Honduras losing $20 million in U.S. aid, and counting

McClatchy NewspapersJuly 9, 2009 

WASHINGTON — The political crisis in Honduras has cost the country nearly $20 million in U.S. aid — and the price tag could rise if the dueling governments aren't able to reach a solution.

Some aid and international loans were suspended in the wake of the ouster of President Manuel Zelaya, and Secretary of State Hillary Clinton noted this week that much U.S. assistance "is conditioned on the integrity of the democratic system."

"But if we were able to get to a status quo that returned to the rule of law and constitutional order within a relatively short period of time, I think that would be a good outcome," Clinton said.

Several members of Congress and Latin American advocacy groups have called on Clinton to cut off all aid to the de facto government to send a strong message that military coups won't be tolerated. Analysts said the interim government could hope to ride out a potential cutoff in aid until elections in November, but they said the damage could be considerable as construction projects dry up and the government runs out of cash.

"They could be in for a rough time," said Kevin Casas-Zamora, a former vice president of Costa Rica and a senior fellow at the Brookings Institution, a center-left research organization. "It's a very small country that could be feeling severe economic contractions."

The U.S. last week said it was suspending some aid to Honduras, the third-poorest country in the Western hemisphere, while it determined whether the removal of Zelaya met the definition of a military coup under U.S. law, which cuts off all but humanitarian aid to the government of any country "whose duly elected head of government is deposed by military coup or decree."

The suspended aid — close to $20 million — includes money for "programs that could be construed as having directly aided the government," State Department spokesman Ian Kelly said.

That means about $16.5 million in foreign military financing, international military education and training, and peacekeeping operations. The State Department has also suspended about $1.9 million in "activities related to basic education and some environment and family planning programs."

Some Republican members of Congress have criticized the Obama administration for siding with Zelaya, who they said was consorting with Venezuela's leftist-leaning president, Hugo Chavez, and violating the Honduran constitution by angling to keep himself in office, though his term ends in December.

Florida Rep. Ileana Ros-Lehtinen, the top Republican on the House Foreign Affairs Committee, wrote Thursday to Clinton asking her to restore the aid.

Sheila Herrling, a senior policy associate with the Washington-based Center for Global Development, suggested the administration was delaying a decision to get tougher on the country in hopes of reaching a political resolution.

"At the end of the day you don't want to hurt the Honduran people, which is where a lot of the aid is going," she said. "You don't want a situation where the U.S. is blamed for putting more people into poverty. That's why you want to go as far as you can with diplomacy before you roll out sanctions."

U.S. aid to Honduras in 2009 includes $43 million budgeted for development assistance, military training and health care and child programs. In addition, Honduras is likely to receive a share of $105 million earmarked for Central America through the Merida Initiative, a partnership between the U.S. and Latin American governments to fight the drug trade.

Honduras also has more than $100 million yet to be delivered in a five-year, $215 million Millennium Challenge Corp. grant signed in June 2005.

The country's expulsion from the Organization of American States could also complicate its bottom line. The OAS resolution encourages member states and international groups to "review their relations" with the government — code for "cut them off at the knees," suggested Bruce Bagley, a Latin America specialist at the University of Miami.

Venezuela, a key ally of Zelaya, cut off oil shipments to Honduras shortly after the military shipped Zelaya to Costa Rica.

The OAS suspension also complicates the country's access to loans, particularly from the Inter-American Development Bank, which said last week it would pause in implementing its programs in Honduras and would "decide its future course of action depending on decisions taken by the OAS." The World Bank, too, suspended lending to the country.

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