Republic of Honduras
Area: 112,090 sq. km. (43,278 sq. mi.); about the size of Louisiana.
Cities: Capital--Tegucigalpa (1,150,000); San Pedro Sula (800,000-900,000).
Climate: Tropical to subtropical, depending on elevation.
Type: Democratic constitutional republic.
Independence: September 15, 1821.
Constitution: 1982; amended 1999.
Branches: Executive--president, directly elected to 4-year term. Legislative--unicameral National Congress, elected for 4-year term. Judicial--Supreme Court of Justice (appointed by Congress and confirmed by the president); several lower courts.
Political parties: National Party, Liberal Party, Innovation and National Unity Party, Christian Democratic Party, and the Democratic Unification Party.
Suffrage: Universal and compulsory at age 18.
Administrative subdivisions: 18 departments.
The 2006 US-Central America Free Trade Agreement
(CAFTA) increased direct investment in Honduras;
however, by 2010, economic growth
was still ineffective in improving conidtions
for the 65% of the population
living in poverty
GDP Official Exchange Rate: $17.3 billion (2011)
Growth rate: 3.5% (2011)
Per capita GDP: $4,300 (2011)
Natural resources: Arable land, forests, minerals, and fisheries.
Agriculture (11% of GDP): Products--coffee, bananas, shrimp and lobster, sugar, fruits.
Manufacturing (18% of GDP): Types--textiles and apparel, cement, wood products, cigars, and foodstuffs.
Trade: Exports--$6.839 billion (2011): apparel, coffee, shrimp, automobile wire harnesses, cigars, bananas, gold, palm oil, fruit, lobster, lumber.
INFORMATION ON ITS PEOPLE
About 90% of the population is mestizo. There also are small minorities of European, African, Asian, Arab, and indigenous Indian descent. Most Hondurans are Roman Catholic, but Protestant churches are growing in number. While Spanish is the predominant language, some English is spoken along the northern coast and is prevalent on the Caribbean Bay Islands. Several indigenous Indian languages and Garifuna (a mixture of Afro-indigenous languages) are also spoken. The restored Mayan ruins near the Guatemalan border in Copan (Copan Ruins) reflect the great Mayan culture that flourished there for hundreds of years until the early 9th century. Columbus landed at mainland Honduras (Trujillo) in 1502. He named the area "Honduras" (meaning "depths") for the deep water off the coast. Spaniard Hernan Cortes arrived in 1524. The Spanish founded several settlements along the coast, and Honduras formed part of the colonial era Captaincy General of Guatemala. The cities of Comayagua and Tegucigalpa developed as early mining centers.
Honduras, along with many other Central American provinces, gained independence from Spain in 1821. The country was then briefly annexed to the Mexican Empire. In 1823, Honduras joined the newly formed United Provinces of Central America. Social and economic differences between Honduras and its regional neighbors exacerbated harsh partisan strife among Central American leaders and brought on the federation's collapse in 1838. Gen. Francisco Morazan--a Honduran national hero--led unsuccessful efforts to maintain the federation, and restoring Central American unity remained the chief aim of Honduran foreign policy until after World War I.
Since independence, Honduras has been plagued with nearly 300 incidents of unrest, including internal rebellions, civil wars, and changes of government--more than half of which occurred during the 20th century. The country traditionally lacked both an economic infrastructure and social and political integration. Its agriculture-based economy was dominated in the 1900s by U.S. companies that established vast banana plantations along the north coast. Foreign capital, plantation life, and conservative politics held sway in Honduras from the late 19th century until the mid-20th century. During the relatively stable years of the Great Depression, authoritarian Gen. Tiburcio Carias Andino controlled Honduras. His ties to dictators in neighboring countries and to U.S. banana companies helped him maintain power until 1948. By then, provincial military leaders had begun to gain control of the two major parties, the Nationalists and the Liberals.
