About the CBI

February 2006
Background Note: Honduras

Flag of Honduras is three equal horizontal bands of blue (top), white, and
blue with five blue, five-pointed stars arranged in an X pattern centered in
the white band; the stars represent the members of the former Federal
Republic of Central America -- Costa Rica, El Salvador, Guatemala, Honduras,
and Nicaragua.

PROFILE

OFFICIAL NAME:
Republic of Honduras

Geography
Area: 112,090 sq. km. (43,278 sq. mi.); about the size of Louisiana.
Cities: Capital--Tegucigalpa (1,150,000); San Pedro Sula (800,000-900,000).
Terrain: Mountainous.
Climate: Tropical to subtropical, depending on elevation.

People
Nationality: Noun and adjective--Honduran(s).
Population (2004 est.): 6.8 million.
Growth rate (2004 est.): 2.24%.
Ethnic groups: 90% mestizo (mixed Indian and European); others of European,
Arab, African, or Asian ancestry; and indigenous Indians.
Religions: Roman Catholic, Protestant minority.
Language: Spanish.
Education: Years compulsory--6. Attendance--88% overall, 31% at junior high
level. Literacy--76.2%.
Health: Infant mortality rate--29.64/1,000. Life expectancy--66.2 yrs.
Work force: Services--42.2%; natural resources/agriculture--35.9%;
manufacturing--16.3%; construction/housing--5.6%.

Government
Type: Democratic constitutional republic.
Independence: September 15, 1821.
Constitution: 1982; amended 1999.
Branches: Executive--president, directly elected to 4-year term.
Legislative--unicameral National Congress, elected for 4-year term.
Judicial--Supreme Court of Justice (appointed by Congress and confirmed by
the president); several lower courts.
Political parties: National Party, Liberal Party, Innovation and National
Unity Party, Christian Democratic Party, and the Democratic Unification
Party.
Suffrage: Universal and compulsory at age 18.
Administrative subdivisions: 18 departments.

Economy (2003)
GDP: $17.46 billion.
Growth rate: 2.5%.
Per capita GDP: $2,600.
Natural resources: Arable land, forests, minerals, and fisheries.
Agriculture (11% of GDP): Products--coffee, bananas, shrimp and lobster,
sugar, fruits, basic grains, and livestock.
Manufacturing (18% of GDP): Types--textiles and apparel, cement, wood
products, cigars, and foodstuffs.
Trade: Exports--$1.37 billion: apparel, coffee, shrimp, bananas, palm oil,
gold, zinc/lead concentrates, soap/detergents, melons, lobster, pineapple,
lumber, sugar, and tobacco. Major market--U.S. (69%). Imports--$3.11 billion:
fabrics, yarn, machinery, chemicals, petroleum, vehicles, processed foods,
metals, agricultural products, plastic articles, and paper articles. Major
source--U.S. (53%).

PEOPLE
About 90% of the population is mestizo. There also are small minorities of
European, African, Asian, Arab, and indigenous Indian descent. Most Hondurans
are Roman Catholic, but Protestant churches are growing in number. While
Spanish is the predominant language, some English is spoken along the
northern coast and is prevalent on the Caribbean Bay Islands. Several
indigenous Indian languages and Garífuna (a mixture of Afro-indigenous
languages) are also spoken. The restored Mayan ruins near the Guatemalan
border in Copan reflect the great Mayan culture that flourished there for
hundreds of years until the early 9th century. Columbus landed at mainland
Honduras (Trujillo) in 1502. He named the area "Honduras" (meaning "depths")
for the deep water off the coast. Spaniard Hernan Cortes arrived in 1524. The
Spanish founded several settlements along the coast, and Honduras formed part
of the colonial era Captaincy General of Guatemala. The cities of Comayagua
and Tegucigalpa developed as early mining centers.

HISTORY

Independence
Honduras, along with many other Central American provinces, gained
independence from Spain in 1821. The country was then briefly annexed to the
Mexican Empire. In 1823, Honduras joined the newly formed United Provinces of
Central America. Social and economic differences between Honduras and its
regional neighbors exacerbated harsh partisan strife among Central American
leaders and brought on the federation's collapse in 1838. Gen. Francisco
Morazan--a Honduran national hero--led unsuccessful efforts to maintain the
federation, and restoring Central American unity remained the chief aim of
Honduran foreign policy until after World War I.

