The Heritage Foundation

Backgrounder #412 on Latin America

February 28, 1985

February 28, 1985 | Backgrounder on Latin America

Honduras' Role in U.S. Policy for Central America


(Archived document, may contain errors)

412 February 28, 1985 HONDURAS ROLE IN U.S. POLICY FOR CENTRAL 'AMERICA INTRODUCTION Continuing troubles in Central America have raised new concerns about the fragile political and economic situation in Honduras. It is Central America's poorest country and is struggl ing with a severely depressed economy and regional instability.

Both threaten its recent steps toward democracy. Honduras has growing concerns, moreover, about overall United States policy in the region, and fears particularly. that a policy shift would l eave Honduras standing alone against the Sandinista regime in Nicaragua and the embittered Nicaraguan freedom fighters.

Evolution of Honduras toward a prosperous and pluralistic future is vital to the regional peace process. As a recent phenomenon in Cent ral America, democracy dust be nurtured and protected from Sandinista-style totalitarianism. The success of democratic institutions and a rising standard of living based on a free market economy are important in the U.S. effort to convince Central America ns that the West offers them far more than the empty promises of Soviet-style socialism.

Honduras so far has escaped the large-scale guerrilla warfare suffered by El Salvador. Yet Honduras has been the target of terrorist attacks and subversion orchestrate d by the Sandinistas and Cubans. Such assaults are designed to intimidate the Hondurans into loosening ties with the U.S. and to punish them for allowing democratic anti-Sandinista forces to operate from Honduran terri tory while denying Salvadoran leftis t guerrillas a similar sanc tuary.

Although the U.S. should not simply accede to the Honduran request for a quantum increase in economic aid, currently totalling 134.9 million, American policymakers should consider seriously modernizing the outmoded Hondur an Air Force and helping resolve the Salvadoran-Honduras border dispute. 2 A non-Communist Honduras is vital to long-term U.S. interests As such, Washington must assure the Hondurans that the U.S. will defend its freedom. At the same time U.S. policymaker s must appreciate that U.S. relations with Honduras are best kept at low profile. Honduran concern about the anti-Sandinista rebels based in Honduras can be assuaged if Congress approves the $14 million the Administration has requested to support them. Fin ally, the U.S. should assure Honduras of protection against cross-border aggression by Nicaragua. And the U.S. should continue its joint military exercises with Honduras, such as Big Pine I11 which began on February 11, 1985.

THE ROAD TO DEMOCRACY Slightly larger than the state o.f Tennessee, and with a population of 4.3 million, Honduras lies between Guatemala and Nicaragua. The least developed country in Central America, its economy is centered on two export crops, bananas and coffee.

Like many of its ne ighbors during the 1960s and 1970s Honduras was ruled by a series of military officers whose usual method of succession was,a coup d'etat calization of Nicaragua and political strife in El Salvador prompted General Policarpio P6z Garcia to hold elections for a constituent assembly in April 19

80. As a gesture of support for Honduras return to the democratic process, the United -States nearly doubled its economic aid and greatly increased its military assistance at that time Concern about the radi The Hondu ran presidential election of November 1981 was won by the Liberal Party's candidate Roberto Suazo Cordova a physician with little previous governmental experience. Apparently to appease a faction of the military that was reluctant to give civilians comple t e control 'of the country, President Suazo named Colonel Gustavo Alvarez Martinez to be chief of the Honduran armed forces. Promoted to general and given the Defense Minister's portfolio, Alvarez quickly established a good working relationship with U.S. A mbassador John Negroponte and began strengthening Honduras' counterinsurgency capabilities.

Although the military remains the strongest institution in Honduras it has never earned the reputation as a repressive force maintaining the privileges of the elite . The military appears committed to democracy, although some older officers remain wary about the civilian government's ability to rule the country effectively at a time of growing economic and diplomatic turmoil. Nonetheless, in a remarkable break from t r adition, the military voluntarily began turning over key government ministries to civilians in a transition period following the 1980 election of the constituent assembly. Today, the Defense Ministry and the telephone and telegraph agencies are the only m a jor government bodies still controlled by the military. 3 The Honduran .government confronts major problems that threaten its stability. While most observers agree that President Suazo has established a personal reputation for honesty, the persistence of incompetence, corruption and special privileges within the governmental bureaucracy have made the Liberal Party administration the target of mounting criticism.