From Military to Civilian Rule
In October 1955--after two authoritarian administrations and a 1954 general strike by banana workers on the north coast--young military reformists staged a palace coup that installed a provisional junta and paved the way for constituent assembly elections in 1957. This assembly appointed Dr. Ramon Villeda Morales as President and transformed itself into a national legislature with a 6-year term. The Liberal Party ruled during 1957-63. At the same time, the military took its first steps to become a professional institution independent of leadership from any one political party, and the first class of the newly created military academy graduated in 1960. In October 1963, conservative military officers preempted constitutional elections and deposed Villeda in a bloody coup. These officers exiled Liberal Party members and took control of the national police. The armed forces, led by Gen. Lopez Arellano, governed until 1970. Popular discontent continued to rise after a 1969 border war with El Salvador. A civilian President--Ramon Cruz of the National Party--took power briefly in 1970 but proved unable to manage the government. In December 1972, Gen. Lopez staged another coup. Lopez adopted more progressive policies, including land reform, but his regime was brought down in the mid-1970s by corruption scandals.
Gen. Lopez's successors continued armed forces modernization programs, built army and security forces, and concentrated on Honduran Air Force superiority over its neighbors. The regimes of Gen. Melgar Castro (1975-78) and Gen. Paz Garcia (1978-83) largely built the current physical infrastructure and telecommunications system of Honduras. The country also enjoyed its most rapid economic growth during this period, due to greater international demand for its products and the availability of foreign commercial lending.
Following the overthrow of Anastasio Somoza in Nicaragua in 1979 and general instability in El Salvador at the time, the Honduran military accelerated plans to return the country to civilian rule. A constituent assembly was popularly elected in April 1980, and general elections were held in November 1981. A new constitution was approved in 1982, and the Liberal Party government of President Roberto Suazo Cordoba took office following free and fair elections.
Suazo relied on U.S. support to help during a severe economic recession which was the result of regional instability caused by the revolutionary Sandinista government in Nicaragua and the chaos of the brutal civil war in El Salvador. Close cooperation on political and military issues with the United States was complemented by ambitious social and economic development projects sponsored by the U.S. Agency for International Development (USAID). Honduras became host to the largest Peace Corps mission in the world, and nongovernmental and international voluntary agencies proliferated.
As the November 1985 election approached, the Liberal Party had difficulty settling on a candidate, and interpreted election law as permitting multiple presidential candidates from one party. The Liberal Party claimed victory when its presidential candidates, who received 42% of the vote, collectively outpolled the National Party candidate, Rafael Leonardo Callejas. Jose Azcona Hoyo, the candidate receiving the most votes among the Liberals, assumed the presidency in January 1986. With the endorsement of the Honduran military, the Azcona administration ushered in the first peaceful transfer of power between civilian presidents in more than 30 years. Four years later, Rafael Callejas won the presidential election, taking office in January 1990. Callejas concentrated on economic reform, reducing the deficit, and taking steps to deal with an overvalued exchange rate and major structural barriers to investment. He began the movement to place the military under civilian control and laid the groundwork for the creation of the public ministry (attorney general's office).
Despite his administration's economic reforms, the nation's fiscal deficit ballooned during Callejas' last year in office. Growing public dissatisfaction with the rising cost of living and with widespread government corruption led voters in 1993 to elect Liberal Party candidate Carlos Roberto Reina over National Party contender Oswaldo Ramos Soto, with Reina winning 56% of the vote.
President Reina, elected on a platform calling for a "moral revolution," actively prosecuted corruption and pursued those responsible for human rights abuses in the 1980s. He created a modern attorney general's office and an investigative police force and was successful in increasing civilian control over the armed forces and transferring the police from military to civilian authority.
Reina also restored national fiscal health by substantially increasing Central Bank net international reserves, reducing inflation, restoring economic growth, and, perhaps most importantly, holding down spending.
Carlos Roberto Flores Facusse took office on January 27, 1998, as Honduras' fifth democratically elected President since democratic institutions were restored in 1981. Like three of his four predecessors, Flores was a member of the Liberal Party. He was elected by a 10% margin over his main opponent, National Party nominee Nora de Melgar. Upon taking office on January 27, 1998, Flores inaugurated programs of reform and modernization of the Honduran government and economy, with emphasis on helping Honduras' poorest citizens while maintaining the country's fiscal health and improving international competitiveness.