Since independence, Honduras has been plagued with nearly 300 incidents of
unrest, including internal rebellions, civil wars, and changes of
government--more than half of which occurred during the 20th century. The
country traditionally lacked both an economic infrastructure and social and
political integration. Its agriculture-based economy was dominated in the
1900s by U.S. companies that established vast banana plantations along the
north coast. Foreign capital, plantation life, and conservative politics held
sway in Honduras from the late 19th century until the mid-20th century.
During the relatively stable years of the Great Depression, authoritarian
Gen. Tiburcio Carias Andino controlled Honduras. His ties to dictators in
neighboring countries and to U.S. banana companies helped him maintain power
until 1948. By then, provincial military leaders had begun to gain control of
the two major parties, the Nationalists and the Liberals.

From Military to Civilian Rule
In October 1955--after two authoritarian administrations and a 1954 general
strike by banana workers on the north coast--young military reformists staged
a palace coup that installed a provisional junta and paved the way for
constituent assembly elections in 1957. This assembly appointed Dr. Ramon
Villeda Morales as President and transformed itself into a national
legislature with a 6-year term. The Liberal Party ruled during 1957-63. At
the same time, the military took its first steps to become a professional
institution independent of leadership from any one political party, and the
first class of the newly created military academy graduated in 1960. In
October 1963, conservative military officers preempted constitutional
elections and deposed Villeda in a bloody coup. These officers exiled Liberal
Party members and took control of the national police. The armed forces, led
by Gen. Lopez Arellano, governed until 1970. Popular discontent continued to
rise after a 1969 border war with El Salvador. A civilian President--Ramon
Cruz of the National Party--took power briefly in 1970 but proved unable to
manage the government. In December 1972, Gen. Lopez staged another coup.
Lopez adopted more progressive policies, including land reform, but his
regime was brought down in the mid-1970s by corruption scandals.

Gen. Lopez's successors continued armed forces modernization programs, built
army and security forces, and concentrated on Honduran Air Force superiority
over its neighbors. The regimes of Gen. Melgar Castro (1975-78) and Gen. Paz
Garcia (1978-83) largely built the current physical infrastructure and
telecommunications system of Honduras. The country also enjoyed its most
rapid economic growth during this period, due to greater international demand
for its products and the availability of foreign commercial lending.

Following the overthrow of Anastasio Somoza in Nicaragua in 1979 and general
instability in El Salvador at the time, the Honduran military accelerated
plans to return the country to civilian rule. A constituent assembly was
popularly elected in April 1980, and general elections were held in November
1981. A new constitution was approved in 1982, and the Liberal Party
government of President Roberto Suazo Cordoba took office following free and
fair elections.

Suazo relied on U.S. support to help during a severe economic recession which
was the result of regional instability caused by the revolutionary Sandinista
government in Nicaragua and the chaos of the brutal civil war in El
Salvador. Close cooperation on political and military issues with the United
States was complemented by ambitious social and economic development projects
sponsored by the U.S. Agency for International Development (USAID). Honduras
became host to the largest Peace Corps mission in the world, and
nongovernmental and international voluntary agencies proliferated.

As the November 1985 election approached, the Liberal Party had difficulty
settling on a candidate, and interpreted election law as permitting multiple
presidential candidates from one party. The Liberal Party claimed victory
when its presidential candidates, who received 42% of the vote, collectively
outpolled the National Party candidate, Rafael Leonardo Callejas. Jose Azcona
Hoyo, the candidate receiving the most votes among the Liberals, assumed the
presidency in January 1986. With the endorsement of the Honduran military,
the Azcona administration ushered in the first peaceful transfer of power
between civilian presidents in more than 30 years. Four years later, Rafael
Callejas won the presidential election, taking office in January 1990.
Callejas concentrated on economic reform, reducing the deficit, and taking
steps to deal with an overvalued exchange rate and major structural barriers
to investment. He began the movement to place the military under civilian
control and laid the groundwork for the creation of the public ministry
(attorney general's office).

Despite his administration's economic reforms, the nation's fiscal deficit
ballooned during Callejas' last year in office. Growing public
dissatisfaction with the rising cost of living and with widespread government
corruption led voters in 1993 to elect Liberal Party candidate Carlos Roberto
Reina over National Party contender Oswaldo Ramos Soto, with Reina winning
56% of the vote.

