Envío Digital
Central American University - UCA  
  Number 149 | Diciembre 1993



Callejas on his Way Out

The neoliberal adjustment has been a failure for the majorities, including in Honduras. Economists there are demanding a national patriotic accord in order to promote a true development project.

Mario Posas

With the November 28 presidential elections drawing near, the government of Rafael Leonard Callejas has entered its twilight. As a sendoff, the Honduran College of Economists once again criticized the severe structural adjustment program it imposed in March 1990. Some data from this final evaluation follow, demonstrating why it is the incumbent party's Achilles Heel.

Criticisms from Economists

In 1992, similar to 1989, the gross domestic product (GDP) grew by 4.3.%, but it was thanks more to state than private sector investment. In the economists' opinion, this contradicts the neoliberal doctrine upon which the government's economic policy is based.

This modest GDP increase was due to the low international prices of the country's traditional export products coffee and bananas as well as to the quotas established for Latin American bananas by the European Community. Some nontraditional export products, such as those assembled in maquila plants and shrimp, have experienced a relative growth, but still not one particularly significant for the economy.

The government has been unable to reduce its trade deficit, which grew 75% between 1989 and 1992. This increase is the net result of both the inadequate growth of traditional and nontraditional exports and the import frenzy into which the few beneficiaries of the structural adjustment have fallen.

There were also other criticisms from the economists: the government's inability to attract foreign investment or reduce the fiscal deficit to the level required by the international credit organizations. In terms of the foreign debt, it is recognized that the government has recovered the country's credibility, but it has not substantially reduced the debt. In the economists' opinion, the debt payment under the conditions imposed has put a serious brake on the country's economic growth and become a heavy burden for the Honduran people.

A Failure for the Majority

The economists adopted as their own a note to a World Program for Employment study stating that "it is clear that the country's relative economic modernization during the 1990 1992 period did not allow for either an increase of real income [which was impossible according to the logic of the adjustment), an improvement in the quality of employment or a reduction in poverty. Neither the costs nor the benefits of the adjustment were distributed equitably among the population. Under these conditions, it is obvious that, once the economic reform is underway, Honduras still has a pending task: redistributive social reform."
Confirming this assessment, official data show that food prices increased by more than 100% between 1990 and 1992. The program of periodic devaluations begun in 1990 has caused the lempira to lose 51.5% of its purchasing power. The percentage of poor households went from 68% in 1989 to 78% in 1992, while unemployment affects some 40% of the economically active population. Although more than 20,000 new jobs have been created, particularly in the maquila sector, they do not make up for those lost through the adjustment program.

The economists also criticized what the Callejas government has done in the last year, especially the Central Bank's contractive measures to break the upward tendency of the dollar vis a vis the lempira.

Natural disasters must be added to this crisis. Tropical storm Gert, which battered the country in September, destroyed some 3,400 acres of banana plantations belonging to local growers and to the Tela Railroad Company. A spokesperson for this company, the United Fruit Company's main subsidiary in Honduras, estimates that the country will lose $50 million over the rest of the year due to a decrease in banana exports.

The economists concluded that the structural adjustment program has been "a failure" and demanded a "Patriotic National Accord" to promote a "Historic Development Project."

Callejas Defends and Contradicts Himself

Responding to these criticisms, President Callejas defended his program, emphasizing that the world is being restructured based on two elements: democracy and a free market. "Whoever doesn't want to understand that," he said, "is living in the past."
Ricardo Maduro, president of the Central Bank and one of the principal architects of the structural adjustment program, holds that the government's economic policy has "reduced the fiscal deficit to manageable levels, reduced tariffs to open the doors to international competition, eliminated entrance barriers, privilege for dollars and special exemptions, thus making it a freer economy and nobody can deny that." And the increase in poverty? "One of the principal objectives of the adjustment is to reestablish the economy's capacity to reduce poverty. But this will not be achieved if there's no economic growth, which is only brought about through competitive investment at the international level and with a free market," said Maduro.

