“Political crisis in Honduras: The historic political-economic sources”

By Charles McKelvey

Originally published on the author’s Substack column (https://charlesmckelvey.substack.com/) on January 25, 2022.

     During the twentieth century, the politics of the Latin American republics were for the most part dominated by two political parties, which coexisted with periodic military dictatorships.  Beginning in the 1980s, the traditional political parties participated in the imposition of the neoliberal project, which undermined the sovereignty of the nations and had draconian consequences for the working class and the poor.

     The process of social change unleashed in Latin America during the first decades of the twenty-first century was built on popular rejection of the neoliberal project and the delegitimation of the traditional political parties, rejected for their evident complicity in the political-economic project of the imperialist power.

      In the case of Honduras, the traditional political parties were more than political parties.  They functioned as social organizations to which families had belonged for generations, and they were an important dimension of personal identity for many Hondurans.  Therefore, they were slower in falling than in other Latin American countries.

      But they now have fallen.  The catalyst was the coup d’état of 2009, which made evident the limitations of the traditional political parties.  Under President Manuel Zelaya of the Liberal Party, Honduras joined ALBA, the alternative regional alliance created by Hugo Chávez and Fidel Castro and included the four Latin American nations that had declared for the option of constructing socialism.  The joining of ALBA implied close ties with the socialist and progressive nations of the region, and it is considered unacceptable by the Honduran oligarchy and political establishment and the always politically active U.S. embassy. 

      The Liberal Party was not really designed to support such a leftist turn.  Zelaya had the support of the radical sector of the Party, but not the majority, which could join with the National Party to block any radical initiative.  Hence, a parliamentary coup d’état that ended the Zelaya presidency and launched another military dictatorship.

      The voice of the people was present.  They took to the streets to declare their support for the President and their opposition to the coup.  Because the international media almost never report on Third World poverty but always report on Third World coups, the whole world was able to see the dignified and inspiring voice of the people.

      The process led to the emergence of Xiomara Castro, who is the wife of the deposed president.  During the coup, she took to the streets to join the people, and she expressed how moved she was by the courage of the people in defying soldiers and standing with their president.  She declared that she was from that day forward a fervent supporter of the people and their aspirations.

Photo: Xiomara Castro, President-Elect of Honduras

     In the twelve years since the coup, different governments of the National Party have maintained the neoliberal economic policies that both political parties have implemented, under pressure from the U.S. government and the International Monetary Fund, since the 1980s.  Poverty has reached 70% of the society, and four in ten Hondurans live in misery.  Unemployment has surpassed fifty percent, and treaties of free trade have depressed agricultural production.  Honduras imports nearly 90% of the food that it consumes.  In the rural areas, there is extreme repression by the military forces and the para-military groups employed by the large capitalistic agricultural enterprises dedicated to exportation.

      Since 2018, ten migrant caravans have marched toward the United States.  In 1990, three per cent of Hondurans lived outside the country; today the figure is nine percent.  They leave for various reasons: the precarious economic situation; high levels of crime and violence; and the failure of the institutions of democracy.

      Following the coup, Xiomara Castro joined with social movement organizations and alternative political parties to form a new party, the Party of Liberty and Refoundation (Libre, which means “free” in Spanish).  She was its presidential candidate in the November 28, 2021, elections, which she won with 55% of the votes.  Libre won fifty seats in the Congress, and in alliance with other alternative parties, attained a governing congressional majority.  In October, prior to the elections, Libre had reached an agreement with the Savior Party of Honduras (PSH for its initials in Spanish) and other political parties, in which the presidential candidate of PSH would renounce his candidacy and support Xiomara Castro, and the elected congressional delegates of the aligning parties would vote for a PSH delegate for the position of president of the National Congress. 