President Reina, elected on a platform calling for a "moral revolution,"
actively prosecuted corruption and pursued those responsible for human rights
abuses in the 1980s. He created a modern attorney general's office and an
investigative police force and was successful in increasing civilian control
over the armed forces and transferring the police from military to civilian
authority.

Reina also restored national fiscal health by substantially increasing
Central Bank net international reserves, reducing inflation, restoring
economic growth, and, perhaps most importantly, holding down spending.

Carlos Roberto Flores Facusse took office on January 27, 1998, as Honduras'
fifth democratically elected President since democratic institutions were
restored in 1981. Like three of his four predecessors, Flores was a member of
the Liberal Party. He was elected by a 10% margin over his main opponent,
National Party nominee Nora de Melgar. Upon taking office on January 27,
1998, Flores inaugurated programs of reform and modernization of the Honduran
government and economy, with emphasis on helping Honduras' poorest citizens
while maintaining the country's fiscal health and improving international
competitiveness.

In October 1998, Hurricane Mitch devastated Honduras, leaving more than 5,000
people dead and 1.5 million displaced. Damages totaled nearly $3 billion. The
Honduran Government agreed to a new transparent process to manage relief
funds, which included significant donor oversight. This open process greatly
facilitated the relief and reconstruction effort. President Flores and his
administration successfully managed more than $600 million in international
assistance. Civil society's role in the government-coordinated reconstruction
process was lauded internationally. President Flores also moved judicial and
penal reforms forward. He established an anticorruption commission, supported
passage of a new penal code based on the oral accusatorial system, and saw
passage of a law that created an independent Supreme Court. Flores cemented
the transition from military to civilian rule by eliminating the military's
commander in chief position, and by signing a law that established a civilian
Minister of Defense with formal authority over the military.

Ricardo Maduro Joest of the National Party was elected to the Honduran
presidency on November 25, 2001, outpolling the Liberal candidate, Rafael
Pineda Ponce, by 8 percentage points. He was inaugurated on January 27, 2002.
The elections, characterized by international observer teams as free, fair,
and peaceful, reflected the maturing of Honduras' democratic institutions.
During his campaign, President Maduro promised to reduce crime, reinvigorate
the economy, and fight corruption. Working to fulfill this promise, Maduro's
first act as President was to deploy a joint police-military force to the
streets to permit wider neighborhood patrols in the ongoing fight against the
country's massive crime problem. While the initial result of this policy was
overwhelmingly positive, the policy appears to have had only a minimally
positive long-term effect on the country's crime rate. President Maduro has
been a strong supporter of the global war on terrorism and joined the
U.S.-led coalition in Iraq with a contribution of 370 troops. Under President
Maduro's guidance, Honduras also participated in the successful Central
America Free Trade Agreement talks and actively promoted greater Central
American economic integration.

GOVERNMENT
The 1982 constitution provides for a strong executive, a unicameral National
Congress, and a judiciary appointed by the National Congress. The president
is directly elected to a 4-year term by popular vote. The Congress also
serves a 4-year term; congressional seats are assigned the parties'
candidates in proportion to the number of votes each party receives in the
various departments. The judiciary includes a Supreme Court of Justice,
courts of appeal, and several courts of original jurisdiction--such as labor,
tax, and criminal courts. For administrative purposes, Honduras is divided
into 18 departments, with municipal officials selected for 4-year terms.

POLITICAL CONDITIONS
Reinforced by the media and several political watchdog organizations, human
rights and civil liberties are reasonably well protected. There are no known
political prisoners in Honduras, and the privately owned media frequently
exercises its right to criticize without fear of reprisals. Organized labor
now represents approximately 8% of the work force and its economic and
political influence has declined. Honduras held its sixth consecutive
democratic elections in November 2001, to elect a new president, unicameral
Congress, and mayors. For only the second time, voters were able to cast
separate ballots for each office, and for the first time, voters denied the
president-elect's party an absolute majority in the Congress. The incidence
of cross-voting between presidential and congressional candidates was marked.