But all these doctrinaire arguments are pushed aside when political interests so demand. The failure of the government's food policy demonstrated halfway through the year with a scarcity of and subsequent price hike in beans led President Callejas to prohibit the export of beans. The same thing happened with sugar and cement. The lack of regulations in the sale of these products had provoked a situation in which a fair part of national production was being exported to other Central American countries, causing a scarcity in Honduras. This had a high political cost for Callejas and Oswaldo Ramos, the governing party's presidential candidate.

The free market has also been a headache for the associations of cattle ranchers and farmers, which initially supported the economic liberalization program. The Sula Association of Cattle Ranchers and Farmers reached the point of requesting the Ministry of Economy to prohibit the import of Dos Pinos milk and dairy products from Costa Rica. "Each liter of milk from Costa Rica consumed in Honduras is a liter of nationally produced milk that loses its market," they argued. They also accused Dos Pinos of "dumping" dramatically reducing prices until national industry is bankrupt and they gain de facto control over the whole market.

On September 23, Oscar Armando Avila, Liberal representative from Cortés, presented a bill that would exclude milk from the Central American free trade agreements. The proposal did not pass.

Weevils Wreak Havoc

In the last months of his administration, President Callejas contradicting the neoliberal line he has so ardently preached turned to subsidies in an attempt to win popular support. After the midyear "bean crisis," he ordered the import of some 15 million pounds of red beans from the People's Republic of China.

The Vegetable Quarantine Department of the Ministry of Natural Resources inspected the beans as they arrived in the country at the end of September. It detected larvae from the Khapra weevil, an insect that attacks and destroys all kind of grains. Various agricultural organizations recommended that the country not permit the entrance of beans from countries infested by this insect. The government rejected these findings and attempted to convince public opinion that concern about the weevil was just another Liberal Party attempt to undermine the government's prestige. After being fumigated twice, the beans were sold on the local market at subsidized prices, without taking into account their contamination level.

With similarly clear political purposes, the government also reduced electricity rates. Eduardo Facussé, president of the Tegucigalpa Chamber of Commerce and Industry, has accused the government of artificially sustaining the lempira's exchange rate to help its candidate in the upcoming elections.

Highways with a "Name Tag"

As part of the campaign in favor of his party, President Callejas also intensified his christening of public works, the majority built with resources from the Honduran Social Investment Fund, the institution that coordinates social compensation programs.

The zeal to finish and christen these works has accelerated the construction beyond all real possibilities. For example, the government is paying many millions extra to finish the highways between San Pedro Sula and El Progreso, Puerto Cortés and Villanueva. The risk that they will be built without meeting necessary construction standards appears unimportant to Callejas. He simply wants a plaque with the his government's name on it to use as propaganda. The same political taint is seen in the "single mother bond" and the shoes the government is giving away to poor children in the cities and countryside.

Health Care Strike

In mid September, the approximately 1,400 doctors who work for the state demanded a 130% salary hike. They were trying to recover some of the purchasing power that their salaries, like those of other sectors in the country, have lost in recent years due to devaluation and inflation.

Before the agreed upon salary hike, a general practitioner working in the state earned 2,985 lempiras ($426) a month, while a specialist earned, on average, 3,715 lempiras (about $530). Doctors are a relatively privileged group in Honduras. In accordance with medical statues, a doctor's working day is 6 hours, which allows them to have up to three simultaneous jobs, two in state institutions and one in the private sector.

In negotiations with the Ministries of Health and the Treasury, the different sides ended up signing a letter of intent in which the government agreed only to a 55% adjustment, which meant an additional payout of 50 million lempiras.

Seeing the government's relatively quick concession to the doctors, 13,000 health workers under the leadership of René Madrid, president of the militant health workers' union SITRAMEDYS, created a National Coordinating Body of Health Workers (CNTS). The CNTS demanded a salary hike of 60%.
With the CNTS demand, the Ministry of Health realized that raising the doctors' salaries would legitimize the health workers' demands. Thus, things never went beyond the letter of intent. The government had been willing to cede to the doctors, but not to the health workers.