Parallel Directing Boards of the National Congress

       But the alliance has fractured.  On January 21, at the first session of the National Congress, in violation of the agreement of the aligning parties, Libre delegate Beatriz Valle presented a motion from the floor, nominating Libre delegate Jorge Cálix for the position of President of the National Congress.  Chaos, insults, and fistfights ensued.  According to the Cuban news agency Prensa Latina (PL), the event was not spontaneous; at least twenty-one of the Libre parliamentarians had not accepted the agreement of the aligning parties since the results of the November 28 elections were announced. 

       In a separate session held in the club Forests of Zambrano on the outskirts of the capital city of Tegucigalpa, Jorge Cáliz was elected President of the National Congress.  He received 79 votes from 19 deputies of Libre, 44 deputies of the National Party, 15 of the Liberal Party, and one of the Anticorruption Party.  A Vice-President and Secretary also were elected to the directing board of the Congress, including Beatriz Valle as Secretary. 

     PL noted that, in the view of political analyst Luis Méndez, the 19 Libre deputies were acting in defense of the political and economic sectors that sought to prevent the repeal of laws that worked to their benefit; the deputies had betrayed a political project of refoundation that was born in a popular base and the voice of the social movements, and that Xiomara Castro had presented with full transparency.  The specialist René Hernández told PL that some of the Libre deputies had received bribes for their votes. 

     As a result of these developments, eighteen of Libre delegates of the National Congress were expelled from the Libre Party.  They were accused of betraying the Party by not complying with the agreement of the aligning parties to vote for Luis Redondo of PSH for the position of president of the National Congress, joining instead in an alternative road led by the traditional parties. 

     However, following up on the pre-election agreement of the Libre alliance, the Congress, meeting in its normal parliamentary building, elected the three members of the directing board, including Luis Redondo of PSH as president of the National Congress, who received 96 votes.  In addition to Libre and PSH, his election was supported by deputies of the Liberal Party and deputies from longstanding smaller parties.  The deputies denounced what they described as illegitimate maneuvers of the separate Forests of Zambrano session to undermine the democratic and representative system. 

       Thus, there are two presidents and directing boards of the National Congress, both named in separate congressional sessions.  Honduran analysts, speaking on the Venezuelan state television network Telesur, maintained that both congressional sessions complied with legal requirements, inasmuch as the location of the session is legally irrelevant and the Forests of Zambrano session verified that a quorum was present.  Moreover, because the jurisdiction of the Supreme Court has been limited by the military dictatorship, the Court does not have the authority to resolve the question.  Thus, the conflict cannot be legally and constitutionally resolved.  The only resolution is the renunciation by one side or the other, which could occur in the event of widespread repudiation by governmental and social institutions and/or the people. 

      Castro has recognized Luis Redondo as the head of the National Congress, and she has invited him to attend her January 27 inauguration in that official capacity.  The Vice-President Elect Salvador Nasralla, who also is head of the PSH and former presidential candidate, asserted that any session realized in any place that is not the seat of the Congress does not have legal validity.  On January 24, Luis Redondo convoked a session of the National Congress for January 25.  At the January 25 session, Redondo, chairing the session in his capacity as President of the Congress, presented various proposals for the project of refoundation, including the condemnation of the 2009 coup d’état and the establishment of an International Commission against Impunity and Corruption.  He also proposed analysis of the subsidies received by deputies and of amnesty for political prisoners.  He also suggested a special law denouncing the reelection of Juan Orlando Hernández in 2017, which he characterized as a crime of treason.  Meanwhile, a parallel legislative session was presided by Jorge Cálix, which was a virtual session transmitted live via Facebook.  The parallel session appears to be presenting an image of support for the program of the President-Elect, apparently with the intention of appeasing the people and giving the appearance of supporting a refoundation, while using its planned control of the legislative process to avoid substantive measures of reform.