Political Parties
The two major parties--the Liberal Party and the National Party--run active
campaigns throughout the country. Their ideologies are mostly centrist, with
diverse factions in each centered on personalities. The three smaller
registered parties--the Christian Democratic Party, the Innovation and
National Unity Party, and the Democratic Unification Party--have increased
their political muscle in the National Congress by doubling their
representation in the 2001 elections. Despite significant progress in
training and installing more skillful advisers at the top of each party
ladder, electoral politics in Honduras remain traditionalist and
paternalistic.

Principal Government Officials
President--Ricardo MADURO Joest
Minister of Foreign Relations--Mario FORTIN
Ambassador to the United States--Charge d'Affaires Sergio MEMBRENO CEDILLO
Ambassador to the United Nations--Manuel ACOSTA BONILLA
Ambassador to the OAS--Salvador Enrique RODENZO

Honduras maintains an embassy in the United States at 3007 Tilden Street NW,
Washington, DC 20008 (tel. 202-966-7702).

ECONOMY
Honduras is one of the poorest and least developed countries in Latin
America. Industrial development has been limited, and historically the
economy has been dependent on exports of coffee and bananas. In the past 15
years, however, the economy has been diversified, with the development of
non-traditional exports such as cultivated shrimp, melons, and tourism, and
the establishment of a growing maquila industry (primarily, assembly for
re-export of textiles and apparel). Investment incentives aimed at attracting
foreign capital in export industries have been introduced. Meanwhile the
coffee industry has suffered from low world prices, and banana production has
yet to reach pre-Hurricane Mitch levels. Coffee and bananas now account for
less than 15% of Honduran export earnings. Honduras also has extensive
forest, marine, and mineral resources, although widespread slash-and-burn
agricultural methods continue to destroy Honduran forests.

Family remittances from Hondurans living abroad (mostly in the United States)
rose 19% to $860 million in 2003, and are soon expected to pass the maquila
sector as the country's largest source of foreign exchange.

The exchange rate as of July 2004 was 18.26 Honduran Lempira to the dollar,
compared to 17.18 Lempira to the dollar a year earlier. The currency has been
undergoing a steady and controlled devaluation of roughly 6% per year for the
last several years. Inflation, as measured by the consumer price index, was
7.7% in 2003, identical to the rate of 2002 and considerably lower than the
double-digit inflation rates of the 1990s. International reserves, which had
fallen from $1.235 billion at the end of 2002 to $1.16 billion at end of
2003, rebounded to $1.248 million by April 2004.

Unemployment was officially estimated at around 27.5% in 2003. The economic
slowdown in the United States in 2001 and 2002 caused a downturn in the
growth of Honduras' maquila sector, but investment and employment revived in
2003. Employment in the sector is almost back to its 2000 peak of 125,000
workers.

In July 2000, Honduras reached its decision point under the Heavily Indebted
Poor Countries (HIPC) initiative, qualifying the country for interim
multilateral debt relief. However, fiscal problems soon derailed the
government's International Monetary Fund (IMF) program and put the HIPC debt
relief on hold. After the Honduran Government took several important measures
to control government spending and improve its fiscal situation, the IMF
approved a new 3-year Poverty Reduction and Growth Facility program in
February 2004. This in turn made possible the signing of a debt relief
agreement with Paris Club creditors in April 2004, and Honduras reached the
HIPC completion point in 2005.

NATIONAL SECURITY
With the cessation of the 1980s civil wars in El Salvador and Nicaragua, the
Honduran armed forces refocused their orientation toward combating
transnational threats such as narcoterrorism and organized crime syndicates.
Honduras supports efforts at regional integration and deployed troops to Iraq
in support of Operation Iraqi Freedom. However, the resolution of the civil
wars in El Salvador and Nicaragua and across-the-board budget cuts made in
all ministries greatly reduced funding for the Honduran armed forces, and the
abolition of the draft created staffing gaps in the now all-volunteer armed
forces. The military is now far below its authorized strength. In January
1999, the constitution was amended to abolish the position of military
commander in chief of the armed forces, thus codifying civilian authority
over the military. Former President Flores also named the first civilian
Minister of Defense in the country's history.

FOREIGN RELATIONS
Honduras is a member of the United Nations, the World Trade Organization
(WTO), the Organization of American States (OAS), the Central American
Parliament (PARLACEN), the Central American Integration System (SICA), and
the Central American Security Commission (CASC). During 1995-96, Honduras, a
founding member of the United Nations, for the first time served as a
nonpermanent member of the UN Security Council. Honduras is currently a
member of the UN Human Rights Commission.