The most vocal critics of the Suazo government are educated and middle class Hondurans, includi ng military officers and businessmen. The Liberal Party has few middle class supporters drawing its electoral strength from a politically uninterested peasantry dominated by a strong party machine. The largest opposition group, the Nationalist Party, also has a traditional base among the peasantry plus some sectors of the middle class.

The Nationalists, however, have been weakened by political defec tions and quarreling among intraparty factions other Latin American nations A landed oligarchy does not exist and the peasants share in the political and the economic processes.

The Honduran press is virtually unrestricted, offering a diverse range of ideological forums. Trade unions have functioned freely for more than 30 years and possess considerable political influence Honduras offers democracy a more fertile soil than do many ECONOMIC M ALAISE The greatest threat to Honduran democracy is the dismal state of the economy. Suazo inherited an economy that was nearly bankrupt and the situation has worsened.

Honduras is.the poorest nation in Central America, with a per capita income of only $520 per annum compared to $650 in El Salvador, $1,430 in Costa Rica and $1,140 in Guatemala. Honduran unemployment and underemployment each are approximately 45 percent.

Honduras' external debt is close to $2 billion and the value of exports is declining. T he Honduran Gross Domestic Product (GDP of $2.8 billion began sliding in 1979, recording its lowest growth rate of 1.8 percent in 1982, the year in which the Suazo government imposed a harsh austerity budget. Despite' such mea sures, at least 30 percent o f the budget must come from interna tional financial sources to keep Honduras afloat. In 1983 Honduras had to commit more than 18 percent of its budget just to service its existing debt of more than $1.5 billion. The nation's official foreign borrowing for the same year amounted to $283.9 million, a figure that excludes funding from such sources as the European Economic Community, private banks, and other governments.

Honduras' economic ills stem from a variety of sources. Its agriculture-based economy has never recovered from the last cycle of worldwide recession and is affected by declining productivity.

In March 1983, 70 percent of the Honduran banana crop was destroyed by hurricane winds, losing millions of dollars in potential foreign exchange earnings and driving some small producers out of business. 4 Although the U.S. is Honduras' largest trading partner buying more than half of all its exports and supplying 45 percent of its imports U.S. agricultural import quotas have contributed to the Honduran e c onomic problems. The U.S. sugar quota for 1982, for example, allowed Honduras to sell only 28,000 metric tons of sugar--one of its most important exports--to the U.S. at 22 cents per pound, the artificially high price caused by U.S protection of its domes t ic sugar industry. This left Honduras with a sugar surplus of nearly 100,000 metric tons worth only 6 cents per pound on the world market. As this price was far below production costs, sugar output fell. The result has been that new Honduran sugar factori e s built with U.S. loans at high interest rates operate below capacity, driving up costs and forcing lay offs of Honduran workers. The country1s,46,000 independent coffee growers also have suffered severely from the weakness in the international commodity markets.

Honduran businessmen, fearful that regional strife will engulf their country, have exacerbated the economic crisis by sending their money abroad--usually to Miami or New Orleans.

This group has joined opposition political parties in blaming the S uazo government for the International Monetary Fund's September 1983 ruling that Honduras is out of compliance with its debt renegotiation agreement. The IMF, among other things, demanded currency devaluation and harsher austerity measures. To force the H ondurans to comply with such belt tightening measures, the U.S. is holding back $72.5 million in assistance. The Suazo government, however, argues that compliance with these demands will damage seriously the country's progress toward democracy.

Honduran business leaders worry that the large U.S. budget deficit will prompt cut-backs in American economic support.

HONDURAN WLNERABILITY Honduras' economic and social problems make it increasingly vulnerable to subversion by the Left and attacks by a disaffected Right. The strife embroiling other Central American nations also infects Honduras, making it susceptible to political intimidation by the Soviet-backed Sandinistas in neighboring Nicaragua.

