Honduras, already poor, sinks further after coup

TEGUCIGALPA, Honduras -- A woman caring for six grandchildren can no longer afford milk. A bricklayer who used to work six days a week now is lucky to get two. A shop manager has seen his earnings evaporate.

Nearly four months after the military ousted President Manuel Zelaya, Hondurans are feeling the sting of a political crisis that has eroded an already fragile economy and increased hunger in one of the Western Hemisphere's poorest countries.

"Everything has gone up since the coup," said 50-year-old Leticia Medina as she walked along an unpaved road in the ramshackle Honduran capital. "It was hard before, but now you can buy even less."

Honduras wasn't in great shape economically before the June 28 coup -- the global recession had cut demand for exports and slowed the remittances many families depend on. But the political chaos, with its protests, curfews, blockaded streets and international isolation, made things worse.

Keeping tourists away

Tourists have stayed away from the country's beaches, Mayan ruins and rainforests -- a decline driven in part by a U.S. State Department alert recommending people avoid non-essential travel to the country.

In Roatan, a world-class diving destination far from the troubles in the capital, tourism dropped 85 percent after the coup, said Mario Pi, president of the island's Tourist Information Center.

"For the hotels, it's been a disaster," said Pi, who predicted the resort would finish the year down 50 percent.

Meanwhile, ordinary shoppers in the capital, Tegucigalpa, are staying away from stores out of economic anxiety or fear of the protests and traffic jams they cause.

Countries around the world have demanded Zelaya be allowed to return and serve out his term, which ends in January, in a coalition government. Many have cut off aid to isolate the interim government: the U.S. suspended about $40 million in non-humanitarian assistance while the European Union halted $90 million. Multi-lateral lending agencies have also blocked the country's access to credit.

These measures have had severe ripple effects in Honduras, where more than 70 percent of the population of about 7.7 million are considered poor and more than 1.5 million get by on $1 a day or less.

Among those feeling the effects are 65-year-old Susan Trimino, who is caring for six grandchildren and can no longer afford milk on her husband's meager earnings as a laborer. Instead she is giving them ground up corn and water, she said, as she walked along a dirt road in plastic shoes.

Bricklayer Luis Palma said there is such a shortage of work that he's down to earning less than $8 a day. "In my neighborhood, there's a ton of people with no work," said the 24-year-old Palma, who lives in the capital.

Augusto Reyes, who manages a store selling glass and ceramic dinnerware in the capital's Palmira neighborhood, estimates sales have dropped 90 percent since Zelaya returned last month and took refuge in the nearby Brazilian Embassy.

The once-thriving commercial district of sloping streets has become a militarized zone of blockaded streets and protests, prompting him to cover the windows and door of his shop with plywood.

"In my case, if there are no sales, there are no commissions," the 47-year-old father of three said. "If the crisis continues, it's going to be very difficult for us."

Enrique Nunez, president of the National Association of Small and Medium-Sized Enterprises, said the group's members have eliminated more than 18,000 jobs -- about 65 percent of their work force -- amid an "alarming" decrease in demand.

"More than anything, the crisis is creating a climate of uncertainty," said Norman Garcia, an adviser to the Honduran Private Enterprise Council. "Investments that might have been made are being held up because no one knows when there's going to be a return to normalcy."

Interim President Roberto Micheletti and his supporters insist they acted legally under the Honduran constitution to remove a president they considered inept, corrupt and too close to Venezuelan President Hugo Chavez.

The military ousted Zelaya, with the backing of Congress and the Supreme Court, for pushing a referendum that his critics claimed was an attempt to repeal a constitutional ban on term limits -- an allegation the deposed president denies.

Negotiators said Wednesday they had reached a consensus on Zelaya's return to the presidency, but later toned down hopes, saying the final text of a deal is still being worked out and talks would continue.

As the two rival factions negotiate for control of the country, the elite are comfortable behind their walled homes, although the U.S. has revoked the visas of some of the country's prominent business and political leaders.

The U.S., citing privacy rules, won't disclose the names. But Adolfo Facusse, a textile manufacturer who heads a business association, said he was among them and was forced to return home after arriving on a flight to Miami with his 11-year-old son.

Many still believe soldiers did the right thing by forcing out Zelaya, a wealthy rancher and timber baron who alienated fellow business leaders with such populist moves as hiking the minimum wage by 60 percent during the global economic crisis and strengthening ties with Chavez.

"It would have been infinitely worse with Zelaya here," said Facusse, who says he had to lay off 800 workers earlier this year because of the recession in the U.S.

Those farther down the economic ladder are just eager for the situation to be resolved.

Miguel Alvarez, manager of an electronics and audio equipment store, said his sales have dropped 60 percent and he has laid off two of his 16 employees. If sales don't pick up, the shop might have to move or close down.

"What we want is that it's resolved in the most peaceful way possible," Alvarez said. "We can't operate in these conditions."