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Hazards of Lending Money To Honduras
_____________________________________________________________________________
Editorial Note: This
letter was sent to both the "Social Forum of Foreign Debt & Development" and
to Mr. James Wolfson, President, World Bank. It is intended to offer a cogent
argument against further lending to Honduras, until and unless stringent loan supervision
is in place and agreed to, to assure that the funds involved will be disbursed in
strict accordance with the lending terms.
____________________________________________________________________
March
9, 1998
Ladies and Gentlemen of Foro Social de la Deuda Externa y Desarrollo
de Honduras:
As a private United States citizen, I am presuming to reply to your message to The
Honorable James Wolfsohn, President of the World Bank, because this topic is much too
important to be left to the politicians, as someone has said. If you have taken time to
sample American taxpayer attitudes, I know what you have learned. Namely, that a
solid majority of my countrymen agree with the attitudes reflected here, and on mWebSite.
I have their written responses to prove it.
With respect to personal credentials, I know Honduras intimately. I draw on more than
thirty of experience in Latin America, as a working journalist, private investor,
economic consultant the Honduras Ministry of Hacienda and Credito Publico, and
holder of a Honduras Residency for several years during which time I lived in La
Republica. I have known top people in almost every Honduras administration since that of
Don Osvaldo
Lopez Arrellano (1963).
In a careful reading of your presentation, I find the most significant declaration in it
to be the 7th paragraph, to-wit:
"It is clear that the loans that have produced the debt have not promoted development
and that their misuse (in great part a victim of the corruption which you have tended to
condemn) is a responsibility both of those who have provided the credit as well as those
who have administrated (sic) it."
You are right on two points, at least: First, the millions and millions of dollars the
United States has pumped into Honduras, from the Roosevelt "Good Neighbor
Policy," up to today - under a plethora of grants, development projects, foreign aid
authorizations, etc., etc., - have certainly not promoted development. Second, an unending
pattern of political corruption has siphoned the majority of these funds out of their
designated channels of use
and into the pockets and foreign bank accounts of venal, shameless, but duly-elected
Honduras "public servants."
You then undertake to divide responsibility for these monumental failures between
"both .. those who have provided the credit, as well as those who have administered
it," again, I must agree. Continuing to annually pour millions of dollars into
Honduras, with virtually "no strings attached"; and long after Honduras had
shown its inability and/or unwillingness to manage and conserve those funds to the
purposes for which they were intended, was not just an economic outrage, but worked
historic and callous wrongs on the citizens of
Honduras - for whose benefit those millions were intended. In view of this, I must agree
with you: The people who duplicitously engineered and lobbied these money bills through
the U. S. Congress, are only slightly less culpable than those who blatantly stole the
money on its arrival in Honduras.
Having been privileged to sit through many of the hearings in both the House and Senate,
when foreign-aid bills were being examined, I am familiar with the rhetoric. So familiar
with it, in fact, that I can write a good deal of the standard "testimony" from
memory: The foundation for more "forgiveness" of interest and principal is the
verity you set forth: Namely that, whether forgiven or not, funds already received are not
going to be repaid. Those moneys have been spent, wasted, diverted to private bank
accounts, or otherwise disappeared in what you might choose to euphemistically call
"illicit enrichment".
I call it "thievery." But whatever the label employed, that money is gone. Gone!
We are never going to see it again.
Next comes the entreaty for a fresh start. We must forget what has gone before, Honduras
spokesmen will insist; let us draw a line in the sand and begin anew. Honduras has a
newly-elected President. Don Carlos Roberto Flores Facusse is an exemplary businessman, an
honorable genteman, educated in a distinguished American university. With him heading the
Honduras government, this time it will be different! Give Honduras
another chance. It's an all-too-familiar litany.
The same performance has been given at four-year intervals since Honduras began holding
elections instead of golpes de estados. The only notable differences have been
the names of the performers delivering the speeches. The words and the messages are always
the same - and so are the disheartening eventualities that, in due course, follow the
presentations.
I need not go into laborious detail concerning the reasons that Honduras shapes up as a
perfectly horrible credit risk.
Successive cadres of Honduras politicians have written a record of
venality, faithlessness, functional ineptitude and administrative abuse of its own hapless
citizens, that has seldom if ever been duplicated in this hemisphere. It needs no
amplification from any quarter. In spite of this overwhelming evidence to the contrary,
the message to the United States this quadrennial year is, as it has for so long been,
"this time it will be different."
But will it? All the insticts of a rational individual urge viewing the past record, as
the most reliable guide to future behavior. On this basis, a significant change in
Honduras political comportment must be seen as a very thin possibility, at best.
I have spent a good bit of time and effort assembling a brief public record from which
Honduras will necessarily have to proceed. There are hard facts that must be faced up to,
as Honduras calls on the United States Congress for yet another infusion of cash, to keep
the bankrupt system afloat for four more years. You can read the Honduras scoreboard on
the World Wide Web, at:
<
http://www.goodfelloweb.com/lorenzo/ >
Read it, and then ask yourself what kind of a credit-rating you will assign, on that kind
of performance.
Sincerely,
Lorenzo
Dee Belveal
< http://www.goodfelloweb.com/lorenzo/ >
What you must know to survive in Honduras.
============================================================
Foro Social de la Deuda Externa y Desarrollo de Honduras wrote:
Mr. James Wolfensohn
President, World Bank
Dear Mr. Wolfensohn:
We are aware that your stay in Honduras is short, however we would like to take this
opportunity to invite you to a constructive dialogue concerning the structural adjustment
and debt policies being carried out by the World Bank and other multilateral, bilateral,
and private credit institutions in our country.