      There have been various expressions of support for the refoundation project of Xiomara Castro.  Members of the workers’ union of the National Company of Graphic Arts have held vigil since the afternoon of January 23, blocking the dissemination of the official publication of the members of the directing council of the National Congress, approved at the separatist session at the Forests of Zambrano.  On January 24, the National Police issued a communique reiterating its total support for the constitutional president Xiomara Castro.  The communique called upon all the armed institutions of the country to defend the decision of the citizenry, expressed by means of popular suffrage.  On January 25, the Pedagogical University of Honduras condemned the betrayal and the anti-patriotic maneuvers of the dissident Libre delegates.  They maintained that it is a question of the ties of organized crime and drug trafficking to the political system and the judicial process, who are not standing idly by while their interests are threatened by a political project based in the interests of the people.  The professors called upon the people to take to the streets to defend democracy.

The historic background to the present crisis

     During the seventeenth and eighteenth centuries, Central America was integrated into the world-economy through the development indigo haciendas by an elite of Spanish descent.  The haciendas were characterized by mixed economic activities, including small parcels of land for subsistence production for indigenous and ladino families.  In some cases, labor on the haciendas was “voluntary,” as families looked for some measure of protection in the aftermath of the sixteenth century conquest.  In other cases, the labor was coerced, utilizing strategies such as labor tributes imposed on indigenous villages and debt peonage.  During the period, in addition to indigo, cattle ranching for the exportation of hides and leather emerged.  And in the mountains of Western Honduras, silver mining was developed, using a combination of voluntary labor, indigenous forced labor, and African slaves.  The integration was partial, in that a good proportion of the land continued to be under the communal ownership of indigenous villages. 

     By 1850, the German chemical industry developed synthetic means for producing dyes that were less expensive, thus causing the total collapse of the market for indigo.  The Central American elite advocated utilizing strong state action to modernize the Central American economy, so that it could more effectively participate in the peripheral function of the expanding global economy.  Their philosophy, which came to be known as liberalism, became the dominant political philosophy in nineteenth century Central America.  Liberals modernized the economy by taking land away from the Church and the indigenous villages, both of which had used land to produce a variety of products consumed locally rather than to develop a raw materials production economy oriented to markets in the core of the world-economy.  Liberals developed ideas such as the secularization of society, the separation of church and state, and general notions of progress to justify these actions against the Church and the indigenous villages.  Liberals were particularly effective in implementing their policies beginning in the 1870s.  There emerged coffee plantations under Central American ownership and banana plantations and silver mines under U.S. ownership, so that by 1913, coffee comprised 63% of Central American exports; bananas, 18%; and metals, 10%.  Thirteen products were exported from Central America in 1913, and all were raw materials destined to the core. 

     The conversion of the land from indigo haciendas to coffee plantations deepened and expanded the peripheralization of Central America.  Multi-purpose haciendas were converted into single-product plantations, and land previously functioning beyond the structures of the world-economy was transformed to the peripheral role.

     In the case of Honduras, the central figure in the liberal reform was Marco Aurelio Soto, who became chief of state in 1876.  The Soto government used the state apparatus to remove obstacles to economic development and to promote sustained capitalist development, especially the development of mining and agricultural production for export.  Obsolete Spanish laws, incompatible with capitalist economic development, were replaced with new laws that stimulated credit, agriculture, commerce, and industry and which encouraged foreign investment.

     The economic policies of the Soto government promoted the production of agricultural products for export, providing free grants of land to agricultural producers and exempting agricultural producers from payment of taxes on tools, machinery, fertilizer, seed, and housing construction materials.  In addition, indigenous villages were required to sell or lease any land not being cultivated permanently.  In order to facilitate the sale of these products in the world market, the government constructed systems of transportation and communication.  Moreover, the Soto government took measures to ensure the availability of cheap labor on agricultural plantations:  it forced the rural masses to work by requiring villages to provide day laborers to agricultural plantations.  In order to ensure control over the rural population and the coerced labor force, the government modernized the army and increased its size.  These policies led to a tremendous growth in Honduran production and export of coffee in the 1870s and 1880s.

