Envío Digital
Central American University - UCA  
  Number 168 | Julio 1995



Telecommunications: Privatize or Demilitarize?

As in Nicaragua and other Latin American countries, the IMF and the World Bank are pressuring for Honduras to sell its telecommunications companies to foreigners. This privatization of communications is linked to the process of demilitarizing the country.

Mario Posas

The economic crisis that is keeping the majority of Honduras in a state of desperation continues to worsen. President Carlos Reina's economic Cabinet has not yet found a way to retard the inflationary process that feeds the continual rise in the prices of basic products. Cumulative inflation for 1995 was 11.8% as of April, very close to the 12% that the economic Cabinet had estimated for all of 1995. According to the Honduran Economists' College, if the situation continues, cumulative inflation by the end of the year will reach 30% or more.

Speculation Reigns

The liberalization of fuel prices, initiated by the previous administration and continued under the current one, has been fundamental to continuing inflation. Fuel prices have been "adjusted" (increased) 12 times by the Reina administration.

Fuel tax is an important source of income for the state budget. "The government can't cut back the fuel tax because every government lives by taxes," recognizes Delmer Urbizo Panting, until recently economic minister and currently foreign minister.

Leaders of diverse social sectors have asked the government to use part of this income to cushion the continual price rises that result from the fuel liberalization policy and the fluctuations in international petroleum prices. A similar call has been made to fuel importers who, according to declarations from Vice Minister of the Economy Otto Martínez, have annual earnings between $20 million and $30 million.

The policy to eliminate subsidies, recommended by the international financial institutions and duly and docilely applied by the government, also feeds inflation and is the basis of the rise and fall in fuel prices and price increases in urban transport.

The increased weight of inflation also contributes to generalized speculation. Honduran society has become a haven for all types of speculators. Traders, small merchants and even street vendors set prices totally out of proportion and with no cost benefit logic. One symptom of this is the fact that, even though the government has relatively stabilized the lempira in relation to the dollar, medicine prices are readjusted daily, using the pretext of exchange rate fluctuations.

On their Knees before the IMF

A concerted salary readjustment policy could diminish the weight of inflation. But this demand, reiterated on May 1 when workers met to celebrate International Labor Day, continues to be ignored by the government and faces active opposition by the Labor Ministry and high level business representatives.

In this scenario of official silence, National Congress president Carlos Flores Facussé is being politically astute. As the almost guaranteed presidential candidate for the governing party in the 1997 elections, Flores Facussé has made it one of his primary tasks to try to moderate the negative impact of the current neoliberal economic policies.

Can he do it? Everyone can now see that there is a continuity of economic policy between the National Party administration of Callejas and the Liberal Party administration of Reina, despite being political adversaries. "We have not forgotten that just days before the new government took office, Jorge Arturo Reina assured the nation that he would never bow down before the international credit organizations," an opposition daily commented recently. "The nation is now witness that not only has [the Reina administration] bowed down but it has no other government program, even though this means the government has turned its back on its own people."

HONDUTEL: A Priority

The future of the Honduran Telecommunications Institute (HONDUTEL) is a priority of this economic policy. In a presentation to the Legislature as early as January 1993, ex President Callejas convoked the representatives to study "appropriate legislation to privatize HONDUTEL and finance the new national educational model with its profits, which will give Hondurans what we need." But the National Congress took no steps to privatize HONDUTEL.

Not until April of this year did President Reina send Congress a proposal to privatize HONDUTEL. According to the proposal, the state institute would become a limited stock company owned by the state under the name Honduras Telecommunications Company, Ltd (HONDUCOM). A technical partner who would have administration rights would be sold 47% of the shares. Two years after the sale of this 47%, HONDUCOM would be able to sell 41% more of its shares to private investors through the local and international stock markets. Parallel to this sale, 2% of the shares would be sold to individual HONDUTEL workers who offer services to HONDUCOM. The government proposal advocates that any HONDUTEL workers who must be laid off would receive all labor benefits.

According to the proposal, the income earned from the sale of HONDUCOM shares should go to social investment, investment in productive sectors and payment of the foreign debt. This proposal states that the profits cannot be used to cover regular state spending, except for income generated by the new HONDUCOM.

Arguments in Favor

The presentation of the government proposal and its publication in the media stimulated a debate that has been open for a long time. As in Nicaragua and other Latin American countries, the initiative and principal source of pressure to privatize HONDUTEL comes from the international financial institutions. The technicians of these organizations cover up the voracity of transnational telecommunications institutions, arguing that the privatization of telecommunications in our countries will relieve the state and the fiscal deficit and generate new resources for "better" ends.

