The Foretold and Untold Chronicles of an Unusual Coup
Prompted by the U.S. government, a couple of rounds of negotiations between Mr. Zelaya’s and de facto President Mr. Michelletti’s teams took place in Costa Rica under the auspices of President and former Peace Nobel Laureate, Mr. Arias. The negotiation also failed by the refusal of the two protagonists to meet in person. Ironically, President Obama’s public calls for the restoration of Mr. Zelaya equally disappointed the de facto administration (whose Foreign Ministry doubted Mr. Obama’s knowledge of the situation with clear racist overtones) as well as the previous administration: Zelaya himself and Venezuela’s President Chavez accused him of not doing enough to put him back in office. Part of this U.S. anomie may be explained by the decisive phases undergoing key domestic and foreign issues for the Obama administration, such as health reform, Afghanistan’s election and U.S. involvement in Iraq, to cite a few.
Mr. Zelaya’s behavior since his ousting has not helped, either, increasingly perceived as being orchestrated from Caracas: specifically his repeated calls to supporters for a direct confrontation with the de facto government (initially calling for an insurrection, then for resistance) and his bizarre attempts to enter the country, first by a broadcasted live incursion by plane, then, literally speaking, by momentarily stepping in and out of the border with Nicaragua. In the contexts of the clashes between supporters and security forces, three people have died.
The Untold Story of Elite Greed and Social Contract Rupture
Under the theory of conflict developed by economists such as Grossman, Hirschleifer, Collier and Hoeffler, the Honduran coup can be modeled as one in which the opposition’s greed plays a critical motivating role. In peace, the government has access to fiscal revenues of both supporters and opposition (whether or how successfully the opposition manages to evade their taxes is not considered here, but it will not change the conclusions). This public provision of services may well be the result of the public good nature of most of these services—many universal, others simply ill-targeted in practice—rather than a benevolent nature of the government.
The government receives external resources in the form of investments and aid that in turn can be destined to economic productive development (which in Honduras has led to investments in infrastructure and timid export-led diversification), military activities, and the financing of public transfers, which in Honduras has meant substantive additional resources for the poverty reduction strategy linked to debt-relief. At its peak since the initiative started in the late 1990s, poverty related spending represented 10 percent of the GDP. The opposition carries out its productive activities, is taxed, and receives public transfers as seen above.
This constitutes what some in the context of conflict theory call “social contract”, a formal or informal arrangement that governs the allocation of resources and the peaceful settlement of grievances. Its fissure is frequently responsible for the onset of civil conflict, as has been the case in Africa (along with ethnic and regional dimensions not applicable to Latin America). Interestingly, this notion of social contract intertwines greed and grievances, which have traditionally separated economist and non-economist explanations of conflict outbreak and duration.
There are obviously several degrees of social contract fractures, only some of which should expectedly bring about such dire consequences as to prompt a rebellion or a coup. In the case of Honduras, was the lack of expected economic growth or faster poverty reductions likely seen as a social contract rupture? Unlikely. For that to happen, poor performance must be solely attributed to the government’s decisions, which becomes increasingly difficult to sustain in the globalized era we live. Furthermore, days before his overthrown, a Gallup opinion poll reported Mr. Zelaya’s approval rates at 46 percent, surprisingly intact with respect to those taken four years ago when he was elected. Did he announce draconian economic, trade, taxation or social policy shifts that would dramatically affect investors’ expectations? No. In fact, both net inflows of foreign direct investments and gross capital formation as a proportion of GDP have been moderately increasing since 2005.
What, then, would likely cause a social contract fracture in Honduras? We need to look at politics not economics. The issue of re-election was central in Mr. Zelaya’s announcements of constitutional reform, starting with a process of constitutional overhaul by a new Assembly clearly reminiscent of Venezuela, Bolivia, and Ecuador’s recent reforms. It is unclear, nonetheless, the extent to which the terms of the constitutional overhaul were already drafted or planned, which must only have contributed towards a greater deal of uncertainty and anxiety among the economic, social and political elite in the country.