The Local Threat Honduras and El Salvador both became targets of Marxist Leninist guerrilla movements after the Sandinista takeover of Nicara.gua in July 19

79. Trained and supplied by Cuba and Nicara gua, Honduran leftists have grown in strength and audacity leading to an increase in terrorist attacks within Honduras One of the most active guerrilla groups is the Movement for Popular Liberation (MLP nicknamed "Cinchoneros The MLP is the military wing of the People's Revolutionary Union (URP formed in 1978 as an offshoot of the Honduran Communist Party.

Copying the insurgency tactics of the Sandinistas, the Cinchoneros 5 kidnapped an American oil company executive in April 1980, but were captured by Honduran authorities before issuing ransom demands.

Cinchoneros leader Antonio Reyes Mata was released as part of the amnesty declared by newly elected President Suazo and promptly fled to Cuba via Nicaragua. Reyes Mata returned to Honduras in July 1983 with a band of about 100 guerrillas, some of whom des e rted and alerted Honduran authorities. Reyes Mata was tracked down and killed before he could establish a rural guerrilla base. The deserters reported that they had been lured to Nicaragua in October 1981 by promises of agricultural and mechanical trainin g , but instead had been sent to Cuba for a nine-month guerrilla course by the Cuban Ministry of the Interior's Department of Special Operations This unit participated in the Marxist coup d'etat in Grenada in March 1979 Shipped back to Nicaragua in Septembe r 1982, the Honduran guerrillas were quartered in a 'Isafehouse" in Managua prior to their infiltration into Honduras. This group was the advance element of a larger force designed to operate in four Honduran provinces, using a network of logistical bases i n the rural highlands which were to have been supplied by Nicaraguan airdr0ps.l Earlier evidence of Cubanfiicaraguan support for Honduran guerrillas was made public after a police raid in November 1981 on a safehouse used by the Morazan Front for the Libe r a$ion of Honduras F'MLH) in Tegucigalpa, the Honduran capital. The captured Marxist revolutionaries included a Honduran, several Nicaraguans and an Uruguayan. Among the documents found were classroom notebooks from a one-year guerrilla training course hel d in Cuba in 1980 and a letter revealing that guerrillas at another FMLH safehouse were responsible for transporting arms and ammunition into Honduras from the Nicaragua town of Esteli.

Numerous other terrorist incidents have occurred over the past four ye ars. They include an aircraft hijacking and kidnapping incidents involving President suazols daugnter ana a ieaaing Honduran banker. Such actions clearly parallel guerrilla tactics in Nicaragua and El Salvador. So did Havana's effort to prod the various H onduran guerrilla factions into a unified movement.

This was achieved in March 1983, when the FMLH, the Cinchoneros and the Central American Worker's Revolutionary Party (PRTC announced that they had merged into the National Unity Directorate of the Revolu tionary Movement of Honduras (DNU-MRH According to the most recent reports, infiltration from Nicaragua is contin uing Background Paper American Subversion, U.S. Department of State and Department of Defense July 18, 1984, p. 27 Nicaragua's .Military Buil d up and Support for Central 6 The Regional Threat Aside from the subversive danger posed by Cuban and Nicaraguan support for indigenous Marxist-Leninist insurgents, Honduras faces a rapidly growing military threat from Nicaragua. The Sandinista military al r eady dwarfs the armed forces of Honduras and is augmented on almost a weekly basis by infusions of advanced Soviet military hardware. Although the Sandinistas have not yet received such high performance Soviet aircraft as the MiG-21s they have used to tra i n their pilots, the former air superiority of the aging Honduran air force has been rendered nearly worthless by Nicaraguan acquisition of sophisticated mobile anti-aircraft missiles. Nicaragua has almost achieved the logistical and material capabilities n eeded to mount a conventional cross-border attack on Honduras. (See Table THE HONDURAN/NICARAGUAN MILITARY BALANCE2 Honduras Nicaragua I 15,200 48,800 Total Active Duty Military Militia, Ready Reserve and Paramilitary Forces Foreign Military (including re s ervists 4,500 75,000 I 10,000 Main Battle Tanks 0 120 Light Armored Vehicles 88 150 Attack Helicopters 0 12 Fighter Aircraft 12 '0 Tactical Support Aircraft 14 14 Surface-to-Air Missiles -0 800 Anti-aircraft Artillery 0 130 Multiple Rocket Launchers 0 24 H onduras: 1,000 U.S. personnel; Nicaragua: 9,900 Cubans, 50 Soviets, 50 East Germans Sources: International Institute for Strategic Studies; U. S. Department of Stat.e; U.S. Department of Defense. Cuban figures include civilian technicians who are members o f the Territorial Troops Militia or Army reserve. 7 Nicaragua increasingly has been harassing Honduras. Last May, Honduras recalled its ambassador to Managua after Sandinista forces shot down a Honduran helicopter inside Honduras, killing all eight men ab o ard. This followed a similar incident in which a U.S. helicopter was destroyed after accidentally straying across the border from Honduras into Nicaragua. Nicaraguan naval vessels, meanwhile, have attacked Honduran fishing boats. Begin ning in 1983, a pow erful Nicaraguan-based.radio transmitter began interfering with broadcasts from Honduras' main radio station probably confirming suspicions that Moscow has given the Sandinis tas sophisticated electronic equipment.

