US embassy cable - 02TEGUCIGALPA2534 (original version)


Identifier: 02TEGUCIGALPA2534
Wikileaks: View 02TEGUCIGALPA2534 at
Origin: Embassy Tegucigalpa
Created: 2002-09-10 17:00:00
Classification: CONFIDENTIAL
Redacted: This cable was redacted by Wikileaks. [Show redacted version] [Compare redacted and unredacted version]
This record is a partial extract of the original cable. The full text of the original cable is not available.

E.O. 12958:  DECL: 09/10/12 
Ref: Tegucigalpa 2472 
Classified by PolChief Francisco Palmieri, Reasons 1.5 (b) 
and (d) 
1. (C) Summary.  WHA A/S Reich met August 28 in Tegucigalpa 
with Honduran President Ricardo Maduro.  The discussion was 
positive and covered a wide range of issues, with the focus 
being the ongoing dispute between Honduras and Nicaragua on 
border issues and the Nicaraguan 35 percent tariff on 
Honduran goods.  Reich praised Maduro for not imposing a 
retaliatory tariff and urged him to seek an amicable 
solution to the dispute.  Unfortunately, it appears that 
there is no immediate solution in sight on the issue.  Reich 
and Maduro also discussed the issue of an ICC Article 98 
Agreement (see reftel).  End Summary. 
2. (U) Participants in WHA A/S Reich meeting with Honduran 
President Ricardo Maduro in Maduro's office in Tegucigalpa: 
USG: A/S Reich, Ambassador, WHA/CEN Director Trivelli, DCM, 
PolCouns, EconCouns, and PolOff (notetaker). 
GOH: President Ricardo Maduro, Foreign Minister Guillermo 
Perez-Cadalso Arias, Minister of the Presidency Luis 
Cosenza, the President's Executive Assistant Xavier Arguello 
and Cesar Batres, the President's Special Advisor on Land 
Nicaragua and the Tariff 
3. (C) Maduro welcomed A/S Reich to Honduras and opened the 
meeting by asking Reich about his trip to Nicaragua August 
26-27, noting that the GOH has many issues pending with the 
GON.  Reich told Maduro that he had met with prominent GON 
officials while in Managua, including President Enrique 
Bolanos.  Reich said Bolanos was doing the best he could 
with a difficult situation, including a struggling economy. 
Reich noted that Bolanos was attacking corruption, just as 
Maduro was doing in Honduras.  Reich explained that the 
question of stripping former President Arnoldo Aleman of his 
congressional immunity was the major issue in Managua.  He 
added that he had also discussed obstacles to Central 
American integration, including the 35 percent tariff 
leveled in late 1999 against Honduran goods by Nicaragua. 
4. (C) Maduro replied that it appeared reversing the tariff 
had unfortunately become linked to the debate over stripping 
Aleman's congressional immunity.  Maduro then recalled that 
Nicaragua's 35 percent tariff on Honduran goods was imposed 
by the Nicaraguan Congress in reaction to Honduras ratifying 
a Caribbean maritime boundary treaty with Colombia in 1999. 
He explained that the Nicaraguans felt the treaty ignored 
GON territorial claims.  Maduro said he understood the GON 
position that the GOH had to renounce its treaty with 
Colombia.  However, Maduro said now that the GON has filed a 
case before the International Court of Justice on the 
maritime boundary the GOH's position is that it will await 
the court's ruling on its boundary claims before taking any 
action on that treaty. 
5. (C) Maduro outlined how Honduran FM Perez-Cadalso had 
explored options to resolve the tariff issue with Nicaraguan 
FM Norman Caldera.  GOH/GON discussions had included the 
possibility of joint maritime exploitation not just in 
disputed areas, but in all areas.  Maduro recognized that 
Aleman had criticized Bolanos for seeking cooperation with 
the GOH.  However, Maduro charged that Caldera's recent 
statements on oil exploration in the Caribbean were contrary 
to statements made in private GOH/GON discussions and done 
for political reasons.  He explained that those comments had 
provoked a strong negative reaction in the Honduran Congress 
and private sector. 
6. (C) Maduro also detailed efforts made by Cardinal 
Rodriguez, the Archbishop of Tegucigalpa, to approach his 
Nicaraguan counterpart Cardinal Obando y Bravo to discus the 
possible elimination of the tariff but that Obando y Bravo 
had declined to get involved.  Subsequently FM Perez- 
Cadalso, Nicaraguan MFA Sub-Secretary Salvatore (FM Caldera 
did not attend), and Vatican officials discussed the issue 
of possible Vatican mediation of the issue without success. 
7. (C) Maduro said he understood that Bolanos had the 
political will to eliminate the tariff but recognized the 
problem Bolanos faced with Aleman.  He offered that the GOH 
was looking at different approaches to solve the tariff 
problem, but warned that domestic political pressure on him 
to take action was growing.  He explained that some 
political opponents were alleging he was not taking the 
border issue seriously because he was not really Honduran. 
(Note:  Maduro was born in Panama and the issue of his 
citizenship was a hot political issue during the 2001 
presidential campaign.  End Note.) 
8. (C) Maduro said he was seeking to dampen political 
rhetoric on the tariff issue and hoped to find a creative 
solution.  However, he flagged that even deputies of his own 
party (the National Party) were calling for a retaliatory 
tariff.  Maduro underscored his strong personal belief that 
a retaliatory tariff would be contrary to Central American 
integration.  Reich complimented Maduro and the GOH for not 
responding with a retaliatory tariff against Nicaraguan 
Gulf Of Fonseca 
9. (C) Maduro also discussed the Gulf of Fonseca border 
dispute with El Salvador and Nicaragua, saying that the 1992 
ICJ ruling had clearly given Honduras an exit point from the 
Gulf in the Pacific Ocean.  Maduro opined that a trilateral 
economic agreement to develop the gulf would be the best 
solution.  However, he noted that the Inter-American 
Development Bank did not want to get involved in the issue 
due to a lack of interest from the GON and GOES. He noted 
that the 10-year anniversary of the ICJ ruling on the 
Honduran/Salvadoran border would occur September 11.  Maduro 
