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Cablegate: Alba Expected to Be Signed On August 25 at a Huge

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P 201150Z AUG 08
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INFO RUEHZA/WHA CENTRAL AMERICAN COLLECTIVE PRIORITY
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C O N F I D E N T I A L SECTION 01 OF 03 TEGUCIGALPA 000765

SIPDIS

E.O. 12958: DECL: 08/18/2018
TAGS: PREL ECIN ETRD PGOV HO
SUBJECT: ALBA EXPECTED TO BE SIGNED ON AUGUST 25 AT A HUGE
RALLY, BUT CONGRESSIONAL PASSAGE NOT SECURED

REF: A. A. 07 TEGUCIGALPA 1915
B. B. TEGUCIGALPA 41
C. C. TEGUCIGALPA 336
D. D. TEGUCIGALPA 458

Classified By: Charge d'Affaires, a.i. Simon Henshaw, reasons 1.4 (b &
d)

1. (C) Summary: Local press continues to spin about the
Honduran government's impending signature to Hugo Chavez's
Bolivarian Alternative for the Americas (ALBA), currently
scheduled to take place with much fanfare on August 25. The
private sector has publicly announced its opposition to the
agreement and lamented its harmful effects on the investment
climate to Embassy officials, but has shown scant leadership
to stop it. Constitutionally required Congressional approval
is needed to adopt ALBA, which, in turn, requires the support
of President of Congress Roberto Micheletti, who has been
suffering from low polling numbers and has been desperately
looking for allies to support his presidential bid. After
reportedly reaching an agreement with Zelaya to support ALBA,
Micheletti may have backed off, and is reportedly now asking
individual members of Congress to take on ALBA without him,
privately declaring his own political capital with the
Presidential palace spent. The outcome may depend on what is
more important to Micheletti - his anti-communist sentiments
or his desire to repair his relationship with Zelaya,
improving his chances of being the next Liberal candidate for
the Presidency. End Summary.

Private Sector Publicly Opposes ALBA, But Lacks Action
---------------------
2. (C) Emboffs met with private sector representatives August
14, including President of the National Council for Private
Enterprise (COHEP), Amilcar Bulnes, Acting President of the
Tegucigalpa Chamber of Commerce, Carlos Bueso, and President
of the Private Banking Association (AHIBA), Roque Rivera.
These representatives had publicly announced their opposition
to ALBA the day after a meeting with President Zelaya. These
private sector representatives told Emboffs that membership
in ALBA would define Honduras as a "communist" country, and
said it would give the GOH impetus to nationalize private
enterprises on a mass scale. Rivera said a growing climate
of economic uncertainty over last two years is punctuated by
increasing aggression toward foreign banks, changes to the
fuel price formula, a flagrantly mismanaged state budget, and
an increasing tendency to issue public procurements through
no-bid contracts under the guise of "emergencies." But, he
said none of this matches the damage that would be done by
ALBA.

3. (C) Despite his expression of opposition, Bulnes excused
himself from leading the charge against ALBA, citing the
political risks of confronting the President. Nevertheless,
he did not hesitate to encourage the Embassy to act against
ALBA before it is "too late," suggesting we should place a
call to Micheletti. (Note: Bulnes has a reputation as a
strong supporter and close friend of President Zelaya, which
he demonstrated through unmitigated support during the
Toncontin airport crisis. In a separate meeting, National
Party insider xxxxxxxxxxxx told Emboffs that Bulnes is
being paid by media magnate Jaime Rosenthal not to stand up
to President Zelaya. Others, including Liberal Party
Congresswoman Martha Alvarado de Casco, have also lamented
the private sector's lack of action on ALBA. Two legal
advisors employed by COHEP told Econoff that, while COHEP's
official line is in opposition to ALBA, Bulnes secretly
supports it due to his close ties to Zelaya. End Note).