A Base for Insurgencies Honduras' strateg ic location has made it one of the most important routes for Cuban and Nicaraguan arms shipments to communist insurgents in El Salvador In January 1981, for example Honduran authorities captured six Salvadoran guerrillas unloading weapons fr0m.a truck en r oute to Nicaragua. Inside the truck were forged passports M-16 rifles, ammunition that included mortar rounds, and other military equipment. By the end of 1981, the Salvadoran leftist ERP guerrillas had formed a joint command with Hondurans in the capital city of Tegucigalpa. On July 4, 1982 this group sabotaged the main power station in Tegucigalpa and the next month bombed various U.S. businesses there, including IBM and Air Florida. Salvadoran guerrillas also maintain clandes tine bases inside Honduras, as evidenced by the August J982 raid on an FMLN safehouse in Tegucigalpa which resulted in the capture of several high-level guerrilla leader HONDURAS AND THE UNITED STATES Diplomatic Relations Honduras became the closest U.S. ally in Central America afte r the 1981 elections that restored Honduran democracy. The Reagan Administration has been pursuing a policy of helping to maintain Honduras' national security while promoting political and economic reform. This is designed to provide a bulwark against the e xport of revolution from Nicaragua. The closest liaison between Honduras and the U.S. during the first two years of democratic rule was Defense Minister Gustavo Alvarez Martinez cized for usurping an inordinate degree of executive power Alvarez loyally su p ported the civilian government during President Suazo's bouts with illness. Alvarez also strengthened his country's defenses by arranging much greater military cooperation with the U.S. He was, moreover, a staunch supporter of the Nicaraguan Democratic Fr ont (FDN) an anti-Sandinista rebel group Although much criti Background Paper: Central America, U.S. Department of State and Depart ment of Defense, May 27, 1983, p 9. See also Richard Araujo Backing Honduras No. 264, May 3, 1983.

Taking a Stand for Democracy Heritage,Foundation Backgrounder 8 Alvarez and four other senior officers were arrested by their own soldiers on March 31, 1984, and exiled to Costa Rica.

This was carried out by a group of young officers, supported by President Suazo, who apparently resented the Defense Minister's independent style of leadership and close relationship with U.S officials I Alvarez's departure inaugurated a markedly different phase in U.S./Honduran relations. The new military commander-in-chief Air Force General Walter Lopez (a leader of the plot against his predecessor, and a close friend of President Suazo) has sought to redefine Honduras' relationship with Washington to gain a firmer U.S. security commitment and greater economic assistance.