In October 1998, Hurricane Mitch devastated Honduras, leaving more than 5,000 people dead and 1.5 million displaced. Damages totaled nearly 3 billion. The Honduran Government agreed to a new transparent process to manage relief funds, which included significant donor oversight. This open process greatly facilitated the relief and reconstruction effort. President Flores and his administration successfully managed more than 600 million in international assistance. Civil society's role in the government-coordinated reconstruction process was lauded internationally. President Flores also moved judicial and penal reforms forward. He established an anticorruption commission, supported passage of a new penal code based on the oral accusatorial system, and saw passage of a law that created an independent Supreme Court. Flores cemented the transition from military to civilian rule by eliminating the military's commander in chief position, and by signing a law that established a civilian Minister of Defense with formal authority over the military.
Ricardo Maduro Joest of the National Party was elected to the Honduran presidency on November 25, 2001, outpolling the Liberal candidate, Rafael Pineda Ponce, by 8 percentage points. He was inaugurated on January 27, 2002. The elections, characterized by international observer teams as free, fair, and peaceful, reflected the maturing of Honduras' democratic institutions. During his campaign, President Maduro promised to reduce crime, reinvigorate the economy, and fight corruption. Working to fulfill this promise, Maduro's first act as President was to deploy a joint police-military force to the streets to permit wider neighborhood patrols in the ongoing fight against the country's massive crime problem. While the initial result of this policy was overwhelmingly positive, the policy appears to have had only a minimally positive long-term effect on the country's crime rate. President Maduro has been a strong supporter of the global war on terrorism and joined the U.S.-led coalition in Iraq with a contribution of 370 troops. Under President Maduro's guidance, Honduras also participated in the successful Central America Free Trade Agreement talks and actively promoted greater Central American economic integration.
The 1982 constitution provides for a strong executive, a unicameral National Congress, and a judiciary appointed by the National Congress. The president is directly elected to a 4-year term by popular vote. The Congress also serves a 4-year term; congressional seats are assigned the parties' candidates in proportion to the number of votes each party receives in the various departments. The judiciary includes a Supreme Court of Justice, courts of appeal, and several courts of original jurisdiction--such as labor, tax, and criminal courts. For administrative purposes, Honduras is divided into 18 departments, with municipal officials selected for 4-year terms.
Reinforced by the media and several political watchdog organizations, human rights and civil liberties are reasonably well protected. There are no known political prisoners in Honduras, and the privately owned media frequently exercises its right to criticize without fear of reprisals. Organized labor now represents approximately 8% of the work force and its economic and political influence has declined. Honduras held its sixth consecutive democratic elections in November 2001, to elect a new president, unicameral Congress, and mayors. For only the second time, voters were able to cast separate ballots for each office, and for the first time, voters denied the president-elect's party an absolute majority in the Congress. The incidence of cross-voting between presidential and congressional candidates was marked.
The two major parties--the Liberal Party and the National Party--run active campaigns throughout the country. Their ideologies are mostly centrist, with diverse factions in each centered on personalities. The three smaller registered parties--the Christian Democratic Party, the Innovation and National Unity Party, and the Democratic Unification Party--have increased their political muscle in the National Congress by doubling their representation in the 2001 elections. Despite significant progress in training and installing more skillful advisers at the top of each party ladder, electoral politics in Honduras remain traditionalist and paternalistic.
Honduras maintains an embassy in the United States at 3007 Tilden Street NW, Washington, DC 20008 (tel. 202-966-7702).
Honduras is one of the poorest and least developed countries in Latin America. Industrial development has been limited, and historically the economy has been dependent on exports of coffee and bananas. In the past 15 years, however, the economy has been diversified, with the development of non-traditional exports such as cultivated shrimp, melons, and tourism, and the establishment of a growing maquila industry (primarily, assembly for re-export of textiles and apparel). Investment incentives aimed at attracting foreign capital in export industries have been introduced. Meanwhile the coffee industry has suffered from low world prices, and banana production has yet to reach pre-Hurricane Mitch levels. Coffee and bananas now account for less than 15% of Honduran export earnings. Honduras also has extensive forest, marine resources leadind to a boom in tourism growth of the Bay Islands of Roatan, Utila and Guanaja as diving honduras has become a popular activity attracting many from around the world for cheap PADI scuba diving certification in Honduras is one of the best in the Caribbean; as well as mineral deposits although widespread slash-and-burn agricultural methods continue to destroy Honduran forests.
Family remittances from Hondurans living abroad (mostly in the United States) rose 19% to $860 million in 2003, and are soon expected to pass the maquila sector as the country's largest source of foreign exchange.
