Grain, Gold, and Greed: It's Still about Money

It is easy to lose sight of what is behind the Honduran coup, lured by the surface craziness and sometimes cartoon-like behavior of officials of the de facto government. Clearly, there are cultural issues here, class issues here, and the Armed Forces, at least, is really truly concerned to protect the US from communist invasion, it would seem.

But we need to remember that fundamentally, the sparks of polarization between the Zelaya government and the business network behind the coup are economic. Honduran academics, including Leticia Saloman and Miguel Cáceres Rivera, have been great guides on this.

Since the coup, Congress has been employed steadily in approving contracts that benefit the business community. The MCC funding cut off would have funded infrastructure projects benefiting the same community.

While the burn rate of reserve funding, the decline in tourism income, and loss of low-cost energy imports should concern this community, they seem not to be coming to terms with the real impact on their own sources of wealth.

The sale of Honduran grain reserves, reported originally August 21 in pro-coup La Tribuna, is another act of questionable wisdom. When originally advanced, the de facto regime's appointed "Minister" of industry and commerce, Benjamin Bogran, argued that the move would ensure a good price to Honduran producers, clear the way for the new harvest, and keep the grain reserve from deteriorating. Sounds good, right?

Yet one day before, La Tribuna reported that the Honduran Institute for the Agricultural Market had recommended not selling the grain reserves, saying

better to keep it to guarantee the sustenance of the population in case the hurricane season affects the production in the country

But really, do you need to pay any attention to the experts on something like this?

A week later, on August 28, La Tribuna reported the approval of the plan to auction a large part of the grain reserves, again justified by the claim it would benefit everyone. By then IHMA had fallen into line, although the article went to excessive pains to repeat arguments for why selling off the grain reserves was actually good. This included extensive explanation that selling off the reserves would insure agro-business better prices, perhaps giving a glimpse of a primary motivation more convincing than keeping the grains from deteriorating. At the time, marketing grain to Guatemala, El Salvador, and even the US was mentioned.

Now it seems this act of desperation or greed is leading to some disquiet in Honduras, as de facto leader Roberto Micheletti felt compelled today to reassure the Honduran populace that there would be plenty of grain and meat for domestic needs, as his government sells off grain to its desperate neighbor, Guatemala, whose need for basic grains is discussed this week by boz.

Micheletti has also tried to assure the Honduran populace that the price of basic foods needed for individual families would hold steady, which seems really unlikely. The price of this canasta basica familiar was the basis for the raise in minimum wage by President Zelaya last fall. Raising the minimum wage was a major trigger of increased discontent by the business community, fostering their support for the coup.

And now we see how much more the de facto regime can do for its business allies. El Tiempo reports that a new proposed special law would change the basic approach of Honduran labor law, allowing employers to pay hourly wages (instead of daily base pay). These changes, desired by the business community, are supposed to be the key to creating tens of thousands of jobs. The article proposes that, as in the US, people would now be able to have two part-time jobs, as if that was a desireable condition.

But even full-time employment at the minimum wage that Zelaya approved is not enough to pay for 100% of the basic food needs of a family. How much worse will the conditions of the working poor be if they are not even guaranteed a day's pay?

In a country where unemployment is currently at 70%, is more part-time employment in any way an improvement?

"Get to Know the 10 Families that Financed the Coup in Honduras!"

So reads the headline in El Libertador today; here is my rapid translation of the main text; you have got to go to the original, it lists point by point all the companies:

The major expert on military themes in Honduras, the investigator of the UNAH, Letiticia Salomón, uncovered the ins and outs of the coup d'Etat. And she explained as a detail without importance for a busy audience present at a roundtable: "It was planned by a business group lead by Carlos Flores Facussé, ex-president of Honduras (1998-2002) and owner of the newspaper La Tribuna, which together with La Prensa, El Heraldo, TV channels 2, 3, 5 and 9 were the fundamental pillar of the coup". The rest of the families that supported the coup against Zelaya and that control 90% of the wealth that the country produces are: José Rafael Ferrari; Juan Canahuati; the financier Camilo Atala, the lumberer José Lamas, the energy entrepreneur Fredy Nasser, Jacobo Kattán, the sugar industrialist Guillermo Lippman and the builder Rafael Flores.