For a number of reasons, H onduras has been reassessing the effects of its ties with the U.S., although the Honduran government remains firmly opposed to Marxism-Leninism. For one thing Honduras is concerned increasingly by the Sandinista threat. For another, it is very concerned b y the U.S. House of Representatives's cut-off last June of aid to Nicaraguan Freedom Fighters, organized in the Nicaraguan Democratic Front. Honduras fears that this signals permanent abandonment of U.S. support for the Freedom Fighters, thus leaving respo n sibility for their welfare to Honduras and increasing the probabi'lity of a punitive attack by Nicaragua on Honduras. This worry was compounded by Secretary of State George Shultz's surprise visit to Managua in June 1984, which many Honduran military and p olitical leaders suspect coyld lead to a U.S. accommodation with the Sandinistas that would leave Honduras exposed to Nicaraguan aggression. Such concern was a factor in the Hondurans' decision to withdraw much of their tacit support for the Nicaraguan De m ocratic Front I I In what now appears to have been a strategy designed to gain a stronger hand in diplomatic bargaining with Washington, the Hondurans initiated a series of moves to assert their independence and draw attention to their important role in r egional security.

Last May, for example, General Lopez told reporters, prior to informing the U.S. embassy, that Honduras wished to renegotiate the 1983 agreement with the U.S. governing the Regional Military Training Center (RMTC) established in Puerto Ca stilla. The RMTC one of the most vital components of the U.S. counterinsurgency effort, disturbed many Hondurans because it has been used as a training school for soldiers from El Salvador. Honduras fought El Salvador in 1969 over still unresolved territo rial disputes.

The Hondurans made it clear that they expect Washington to press El Salvador to re-open negotiations regarding the territory in return.for the continued training of Salvadoran troops at the RMTC Lopez next asked the U.S. to scale down plans for subsequent military exercises in Honduras and reportedly threatened to cancel future maneuvers if the American military presence was not 9 reduced from its level of 1,700 in June 1984.4 This was followed by a 'formal request for the Reagan Administrat ion to appoint a high-level commission to discuss important changes in the Honduran U.S. relationship.

Impatient with what they perceived as the slow U.S. response the Hondurans halted the training of Salvadoran troops at the RMTC, saying the suspension wo uld continue until new economic and security agreements had been negotiated with Washington. Honduran spokesmen indicated that their government was edging toward a nonaligned stance, which very seriously would upset U.S. policy for Central America. Colone l Efraim Gonzalez, Honduran armed forces joint chief of staff, said in October 1984 that although Honduras had no intention of banning of American troops from Honduras "for the moment, I' his government knew that "our friend ship toward the United States i s beneficial for both of us. For this reason, there must be a logical and fair compensation for our troubles I5 Feeling that their bargaining position had been strengthened even further by the large-scale deliveries of Soviet weaponry to Nicaragua during N o vember 1984, the Hondurans sent a commission tions with the U.S. The talks are centering on increased U.S aid and a proposed security pact with the U.S to Washington to begin negotiations on the future of their rela- I U.S. AID PROGRAMS Military Assistanc e Since taking office, the Reagan Administration has given more security assistance to Honduras than the military aid from all previous U.S. administrations combined. The FY 1982 military grant was increased from $1 million to $10 million, while the milita ry sales credit was raised from $9 million to $19 million.

Military aid rose to $37.3 million in 1983 and more than doubled to an estimated $77.5 million in 19

84. For EY 1985, $62.5 million has been allocated, not including an $8 million grant for airfie ld reconstruction and a $13 million appropriation for 'a new airbase which will: greatly improve the U.S. ability to defend Honduras against Nicaraguan attack basic tactical equipment and training, including use of the Regional Military Training Center, f rom which nearly 4,000 Honduran soldiers have graduated since 19

83. Military equipment includes helicopters, transport and communications gear, naval equipment The U.S. military assistance program provides Honduras with New York Times, June 7, 1984, p. A1 9 FBIS, October 16, 1984, P2; Panama City ACAN in Spanish (1109 GMT October 13, 1984. 10 and patrol boats, vehicles, medical equipment, radar, communica tions gear, ammunition and spare parts. The ongoing series of joint U.S./Honduran military exercises i s designed to improve the quaity of the Honduran armed forces and to demonstrate American support for the Suazo government.

The Hondurans have made it clear that they consider the current level of U.S. military assistance inadequate. They seek a security pact with the U.S.--something without precedent in this hemisphere--and a sizable increase in military assistance.