The Honduran Council of Private Enterprise (COHEP) has adopted this argument. COHEP also advocates privatizing HONDUTEL as the best way to modernize national telecommunications, seeing a tempting opportunity for some businessmen to buy shares in powerful foreign institutions. Big Honduran business defends the privatization of HONDUTEL in the name of "globalizing" the economy and the search for competitiveness in the international market.

On a more concrete plane, COHEP leaders know that privatization is a mechanism to take the institute out of the hands of the military which, using "national security" arguments, has usurped many of its benefits. Private business also sees privatization as the way to eliminate the over employment of the HONDUTEL payroll once and for all.

To avoid the criticism of political favoritism that previous governments faced when privatizing state businesses since the 1980s, the Reina government has promised transparency in the sale of HONDUTEL shares. For this, the sale of a large percentage of institute shares would be channeled through the stock market. Up to now, "privatization" has actually meant returning to private enterprise recovered state businesses that the private sector had previously bankrupted through fraud and speculation.

Arguments Against

Those who oppose privatizing HONDUTEL offer other arguments. The HONDUTEL workers' union (SITRATELH) claims that services will get more expensive with privatization and rural telephone projects will be cancelled for lack of profitability. It warns that there will be massive worker layoffs and that the union will disappear. SITRATELH insists that the state keep HONDUTEL because it is a profitable institute that guarantees a net profit for the nation. The Honduran Economists' College also opposed to privatization considers that selling national telecommunications to transnational corporations would mean ceding a strategic sector of the national economy to foreign capital.

The real value of HONDUTEL has still not been estimated. President Reina has said that it could be sold for some $400 million.

The Military's Milk Cow

Since its foundation in 1976, HONDUTEL has until recently been administered exclusively by the Honduran military in the name of "national security." The naming of lawyer Mario Maldonado as HONDUTEL manager in 1994 was seen as an important step in the country's demilitarization. Maldonado is a retired military officer, more loyal to the governing party than to the High Command.

It is accepted as fact that all military members have used HONDUTEL to give work to "theirs," among them wives and close relatives. One union leader who today lives in exile in the United States accused the Honduran military of using HONDUTEL for telephone espionage and to promote businesses with army investments.

HONDUTEL, the only clearly profitable state industry, has for many years been the army's "milk cow," its "private plunder." Administratively, HONDUTEL is a clear example of "what should not be done": huge outstanding bills, fixed bidding, excessive bureaucracy, influence peddling, illicit large figure transfers, onerous projects, open or masked feather bedding and the like.

Given this known reality, the true problem is not whether to privatize HONDUTEL or not, but rather to get the military out of it and administer it with honor and efficiency. This would allow the institute to still be a source of income for the government and to develop national telecommunications according to the country's needs.

Controversial Strike

This context explains the reactions generated by the strike SITRATELH called on May 15. The strikers, who took over the primary HONDUTEL buildings, expressed opposition to its privatization and demanded respect for the salary clause in the current collective bargaining agreement establishing a 22.9% wage increase. The workers also opposed the firing of some 400 workers, among them various union leaders.

SITRATELH demanded the dismissal of HONDUTEL manager Mario Maldonado, who called a press conference and accused union leaders of plotting with various colonels to "destabilize" HONDUTEL. He suggested that the strike was trying to throw a smoke bomb to weaken the impact of the publication of a list of people, especially high level military, who had accumulated huge debts with HONDUTEL by transferring to the military institution the cost of international phone calls made from their own homes. The High Command said that if some military leaders were involved with the strike it was on an individual basis and not as part of the institution. SITRATELH leaders denied any link between the military and the strike.

Privatize or Administer Well?

The strike ended three days after it had begun. At dawn on the second day, an army supported police contingent evicted the workers from the buildings they had taken over. Even so, the strikers won the signature on an agreement in which the HONDUTEL administration promised to set a date for applying the 22.9% salary increase, reintegrate fired union leaders, not take action against the strikers and design the personnel reduction procedure Congress passed in October 1994 with SITRATELH. A high level commission named by President Reina was key in achieving these agreements.

The government proposal for privatizing HONDUTEL is now in the hands of a legislative commission. There is certain resistance to privatization among congress members. It remains to be seen whether the National Congress and the President of the Republic are willing to continue demilitarizing the Honduran state and society. The process began by transferring the Merchant Marine to civilian power, continued with the recent ratification of voluntary and educational military service and could continue by withdrawing military officers and appointees from the HONDUTEL administration and transferring the police to civilian power.

Together with the government proposal, the legislative commission must consider an alternative proposal submitted to the Congress by the country's central unions. The proposal recommends forming a representative council of all organized sectors in the country to administer HONDUTEL instead of privatizing it.

"The problem with HONDUTEL is that it has never been administered by people who know about administration, but by military officers who used the pretext of national security," points out Francisco Guerrero, General Secretary of the Honduran Workers' Confederation (CTH), which signed the alternative proposal.