The social contract at risk was not necessarily that governing the transfers across citizens’ political identities. Instead, it pointed to the accustomed power sharing between the two major parties, Liberal and National, which equates to the share of power among the handful of families dominating the political and economic spheres of the country. In a simulation exercise that models the rupture of social contract for Honduras, I estimated that the feared losses by this elite sector must have exceeded a whopping 11 percent of the GDP in order to green-light the military ousting of Mr. Zelaya. Perceived losses by the elite might have consisted of direct redistributions of wealth to the non-elite as well as indirectly from the empowerment of other groups such as supportive radical civil society organizations. The estimated amount undoubtedly would constitute a massive redistribution of resources within any society large enough to support such drastic measures. Also, it is a mobilization of resources feasible enough in Honduras, which has recently witnessed poverty-related spending within a similar order of magnitude. It is also reassuringly close to Paul Collier’s gross estimates of a 15 percent GDP loss in an average civil war.
The Next Critical Question
Beyond the questions of what motivated Mr. Zelaya and the elite to what they did, the social contract and greed explanation suggests that even in a heavily indebted poor country subject to continuous monitoring by the international community and strongly dependent on aid and debt-relief, the influence of the international community is ineffective in defraying a major crisis when the mechanisms that guarantee the elites’ grip on power are at risk. Regardless of the advocated principle of defending democracy’s legitimacy against a coup or the principle of defending the Constitution against its internal threats, it is the conventional fear—justified or not—of extraordinary economic losses expected under new rules of the game that might explain the lion’s share of motivations for the unusual coup in Honduras. The critical question for the future is whether more deliberate efforts to reform the economy, to tackle daunting levels of poverty and inequality, and to make Honduras’ form of democracy more participatory will meet the same fate as Mr. Zelaya’s purported re-election ambitions.
Mr. Cuesta several times INCORRECTLY refers to the military’s removal of President Zelaya as a coup. A military coup is when the military acts INDEPENDENTLY to remove the head of a government. In the case of Zelaya’s removal, the military was only FOLLOWING THE ORDERS of the Honduran Supreme Court (which had unanimously voted for Zelaya’s arrest) and of the Honduran Congress which had voted 122 to 6 for the removal and arrest of Zelaya. Five of the dissenting congressmen are members of the Honduran Communist party. In a miliary coup, the military maintains control of the government. In the case of Zelaya’s removal, the military NEVER was in control of the government. A successor to Zelaya was picked in accordance with the Honduran constitution. The constitution calls for the President of the Congress to be made interim president. Roberto Michiletti was the President of the Corgress and was installed according to Honduran rule of order.
Mr. Cuesta states: “Adding to these numerous contradictions in Honduran history, the MILITARY TOPPLED Mr. Zelaya’s administration just five months before the legal expiration of his term.” Again, this is INACCURATE. The Honduran Supreme Court and the Congress toppled President Zelaya from office. The military only executed the order GIVEN TO IT. Such a statement is unfortunate as many will not read the full article and this gives an inaccurate picture of what happened in Honduras. Much later in the article, Mr. Cuesta brings out more completely what actually happened. Many readers will have stopped reading the long article before getting to that point.
Mr. Cuesta’s following statement is also WOEFULLY INACCURATE. He states: “The military did not seize power for itself, but instead transferred it to the oppostion group, which maintianed the constitutional rule of law pre-existing the coup.” The TRUTH of the MATTER is that Mr. Roberto Micheletti, who was made president is a MEMBER OF THE LIBERAL PARTY, the SAME PARTY AS PRESIDENT ZELAYA. EVERY MEMBER OF EX-PRESIDENT’S LIBERAAL PARTY VOTED FOR HIS REMOVAL AND ARREST. If Barack Obama did something that caused EVERY DEMOCRAT in Congress to vote for his removal and then he was replaced by another DEMOCRAT, would that mean power being transferred to the other party? Of course, not. Neither did EVERY MEMBER of Zelaya’s own party voting for his ouster and then his being replaced by a member of his own party, constitute a transferrence of power to the opposition party, as Mr. Cuesta so INACCURATELY states to have been the case.