The exchange rate is 18.89 Honduran Lempira to the dollar, the currency has been undergoing a steady and controlled devaluation of roughly 6% per year for the last several years. Inflation, as measured by the consumer price index, was 7.7% in 2003, identical to the rate of 2002 and considerably lower than the double-digit inflation rates of the 1990s. International reserves, which had fallen from $1.235 billion at the end of 2002 to $1.16 billion at end of 2003, rebounded to $1.248 million by April 2004.
Unemployment was officially estimated at around 27.5% in 2003. The economic slowdown in the United States in 2001 and 2002 caused a downturn in the growth of Honduras' maquila sector, but investment and employment revived in 2003. Employment in the sector is almost back to its 2000 peak of 125,000 workers.
In July 2000, Honduras reached its decision point under the Heavily Indebted Poor Countries (HIPC) initiative, qualifying the country for interim multilateral debt relief. However, fiscal problems soon derailed the government's International Monetary Fund (IMF) program and put the HIPC debt relief on hold. After the Honduran Government took several important measures to control government spending and improve its fiscal situation, the IMF approved a new 3-year Poverty Reduction and Growth Facility program in February 2004. This in turn made possible the signing of a debt relief agreement with Paris Club creditors in April 2004, and Honduras reached the HIPC completion point in 2005.
NATIONAL SECURITY INFO
With the cessation of the 1980s civil wars in El Salvador and Nicaragua, the Honduran armed forces refocused their orientation toward combating transnational threats such as narcoterrorism and organized crime syndicates. Honduras supports efforts at regional integration and deployed troops to Iraq in support of Operation Iraqi Freedom. However, the resolution of the civil wars in El Salvador and Nicaragua and across-the-board budget cuts made in all ministries greatly reduced funding for the Honduran armed forces, and the abolition of the draft created staffing gaps in the now all-volunteer armed forces. The military is now far below its authorized strength. In January 1999, the constitution was amended to abolish the position of military commander in chief of the armed forces, thus codifying civilian authority over the military. Former President Flores also named the first civilian Minister of Defense in the country's history.
INFORMATION ON FOREIGN RELATIONS
Honduras is a member of the United Nations, the World Trade Organization (WTO), the Organization of American States (OAS), the Central American Parliament (PARLACEN), the Central American Integration System (SICA), and the Central American Security Commission (CASC). During 1995-96, Honduras, a founding member of the United Nations, for the first time served as a nonpermanent member of the UN Security Council. Honduras is currently a member of the UN Human Rights Commission.
Honduras is a strong proponent of Central American cooperation and integration, and continues to work towards the implementation of a regional customs union, which would ease border controls and tariffs among Honduras, Guatemala, Nicaragua, and El Salvador.
In 1969, El Salvador and Honduras fought the brief "Soccer War" over disputed border areas and the emigration of some 300,000 Salvadorans to Honduras in search of land and employment. The catalyst was nationalistic feelings aroused by a series of soccer matches between the two countries, but the roots of the conflict lay in local disputes over land ownership and usage. The two countries formally signed a peace treaty on October 30, 1980, which put the border dispute before the International Court of Justice (ICJ). In September 1992, the Court awarded most of the disputed territory to Honduras. In January 1998, Honduras and El Salvador signed a border demarcation treaty to implement the terms of the ICJ decree although delays continue due to technical difficulties. Honduras and El Salvador maintain normal diplomatic and trade relations; however, they continue to disagree over the status of their maritime borders in the Gulf of Fonseca.
Honduras and Nicaragua had tense relations throughout 2000 and early 2001 due to a maritime boundary dispute off the Atlantic Coast. Relations between the two countries have since improved, although some animosity remains.
U.S.- HONDURAN RELATIONS
The United States and Honduras have close and friendly relations. Honduras is supportive of U.S. policy in the United Nations and other fora. As a nonpermanent member of the UN Security Council, Honduras played a very helpful role in 1996, most notably in advancing the process of selecting a new UN Secretary General during its October presidency of the Council. The United States also continued to be able to count on Honduras' strong support in the war on terrorism.
