by Todd Gordon
In an effort to create a hospitable environment for investment generally, the Canadian state has long promoted what it calls “public sector reform” and “fiscal discipline,” which has generally meant respectively privatization and austerity.288 As part of this orientation, FAIT’s pre-coup Country Strategy Process report for Honduras had already noted how CIDA ought to play a key role in pushing public sector reform in the country and that such “development assistance efforts are at the heart of our bilateral relationship with Honduras.”289 Along similar lines, the Canadian state, through the Canadian Commercial Corporation (CCC), has also quietly facilitated what some Hondurans believe to be the partial privatization of a Honduran state agency, which raises money through a national lottery for children’s and family support programs. The Patronato Nacional de la Infancia (PANI: National Children’s Trust), according to the Honduran government, was running a debt. So Honduras and the CCC negotiated a financing arrangement in which Canadian Banknote (a company specializing in, among other things, products for lottery systems) will inject 120 million lempiras (approximately C$6.3 million) from 2012 to 2016 into PANI to pay off its debt to the Honduran government and modernize its lottery system, in return for 45 percent of its future profits.290
Stronger economic ties between Canada and Honduras do not turn exclusively on foreign investment. In addition to opening access to the Honduran market and resources, Canadian officials have been promoting access to cheap Honduran labour for Canadian-based employers. In one of his communiqués to Ottawa, Reeder notes that “labour cooperation looks set to grow and Honduras is becoming an important source country to fill Canadian labour shortages.” 291 The coup has allowed Canada to bring Honduras into the orbit of Latin American and Caribbean countries that provide a plentiful supply of cheap and vulnerable labour, without citizenship, to primarily labour-intensive Canadian industries whose profitabilty hinges in large measure on keeping wages low and rights to a minimum.
FREE TRADE AGREEMENT
The first coup de grâce of Canada’s push for more extensive access to the Honduran market was the bilateral Free Trade Agreement (FTA). Signed by Harper and Lobo on July 26, 2011, the FTA was a culmination of Canada’s aggressive economic diplomacy, though it was made more palatable to the official international community through the formal reintegration of Honduras into the OAS. The FTA was presented as an expression of normalized relations with a democratic Honduras.
In August 2010, Reeder was promoted to Director General for Latin America and the Caribbean in FAIT. He was replaced by new Ambassador, Cameron Mackay. Mackay’s appointment was influenced by a desire to advance trade negotiations between Canada and Honduras. His CV for FAIT, which should give one a good idea of the role the Department envisions for the Canadian embassy, includes stints as a member of Canada’s Permanent Mission to the World Trade Organization; trade and economic relations officer; senior trade policy officer (WTO); Trade Policy and Planning Division; deputy director of the Regional Trade Policy Division; and director of regional trade policy for the Americas.292 Indeed, not long after his appointment (but before his credentials had been received by the Honduran government from Ottawa) arrangments were made to meet with Canadian investors in Honduras and with Honduran cabinet ministers to discuss the mining law.293
Honduras was originally part of the Central American Four (CA4) multilateral negotiations with Canada, which also included Guatemala, El Salvador, and Nicaragua. But having built up its political capital as an ardent ally of the post-coup Honduran regimes, and knowing Lobo was a strong supporter of foreign investment and free markets, Canada started negotiating with Honduras independently of the rest of the CA4 in December 2010. With the CA4 talks not moving nearly as efficiently as Canada wanted, Honduras was an easy target following the coup, with FAIT reflecting prosaically that now, “Canada is closer to reaching an agreement with Honduras than it is with the other three countries.” A successful bilateral negotiation was perhaps also seen as leverage to advance negotiations with the remaining CA4 by FAIT strategists, who noted in their announcement about moving ahead bilaterally with Honduras that “Canada remains open to re-engaging in negotations” with Guatemala, El Salvador, and Nicaragua.294
Not surprisingly, representatives of the mining industry talked up the opportunities for increased investment provided by an FTA. Exploration had stalled after Zelaya placed a moratorium on new exploration activities and in the absence of a new mining law. A FAIT press release on the state of bilateral negotiations tersely noted that “Honduras offers promising opportunities for Canadian businesses and workers.”295 The president of the Asociación Nacional de Minería Metálica en Honduras (National Association of Metallic Mining in Honduras, ANAMINH), Santos Gabino Carbajal, was more specific, stating that “without a doubt it [the FTA] will increase investment” in mining; the majority of that, of course, will be Canadian. 296 While not specific to mining, the FTA was an important signal that Honduras is open for Canadian business, and represented one important step in the process of opening the floodgates to Canadian mining capital. After several years of uncertainty in the industry due to legal challenges to the existing law and the Zelaya-instituted moratorium, it was six months after the signing of the FTA when the new mining law was introduced into the Congress. It was not just the mining sector that expressed its pleasure at the negotiations, though. They were praised by Jesús Canahuati, member of one of the most powerful maquila dynasties in Honduras, and brother of Lobo’s Minister of Foreign Affairs, as mentioned above. For Canahuati, the negotiations sent “an important message to other investors” that post-coup Honduras is a “favourable climate for investment.”297 It will benefit the maquila sector, but perhaps just as importantly it gives greater weight to the idea that Honduras, despite its political problems, is a legitimate destination for foreign capital.