A fundamental person in this conspiracy was the magnate Miguel Facussé, decorated by the Colombian Senate in 2004 with the Orden Mérito a la Democracia, and who today monopolizes the business of palm oil and in 1992 supported the purchase of land from campesinos at less than 10% of its actual value.

Telethon Funds Used for the Coup

Knowing the participation of these people in the coup d'Etat against Zelaya, among others, Jorge Canahuati Larach, José Rafael Ferrari and Carlos Flores Facussé, the reason that the Supreme Tribunal of Accounts has never carried out an audit of the public funds that are collected each year by the Telethon can be deduced; money that many people have given in good faith, but that Ferrari and Canahuati have used to destroy the weak State of Law that Honduras had.

Clarity, Part 3

Adrienne Pine provides a translation of a follow up to the analysis by Leticia Saloman discussed here. Saloman's overview of the issues is important, but even more so her conclusions. She calls for three necessary actions:

(1) restore the constitutionally elected president

(2) remove from office all those who broke the law, including giving President Zelaya a fair trial on charges against him, and also against those institutions that acted illegally in fomenting and carrying out the coup and its aftermath

(3) agree to create a new Constitution that includes adequate mechanisms for its continuing reform

In her discussion of the role of the US, Saloman endorses the argument that the coup itself in some ways makes no sense, given that President Zelaya was almost out of office and that the Congress would have had to enact any call for a constitutional assembly:

What is odd about the case is that the constitutional president only had seven months of his term left, neither of the presidential candidates have leftist inclinationes, and furthermore there was not even a remote threat that the president would convene a national constituent assembly (the actions themselves invalidate this threat, but it is so laughable that it is almost impossible to believe: supporting (yes or no) the placement of a fourth ballot box in the general elections in November, to vote for the installation of a national constituent assembly to review and create a new Constitution of the Republic. Creating it would be under the authority of the National Congress and never of the President of the Republic because he does not have these duties).

This continues to be one of the key questions: what was really so frightening to the power elites Saloman describes so well?

The trigger was money, not continuity in office

As international media repeat that the center of the conflict between President Zelaya and his opponents was a supposed intention to remain in office (despite the self-evident fact that he had no control over the military, always the key allies in unconstitutional continuity in office), it is worth taking a step back and examining the long-term history. We have already seen how Honduran sociologist Leticia Saloman points to an alliance of media, business, and political parties, aided in the end as well by the military and church, as key in opposing President Zelaya's non-binding opinion poll.

But why were they all so bitterly opposed to this action? Honduran economist Miguel Cáceres Rivera, in a commentary in the form of an open letter to his brother whose poetry I refuse to violate by even attempting to translate it, provides the most complete rehearsal of the issues I have yet seen. What he demonstrates is that President Zelaya had accomplished several fundamental steps that lowered the cost of living for the poorest of the poor in Honduras, and raised their potential income. These gains came at the expense of the rich, who gave up some of their profit margin. It is the gap between rich and poor that swallowed up Zelaya.

Specifically, Cáceres Rivera lists the following actions, explaining whose interests were affected:

(1) Steps taken to reduce the cost of petroleum to consumers: this included putting into place subsidies; reducing the profit margin allowed by the distributors; and of course, entering into a contract through Petrocaribe that allowed purchase of fuel with long-term, low cost financing. Who benefitted: everyone whose job depended on fuel (taxi drivers, bus owners) or who would have ended up paying higher prices for goods if transport costs were higher (end consumers). Who lost: owners and investors in petroleum companies, who saw their profits reduced and limited.

(2) While I was aware of the oil contract issues, I was not aware that President Zelaya's government had persuaded bankers to reduce interest rates on home loans. Cáceres writes that these went from a range of 24-32% annually to one-half or even one-third of those rates. While 12% interest rates on home loans are still shocking, this one action would have made it possible for working Hondurans to remain in their homes as other parts of the cost of living rose. Who lost? obviously, banks whose profit margins were based on such high loan interest. Cáceres notes that these reforms actually allowed new banks, coming into the country from outside, to be competitive, offering loans at rates from 10.7% to 12.7%. He notes that this actually led to a boom in construction, and thus raised the income of the companies, from small to large, that supplied construction. In essence, he argues that while on the one hand business interests lost some interest income, the multiplier effect of the saved income, spent on housing, was good for the economy and for those capitalizing it.