The United States favors stable, peaceful relations between Honduras and its Central American neighbors. During the 1980s, Honduras supported U.S. policy in Central America opposing a revolutionary Marxist government in Nicaragua and an active leftist insurgency in El Salvador. The Honduran Government also played a key role in negotiations that culminated in the 1990 Nicaraguan elections. Honduras continues to participate in the UN observer mission in the Western Sahara, contributed troops for the reconstruction of Iraq, and remains interested in participating in other UN peacekeeping missions.
The United States is Honduras' chief trading partner, supplying 53% of its imports and purchasing 69% of its exports in 2003. U.S.-Honduran trade is dominated by the Honduran maquila industry, which imports yarn and textiles from the United States and exports finished articles of clothing. Other leading Honduran exports to the United States include coffee, bananas, seafood (particularly shrimp), minerals (including zinc, lead, gold, and silver), and other fruits and vegetables. The United States encourages U.S. investment that contributes to Honduran development and bilateral trade.
U.S. direct investment in Honduras is valued at $601 million, about 44% of the total foreign direct investment (FDI) in the country of $1.37 billion. FDI flow into Honduras in 2003 totaled $176 million, with the United States leading the way with investments totaling $145 million, or 82% of the total FDI. The largest U.S. investments in Honduras are in the maquila sector, in which apparel and textile export revenues totaled $2.53 billion in 2003. There are also significant U.S. investments in fruit production--particularly bananas, melons, and pineapple--tourism, energy generation, shrimp culture, animal feed production, telecommunications, fuel distribution, cigar manufacturing, insurance, brewing, leasing, food processing, and furniture manufacturing. Many U.S. franchises, particularly in the restaurant sector, operate in Honduras.
From January to December of 2003, the United States negotiated a free trade agreement with Costa Rica, El Salvador, Guatemala, Honduras, and Nicaragua. Further negotiations in 2004 brought the Dominican Republic into the agreement as well. The agreement was signed in May 2004, and was ratified by the U.S. Congress and by those of the other participating countries in 2005. The agreement, known as the U.S.-Central America Free Trade Agreement or CAFTA, eliminates tariffs and other barriers to trade in goods, services, agricultural products, and investments. Additionally, CAFTA is seen as a mechanism to solidify democracy, encourage greater regional integration, and provide safeguards for environmental protection and labor rights.
The United States maintains a small presence at a Honduran military base; the two countries conduct joint peacekeeping, counternarcotics, humanitarian, disaster relief, and civic action exercises. U.S. troops conduct and provide logistics support for a variety of bilateral and multilateral exercises--medical, engineering, peacekeeping, counternarcotics, and disaster relief--for the benefit of the Honduran people and their Central American neighbors. U.S. forces--regular, reserve, and National Guard--benefit greatly from the training and exercises.
As of early 2001, the U.S.-trained Honduran demining unit had cleared nine major minefields measuring about 333,000 square meters, and more than 2,200 mines had been destroyed. The project was completed in 2004, and Honduras has been declared mine free.
U.S. Policy Toward Honduras
U.S. policy toward Honduras is aimed at consolidating stable democracy with a justice system that protects human rights and promotes the rule of law. U.S. Government programs are aimed at promoting a healthy and more open economy capable of sustainable growth, improving the climate for business and investment while protecting U.S. citizen and corporate rights, and promoting the well-being of the Honduran people. The United States also works with Honduras to meet transnational challenges--including the fight against terrorism, narcotics trafficking, money laundering, illegal migration, and trafficking in persons--and encourages and supports Honduran efforts to protect the environment. The goals of strengthening democracy and promoting viable economic growth are especially important given the geographical proximity of Honduras to the United States. Approximately 800,000 to 1 million Hondurans reside in the United States; consequently, immigration issues are an important item on our bilateral agenda.
U.S.-Honduran ties are further strengthened by numerous private sector contacts, with an average of between 80,000 and 110,000 U.S. citizens visiting Honduras annually and about 11,000 Americans residing there. More than 150 American companies operate in Honduras.
Economic and Development Assistance
October 1998's Hurricane Mitch--the worst natural disaster ever to strike the Western Hemisphere--left hundreds of thousands homeless, devastated the road network and other public infrastructure, and crippled certain key sectors of the economy. Estimates show that Hurricane Mitch caused $8.5 billion in damages to homes, hospitals, schools, roads, farms, and businesses throughout Central America, including more than $3 billion in Honduras alone.