     Similar concessions were made with respect to mining, such that in the period 1888-1889, Honduras became the most important exporter of silver, gold, lead, and copper in the region.  Silver mining, under North American ownership, led this dynamic.  However, In the 1890s, the international market for silver declined, because most countries abandoned silver as a base for the monetary system.  This decline in the world market, in conjunction with the relative inaccessibility of the mines due to the undeveloped transportation system and the mountainous terrain, led to a decline in the production of silver, such that by 1900 it virtually came to an end.

     Banana production grew rapidly in the 1890s, and by the 1920s Honduras had become the world’s leading exporter of bananas.  Prior to 1899, there were more than 100 small-scale enterprises, owned by Hondurans, which sold bananas to North American merchants, who in turn sold them in North American markets.  In 1899, two North American banana-producing enterprises were formed, and a third was founded in 1905.  As the demand for bananas in the world market rapidly expanded, an increasing amount of capital became necessary in order to clear the tropical forest, develop a transportation system, modernize the productive process and develop a system of refrigeration for maritime transport.  The North American producers, with greater access credit and capital, were able to displace Honduran producers.  By 1911 the three North American producers completely dominated the exportation of Honduran bananas.

     The North American banana companies were aided by concessions from the Honduran government in their domination of Honduran banana production and in their rapid expansion after 1911.  These concessions included free grants of the richest land, permission to construct railroads and to control the administration of the railroads, and exemptions from taxes and tariffs on imported equipment and construction materials and on exports.  The government permitted the North American companies to have complete control of the entire system of transportation and commerce on the north coast, the region of the banana production. 

     As the government pursued a policy of attracting foreign investment in raw-materials export production, foreign capital became the most important economic and political force in the country.  The banana companies came to own not only banana enterprises, but also related industries, including transportation, communication, energy, food, and retail outlets.  This dominance by foreign economic interests inhibited the development of a national bourgeoisie able to formulate and defend national interests.  Local elites became employees or consultants of foreign companies, serving as intermediaries between them and the government, defending their interests and seeking new concessions.  In this role, local elites were not in a position to accumulate capital.  This factor, combined with the low wages of labor in raw materials export production, meant that the country would not be able to develop the capital or the home market necessary for industrial development.

     During the course of the twentieth century, the USA acted to defend the interests of its corporations in Honduras.  It intervened militarily to defend its political interests in a war between Honduras and Nicaragua in 1907; to overthrow President Miguel Dávila in 1921; and to protect its interests in the war between local political forces in 1923 and 1924.  However, beginning in the 1930s, the USA increasingly turned to attaining its interests in Central America with strategies other than direct military intervention.  In Honduras, it supported: the authoritarian government of Tiburcio Carias from 1932 to 1948; the seizing of power by the Vice-President in 1952 and by the Honduran military in 1956; and military governments from 1963 to 1981. 

     The banana workers strike of 1954 was a pivotal event in Honduran history.  Conducted by all the workers of the United Fruit Company and some workers of the Standard Fruit Company, the two largest North American banana companies, workers in other industries supported the strike, creating a general social confrontation and popular insubordination, and paralyzing the country for 69 days.  The strike did not result in a clear-cut victory for the workers, but it did force the companies to negotiate with representatives of workers, in which agreement was reached for legal recognition of the rights of Honduran workers to form unions and to strike. 

     The banana strike of 1954 fundamentally and permanently altered political conditions in Honduras.  The strike demonstrated to the elite that the voice of popular organizations had to be taken into account in the formulation of elite strategies, and it demonstrated to the people their potential power to obtain concessions from the elite through unity and organization.  The 1954 strike gave rise to a popular movement of workers, peasants, and students that would develop increasing organizational capacity and political presence in subsequent decades. 