Mr. Cuesta makes a judgment that the real reason for the removal of Zelaya was greed on the part of the elite in the goveernment. How can you say that when the Supreme Court UNANIMOUSLY voted for his arrest and removal as well as 122 of the 128 members of the Honduran ccongress? Mr. Cuesta is obviously writing from a Marxist theory of economics. The truth of the matter is that there are considerations OTHER THAN THINGS AND MONEY in the hearts of people. Marxist economists look at everything being the result of only material things. But I believe that in the hearts of those Honduran Supreme Court justices and Congresspeople was a GENUINE DESIRE to preserve their democracy – and not have their country go the way of Chavezistic Venezuela. In fact, they have shown their WILLINGNESS TO SUFFER SUBSTANTIAL MONETARY LOSS to date in order to do so.
“the military was only FOLLOWING THE ORDERS of the Honduran Supreme Court”
The military well exceeded the alleged order to arrest Zelaya, violating the Constitution in the process, as Mr. Cuesta rightly points out.
“would that mean power being transferred to the other party?”
Mr. Cuesta didn’t say power was transferred to “the other party”, he correctly observed power was transferred to the “opposition group”.
Dr. Pagget, what a waist of time your comment. I think you should taken more time to read more carefully the article and really understand what Dr. Cuesta meant. Or did’t you read him saying that the military was only the instrument to remove President Zelaya. Or you have a different name for that? I agree and I think everybody do too… that this is not a traditional military coup. But how can we named? if it doesn’t have a name yet. I think he was trying to give us a reference of what happened and take us to the point of why he think is the main reason for the removal of the president.
Your simulations show 11%? That is remarkable precision; with such a precise model, perhaps you could tell us what happens next?
Sarcasm aside, this article is spot-on in its underlying message: elites were not so much afraid of Zelaya continuing in power, as of an unpredictable change in the status quo, a status quo in which they reap immense profits. However, trying to quantify such arguments precisely is doomed to fail, partly because it ignores factors such as Zelaya’s abrasive personality. Thus, the final question – does this coup mean that constitutional reform in general is doomed in Honduras – is well-posed, but still a much more open one than a quasi-numericalized analysis would suggest.
As an American of Honduran descent and as an Ivy League graduate that specialized in international political economy, I agree wholeheartedly with Dr. Padgett’s clarifications. The article tries to appear evenhanded, but at critical points, the article displays an ignorance and/or disregard to important details regarding Honduras. I can only explain such failures to the article’s slant towards a materialistic view of historical events (a.k.a. marxism).
I disagree with this cliche view that Honduras is poor, thus it MUST be controlled by wealthy elites. I would argue that Honduras is no more controlled by its elites than the U.S. Are there families with greater access to political power? Yes, but we have the Kennedys, Clintons, Bushes, etc. Are there special interests who have a recurring role in Honduran government? Yes, but the U.S. has Goldman Sachs alumni in every administration.
The reality is that most of the commentators on the Honduran situation are Johnny-come-lately’s who read 2 pages of headlines, and then spout out preconceived notions. I have family that still lives in Honduras. My brother was in Honduras during Zelaya’s removal. The events in Honduras was a process beginning years ago.
This article says: “Did he announce draconian economic, trade, taxation or social policy shifts that would dramatically affect investors’ expectations? No.” This is false. Over the past years, Zelaya announced several initiatives that were draining the Honduran treasury. He increased the minimum wage and significantly increased salaries of government workers. Sounds nice, but not when the country cannot afford these measures and is paid for by decreased spending on security in a country suffering from a murder rate much higher than U.S. casualties in Iraq. Even conforming to the author’s economic-based viewpoint, when murder rate and government debt goes up significantly, don’t these affect investor expectations?
In my view, this “social contract” that the author proposes is no different in Honduras than in the U.S., except that its flaws are definitely magnified due to the extreme poverty of the country.
What bother me is that I see a patronizing paternalistic strain in commentators who seem to be completely dismissive of Honduran institutions and politics.