Honduras is a strong proponent of Central American cooperation and
integration, and continues to work towards the implementation of a regional
customs union, which would ease border controls and tariffs among Honduras,
Guatemala, Nicaragua, and El Salvador.

In 1969, El Salvador and Honduras fought the brief "Soccer War" over disputed
border areas and the emigration of some 300,000 Salvadorans to Honduras in
search of land and employment. The catalyst was nationalistic feelings
aroused by a series of soccer matches between the two countries, but the
roots of the conflict lay in local disputes over land ownership and usage.
The two countries formally signed a peace treaty on October 30, 1980, which
put the border dispute before the International Court of Justice (ICJ). In
September 1992, the Court awarded most of the disputed territory to Honduras.
In January 1998, Honduras and El Salvador signed a border demarcation treaty
to implement the terms of the ICJ decree although delays continue due to
technical difficulties. Honduras and El Salvador maintain normal diplomatic
and trade relations; however, they continue to disagree over the status of
their maritime borders in the Gulf of Fonseca.

Honduras and Nicaragua had tense relations throughout 2000 and early 2001 due
to a maritime boundary dispute off the Atlantic Coast. Relations between the
two countries have since improved, although some animosity remains.

U.S.-HONDURAN RELATIONS

Overview
The United States and Honduras have close and friendly relations. Honduras is
supportive of U.S. policy in the United Nations and other fora. As a
nonpermanent member of the UN Security Council, Honduras played a very
helpful role in 1996, most notably in advancing the process of selecting a
new UN Secretary General during its October presidency of the Council. The
United States also continued to be able to count on Honduras' strong support
in the war on terrorism.

The United States favors stable, peaceful relations between Honduras and its
Central American neighbors. During the 1980s, Honduras supported U.S. policy
in Central America opposing a revolutionary Marxist government in Nicaragua
and an active leftist insurgency in El Salvador. The Honduran Government also
played a key role in negotiations that culminated in the 1990 Nicaraguan
elections. Honduras continues to participate in the UN observer mission in
the Western Sahara, contributed troops for the reconstruction of Iraq, and
remains interested in participating in other UN peacekeeping missions.

The United States is Honduras' chief trading partner, supplying 53% of its
imports and purchasing 69% of its exports in 2003. U.S.-Honduran trade is
dominated by the Honduran maquila industry, which imports yarn and textiles
from the United States and exports finished articles of clothing. Other
leading Honduran exports to the United States include coffee, bananas,
seafood (particularly shrimp), minerals (including zinc, lead, gold, and
silver), and other fruits and vegetables. The United States encourages U.S.
investment that contributes to Honduran development and bilateral trade.

U.S. direct investment in Honduras is valued at $601 million, about 44% of
the total foreign direct investment (FDI) in the country of $1.37 billion.
FDI flow into Honduras in 2003 totaled $176 million, with the United States
leading the way with investments totaling $145 million, or 82% of the total
FDI. The largest U.S. investments in Honduras are in the maquila sector, in
which apparel and textile export revenues totaled $2.53 billion in 2003.
There are also significant U.S. investments in fruit production--particularly
bananas, melons, and pineapple--tourism, energy generation, shrimp culture,
animal feed production, telecommunications, fuel distribution, cigar
manufacturing, insurance, brewing, leasing, food processing, and furniture
manufacturing. Many U.S. franchises, particularly in the restaurant sector,
operate in Honduras.

From January to December of 2003, the United States negotiated a free trade
agreement with Costa Rica, El Salvador, Guatemala, Honduras, and Nicaragua.
Further negotiations in 2004 brought the Dominican Republic into the
agreement as well. The agreement was signed in May 2004, but must be ratified
by the U.S. Congress and by those of the other participating countries before
it enters into force. The agreement, known as the U.S.-Central America Free
Trade Agreement or CAFTA, will eliminate tariffs and other barriers to trade
in goods, services, agricultural products, and investments. Additionally,
CAFTA is seen as a mechanism to solidify democracy, encourage greater
regional integration, and provide safeguards for environmental protection and
labor rights.