     The Liberal Party under the leadership of Ramón Villeda Morales prevailed in the elections of 1957.  The period of the Villeda government (1957-63) was for the most part an era of social reform, as the government responded to the popular mood established by the banana strike of 1954.  A new labor code and new social security legislation were enacted.  The National Agrarian Institute (INA) was created in 1961, and the Agrarian Reform Law of 1962 was passed.  The Agrarian Reform Law authorized INA to distribute public lands and unused land to peasants, and it gave INA the power to recover public land occupied illegally by large landholders.  But the Villeda government equivocated in its support of social reform.  In an effort to restrict the activities of worker and peasant organizations, the government passed anti-communist legislation.  And it granted tax benefits and other concessions to foreign and domestic capital.  Moreover, the Agrarian Reform Law was confined to public and unused land, limiting its capacity to improve the standard of living of the peasants.  Thus, the government did not have the united support of workers and peasants, but it did provoke hostility from the large landholders and transnational fruit companies for its modest reformism.  It was ended by a military coup in 1963.

    Although most of the military governments from 1963 to 1982 launched campaigns of repression against popular organizations, the military government of 1972-75 was a reformist government.  It proclaimed land reform as its fundamental objective and sought the support of labor and peasant organizations.  On December 26, 1972, the government issued a decree that empowered INA to grant to peasants public lands and unused private land, and to establish mechanisms for technical support and credit.  In 1974, the government issued its National Plan for Agrarian Reform, which was a comprehensive plan for raising the standard of living of the peasants through agrarian reform, thereby strengthening the home market and stimulating industrial development. 

    There were economic sectors that had an interest in the transformation of the social system and the structure of land tenancy in Honduras in the 1970s.  These included peasants and workers, for whom substantive agrarian and social reform would mean an increase in their standard of living.  In addition, the sector of the Honduran industrial bourgeoisie least linked to international capital had an interest in the expansion of the domestic market through improvement in the standard of living of peasants and workers, increasing their capacity to buy the products of domestic manufacturers and merchants. 

     In 1972, this progressive sector of the national bourgeoisie was in control of the Honduran military.  In accordance with the interests of this sector, the military interrupted the electoral process of 1971, which was under the control of the traditional political parties, taking control of the government.  It sought to form an alliance of the progressive industrial bourgeoisie, peasants, and workers in support of a program of agrarian reform.  The key to success in this endeavor was the strong support of the peasants and workers, in order to check the political power of the sectors that oppose agrarian reform. 

     There were powerful economic interests opposed to land reform in Honduras, including Honduran large landholders, North American banana companies, international capital, and those elements of the Honduran industrial bourgeoisie linked to international capital.  Because of the resistance of these sectors, the agrarian reform program of the military government of 1972 to 1975 contained serious limitations.  Much of the land that was transferred to peasants was marginal land, of poor quality and away from infrastructure and commercial centers; and credit and technical services were not sufficient.  Moreover, the implementation of the plan, with respect to the amount of land distributed and the number of benefitting peasant families, was far short of the stated goals of the program.  Accordingly, the agrarian reform program did not significantly change the distribution of land; it was not sufficient to transform the structure of land tenancy or the social system.

    Because of its limited nature, and because it was not directed by leaders of the popular movement, the peasants and workers had mixed feelings about the program, and the military government was unable to mobilize the masses in its support.  This enabled those sectors opposed to the agrarian and social reform to reassert their power and to regain control of the military and the government in 1975.

     In 1982, Honduras returned to electoral politics, but it was not a “transition to democracy.”  In the first place, the return to electoral politics was accompanied by a significant increase in repression directed against peasant and union leaders, as well as against political and student leaders and progressive priests.  The methods included torture and disappearances, with the goal of decapitating popular organizations that were critical of the government.  In the second place, the elected governments, in response to pressure from the USA and international finance organizations, turn to neoliberal economic policies, which weakened the already limited capacity of the state to respond to the social and economic needs of the people.  

     The Suazo Cordóva government (1982-86) adopted neoliberal policies in accordance with the recommendations of the Reagan administration.  The measures increased incentives for export production and for foreign investment.  They eliminated many price controls and began the privatization of government-owned enterprises.  And they reduced government expenses by freezing salaries of government employees and reducing the number of government employees. Neoliberal policies were continued by the government of Azcona Hoyo (1986-1990), and it moved the rate of exchange for the lempira (the national currency) closer to a free market rate. 