(3) The raising of the minimum wage is the third factor Cáceres discusses. He notes that the costs of basic products within the country-- wheat, chicken, eggs, and palm oil (which replaced other sources of cooking oil in Honduras, even though the country still uses the word "manteca" translated elsewhere as "lard")-- increased as international prices increased, but then stayed high even when international prices declined. President Zelaya was unable to convince the producers of these goods to lower their prices, making an increase in the minimum wage the main way to give consumers enough purchasing power to survive again.

Cáceres then explores, as only an economist can, what these actions imply: a change in how economic growth is managed, and in particular, how the costs and benefits are distributed, that literally spreads the wealth around. But as he notes, this is a zero-sum game: what was previously managed by devaluation of Honduran currency (the lempira, which was for most of the 1990s constantly declining vis a vis the dollar) now is managed in other ways (and the lempira has remained notably stable, around 18 to the dollar, for the last few years). Devaluation, he explains, actually increased the supply of capital within the country as long as the minimum wage did not increase as the value of the lempira internationally declined.

To put it another way, labor that cost $10 in 2001 declined in cost to $8.50 by 2003, gains that exporting businesses and the banks financing them realized because they sold their products on the international market. Cáceres explains that those realizing gains and transforming them into sufficient consumption of imported goods actually passed the costs of their increased consumption onto the mass of Hondurans whose income was limited and who had to deal with increasing costs.

Cáceres gives precise numbers to illustrate what lies behind the differential patterns of consumption that exist today in Honduras, with imported luxury goods enjoyed by a minority while the majority use a new sector of sales of used clothing and goods to try to make ends meet. In 1989, the official pay for a farm worker was about $4.56 a day. In 2007, the official salary fell in value to $3.97 a day, declining 13% over 18 years. This, he notes, is an underestimate because he has not accounted for inflation at all, which means the purchasing power of the average worker will have eroded even more.

One outcome of this economic deterioration, he notes, is that 1.5 million young Hondurans have left the country, many as undocumented emigrants, in search of work they cannot find in the country. In addition, the main engines of economic development, small and medium sized businesses, oriented to internal consumption and thus lacking the means to profit from devaluation, have not been able to persist or expand.

Like Leticia Saloman, Cáceres points to the unprecedented concentration of economic interests in the hands of a few families that also monopolize most media as one of the features allowing the coup. In this group he includes the agro-food companies, the large export and import businesses, the banks, oil importers and refiners, large media networks, fast-food chains, as well as energy and telephone companies. He notes that Honduras has the highest prices for electricity, telephone, and fuel in Central America, benefitting this same network at the expense of medium and small business as well as the broader body of consumers.

Cáceres concludes that without some change, the gap between rich and poor will continue to widen as the rich benefit from structural conditions at the expense of the poor. Without changes, he warns,no matter what strategies to reduce poverty, no matter how much more well-intentioned international aid, no matter how much more focus on rural sustainable development, the attempts to battle poverty will be the perennial task of Sysiphus.

Cáceres identifies the stakes at play as economic, pointing to the potential, under a new constitution, that disadvantageous contracts that have given private enterprise exploitation of electrical generation and telecommunications for a fraction of what they could generate could be renegotiated. He notes that one of Micheletti's first actions was to return to international oil companies their monopoly on supplying oil, which President Zelaya had broken by his participation in Petrocaribe.

Finally, like Leticia Saloman, Cáceres notes that the existing governmental system is inextricably intertwined with the families that control these sectors of the economy. From this he concludes that a new attempt to reform government to allow broader participation is an unavoidable step, if there is to be fundamental improvement in the situation of poverty, and if there is to be more participatory democracy.

Clarity, Part 2 of 2

The increasing role of the military is, in Saloman's analysis, one of the tipping points in the crisis.

She notes that the opponents of Zelaya directly approached the serving head of the armed forces, and engaged retired military, increasing the public visibility of the army and polarizing civil society around the question of what role the military should play. She writes that this "placed on the public agenda retired military, protagonists of the 80s, formed in the full cold war, reaffirming anti-communist positions, inciting disobedience and calling for insubordination on the part of the active military". This made President Zelaya's confrontation with the head of the Armed Forces, who he fired on Wednesday before the coup, inevitable. The outright engagement in political action by serving military that followed and led up to the military action of Sunday itself represents, Saloman says, a backward movement reversing 28 years of progress in legitimating the role of the military in civil society that had been so successful that the approval ratings for the armed forces equalled those of the Catholic Church.