The United States maintains a small presence at a Honduran military base; the
two countries conduct joint peacekeeping, counternarcotics, humanitarian,
disaster relief, and civic action exercises. U.S. troops conduct and provide
logistics support for a variety of bilateral and multilateral
exercises--medical, engineering, peacekeeping, counternarcotics, and disaster
relief--for the benefit of the Honduran people and their Central American
neighbors. U.S. forces--regular, reserve, and National Guard--benefit greatly
from the training and exercises.

As of early 2001, the U.S.-trained Honduran demining unit had cleared nine
major minefields measuring about 333,000 square meters, and more than 2,200
mines had been destroyed. The project was completed in 2004, and Honduras has
been declared mine free.

U.S. Policy Toward Honduras
U.S. policy toward Honduras is aimed at consolidating stable democracy with a
justice system that protects human rights and promotes the rule of law. U.S.
Government programs are aimed at promoting a healthy and more open economy
capable of sustainable growth, improving the climate for business and
investment while protecting U.S. citizen and corporate rights, and promoting
the well-being of the Honduran people. The United States also works with
Honduras to meet transnational challenges--including the fight against
terrorism, narcotics trafficking, money laundering, illegal migration, and
trafficking in persons--and encourages and supports Honduran efforts to
protect the environment. The goals of strengthening democracy and promoting
viable economic growth are especially important given the geographical
proximity of Honduras to the United States. Approximately 800,000 to 1
million Hondurans reside in the United States; consequently, immigration
issues are an important item on our bilateral agenda.

U.S.-Honduran ties are further strengthened by numerous private sector
contacts, with an average of between 80,000 and 110,000 U.S. citizens
visiting Honduras annually and about 11,000 Americans residing there. More
than 150 American companies operate in Honduras.

Economic and Development Assistance
To help strengthen Honduras' democratic institutions and improve living
conditions, the United States has provided substantial economic assistance.
The United States has historically been the largest bilateral donor to
Honduras. The USAID budget for Honduras was $45 million in fiscal year 2004.
Over the years, U.S. foreign assistance has helped advance such objectives as
fostering democratic institutions, increasing private sector employment and
income, helping Honduras fund its arrears with international financial
institutions, providing humanitarian aid, increasing agricultural production,
and providing loans to microbusinesses.

October 1998's Hurricane Mitch--the worst natural disaster ever to strike the
Western Hemisphere--left hundreds of thousands homeless, devastated the road
network and other public infrastructure, and crippled certain key sectors of
the economy. Estimates show that Hurricane Mitch caused $8.5 billion in
damages to homes, hospitals, schools, roads, farms, and businesses throughout
Central America, including more than $3 billion in Honduras alone.

In response, the United States provided more than $461 million in immediate
disaster relief and humanitarian aid spread over the years 1998-2001. This
supplemental assistance was designed to help repair water and sanitation
systems; replace housing, schools, and roads; provide agricultural inputs;
provide local government crisis management training; grant debt relief; and
encourage environmental management expertise. Additional resources were
utilized to maintain anti-crime and drug assistance programs. The vast
majority of the U.S. reconstruction projects were scheduled to finish by
December 31, 2001, with the exception of some water and sanitation and
transparency projects that were extended for another 14 months. In 2001, the
United States also provided food aid in response to a short drought and the
depressed state of the agriculture sector. Subsequently, the United States
provided $265,000 in disaster assistance after Tropical Storm Michelle
inundated the north coast with floods.

New and existing U.S. economic programs--some with proposed enhancements that
have taken on even greater importance since the hurricane--include the
Caribbean Basin Economic Recovery Act, Overseas Private Investment
Corporation financing for private investment and insurance against risks of
war and expropriation, U.S. Trade Development Agency grant loans for
pre-feasibility studies of projects with U.S. product and services export
potential, and U.S. Export-Import Bank short- and medium-term financing for
U.S. exports to Honduran importers. All of these provide greater economic
opportunity for U.S. and Honduran businessmen and women.

The Peace Corps has been active in Honduras since 1962, and currently the
program is one of the largest in the world. In 2004, there were 223 Peace
Corps Volunteers working in the poorest parts of Honduras.

The U.S. Government strongly supports the professionalization of the civilian
police force as an important element in strengthening the rule of law in
Honduras. The American Embassy in Tegucigalpa provides specialized training
to police officers through the International Criminal Training Assistance
Program.

Security Assistance
The role of the Honduran armed forces has changed significantly in recent
years as many institutions formerly controlled by the military are now under
civilian authority. The defense and police budgets have hovered at around $35
million during the past few years. Honduras receives modest U.S. security
assistance funds and training.