The Honduran Social Forum on External Debt and Development (Foro Social de la Deuda
Externa y Desarrollo de Honduras - FOSDEH), which groups important sectors of civil
society, cannot let your presence here go unnoticed since the policies you approve are
vital for our people.
The bank you direct is the second most important in the list of our multilateral lenders.
The amount of the public external debt of Honduras with the World Bank was 700 million
dollars up to December, 1997. As is well known, approximately 50% of the national debt was
suscribed with multilateral organizations, most of which are inflexible in the face of
many requests presented for eventual condonation, reduction or alleviation policies in the
service of the debt. In total, our external debt surpasses four billion dollars; an amount
that grows automatically on its own, due to the need to finance the payment of the
interest through new loans.
It is possible that the World Bank holds the view that, international debt is no longer a
priority problem, but in countries like Honduras it continues to lessen the possibilities
of true development and equity. Honduras has paid in interest just to the World Bank, 128
million dollars in the last five years, an amount that could have served to construct and
equip 100 hospitals in rural areas, provide literacy for the entire country, create
thousands of permanent jobs or reduce the destructive impact of infant malnutrition.
Mr. Wolfensohn, it might be useful to remind you that each year we pay approximately 500
million dollars for the total service of the debt and that this payment erodes our scarce
systems for sanitation, education and production, degrading the quality of life of the
majority and deteriorating towns and cities, as well as polarizing society in violent
extremes.
From the perspective of the civil society, the only real possibility to continue
"honouring" the debt is sacrificing the wellbeing of all Hondurans and of our
environment. We consider it a tragic result that Honduras is now considered a
"country with a sustainable debt" when the only thing that grows as rapidly as
the debt is the surrounding poverty. Eight out of every ten Hondurans today confront
serious problems of survival.
It is clear that the loans that have produced the debt have not promoted development and
that their misuse (in great part a victim of the corruption which you have tended to
condemn) is a responsibility both of those who have provided the credit as well as those
who have administrated it.
The official "sustainability" of the debt condemns thousands of Honduran people
to die, therefore more than an economic problem, it is rather a fundamentally human and
ethical one. The World Bank, as well as the multilateral, bilateral, and private banks
must understand that this sacrifice is unsustainable and that we must seek a solution.
This is the central objective of the FOSDEH, the search for sustainable alternatives in
the management of the debt and the promotion of true development policies. As a civil
network, we reject limiting the role of the excluded to pay the debt with their scarce
resourses.
Due to the above, the FOSDEH forms an active part of the worldwide campaign, Jubillee
2000, in favor of condoning the external debt. FOSDEH also advocates the establishment of
national policies which are fair, transparent and effective in the management of the debt
and other financial resources. We do not want to eliminate the burden of the current debt
so that other governments in the near future can place the country in debt once again and
gain a profit in doing so.
Mr. Wolfensohn, we would like to take advantage of your visit in the following concrete
terms:
1. We request the initiation of a dialogue with the World Bank to include Honduras in the
Structural Adjustment Participatory Revision Initiative (SAPRI), with tripartite
participation of the World Bank, the government under Carlos Flores Facussé and organized
Honduran civil society. The basis of the dialogue should be the revision of the external
debt policies
including the HIPC initiative, seeking modalities of reduction, alleviation or extinction
of the debt compatible with the fundamental right of our people to live in dignity and
development.
2. To promote programs and projects of external debt exchange for development, in which
Honduran Civil Society has concrete experience and capacity to mobilize and invest
resources in favor of the communities which are most affected by adjustment and poverty.
No sacrifice by the people of Honduras, no matter how intense, will achieve the payment of
this unpayable debt. There is no way of paying it off just through our own efforts and any
attempt to do so would end up holding us permanently in dependence and poverty.
The FOSDEH looks forward to your response to this request, and at the same time we request
that Mr. President Carlos Flores Facussé provides his personal support to our citizenship
initiative in the private meeting that will be held today and in the following bilateral
contacts between the Government and the technical missions from the World Bank.
Respectfully submitted,
Lorenzo Dee Belveal
========================
Copies to:
FORO SOCIAL DE LA DEUDA EXTERNA Y DESARROLLO DE HONDURAS:
- Association of Non Governmental Organizations - Asociación de Organismos
No Gubernamentales (ASONOG).
- Catholic Church - Iglesia Católica - Arzobispado de Tegucigalpa.
- Honduran College of Economists - Colegio Hondureño de Economistas.
- Union of Farm Workers - Unión de Trabajadores del Campo (UTC).
- Central Union of Honduran Workers - Central Unitaria de Trabajadores de
Honduras (CUTH).
- Movement of Women for Peace - Movimiento de Mujeres por la Paz
"Visitación Padilla".
- Association of Christian Youth - Asociación de Jóvenes Cristianos (ACJ).
- Association of International Cooperation - Asociación de la Cooperación
Internacional (ACI).
- Coordinating Counsel of Farmer Organizations - Consejo Coordinador de
Organizaciones Campesinas.
- Graduate Studies in Economy and Development - Postgrado en Economía y
Desarrollo (POSCAE-UNAH).
- Federation of Private Development Organizations - Federación de
Organizaciones Privadas de Desarrollo (FOPRIDEH).
Francisco Machado Alexis Pacheco
Manajement Bord Executive Secretary
ASONOG FOSDEH
Let those who have never been heard, be heard
ASONOG E-mail: asonog@sdnhon.org.hn
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Lorenzo Dee Belveal, Author
Copyright © 1997 Lorenzo Dee Belveal
All Rights Reserved
Guadalajara, Jalisco, MEXICO
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