| | |  Americas & Beyond | September 2009 
US Cuts Aid to Honduras
 Paul Richter - Los Angeles Times
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September 04, 2009
| | Supporters of Honduran President Manuel Zelaya protest after he was removed from power in a military coup. (AFP) | |
Washington - Secretary of State Hillary Rodham Clinton cut off more than $30 million in aid to Honduras on Thursday in an effort increase pressure on the country's de facto government to restore democratic rule after a coup in June.
The State Department, which had earlier suspended the aid, said it could cut off as much as $200 million more unless the government that ousted former President Manuel Zelaya reinstated the democratically elected leader.
U.S. officials said they also may not recognize the presidential election that the de facto government has scheduled for November.
The Obama administration has moved cautiously to cut off assistance to Honduras, a tiny and impoverished country that is heavily dependent on U.S. aid and trade. But the administration faces growing pressure to do more to dislodge the government led by Roberto Micheletti.
Zelaya, in a speech at George Washington University, said Wednesday that President Obama was "risking his prestige in Latin America" by failing to do more to pressure the de facto government.
Philip J. Crowley, the chief State Department spokesman, said that Clinton, in taking action to cut off aid, was "recognizing the need for strong measures in light of the continued resistance" to a peace deal proposed by Costa Rican President Oscar Arias, who has been mediating. The deal would have restored the populist Zelaya to office before the November election.
The State Department said it was also revoking the visas of several officials and supporters of the de facto government.
The Honduran crisis has placed the Obama administration in a difficult position. It has been accused by some critics of failing to use all of its leverage to force the de facto government to give way.
Some Latin American countries are eager to see greater pressure exerted on the de facto government.
At the same time, the Obama administration faces growing opposition from some congressional Republicans and lobbyists who contend that Zelaya, a political ally of leftist leaders in Latin America, was seeking to undermine the Honduran Constitution so that he could extend his term.
"The Honduran people seek freedom, security and prosperity for their country," said Rep. Connie Mack (R-Fla.). "They deserve our support, not punishing sanctions and severe reductions in aid."
Crowley said that the State Department "recognizes the complicated nature of the actions which led to the June 28 coup d'etat."
"This is not about what the United States must do," Crowley said. "This is about what they must do if they're going to get out of the hole that they have put themselves in."
IMF Gives $164 Million to Coup Government in Honduras, Following Familiar Pattern
Mark Weisbrot - The Center for Economic and Policy Research
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September 04, 2009
UPDATE: As this column was posted, the U.S. State Department issued a release announcing "the termination of a broad range of assistance to the government of Honduras as a result of the coup d'etat that took place on June 28."
See this CEPR press release for an explanation.
The IMF is undergoing an unprecedented expansion of its access to resources, possibly reaching a trillion dollars. This week the European Union committed $175 billion, $67 billion more than even the $108 billion that Washington agreed to fork over after a tense standoff between the U.S. Congress and the Obama administration earlier this summer.
The Fund and its advocates argue that the IMF has changed. The IMF is "back in a new guise," said the Economist. This time, we are told, it's really going to act as a multilateral organization that looks out for the countries and people of the world, and not just for Washington, Wall Street, or European banks.
But it's looking more and more like the same old IMF on steroids. Last week the IMF disbursed $150.1 million to the de facto government of Honduras, and it plans to disburse another $13.8 million on September 9. The de facto government has no legitimacy in the world. It took power on June 28th in a military coup, in which the elected President, Manuel Zelaya, was taken from his home at gunpoint and flown out of the country. The Organization of American States suspended Honduras until democracy is restored, and the United Nations also called for the "immediate and unconditional return" of the elected president.
No country in the world recognizes the coup government of Honduras. From the Western Hemisphere and the European Union, only the United States retains an ambassador there. The World Bank paused lending to Honduras two days after the coup, and the Inter-American Development Bank did the same the next day. More recently the Central American Bank of Economic Integration suspended credit to Honduras. The European Union has suspended over $90 million in aid as well, and is considering further sanctions.
But the IMF has gone ahead and dumped a large amount of money on Honduras - the equivalent would be more than $160 billion in the United States - as though everything is ok there.
This is in keeping with U.S. policy, which is not surprising since the United States has been - since the IMF's creation in 1944 - the Fund's principal overseer. Washington has so far made only a symbolic gesture in cutting off about $18.5 million to Honduras, while continuing to pour in tens of millions more.
In fact, more than two months after the Honduran military overthrew the elected president of Honduras, the United States government has yet to determine that a military coup has actually occurred. This is because such a determination would require, under the U.S. Foreign Appropriations Act, a cut off of aid.
One of the largest sources of U.S. aid is the Millennium Challenge Corporation (MCC), a government entity whose board is chaired by U.S. Secretary of State Hillary Clinton.
Interestingly, there were two military coups in the last year in countries that were receiving MCC money: Madagascar and Mauritania. In both of those cases MCC aid was suspended within three days of the coup.
The IMF's decision to give money to the Honduran government is reminiscent of its reaction to the 2002 coup that temporarily overthrew President Hugo Chavez of Venezuela. Just a few hours after that coup, the IMF's spokesperson announced that "we stand ready to assist the new administration in whatever manner they find suitable." This immediate pledge of support by the IMF to a military-installed government was at the time unprecedented. Given the resources and power of the IMF, it was an important source of international legitimacy for the coup government. Members of the U.S. Congress later wrote to the IMF to inquire how this happened. How did the IMF decide so quickly to support this illegitimate government? The Fund responded that no decision was made, that this was just an off-the-cuff remark by its spokesperson. But this seems very unlikely, and in the video on the IMF's web site, the spokesperson appears to be reading from a prepared statement when talking about money for the coup government.
In the Honduran case, the IMF would likely say that the current funds are part of a $250 billion package in which all member countries are receiving a share proportional to their IMF quota, regardless of governance. This is true, but it doesn't resolve the question as to whom the funds should be disbursed to, in the case of a non-recognized, illegitimate government that has seized power by force. The Fund could very easily postpone disbursing this money until some kind of determination could be made, rather than simply acting as though there were no question about the legitimacy of the coup government.
Interestingly, the IMF had no problem cutting off funds under its standby arrangement with the democratically elected government of President Zelaya in November of last year, when the Fund did not agree with his economic policies.
We're still a long way from a reformed IMF.
This column was published by The Guardian Unlimited on September 3, 2009.
Mark Weisbrot is co-director of the Center for Economic and Policy Research, in Washington, D.C. He is also president of Just Foreign Policy.
The Center for Economic and Policy Research is an independent, nonpartisan think tank that was established to promote democratic debate on the most important economic and social issues that affect people's lives. CEPR's Advisory Board includes Nobel Laureate economists Robert Solow and Joseph Stiglitz; Janet Gornick, Professor at the CUNY Graduate Center and Director of the Luxembourg Income Study; Richard Freeman, Professor of Economics at Harvard University; and Eileen Appelbaum, Professor and Director of the Center for Women and Work at Rutgers University. |
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