said he wanted to lower border tensions and emphasize 
positive economic issues between the countries. 
10. (C) A/S Reich responded that the USG would be happy to 
help if it could to reduce tensions in Central America.  He 
noted that no one wanted to return to the tensions of the 
1980s.  Reich emphasized that President Bush was very 
interested in Central America.  Reich added that Honduras 
needed to catch up economically with El Salvador and Costa 
Rica, but acknowledged that would not be easy and that 
expectations needed to be realistic. 
Regional Disarmament? 
11. (C) Maduro said that he had discussed with El Salvadoran 
President Francisco Flores the idea of regional disarmament. 
Maduro said that if disarmament occurred it could lead to 
savings that could be used for social investment.  A/S Reich 
said that the USG was concerned about the number of arms in 
Central America, and cited the recent case of 3,000 rifles 
that went from Nicaragua to Colombia via Panama.  Reich also 
noted that in Nicaragua there was a plethora of AK-47 rifles 
but a shortage of pistols for police.  He stressed that all 
of the arms left over from the 1970s and 80s in the region 
concerned the U.S.  Maduro noted that Honduras had fewer 
weapons and a smaller military than its neighbors do and was 
concerned by its neighbors' military spending.  Maduro said 
that the GOH could not invest in military hardware because 
it needed the money for police, teachers, and other 
important productive domestic investments.  He asked for 
U.S. support on the disarmament issue, saying American 
leadership would be helpful.  A/S Reich offered U.S. and 
pledged to look into ways to assist this effort. 
Trade is Key 
12. (C) Maduro emphasized his vision that Central American 
integration and free trade within the region were key to 
making progress against poverty in the region.  He noted he 
has now met with Bolanos and Flores together at least 4 
times since taking office in January.  He shared that he 
would soon meet again privately with Bolanos, and separately 
with Flores, to encourage more concrete efforts toward 
regional integration. 
13. (C) Maduro stressed the importance of a Central American 
free trade agreement with the U.S.  Maduro said the GOH was 
happy about the U.S. Congress voting to grant the President 
Trade Promotion Authority.  Maduro pointed out that 
increased trade was key to reducing illegal immigration to 
the U.S., but underscored that Honduran remittances from the 
U.S. were a critical element to maintaining a stable 
economic situation in Honduras.  Maduro said he hoped the 
proposed Central America Free Trade Agreement would boost 
foreign investment in the region.  A/S Reich said such 
investment usually followed a trade agreement, especially if 
progress was made against corruption and in favor of 
judicial security. 
Land Disputes and the Administration of Justice 
--------------------------------------------- -- 
14. (C) Maduro introduced Cesar Batres, his Legal Advisor, 
who explained (as expected) that the GOH had decided to seek 
to resolve land disputes involving the GOH by submitting 
them to arbitration (similar to the process used in Costa 
Rica for expropriation cases).  The proposal required a 
change in legislation.  Batres provided the draft law 
prepared by the Supreme Court to Ambassador.  A/S Reich and 
Ambassador thanked Maduro for this initiative. 
15. (C) Reich noted that the administration of justice (AOJ) 
was key for investment.  Why would a business invest if the 
law and protection for investments were not clear when they 
could invest in another location where investments were 
protected, asked Reich.  Maduro agreed that AOJ was critical 
for investment. 
Limited Progress on Economic and Security Problems 
--------------------------------------------- ----- 
16. (C) On agricultural issues, Maduro suggested the need 
for a coordinated international response to the free-fall in 
coffee prices.  Reich noted the importance of coffee in 
Central America and the challenge producers in Central 
America and the Andean Region faced from Vietnamese coffee. 
Maduro said that even though oversupply had led to falling 
producer prices, it had not affected consumer prices, which 
if anything were rising. 
17. (C) Maduro commented that the tourism and textile 
sectors were improved.  He said his administration was 
trying to foster home ownership, infrastructure development, 
and micro and small businesses.  Maduro explained that 
though the International Monetary Fund (IMF) was 
disappointed in the GOH's wage settlement with teachers, he 
hoped they would be successful in negotiating a new three- 
year IMF program, when the IMF team arrived in October.  He 
indicated that tax receipts had risen since July, due to use 
of enforcement measures in the new tax law that included 
temporarily closing businesses that did not pay taxes. 
18. (C) Maduro noted he had boosted police patrols with the 
military to crack down on crime and claimed that both 
homicides and crime in general had dropped since his 
GOH Appreciates Visit 
19. (C) Reich thanked Maduro for the GOH's support on issues 
of concern to the USG at the UN.  Maduro thanked Reich for 
his visit and noted that U.S. support is key and very much 
appreciated.  Maduro praised retiring Ambassador as a friend 
of Honduras and of Maduro. 
Candid Discussion Reveals No Quick End to Tariff Issue 
--------------------------------------------- --------- 
20. (C) Comment.  Reich and Maduro had a friendly and open 
discussion, dominated by discussion of the tariff and border 
dispute with Nicaragua.  In the lengthy talk it was clear 
that there was no immediate solution at hand on the tariff 
issue.  Maduro is likely to face growing political pressure 
to retaliate against the Nicaraguan tariff unless there are 
signs of progress in resolving the issue.  Reich's visit was 
an important statement that the USG recognizes Maduro's 
leadership in avoiding such retaliation, and that its 
resolution is key to Central American free trade and 
integration. End Comment. 

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