Recommendations Rain Down

On March 6, President Reina swore in members of the ad hoc commission charged with drawing up recommendations to contain the spiral of crime and social violence enveloping the country. The Commission is chaired by Oscar Andrés Rodríguez, Archbishop of Tegucigalpa, and includes government and civil society representatives. It is also responsible for suggesting measures to improve and strengthen the penitentiary system and lay foundations for an atmosphere of respect for human rights. The Commission was given 60 days to do all of this.

After almost two months of consulting with different sectors of society, the commission presented its 25 page report to President Reina on May 26. Among its most important recommendations are that:
* the police be transferred to civil jurisdiction, and a fund of 25 million lempiras be established to improve the administration process;
* discussion and approval of the new Penal Procedures Codes aimed at combating impunity get underway;
* the country's administration of justice be improved and necessary measures adopted to impede the abuse of extraordinary bonds, "whose issue has frequently served to facilitate the escape and impunity of those processed or sentenced prisoners who convert their economic resources into judicial privilege;"
* monitoring organizations within the state and the Commission for Prevention of Corruption be strengthened in order to moralize public functionaries;
* and the construction of the Marco Aurelio Soto central penitentiary and the La Paz penal farm be accelerated.

The commission also declared that it favored initiating a national campaign to stop violence against children and women. It proposed transforming the National Welfare Council into the Institute of the Child and creating a National Council of Women. The government was exhorted to adopt measures aimed at moralizing the media and promoting educational, cultural and civic programs.

In economic and social terms, the commission exhorted the government to take measures to reduce agrarian conflicts, creating a trust fund that would allow poor peasants access to land and subsidized credit. To avoid the danger to social peace represented by "inattention and lack of satisfactory solutions to certain claims presented to the different state branches by popular groupings," the commission proposed creating a National Commission for Attention, Oversight and Follow up to Social Demands. It would be a new institution to promote social unity. Will this organization have more luck than the Economic and Social Concertación Forum the National Congress created in October 1994, which has not yet even begun to function?
"Genuine peace is not achieved only by creating legal instruments to deal with social injustice or public immorality," concludes the commission's report. "True, permanent and productive peace is achieved gradually, by working tenaciously and calmly against the incorrect and immoral acts that are the source of aggression in society. Therefore, we urgently recommend the reinstallation of the Commission for the Prevention of Corruption as one of the necessary instruments to achieve the desired goal." Echoing society's general clamor, President Reina had already ordered that this commission be restored on May 5. He promised to make the other recommendations viable.

The Ad hoc Commission made no concrete recommendations to alleviate the severe economic crisis affecting the majority of the Honduran people, which can be understood given the commission's heterogeneous make up. Nonetheless, its report represents a step forward in the search for agreement among the country's diverse social sectors.

A Pending Mystery

The ratification by an appeals court of the sentence against Colonel Angel Castillo Maradiaga and Sergeant Santos Illovares Funez once again brought to national attention the case of student Riccy Mabel Martínez Sevilla, found brutally mutilated, raped and murdered outside of Tegucigalpa on July 15, 1991.

After a long judicial process that has made history in Honduran jurisprudence, Colonel Castillo and Sergeant Illovares were sentenced to prison on July 22, 1994 by judge María Antonieta Mendoza. Castillo was given 10 years and 6 months for murder and 6 more years for rape. Illovares was sentenced to 10 years and 6 months for murder.

Castillo's sentence was hailed at the time as an exemplary precedent against the traditional impunity enjoyed by high level military officers and other powerful citizens. "A fat cat was finally punished," was the general sentiment. US Ambassador Crescencio Arcos played an important role in Castillo's sentencing, as did the permanent mobilization of young student friends of Riccy Mabel. Arcos was in his last years in Honduras and maintained a policy of opposing the armed forces' protagonist role in the 1980s, even though he himself had openly supported that rampant protagonism in those years.

Now that his appeal has failed, Colonel Castillo is once again claiming his innocence and presenting himself to the local press as the sacrificial lamb of a conspiracy to protect those truly responsible for the abominable crime. Castillo declared that General Luis Alonso Discua, current head of the armed forces, knows better than anyone that he is innocent and that this has been clearly established in an investigation ordered by the military High Command. He claims he was incriminated to protect two US Drug Enforcement Agency agents who had, according to his information, participated in the rape and murder of the young woman. Castillo claims that the only one who really knows who raped and killed the student is Sergeant Illovares.

Castillo's most recent declarations reopened an already active debate, giving credence to the idea that what appears to have been a collective crime has not yet been fully clarified, and that not all of those responsible are in jail. Very few voices, however, have been lifted to echo Colonel Castillo's proclamation of innocence. The Riccy Mabel case continues to be "an unresolved mystery."

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