This includes sales of twelve F-5E fighter aircraft to the Honduran air force, which still flies some Korean War vintage aircraft In all, the Hondurans are seeking $100 million per year in military assistance over a four-year period.

The negotiating commission is also demanding a complete revamping of the 1954 military assistance agreement with the U.S which is based on the 1947 Inter-American Treaty of Recipro cal Assistance, generally known as the Rio Pact. The Hondurans insist that the Rio Pact is inadequate in view of their current risks in cooperatin g with the U.S. during an escalating regional security crisis. A separate security pact is sought which will commit the U.S. formally to defend Honduras regardless of future U S llaccommodationsll with Nicaragua To date, the U.S. military presence in Hondu r as has been low-key, with only a few minor incidents to mar an otherwise harmonious relationship with citizens of the host count'ry. A continuing American military presence would bolster the Suazo administration by deterring the Sandinistas from attacking , and would discourage leftist influence in El Salvador, Guatemala, and Honduras itself.

Economic Assistance The Reagan Administration's economic assistance to Honduras Some 138 million has been requested for EY 1985 also has been generous, totaling $102.7 million in 1983 and nearly $170 million for 1984--or more than double the amount of military aid.

The book value of U.S. private investment in Honduras exceeds 200 million and a new hydroelectric dam built with American loans will soon be in service greatly alleviating Honduras dependence on imported oil.

U.S. economic aid aims at nurturing Honduran democracy A large portion of U.S. financial assistance prbvides badly needed foreign exchange to increase the availability of domestic credit as well as to f oster private sector participation in the develop ment process. The U.S. Agency for International Development AID) has funded an $11 million agrarian reform program that has given land titles to 4,000 peasant families. AID has built more than a thousand n ew schoolrooms and is currently spending $7 million to provide low-cost housing for the poor ties and roads are also being improved.

Health facili- I 11 Although President Suazo expressed gratitude for these and other projects during his January 1983 addre ss to the Honduran Congress,6 Honduras is requesting a total of 1.3 billion in economic aid over the next four years, averaging $325 million per annum.

POLICY RECOMMENDATIONS The U.S. Ambassador Honduran assertion of its independence is understandable in light of its dilemma as a strong U.S. ally and host to Freedom Fighters, while bordering a hostile Nicaragua. Similarly, the Honduran government's shrewd moblization of its strategic assets to press Washington displays admirable diplomatic and political s k ills U.S. Ambassador to Honduras John Negroponte, who is being replaced, played an important role in assuaging Honduran concerns. His successor must demonstrate similar knowledge of the region, sensitivity to Honduran interests, and unswerving loyalty to the Reagan Administration's policy.

Security Assistance U.S. officials have opposed a mutual security pact with Honduras, fearing that it would set a potentially dangerous precedent for U.S policy toward Latin America. By singling out to other Latin .Ameri can nations. Yet there are advantages to a pact. A form-a1 security agreement with Honduras, for example would send a clear message to other Latin American countries and Moscow that the U.S. is renewing and strengthening a permanent commitment to the secu r ity of this Hemisphere I Honduras, it is felt a pact would devalue security commitments The Honduran government already has indicated its willingness to support U.S. policy in the region. Foreign Minister Paz Barnica took the lead in proposing important r evisions in the Contadora Treaty being drafted by several Latin American nations.

His proposals include guidelines to verify treaty compliance and allow U.S. military exercises in the region during the course of arms talks among the Contadora nations. These two points are of ma] or concern to Washington.

Although the Honduran request for a near doubling of its serve U.S. security interests as well as cementing relations with Honduras. This would be in keeping with the recommendations of the National Bipart isan Commission on Central America (the Kissin ger Commission), which stated that "increased U.S. military assistance in Honduras is needed for training and equipment in order to build a credible deterrent and to meet renewed efforts at an insurgency. If U.S. military aid is unrealistic, increased assistance would 9 Central American Report, Vol. X 6, February 11, 1983, p. 43.

Report of the National Bipartisan Commission on Central America, January 1984, p. 102. 12 The out-dated Honduran air force needs to be modernized to counter Nicaragua's dangerous military buildup. Washington seriously should consider the Honduran request for F-5E fighter aircraft. The U.S. regards these as surplus aircraft and they are being supplied to Turkey. Given Nicaragua's growi ng ground forces, Honduran air force must be strengthened.