With the government refusing to comply with what it had already signed, doctors shut down the health care system on October 1. After the strike had gone on for a week, President Callejas tried to scare the doctors and weaken their militancy. He declared the strike illegal, and threatened to cancel the doctors' contracts if they did not go back to work. The doctors continued the strike and resigned from the Honduran Medical College, thus paralyzing private services as well. This sparked the most comfortable sector of the population which had not been affected when only the public hospitals were closed to pressure the government to end the strike as quickly as possible.

A Door Opened

After two weeks, the government negotiators proposed a 20% bond for doctors for the last quarter of 1993 and a 25% salary increase effective January 1, 1994 in all a 23.6 million lempira expense for the government. Rejecting that proposal, the doctors forced Callejas himself to intercede in the negotiations.

Three days later, Callejas promised also to cover Christmas bonuses, vacation time, overtime and payment of the days not worked during the strike. In addition, he pledged to form a commission to prepare a scaled system of promotions with automatic salary increases. The doctors accepted the proposal.

The government was negotiating with the health workers at the same time. It initially offered them a 20% increase, but the CNTS leaders rejected it and demanded an increase at least equal to the one given the doctors. Callejas, not wanting to cede, engaged in yet another publicity move. He declared a general public sector salary increase of 20%, based on a sliding scale that ranged from 165 to 375 lempiras.

Thus the health workers, who had been carrying out incremental work stoppages, were offered a smaller increase than they had originally set their sights on. Unions loyal to the government accepted the increase, but the nurses and health care workers in the CNTS unions maintained their original demands. The government would have to spend some 100 million lempiras to meet those demands. After a month of challenges and negotiations, the government ordered the militarization of the public hospitals. But the strike continued.

The greatest merit of the doctors' strike is that it opened the doors to other state workers who are now mobilizing around demands for their own salary hikes. The salary readjustment granted the state doctors applies as well to the teaching doctors at the National Autonomous University of Honduras. Consequently, in the ivory tower of the university environment, a move is afoot for a 150% salary hike.

The business sector questioned the increases both those granted and the potential ones. Speaking on behalf of business, Juan Ferrera, president of the Honduran Council of Private Enterprise, pointed out that both the deficit and the inflationary spiral in the country would increase. He suggested cutting the state bureaucracy in half in order to avoid this, but, for purely political reasons, Callejas chose not to hear him.

Elections: New Procedure

On November 28, some 2.5 million Hondurans will participate in general elections to choose a new president, three presidential designates (who function as vice presidents), 128 representatives to the National Congress, 20 to the Central American Parliament and 291 municipal authorities.

For the first time in Honduran electoral history, voters will be able to vote for a presidential candidate from one party and a mayor from a different party, although all the posts will be listed on a single ballot. Each ballot has two columns for each legally registered political party. In the first column, the voter chooses candidates for president, designates and representatives. The second column is for the mayoral races.

The National Congress rejected a request from a number of organizations that the vote be separated into three different ballots one for the president and designates, another for representatives and a third for municipal mayors. Many members of Congress know that granting this request would have been political suicide; given their total lack of leadership, they would not have been reelected.

As it stands, the procedure of voting separately on one single ballot will be a challenge for many Hondurans, given their low level of formal education. Foreseeing some of the difficulties that could arise (as well as the risks to their own reelection), Congress approved what it called the "vote of presumption." If someone casts a vote only for a mayoral candidate, for example, a vote will also be counted for the presidential candidate of that party. Thus, a vote for one candidate of a party will be taken as a vote for all that party's candidates, even though that was not necessarily the voter's intent.

The organized Honduran left is not participating in the elections, but, at the end of September, the representatives of the ruling National Party agreed to register the Democratic Unification Party (PUD). The PUD brings together small groups of pro Soviet and pro China Communists and other leftist groupings, traditionally characterized by their bitter internal disputes. With this legislative initiative, the National Party which ran an openly anti Communist electoral campaign is trying to make a show of its pluralistic ideology. Callejas even went so far as to meet with Communists and former guerrillas from the 1980s.