In the absence of a large security assistance program, defense cooperation
has taken the form of increased participation by the Honduran armed forces in
military-to-military contact programs and bilateral and multilateral combined
exercises oriented toward peacekeeping, disaster relief, humanitarian/civic
assistance, and counternarcotics. The U.S. Joint Task Force Bravo (JTF-B),
stationed at the Honduran Soto Cano Air Base, plays a vital role in
supporting combined exercises in Honduras and in neighboring Central American
countries. While JTF-Bravo has been involved in several multilateral
exercises and numerous smaller humanitarian deployments, it played an
absolutely critical role in helping the United States to respond to
Hurricanes Mitch and Keith, and the earthquakes in El Salvador by saving
lives, repairing critical infrastructure, and in meeting high priority health
and sanitation needs. U.S. forces also delivered millions of dollars worth of
privately donated goods to those in need.

U.S. Business Opportunities
U.S. Department of Commerce trade data show that bilateral trade between the
two nations totaled $5.83 billion in 2002, the most recent year for which
statistics are available. Exports of goods and services from the U.S. totaled
$2.56 billion 2002, and Honduran exports to the U.S. totaled $3.26 billion.
U.S. investors account for nearly two-thirds of the estimated stock of $1.3
billion in foreign direct investment in Honduras. More than 150 American
companies operate in Honduras; U.S. franchises are present in increasing
numbers.

Opportunities for U.S. business sales include textile machinery, construction
equipment, automotive parts and accessories, telecommunications equipment,
pollution control/water resources equipment, agricultural machinery, hotel
and restaurant equipment, computers and software, franchising, and household
consumer goods. Best prospects for agricultural products are corn, milled
rice, wheat, soybean meal, and consumer-ready products.

U.S. citizens contemplating investment in real estate in Honduras should
proceed with extreme caution, especially in the Bay Islands or coastal areas,
because of frequently conflicting legislation, problems with land titles, and
a weak judicial system. Investors or their attorneys should check property
titles not only with the property registry office having jurisdiction in the
area in which the property is located (being especially observant of marginal
annotations on the deed and that the property is located within the area
covered by the original title), but also with the National Agrarian Institute
(INA) and the National Forestry Administration (COHDEFOR). Investors in land
should be aware that even clear title is not a guarantee that a future
dispute over land would be resolved equitably.

Principal U.S. Embassy Officials
Ambassador--Charles A. Ford
Deputy Chief of Mission--Roger D. Pierce
Political Counselor--Francisco Palmieri
Economic Counselor Patrick Dunn
Consul General--Ian G. Brownlee
Management Counselor--Jesse I. Coronado
USAID Director--Paul Tuebner
Public Affairs Officer--Melissa Cooper
Defense Attache--COL Derek Dickey
Military Group Commander--COL Fernando Gonzalez
Peace Corps Director--Ruben Hernandez

The U.S. Embassy in Honduras is located on Avenida La Paz, Tegucigalpa (tel.:
011-504-2369320; faxes: general--011-504-236-9037, USAID--011-504-236-7776,
PAS--011-504-236-9309, Military Group--011-504-233-6171, Commercial
Section--011-504-238-2888, Consulate--011-504-237-1792). Internet: http://
honduras.usembassy.gov/english/index_e1.htm

Contact Information
American Chamber of Commerce
Hotel Honduras Maya
Apartado Postal 1838
Tegucigalpa, Honduras
Tel: (504) 232-7043/232-6035
Fax: (504) 232-9959
Branch office in San Pedro Sula
Tel: (504) 557-6402/559-6412
Fax: (504) 557-6402

Caribbean/Latin American Action
1818 N Street, NW
Suite 310
Washington, DC 20036
Tel: 202-466-7464
Fax: 202-822-0075

U.S. Department of Commerce
International Trade Administration
Office of Latin America and the Caribbean
14th and Constitution Avenue, NW
Washington, DC 20230
Tel: 202-482-0057
800-USA-TRADE
Fax: 202-482-0464
Internet: http://www.ita.doc.gov

U.S. Agency for International Development
1300 Pennsylvania Avenue, NW
Washington, DC 20523-0001
Tel: 202-712-4810
Fax: 202-216-3524
Internet: www.usaid.gov