Increasing U.S. military aid to Honduras must be reciprocated.

The Hondurans should overcome their enmity toward El Salvador and begin coordinating counterinsurgency oper ations with it. Salvado ran leftist forces using Honduras as a refuge and an arms conduit must be recognized as a threat to Honduras as well as El Salvador.

Washington, therefore, should encourage a negotiated resolution of the Honduran/Salvadoran dispute . Also in return for increased U.S. aid, Honduras should permit the U.S. to establish a permanent or semi-permanent military base in Honduras as part of a regional anti-Sandinista strategy and as a replacement for U.S.-run train ing facilities in Panama w h ich were closed in September 1984 and concerns regarding the U.S. and the anti-Sandinista Freedom Fighters. U.S. military presence in Honduras must remain unob trusive. Washington, meanwhile, should encourage the Freedom Fighters to maintain their bases i n Nicaragua rather than Honduras.

In seeking further aid for the Freedom Fighters, the Administration should emphasize to the Congress that ending such assistance could jeopardize U.S. relations wth Honduras U.S. policy must take into account Honduran sens itivities Economic Assistance The United States cannot afford to accede to the Honduran request for $325 million per annum in economic assistance over the next four years. The Reagan Administration's proposed $142 million of direct economic aid to Hondura s in the next four years is satisfactory. Free market means should be used to alleviate the country's economic malaise. Honduras, for instance, is a beneficiary under the Caribbean Basin Economic Recovery Act of 19

83. As such, Honduras should be exempted from sugar import quotas imposed by the U.S. Honduras should be encouraged to divest itself of its mismanaged, problem-ridden government-owned utilities. This would bring much-needed foreign capital into the country and deflect a large measure of public d issatisfaction over the poor quality of electrical, telephone and other services.

In the-long term, the U.S. can best help Honduras economically by lowering trade barriers to Honduran exports while working to encourage a more diversified economy. Resources of the Inter American Foundation should be targeted on Honduran private sector development.

Political Relationship U.S. policy in the region cannot succeed unless Hondurans are convinced that the U.S. will not abandon them or undercut their front-line st ruggle with Sandinista Nicaragua. To achieve 13 this, the U.S. should 1) affirm clearly to Honduras that it will be protected against overt Nicaraguan aggression 2) advise Honduras that Washington will work to assure that the anti-Sandi nista forces pose no threat to Honduras 3) provide renewed assistance to the Freedom Fighters seeking change in Nicaragua and 4) refuse to conclude a pact with Nicaragua which would undermine Honduran will to resist the Sandinistas.

CONCLUSION Honduras is a microcosm of Cen tral America, combining the endemic problems of this vital area and the aspirations of all sectors of its society for a just and democratic future. The fate of Honduras is inextricably linked to that of the United States. From their position on the front l ine of the growing conflict in Central America, the people of Honduras are well aware of the threat posed to this hemisphere by communist subver sion. In September 1983, a Costa Rican affiliate of the Gallup polling organization asked 700 Honduran adults w ith at least one year of secondary school what country, if any, was a threat or a help to Honduras. Of the respondents, 80 percent named Nicaragua as a military threat to Honduras, xhile 93 percent identified,the U.S. as helping Honduras to solve its prob iems.

Critics of Reagan Administration policy have said that U.S military aid tips the Honduran don?-.stic power balance ayay from politicians in favor of the armed forces and creates friction between American personnel and the local populace. Both charges are largely unfounded. The Hondurm military amply has demonstra ted its commitment to democracy by voluntarily returning the country to civilian rule and supporting President Suazo in his power struggle with General Alvarez--even at a time when the U.S m ilitary role had greatly increased.

Washington should reaffirm U.S. friendship and support for the government and people of Honduras. U.S. security may depend on its ability to assure the Hondurans of U.S. commitment to the survival of their struggling dem ocracy and its determination to turn back the communist threat to them and the Western Hemisphere.

Prepared for The Heritage Foundation by Timothy Ashby Management Logistics International, Ltd.

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