The Campaign: Virulent, Vacuous and Pricey

The presidential candidates are Oswaldo Ramos Soto of the incumbent National Party, Carlos Roberto Reina from the Liberal Party, Orlando Iriate for the Christian Democrats (PDCH) and Olban Valladares for the PINU. Historically, the Liberal and Conservative parties together have won 95% of the vote.

In a US style television debate sponsored by the Honduran Private Business Council, UNICEF and the Televicentro television company, PINU candidate Olban Valladares' image came off best. Valladares, a businessman and insurance salesman, demonstrated more aplomb in front of the cameras than the other three as he responded to the moderator's questions. He is also the most handsome of the candidates, which has won him sympathy among undecided voters, especially women.

Valladares, virtually unknown before the debate, could use this image to perhaps double the less than 34,000 votes the PINU won in 1989. It is rumored that the National Party promoted Valladares to sway undecided voters to opt for the PINU instead of the Liberal Party.

The presidential campaign has been characterized by a complete vacuum of serious discussion of key national problems and increasingly virulent personal attacks. The National Party campaign tried to present Reina as an old, leftwing man who sleeps late every morning and would represent a threat to the country's social stability. Carlos Roberto Reina and his brother Jorge Arturo deputy and chief of the Liberal Party campaign were compared to Daniel and Humberto Ortega. Oswaldo Ramos was attacked as unscrupulous and lacking seriousness.

The Catholic Church has repeatedly called on the politicians to be more prudent in their campaigning, but with no positive results. The National Elections Tribunal censored some TV ads as offensive and immoral. The campaign was extremely costly, with the Liberal and National parties combined spending 100 million lempiras of public funds.

All the surveys and polls show a virtual deadlock between Ramos Soto and Reina. The increase in the cost of living is the most important factor at the moment of voting, which affects the National Party, due to its unpopular economic policies.


As part of the vitriolic anti Communist campaign mounted against Liberal Party candidate Carlos Roberto Reina and his brother Jorge Arturo, the organizers of the government's National Party campaign have been using and abusing references to Cuba. The campaign staff also extracted a phrase by Nicaraguan Edén Pastora Comandante Zero from a press conference on Honduran television that "the brothers [Daniel and Humberto Ortega] are confessed Marxist Leninists," to use against the Reina brothers. The Liberal Party responded by presenting a video in which Pastora denounced this crude maneuver by the National Party's
publicists. "I don't like to intervene in the internal affairs of other countries," said Pastora, "but since the propagandists of Mr. Ramos Soto got me mixed up in this conflict between the Reinas and the others, I'm going to talk.
When I went to Honduras, and spoke before the television cameras for all you Hondurans, I mentioned the Ortega brothers, Daniel
and Humberto, and said they had always been Communists. I stress that I was speaking about Nicaragua's internal affairs. I never mentioned the Reina brothers, for whom I have esteem, for whom I have great respect, admiration and esteem for their position, their way of thinking, their attitude as Liberal men with broad minds, open thoughts and honest attitudes.

"I spoke, I repeat, to make it perfectly clear and well established, about the Marxism Leninism of the brothers Daniel
and Humberto Ortega in the past decade. But now that Marxism Leninism has collapsed, now that the Berlin Wall has tumbled down, continuing this whole thing with Marxism Leninism is a witch-hunt. I'm surprised that they're still thinking this way in Honduras when the rest of the world is no longer involved in that kind of politics."
This video presenting Commander Zero was broadly disseminated on Honduran television.

Those running this party's campaign are confident that a fear of Communism still exists among a significant group of Hondurans, and that a campaign straight out of the best years of the Cold War could bring dividends for Ramos Soto.
In no opinion poll was it possible to determine the impact of such a clear and simplistic anti Communist campaign.


Print text   

Send text

<< Previous   Next >>


Why are More People Poor?

Biodiesel: The Miracle of a "Useless" Tree

León: Paralyzed Production, Paralyzed Imaginations

Time to Talk to Each Other... Not at each Other

El Salvador
The Death Squads are Back

De León in his Labyrinth

Callejas on his Way Out


Is It Time for Another Literacy Crusade?
Envío a monthly magazine of analysis on Central America
GüeGüe: Web Hosting and Development