In response, the United States provided more than $461 million in immediate disaster relief and humanitarian aid spread over the years 1998-2001. This supplemental assistance was designed to help repair water and sanitation systems; replace housing, schools, and roads; provide agricultural inputs; provide local government crisis management training; grant debt relief; and encourage environmental management expertise. Additional resources were utilized to maintain anti-crime and drug assistance programs. The vast majority of the U.S. reconstruction projects were scheduled to finish by December 31, 2001, with the exception of some water and sanitation and transparency projects that were extended for another 14 months. In 2001, the United States also provided food aid in response to a short drought and the depressed state of the agriculture sector. Subsequently, the United States provided $265,000 in disaster assistance after Tropical Storm Michelle inundated the north coast with floods.
New and existing U.S. economic programs--some with proposed enhancements that have taken on even greater importance since the hurricane--include the Caribbean Basin Economic Recovery Act, Overseas Private Investment Corporation financing for private investment and insurance against risks of war and expropriation, U.S. Trade Development Agency grant loans for pre-feasibility studies of projects with U.S. product and services export potential, and U.S. Export-Import Bank short- and medium-term financing for U.S. exports to Honduran importers. All of these provide greater economic opportunity for U.S. and Honduran businessmen and women.
The Peace Corps has been active in Honduras since 1962, and currently the program is one of the largest in the world. In 2004, there were 223 Peace Corps Volunteers working in the poorest parts of Honduras.
The U.S. Government strongly supports the professionalization of the civilian police force as an important element in strengthening the rule of law in Honduras. The American Embassy in Tegucigalpa provides specialized training to police officers through the International Criminal Training Assistance Program.
The role of the Honduran armed forces has changed significantly in recent years as many institutions formerly controlled by the military are now under civilian authority. The defense and police budgets have hovered at around $35 million during the past few years. Honduras receives modest U.S. security assistance funds and training.
In the absence of a large security assistance program, defense cooperation has taken the form of increased participation by the Honduran armed forces in military-to-military contact programs and bilateral and multilateral combined exercises oriented toward peacekeeping, disaster relief, humanitarian/civic assistance, and counternarcotics. The U.S. Joint Task Force Bravo (JTF-B), stationed at the Honduran Soto Cano Air Base, plays a vital role in supporting combined exercises in Honduras and in neighboring Central American countries. While JTF-Bravo has been involved in several multilateral exercises and numerous smaller humanitarian deployments, it played an absolutely critical role in helping the United States to respond to Hurricanes Mitch and Keith, and the earthquakes in El Salvador by saving lives, repairing critical infrastructure, and in meeting high priority health and sanitation needs. U.S. forces also delivered millions of dollars worth of privately donated goods to those in need.
Information on U.S. Business Opportunities
U.S. Department of Commerce trade data show that bilateral trade between the two nations totaled $5.83 billion in 2002, the most recent year for which statistics are available. Exports of goods and services from the U.S. totaled $2.56 billion 2002, and Honduran exports to the U.S. totaled $3.26 billion. U.S. investors account for nearly two-thirds of the estimated stock of $1.3 billion in foreign direct investment in Honduras. More than 150 American companies operate in Honduras; U.S. franchises are present in increasing numbers.
Opportunities for U.S. business sales include textile machinery, construction equipment, automotive parts and accessories, telecommunications equipment, pollution control/water resources equipment, agricultural machinery, hotel and restaurant equipment, computers and software, franchising, and household consumer goods. Best prospects for agricultural products are corn, milled rice, wheat, soybean meal, and consumer-ready products.
U.S. citizens contemplating investment in real estate in Honduras should proceed with extreme caution, especially in the Bay Islands or coastal areas, because of frequently conflicting legislation and problems with land titles. Investors or their attorneys should check property titles not only with the property registry office having jurisdiction in the area in which the property is located (being especially observant of marginal annotations on the deed and that the property is located within the area covered by the original title), but also with the National Agrarian Institute (INA) and the National Forestry Administration (COHDEFOR).
Resource for the country of Honduras: Honduras
Caribbean/Latin American Action
U.S. Department of Commerce
International Trade Administration
Office of Latin America and the Caribbean
14th and Constitution Avenue, NW
Washington, DC 20230