The real and symbolic significance of the FTA was reflected in Harper’s attendance at the signing in Honduras. Not only did Harper announce the completion of the Canada-Honduras Free Trade Agreement and meet Canadian business leaders (taking a tour of a Gildan factory along the way), but he became the first foreign leader to visit Honduras and meet Lobo since the country was readmitted to the OAS on June 1, 2011. Harper’s summit with Lobo was intended to signal that the Honduran regime was a deserving member of the international community. It also unambiguously expressed a driving force behind Canada’s Honduran intervention. As Harper declared, “a free trade agreement with Honduras is a key part of our Government’s agenda to open new markets for Canadian business, create new opportunities for our workers and contribute to Canada’s future prosperity.”298 However much Harper may have touted the “opportunities” for Canadian workers, this was little more than the usual obfuscation that accompanies such celebrations so as not to publicly concede outright the narrow band of victors in the agreement. The biggest beneficiaries will be, far and away, Canadian maquila, mining, and tourist investors.
While Canada had already been negotiating for a FTA with Honduras as part of the CA4, there is a line that goes straight from the coup through to Harper announcing the bilateral FTA’s conclusion. The removal of Zelaya and his replacement with Lobo, supported by Canada, is the context in which the agreement was negotiated and concluded bilaterally. Given that the CA4 negotiations had stalled, and that the electoral Centre-Left and social movements had gained a voice in the mainstream political debate in Honduras, without the coup the agreement would not have been concluded. This is certainly not lost on Honduran social movements, who condemned the FTA. The Consejo Cívico de Organizaciones Populares e Indígenas de Honduras (Civic Council of Popular and Indigenous Organizations of Honduras, COPINH), for example, is clear about the connection between the FTA, Canada, and the coup: “the free trade agreement between Canada and Honduras is the fruit of the coup d’etat and its continuation”—a “coup supported by the Canadian government and Canadian companies.” It is also clear about Canada’s inten
tion: the FTA, it argues, represents “a violation of our sovereignty” that will involve the “usurpation of the territories, cultures and lives of indigenous and African” Hondurans, and makes the coup clearer “to the indigenous and African Hondurans” in whose territories are situated the “resources Canadian transnationals need.”299
CONCLUSION
The Harper government implicated Canada quite deeply in the toxic mix of repression and free market fundamentalism that is post-coup Honduras, and offered unfailing support to subsequent post-coup regimes. Although the transition from Zelaya to Lobo was initiated by unconstitutional means, Lobo’s stature as an ally of Canadian interests meant that those circumstances could be ignored or downplayed, as could the horrendous abuses of human rights. As we noted in the introduction, such a posture by Canadian diplomats has become part of the familiar calculus of the Canadian state when its political leaders are dealing with the overthrow of progressive governments that threatened the interests of Canadian capital: so long as the victim is a leader perceived as unfriendly by Canada, unconstitutional means and human rights abuses can be made tolerable.
The Honduran case contrasts sharply with the Malian coup, which took place three years later, in March 2012. In the latter case, a Canadian political and military ally overseeing a favourable mining regime, Amadou Toumani Touré, was overthrown in a military coup. Canada responded even before the coup was successful. Foreign Affairs Minister, John Baird, warned that he was “deeply concerned by reports coming out of Bamako, Mali, where certain elements of the military appear to have attacked the presidential palace.” He added, in much stronger language than was ever used regarding coup plotters in Honduras, that “the democratic will of the Malian people must be respected.”300 Following the coup, Baird announced that “Canada utterly condemns this attack on democracy” and that “the perpetrators of the coup d’etat in Mali need to be sent a clear message, that democracy, constitutional order and stability must be restored in Mali.”301
As Kent and the embassy were promoting the San José-Tegucigalpa negotiations, the embassy was encouraging Canadian NGOs, based almost exclusively in the poor rural areas of the country where Zelaya remained popular, to engage with the Micheletti government, “as they deemed necessary.” With a significant Canadian NGO presence in the country and an important donor relationship (Honduras was an official CIDA Country of Focus and Canada was chairing an international donor’s group at the time of the coup), aid delivered to the government could have been used as a lever against the military dictatorship. Cutting off aid to punish a dictatorship may not be the best result for impoverished aid recipients (assuming aid money reaches its intended targets and is not pilfered by government officials), but for our purposes here it is worth noting that three years later the Harper government, in stark contrast to its response to the Honduran coup, cut off bilateral aid to the unconstitutional government in Mali, with International Cooperation Minister, Bev Oda, declaring that Canada did not want to “further add to the woes of the average Malian.”302
In late January 2014, the historian Dana Frank noted that in a few days,
a new president will take the helm in Honduras: Juan Orlando Hernández. He’s handsome. He’s charming. He’s young. He looks as though he was born wearing a clean white shirt. And he’s a dangerous thug. Hernández was one of the key architects of the 2009 military coup, and has a stellar track record ever since overthrowing the rule of law.303
Hernández was the presidential candidate for Lobo’s National Party in the November 2013 general election. In addition to having been an enthusiastic supporter of the coup in 2009, Hernández, as head of the Congress under Lobo’s administration, also led what has become known colloquially as the “technical coup” of 2013, whereby four members of the Supreme Court were summarily sacked and replaced by conservative stalwarts. He also recently supported the illegal appointment of a new attorney general to a five-year post. Hernández was, furthermore, a key player behind the establishment of a new five thousand-strong military police force in Honduras during the Lobo regime, and campaigned during the presidential race under the terrifying slogan, “a soldier on every corner.”304
For much of 2013, Xiomara Castro, the presidential candidate for the left-wing LIBRE party which emerged out of the resistance, led in the polls, sometimes alternating places with Salvador Nasralla, of the newly established Partido Anticorrupción (Anti-Corruption Party, PAC). In the immediate lead-up to the elections, however, the traditional National and Liberal parties began to gain ground in the polls. The official results ultimately released by the Supreme Electoral Tribunal on December 12, 2013 determined that Hernández had secured the presidency with 37 percent of the vote, beating Castro’s 29.305 Trailing these two frontrunners were Mauricio Villeda of the Liberal Party, with 20 percent, and Nasralla of the PAC, with 13 percent.