     Neoliberal policies had negative consequence for the standard of living of the people and for Honduran industry.  In the 1980s, per capita income, per capita production of grains, and industrial production declined.  Nor did the neoliberal reforms improve monetary conditions, as the balance of payments deficit and the foreign debt grew, and the budget deficit was not reduced.

     The government of Rafael Leonardo Callejas (1990-94) strengthened and deepened the neoliberal program, even though Callejas’ campaign slogans included “no more taxes” and “no to devaluation.”  The Callejas project of “structural adjustment” included increasing incentives for export production, especially agricultural exports; reducing protection for industry; reducing the list of articles that are subject to price controls; increasing prices for those goods that are subject to price controls, including construction materials, medicine, and basic goods such as milk; stimulating foreign investment; devaluating the national currency by moving it closer to a free market rate, including three measures in 1990 that changed the rate of exchange from two lempiras per dollar to 5.5 lempiras per dollar; reducing the size of government by reducing the number of government employees (although the military budget was kept intact); increasing the sales tax and taxes on production and eliminating tax exemptions; and increasing the price for public services such as electricity, water, and telephone.  The program also involved an effort to control popular organizations through selective repression against leaders most opposed to government policies and through an ideological campaign to legitimate the adopted measures.

     The policies of the Callejas government had negative consequences for the peasants, workers, and small businesses of Honduras.  Inflation increased significantly.  In the 1980s, the average annual rate of inflation had been 7.4%; but from 1990 to 1993, the average annual rate of inflation was twenty-two percent, with a cumulative inflation rate of 79.7% for the period.  Inflation was caused by the devaluation of the currency, which raises the costs of all imports; and by the higher prices that followed the elimination of price controls and by higher taxes.  Meanwhile, as a result of government layoffs, unemployment increased.  Some estimates placed unemployment at greater than fifty percent, but unemployment is very difficult to measure because of the high level of underemployment and the high level of participation in the informal economy, particularly in cities. 

      Inflation and unemployment led to a reduction in the standard of living in a country that had already been characterized by high levels of extreme poverty.  In 1991, 59.3% of Honduran households did not have sufficient food (up from 54.1% in 1988), and an additional 13.9% did not have sufficient resources to provide for necessities other than food.  The increasing poverty and declining standard of living led to shrinkage of the home market, thus weakening Honduran industrial development.  At the same time, the neoliberal policies did not have the intended monetary effects, as the balance of payments deficit and the government deficit have increased.

      In the period of 2006 to 2009, President Manual Zelaya attempted to takes modest steps to rectify the consequences the neoliberal legacy, including incorporation into the integrationist cooperative project directed by the socialist and progressive governments of the region.  The result was the coup d’état of 2009, launching a new stage of military dictatorship, corruption, poverty, and desperation, which has given rise to a renewal of the popular movement in the form of a political project of refoundation.


      As is evident, the United Sates has had a long history of seeking to control the politics of Honduras for its own interests.  Analysts on Telesur maintain that the USA at present has an interest political stability and some level of satisfaction of human needs, in order to reduce emigration to the United States.  It therefore supports the taking of power by the refoundation project of Xiomara Castro, with the hope of steering it away from integration into the regional integrating project of cooperation led by Cuba, Venezuela, Nicaragua, and Bolivia.  In the context of the political crisis of the last days, the U.S. Embassy has put forth a proposal for a third way, an agreement between the National Party and the Refoundation project on a third governing board of the National Congress that would replace to two parallel boards.  Such a proposal would help to steer the Refoundation project away from alliance with governments of the Latin American Left.

      U.S. policymakers, however, do not understand that the social and economic problems of Honduras cannot be resolved with superficial measures.  What is required is the severing of the unequal trade between Honduras and the USA, and the establishment of mutually beneficial trade relations with the nations of the region.  And the economic and political cooperation of the United States with such an alternative project is required.  Unless and until such an alternative is developed in practice, the migratory flow to the North will continue.

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