Saloman notes that the Congress engaged in actions that exposed clear contradictions. She notes the production of a supposed, and disclaimed, letter of resignation, whose backdating to June 25-- the original planned date of the coup-- undermined it entirely.

Congress used this supposed resignation to justify acting to fill the supposedly vacant post, arguing they were merely following constitutional procedure. But as Saloman notes, they also made contradictory statements that the president had been overthrown, relieved of his post, disabled, or separated from the position for failure to follow legal orders.

Saloman makes arguments only a Honduran insider could sustain, that also entering the Congressional calculus were party interests in improving their position for the November election, benefitting from the redistribution of government positions even for seven months, and, for Congress head Micheletti, achieving the post of president to which he had aspired, even if he can hold it only for the next seven months.

Saloman identifies as weaknesses that generated the crisis the extreme politicization of governmental institutions; the increasing tendency for the head of Congress to run for President in part by establishing himself as an opponent of the president, ignoring a constitutional reform that called for such sitting officials to resign before running precisely to avoid such politicization; a lack of political will and means to reach agreement over differences within government; a turn to forces asked to be mediators between the parties, in this case, the military and church, which cannot play that role without taking sides and which thereby lose their apolitical position; and a tendency, exacerbated by media that take sides in civil conflicts, toward intolerance of other opinions, leading to an inability to engage in dialogue.

Saloman concludes that the Honduran crisis is a blow to democracy, defined not as the de facto government would like, as the mere continued existence of three branches of government, nor measured by the degree of authority exercised, nor the swiftness of resolution of regime change and replacement of government officials. Honduran politicians, she notes

have dealt a heavy blow to the process of democratic construction that has been developing the last 28 years, demonstrating intolerance, lack of respect for the independence of powers, authoritarianism, ignorance of the changes that have come to pass in the international context, unbounded ambitions, subordination to economic groups and a profound disrespect for the Rule of Law. (my translation)

She concludes

• To consult the citizenry should not be an illegal act: when the members of the political-economic alliance and the media absorb the meaning of that phrase, it will be a great indicator of the advance of a democratic political culture.

• To recognize and respect the co-existence of persons, parties, and countries that are or think differently, will be a great indicator that the Honduran Armed Forces have surpassed their backward and undeveloped position.

• To broadcast an opinion does not automatically imply to be in favor or against, when Honduran society absorbs this criterion, it will be a great indicator of its capacity to debate and propose

Clarity, Part 1 of 2

Reports circulating based on coverage of the OAS visit to Honduras in the New York Times suggest the kind of medium-range resolution of the constitutional crisis that might be under development. Meanwhile, the number of arguments circulating widely that purport to explain that the forcible kidnapping and deportation of a sitting president was legal is rising, many sourced to people viewed by honest readers in the US as reliable sources.

So it may be a good time to begin to look, not to politicians, but to scholars for better analyses.

Leticia Saloman is a Honduran sociologist described as an expert on the Honduran police, widely cited and well regarded internationally. She is the author of a long, Spanish-language consideration of the issues involved in the current constitutional crisis, dated June 29, that can be found in multiple places on the web. I cannot possibly translate and post it in full here, but want to highlight several points she makes. I find her description of the events of the week before the coup, which I lived through in Honduras, the most lucid and accurate anywhere.

That week was marked by escalating confrontation between the Executive branch and the Congress and Judiciary, the latter two united by opposition to the President's proposed public opinion poll.

It was clear that there was a plan to carry out a coup d'etat on Thursday, June 25-- not coincidentally, the date on what appears to be a forged letter of resignation produced after the events of June 28. In the early hours of Thursday, the President of Congress, subsequently acclaimed by the Congress as the "interim president", sought a decree by Congress that would have removed President Zelaya from office. The congress actually put together a committee that was charged with reviewing the evidence of the President's actions and writing a report, which news reports said was expected to be completed within hours of its formation. (Think about what it would be like if an impeachment process here reached its conclusion between midnight and 8 AM, and you have the sense of what it was like as it was happening.)