The Canadian government was, unsurprisingly, pleased with the election results of November 2013. Lynne Yelich, Minister of State, travelled to Honduras from January 25 to 27, 2014 to attend Hernández’s inauguration. Foreign Affairs, Trade and Development Canada made it clear that Ottawa was keen to deepen relations with the Hernández regime going forward. “Canada and Honduras have a growing commercial relationship, and Honduras benefits from long-standing and substantial Canadian development cooperation programming,” said Minister of State Yelich. “The signing of the Canada-Honduras Free Trade Agreement in November 2013 [more on this below] is an indicator of the growing strength of our bilateral relations.”306
While electoral observers from the Organization of American States (OAS) and the European Union (E.U.) declared the elections to have been free and fair, their reports largely ignored the generalized context of militarization in which the elections took place, as well as the targeted political assassinations and intimidation of the political opposition, and particularly activists, candidates, and campaigners affiliated with LIBRE.307 Twenty-two LIBRE candidates, activists, and campaigners were murdered between May 2012 and the November 2013 elections.308 LIBRE headquarters in Tegucigalpa were surrounded two days before the elections by armed men in masks, apparently military police.309
Hernández has pledged to continue the political-economic project that he inherited from Lobo—rooted principally in attracting foreign multinational capital to extract natural resources. This is particularly disturbing given the vast empirical data available on the devastating social and economic consequences of that model since 2009.310 Economic growth has weakened considerably since 2009. Between 2010 and 2013, average annual GDP growth was a mere 3.5 percent. By comparison, from 2006 to 2008 average annual growth hit 5.7 percent. In 2006 and 2007, GDP was over 6 percent, and the country still grew at a rate of 4.2 percent—the highest growth rate in Central America—in 2008, despite the fact that Honduras’ largest trading partner, the U.S., had slipped into the beginnings of what would become the biggest global crisis in world capitalism since the Great Depression. In 2009, the global recession hit the Honduran economy hard, principally through a reduction in external demand and a decrease in remittances being sent home from migrant Honduran workers located in the U.S. economy. Clearly, then, a negative external environment played a role in low growth rates since 2009. However, economists have pointed out that the extent of the problems was exacerbated by the neoliberal policies of the Lobo administration. There was space for countercyclical spending that could have cushioned the blow, as it did in many other Latin American countries over this period.311
Social inequality has also worsened dramatically since the coup, after a four-year improving trend beginning in 2006 under Zelaya’s administration. Since 2010, Honduras has gradually acquired the worst income distribution of any country in Latin America, which is in turn the most unequal region in the world.312 In spite of relatively low aggregate growth in 2010 and 2011, the wealthiest decile of Honduran society actually did better than they had before the recession. The wealthiest 10 percent
captured the entirety of income gains from 2010 to 2011, while the rest of the population experienced a contraction in their incomes, such that they are now at the lowest they have been since 2006.313 Poverty has likewise taken a turn for the worse. Under Zelaya, rates of poverty and extreme poverty fell by 7.7 and 20.9 percent respectively, whereas during the post-coup period the poverty and extreme poverty rates increased by 13.2 and 26.3 percent respectively.314
A significant portion of the explanation for the negative trends in poverty and inequality have to do with social spending patterns. While Zelaya was able to achieve relatively large reductions in poverty and extreme poverty rates in part because of a context of high growth, the increase in social spending as a percent of GDP—including on health and education—he oversaw was also critical. Between 2005 and 2009 social spending as a percent of GDP rose from 10.4 to 13.3, whereas it has decreased since 2010 to 10.9 percent of GDP.315 Adding to the negative impact on poverty and inequality stemming from the decline in social spending has been the worsening rate of unemployment since the coup. Between 2008 and 2012, the rate of involuntary part-time workers and the unemployed increased from 6.8 to 14.1 percent.316