The Effect of the Micheletti Regime on Honduran Businesses Big and Small

I've commented before on the impact that the Honduran coup and Micheletti regime's actions may have had on business elites, and how those business elites in turn may have played an important role in the negotiation of the end of the crisis. However, as the Christian Science Monitor reminds us, the Micheletti regime's actions also directly negatively affected small- and mid-sized businesses:

Doris Midence, a snack bar employee at La Tigra National Park outside the Honduran capital, Tegucigalpa, has the empty gaze of someone with too much time on her hands.

"Customers are down by half," she says, reorganizing gum and candy bars. "Between curfews and protests, people are not leaving their homes."

[...] But even if the curfews are being lifted, the economic ramifications of Latin America's worst crisis for decades could endure much longer.

Tourists who typically visit the northern Bay Islands, for example, are opting for other places in the Caribbean to scuba dive. Foreign investment has dropped. Cuts in aid have stalled construction of roads. And the nation's consumers, some facing their own unemployment or simply saving in the face of political instability, are no longer buying shoes or furniture or other non-essentials.

"Since June 28 demand has declined dramatically," says Jose Enrique Nuñez, the president of the country's national association of small and medium-sized businesses. "It has created chaos, and that chaos is causing us to collapse."

I think it's safe to say that one of the biggest long-term damages that the coup and Micheletti regime caused was economic. To be clear, I'm not some neo-Marxist who sees material struggle and economics as the source of all historical struggle or anything. However, the negotiation has theoretically returned Zelaya to office (though Honduras' Congress is moving particularly slowly in finalizing the act), and so (for now) world opposition to Honduras had faded away; what is more, with the elections (presumably) being held under Zelaya's watch, for now it appears that there won't be any long-term political blackballing of Congress in the international community.

However, the economic consequences of the military coup and Micheletti's actions both domestically and in the broader global economy are definitely going to continue to manifest themselves for years to come. Honduars was already struggling with the global economic crisis, losing hundreds of millions of dollars in trade and forecasting a shrinking GDP this year, according to the article. While wealth does not "trickle down," economic crisis often does, and this certainly is the case in Honduras. As foreign businesses and tourists have pulled out and looked for alternatives, the small- and mid-sized businesses have been adversely effected, too; financial loss has not just been the domain of major business leaders in the country.

And thanks to curfews and repression, small businesses have suffered doubly, as Hondurans were prevented or intimidated from going to the streets to buy basic goods from these businesses. The final part of the article really hammers this point home:

"The country is paralyzed," Mario Canahuati, a businessman and strategist for presidential contender Porfirio Lobo, said last month. He says that the poorest Hondurans suffer most. "The big companies will survive," he says.

The smaller ones might not. Mr. Nuñez says his business association generates about 30,000 jobs but since June 28, according to a survey of its members nationwide, 35 percent of those jobs have been lost. He says that intermittent curfews that force people into their homes, unemployment, and general anxiety are keeping people away from stores, which is having a ripple impact all the way down the chain. "No one is paying more for the crisis than small companies," he says.

While that seems dire, it also seems like a tragically accurate assessment, and really hits home just how reprehensible the Micheletti regime was. It wasn't just that it clamped down on basic civil rights, tried to perpetuate itself under the most illogical and falsest of "legal" excuses, and demonstrated a clear power-hungry tendency. It also managed wage open warfare on everyday Honduran citizens who protested the clear violation of democratic process in their country, and even as the regime (hopefully) comes to an end, those same everyday Hondurans who own or work for small- or mid-sized businesses will continue to feel the economic ramifications of Micheletti's actions for years to come. Micheletti may be out of office soon, but his ruinous legacy isn't going away anytime soon.

Trying to Explain the Honduran Crisis and Its Resolution

Many (myself included) have wondered what caused the sudden shift in attitudes between Zelaya and Micheletti that resulted in the agreement in Honduras this week, with Zelaya returning to office (pending the legislature's approval) after months of disagreement and strife. While I've yet to see any of the agents involved in the process coming out to explicitly state what the catalyst may have been, some people are offering explanations:

-This newspaper article suggests Micheletti had only wanted to stall the whole time, and that the possibility of tainted elections was a major factor in his finally agreeing to points which he had previously outright rejected over the previous 4 months. Although it doesn't explicitly say so, the suggestion that Micheletti feared the new government would be "tainted" does indicate one of the suggestions I made last week: that global opposition was pretty important here.

