US embassy cable - 05TEGUCIGALPA1983

UNCLAS SECTION 01 OF 02 TEGUCIGALPA 001983 
 
SIPDIS 
 
SENSITIVE 
 
STATE FOR EB/IFD, WHA/EPSC, INR/IAA, DRL/IL, AND WHA/CEN 
TREASURY FOR DDOUGLASS 
STATE PASS AID FOR LAC/CAM 
DOL FOR ILAB 
GUATEMALA FOR COMATT AND AGATT 
 
E.O. 12958: N/A 
TAGS: ECON, PGOV, EFIN, ELAB, EAGR, PREL, HO 
SUBJECT: HONDURAN "PACTO POLITICO" SPONSORED BY UNDP 
UNRAVELS IN PUBLIC 
 
 
1. (SBU) On September 5, EconChief attended the very public 
disintegration of the 2005 &Political Pact8 during its 
planned rollout.  The document, based on a similar Pact from 
2001, was intended to serve as a blueprint for the political 
transition following the November 27, 2005 presidential 
elections.  The Pact, an initiative sponsored by the United 
Nations Development Program (UNDP) and the Interamerican 
Development Bank (IDB), has been under negotiation for five 
months, and was to have been signed by all five political 
parties and presented to the public on September 5. 
One-by-one, at least three of the parties balked, leaving the 
document in limbo for now. 
 
2. (SBU) One of the five parties, the small, reformist Party 
for Innovation and National Unity (PINU), had previously 
indicated on Friday, September 2 that they did not intend to 
sign the document.  They claimed that the Pact only served to 
legitimize the two major political parties (the Nationalist 
and Liberal Parties, respectively), while serving as no 
effective constraint on those parties' post-election 
behavior.  According to PINU, the 2001 Pact was largely 
ignored by the leading parties, and PINU expected the current 
Pact would be as well. 
 
3. (SBU) However, the remaining four parties were invited to 
sign the final document in a public ceremony on Friday 
September 5 (Labor Day).  Starting two and a half hours late, 
the rollout ceremony opened with an impromptu press 
conference on the dais by members of the Democratic 
Unification Party (UD), a small, leftist, anti-globalization 
party with five seats in Congress and single-digit voter 
support.  The UD speakers lambasted the current Pact, saying 
it fails to address a number of fundamental concerns of the 
voting public.  Among them, the UD listed:  calling for price 
reductions for energy; lower utility prices; prohibiting 
privatization of water, telephone, and other services; 
cracking down on corruption; price freezes on basic 
foodstuffs; increased agricultural production; increased 
credit to the rural sector; protection of small and medium 
businesses from the competition that will come under CAFTA, 
and passage of the pending legislation on freedom of 
information.  The UD denounced the Pact as something imposed 
by the major parties, and declared they would not in fact 
sign the document. 
 
4. (SBU) Shortly afterwards, National Party presidential 
candidate Porfirio "Pepe" Lobo entered and addressed the 
dwindling crowd from the podium, declaring that there would 
be no signing ceremony, that talks had failed, and that while 
the National Party was prepared to move forward, the Liberal 
Party (the largest opposition party) had scuttled the 
negotiations.  According to Lobo, the Liberals had appeared 
on the morning of September 5 with a new list of demands, 
including reducing energy costs and passing the freedom of 
information bill. 
 
5. (SBU) Liberal Party presidential candidate Manuel &Mel8 
Zelaya did not address the crowd, but EconChief spoke with 
campaign director Hugo Noe Pino.  Noe confirmed that Zelaya 
had demanded that reference to the freedom of information 
bill be put back in the Pact (he claimed it had been removed 
at the last minute.)  He also confirmed the Liberal Party was 
calling for lower energy prices.  Asked how a political party 
could promise lower prices when global events are driving the 
energy markets, Noe replied that wringing corruption out of 
the system would generate important savings.  A price 
reduction of just 8 to 10 lempiras (40 to 55 U.S. cents) per 
gallon would bring Honduran prices in line with regional 
averages, he said, restoring Honduran ability to compete 
without significantly compromising the GOH budget.  "We will 
not break with fiscal discipline," Noe assured EconChief. 
(Note:  This is consistent with what the Liberal Party told 
the International Monetary Fund during its semi-annual visit 
this week.  End note.) 
 
6. (SBU) According to Noe, restarting negotiations on the 
Pact could take several days, and it is being suggested that 
Catholic Church Cardinal Oscar Rodriguez will need to 
intervene personally to bring all five parties back to the 
table.  (Comment:  Cardinal Rodriguez is a politically 
influential player in Honduran and regional politics, has 
long been a key fighter for both debt relief and 
anti-corruption efforts, and was rumored to be on the 
short-list for Pope.  End comment.) 
 
7. (SBU) Though the Pact was to have been a multilateral 
effort involving donors and the Honduran political parties, 
several present at the ceremony complained privately to 
EconChief that they had been shut out of the process. 
Canadian AID Representative Reid Sirrs, currently the 
Chairman of the G-16 coordinating group for donors in 
Honduras, noted that while he had been repeatedly assured the 
process was an open one, he has neither seen a draft of the 
document nor been invited to the preparatory meetings.  World 
Bank ResRep Adrian Fozzard voiced a similar complaint, saying 
that he had not seen the draft document and was unsure what 
it contained.  For our part, Post was approached by the UNDP 
several months ago with their general proposal to undertake a 
new Pact, but we too have seen no drafts of the document and 
await its release. 
 
Williard 
 
Williard