Micheletti's Candidacy
----------------------
4. (C) In order to actually put an ALBA accession into force,
the constitution requires that Zelaya obtain the approval of
the Congress -- which means Zeleya needs Micheletti's
support. With dismal polling numbers, formerly confident
Micheletti has been looking for allies to boost his chances

TEGUCIGALP 00000765 002 OF 003


in the presidential election, bringing Yani Rosenthal
(President Manuel Zelaya's former Minister of the Presidency)
into his movement, and adding Roland Valenzuela, a suspected
money launderer and drug trafficker who was publicly booted
from Vice President Santos' camp. Both figures bring a heavy
bankroll to the Micheletti campaign and suggest growing ties
to Zelaya. On August 6, the press reported that Micheletti
had allegedly reached a deal on ALBA with Zelaya. In
exchange for the President's support of his candidacy,
Micheletti would reportedly ensure the approval of ALBA in
the Congress. To support this rumor, on August 11, Santos
denounced publicly that a member of his movement - Jose
Alfredo Saavedra - had been contacted by the secretary of one
of Micheletti's strongest supporters and instructed to "come
and pick up his one million lempiras" (approximately USD
52,000) in exchange for his positive vote on ALBA.
Apparently the secretary had been trying to reach Jose Angel
Saavedra, but mistakenly contacted Liberal Party Congressman
in Santos' camp. The scandal brought to light what everyone
already knew but could not prove - that the congress, and
specifically the president of the congress, used
discretionary congressional funds to buy votes. This
bolstered the argument that Micheletti supports ALBA.

Micheletti Breaks with Zelaya?
--------------------------
5. (C) In an attempt to quash suspicion of a
Zelaya-Micheletti pact, Congresswoman Alvarado reported to
emboffs on August 18 that Micheletti and Zelaya had met on
August 15 and had suffered a major break. Zelaya reportedly
declared that his government would continue to move towards a
socialist system, to which Micheletti announced, "Then you
will do it without me!" Alvarado explained, however, that
individual members of Congress would be speaking out against
ALBA without Micheletti's leadership because he had spent his
political capital on other recent battles with Zelaya, such
as securing his own Presidential candidacy, killing "Hoy No
Circula," overriding the electoral reform veto, and ending
the battle with the prosecutors (see reftels A - D). She and
several other sources have told us that ALBA should only
receive approximately 25 votes, and that it would die in
Congress.

August 25th - the Signing
-------------------------
6. (C) The ALBA signing ceremony is scheduled to take place
on August 25th and according to multiple sources, the
President will be pulling out all the stops to get massive
public attendance. On August 18, the President interrupted
all television broadcasts (including private cable
transmissions) to tout supposed IMF praise for the economic
advances made by his administration, and then strongly urge
people to attend the upcoming rally. Multiple sources inform
us that attendees will be each be paid 250 lempiras to show
up for the rally (twice the average daily wage), plus lunch
and transportation, plus 250 lempiras upon exiting the event.
This is a substantial sum for an average Honduran, and if
the rumors are true, then we can expect huge crowds on August
25, even if no one who attends understands what ALBA is all
about.

Comment
-------
7. (C) Although no draft of the Honduran agreement with ALBA
seems to be under discussion or negotiation, Zelaya's
signature on the agreement appears a forgone conclusion.
Though the only hope for its defeat is in Congress, dearth of
unified opposition there suggests it could succeed. As with
any Congressional action, Micheletti will be the key to the
outcome on ALBA. Micheletti has a long-standing reputation
as a rabid anti-communist. We have learned, however, that he
is completely unreliable when it comes to promises made about
what he will do in the Congress. We also know that
Micheletti is power-hungry and his desire to become president
is paramount. He has seen his candidacy and his polling
numbers slip away and appears to be so desperate that he

TEGUCIGALP 00000765 003 OF 003


would include drug traffickers and other corrupt people on
his candidate slates, just to get their money and support.
If he believes supporting ALBA will help his presidential
prospects, he may end up supporting it. End comment.
HENSHAW

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