-Another argument that this article seems to be tacitly making is that the opposition among many within the Church played a decent role, too, in that he'd lost support among a major non-political (in the strictest sense of the word) group, too.

-Some Costa Rican sources (perhaps unsurprisingly) feel that it was Arias's efforts to craft an agreement all could accept throughout the summer that was important here, as it laid the groundwork for the current agreement.

-Finally, Greg points us to Raj's argument that it was the Honduran people themselves (and Zelaya to an also-important-but-lesser extent) that forced Micheletti's hand.

Each of these has its particular merits, but I think some are more important than others. While Arias's work is important in the grand scale, little has changed between his proposal in July and the current agreement, so while I think it did help lay the groundwork, I don't really see it as a catalyst. Again, little changed in the plan between July, when Micheletti refused to ever acknowledge it, and this week, when Micheletti suddenly had a change of heart. That's not to say Arias's role was unimportant over the entire process, but in terms of the events of this past week, I think it's pretty clear that the agency on this rests more on Micheletti and Zelaya than Arias.

Likewise, while gaining criticisms from the Church is an important factor, and while the timing is interesting (the Church condemns the human rights abuses under Micheletti just as the agreement is being reached), I think the timing is also coincidental.

I think La Opinion and RAJ get closer - Micheletti definitely wanted to stall as long as he could, and I think the growing opposition to any government elected under his regime played a role. Likewise, I think RAJ is on the right track in saying it was the Honduran people who forced the issue. Still, I don't find any one of these reasons compelling in and of itself, for a simple reason that perhaps seems wishy-washy, but that I think history has proven time and again, and that is:

Things are too complex for it to be any "one" factor.

Put another way, I think all of these factors, and numerous others, played a role. Honduras's economy and image has been hit hard with the global opposition to Micheletti, and while he was willing to weather that for 6 months or so, I think the prospect of the next four-year government also being jaundiced in the eyes of the world made Micheletti "change his mind" somewhat. He managed to achieve what he wanted (preventing any real reforms in Honduras under Zelaya, who will now effectively be a 3-month lame duck), and, perhaps perversely figured getting out now was what would be best for Honduras down the line (in what was perhaps the first time Micheletti was actually concerned with what's best for Honduras during this crisis). I wouldn't be remotely surprised to find out that this is effectively what the U.S. negotiators suggested, and that Micheletti, who's proven he isn't a political idiot (even if he's a repressive, semi-authoritarian, power-hungry man), saw the writing on the wall.

But again, that wasn't all. I absolutely think the Honduran people played a major role. In fact, I'd extend this beyond RAJ's argument. Time may prove me wrong, but I don't think it was just the people in opposition to the coup, or Zelaya, or leaders in the church; as I said on Monday, I'm fairly certain that business leaders may have played a role in this. Greg alludes to the power of informal contacts, and while he doesn't really buy into them in the case of Chile, I'm not convinced they didn't play an important part here. Just as Micheletti may have seen the trouble Honduras would face internationally if the elections happened under his regime, I'm sure business leaders also knew that four years of prejudice against Honduras would really hit them hard. This isn't to say the business leaders were more important than the Honduran people; after all business leaders are Honduran people, too. But I think this all gets at just how complex these processes in general (and this one specifically) are. Numerous groups within and outside of Honduras all had their own reasons for wanting to see this crisis finally come to an end, be it the political elites who feared Zelaya's attempted reforms, the people who stood up against Micheletti's repression, the business elites trying to protect their privileges, the international community standing up for democratic processes, or any other number of voices and opinions, and I think all of their voices played a role in the resolution happening, and happening this week (as opposed to July, September, or next January).

It well may take years for us to really understand the events of these past four-plus months in Honduras, though no doubt many explanations and efforts (including this one) will emerge among political scientists, historians, human rights activists, and others. While some will try to give more credit to one group than another, or explain the shift through just one group or catalyzing factor, I think at the end of the day, the answer to the question "why did the resolution happen when it did, and what caused it?" will be the same as the answer to so many other questions: "Well, it's complicated..."