susan Cornwell, Andrew Gray, Anthony Boadle and Arshad Mohammed in Washington and Ben Harding in Madrid; Writing by Alistair Bell; Editing by John O’Callaghan)