Then the committee didn't produce a report, the President was not arrested, and it seemed the worst was averted. I personally expected there to be police actions against anyone participating in the opinion poll on Sunday, and was prepared to see President Zelaya arrested because he had, in fact, defied the order of the Supreme Court.

Saloman notes that what happened was that the Congressional committee did not produce its resolution removing Zelaya from office as quickly as expected on Thursday, which, "united with the wariness of the Ambassador of the United States to support the disqualification", made it impossible for the coup d'etat to be carried out that same day.

In Honduras, the understanding at the moment was indeed that the US had played a key role, communicating to the authors of the coup that they would not support such an extra-judicial proceeding.

Saloman notes that the 1982 Honduran constitution was drafted in such a way as to make itself resistant to revision. This is what led the proponents of a new constitutional assembly to their fateful campaign: the one way they could envisage to update the fundamental constitution, given the articles written in as inalterable, was to convene a new, elected, constitutional convention in which the people of Honduras, not just the Congress, would be able to consider what guarantees of civil liberties needed to be explicitly stated, and how government might need to function in the future. This very indeterminacy of the goals allowed opponents to characterize the campaign as like the autoritarian Honduran past, where coups d'etat initiated drafting of new constitutions during which Presidential power continued dictatorially.

Saloman identifies the groups who crystallized around opposition to the poll as including political parties; political institutions, with the Supreme Court named by the Congress and owing political loyalty directly to the Congress and to the heads of the political parties to which they belong, and the Congress headed by the loser of the Liberal Party primary for presidency, who blamed Zelaya for lack of support; and the various legal branches, all of whom again owed party loyalty to the Congressional officials who named them to their posts. For me, this is the key thing US commentators fail to understand: by design, the 1982 Honduran constitution lodged a great deal of power in the Congress and little in the Presidency. This includes, notably, the Electoral Tribunal which determined that a public opinion poll was covered by laws passed to oversee binding referenda.

Saloman also notes that the business community opposed President Zelaya, largely due to his decision to raise the minimum wage despite their opinions against it.

Finally, she notes, Honduran media, control of which is highly concentrated in a few hands, including the owners of three of the major newspapers, La Tribuna, El Heraldo, and La Prensa, were opposed to the Zelaya government in part because it declined to give government contracts to these media, in part due to party politics both between the Liberal and Nacional parties and within the Liberal party.

Saloman clearly identifies the issues involved that divided these parties from the administration of President Zelaya, and made the former insist on the absolute changelessness of the Constitution. First, as she notes, Zelaya was interested in promoting participatory democracy, rather than the more passive representative democracy that rules in Honduras. Public trust in government institutions in Honduras was and remains very low, and the Zelaya government saw that clearly as a danger to civil society. Yet for the members of Congress, passivity and acceptance of the status quo on the part of the people meant free reign to govern as they wished.

Saloman notes that the President indeed disobeyed judicial findings, because the judicial branch was clearly acting not impartially, but in concert with the Congress and political parties. As she puts it, "what could have been exclusively a legal dispute, that should have been resolved in the halls of Justice, was converted into essentially a political problem that was managed publicly as a legal problem, while privately, by means of negotiations between the Executive branch and the political-economic-media alliance, it was managed as a political problem".

Saloman notes that the argument that President Zelaya's secret agenda was to remain continuously in power was developed by the Congress and advanced by the media, supported by other factions, most important, including retired military and conservative sectors of society. She notes that this was asserted as a kind of disinformation despite repeated clear statements by Zelaya that he was stepping down when his term ended, although she notes that early on, some proponents of the constitutional reform may have confused the issue with their statements.

Saloman notes that the claim that Zelaya wished to promote communism in Honduras, which began with his (economically motivated) participation in Petrocaribe and ALBA, was particularly promoted by the retired military and promoted by the media.

Added to the mix of charges was the claim that the President had not fulfilled his governmental role. The media attention given by both sides to the campaign for the November ballot question pushed out all other issues, and allowed opposing politicians to claim that in pursuing this agenda, the President was ignoring critical issues such as H1N1, flooding, and most recently, the aftermath of the 7.3 earthquake (which produced miraculously low death tolls but further damaged Honduras' already stressed infrastructure).