The Honduran Congress and Honduran Supreme Court may mean nothing to those who simply would prefer Honduras to go the route of socialism. However, to the Honduran people, these institutions of democracy are VERY important. It is for this reason, the people of Honduras have been an example to the world is not allowing the U.S. or Venezuela to run roughshod over the country’s politics.
Lest anyone think I am part of the “greedy elite”, I submit that I am the first generation of my family to have finished high school, much less go to university. Many in my family in Honduras is part of the 80% that live below the poverty line, and no one in my family has anywhere close to an income to justify being called an “elite” in Honduras, much less “greedy”. I did not just begin to read about Honduras and make my judgements yesterday.
Well stated Jose. Much more in line with what I hear from family who’s LIVED & WORKED in Honduras for many years rather than what I read in publications written by stateside armchair crisis solver wannabe’s. Sad that the US, OAS nations, UN & Europe insist that the only relevant branch of government in Honduras is the presidency and that they must disregard their Constitution. I guess checks & balances is only for “elite” nations that are in denial that they too are ruled by their own form of elites
“I guess checks & balances is only for “elite” nations that are in denial that they too are ruled by their own form of elites”
Nobody’s arguing otherwise.
“I would argue that Honduras is no more controlled by its elites than the U.S. ”
That’s a very weak argument.
If america has problems regarding the rich controling politics, that dos not make it a god thing in Honduras.
This is BS.
Comparing one thing with a similar thing somewhere else doesnt make it better.
That you are not a part of the greedy elite, doesnt make you smart either.
The point is that, this article essentially dismisses the validity of Honduran democratic institutions because they are controlled by “elites”. If that is the case, then we should ignore U.S. democratic institutions (when convenient) because our political system is dominated by elites, too.
And there are plenty of arguments to make that the U.S. system is corrupt and dominated by the rich and elite. No system is perfect, and Honduras is more imperfect than most, but just because you don’t like the rules should not mean that you get to ignore them.
Jose, as a fellow Ivy league grad and actual Honduran citizen I understand your need to express your opinion in the matter. Unfortunately, having poor family members in Honduras is hardly something that would make you an expert in Honduran law, its politics or its economic system.
While I agree that Honduran institutions such as the Congress and the Supreme Court are the backbone of the government’s administrative/political system, it must be noted that the constitution that determines how those institutions interact is, not surprisingly, flawed. It is true that there needs to be independence between the branches of government, reality points, however, in a different direction. So in the face of these institutions being as relevant as they are effective, and in response to this brew resulting in the economically disfavored segment of the population carrying the burden, change is overdue. Which is why, not only Zelaya but the opposition party as well as other in his Partido Liberal, where FOR a revision of the Constitution before they were against it (this last part in response to overwhelming opposition for the political establishment/ruling class).
Raising the minimum wage the way it was raised might not be a silver bullet, but not raising it was not something that people could afford.
The combination of both of those things was, I think, what ultimately brought down this relajo over the Honduran people. Zelaya is not the first president to raise the minimun waige nor is he the first president to try to change the articulos petreos. Articles 239 and 240 were modified twice, once in 1998 and again in 2003. Why, then, weren’t members of congress prosecuted (should I say persecuted) for doing that then? Because these changes were not in direct opposition to the people who control the Empresa Privada. As soon as Zelaya challenged the business interests in Honduras, a smear campaign began to create an environment of fear among Hondurans, very much like what we saw Bush do during the 2004 presidential campain in the US.
You sound like a pretty smart guy, and I trust you did not make up your mind yesterday. You just missed the point entirely and failed to err on the side of those 80% you claim to be, at least in spirit, a part of.
Replying to the article I think it is on spot concerning the elites in Honduras and the poor in Honduras. However he misstates that there are no agricultural resources in Honduras. This is not true at all. I can point you to a video that shows exactly what happened in Honduras concerning the way agriculture was destroyed, and will do so here. Honduras is a great food basket for the world, but because of policies with the world bank, that food basket was destroyed.
http://www.youtube.com/watch?v=L9fIo1iLvls
As far as the rest of the article, I truly agree that elites are the primary cause of Zelaya’s removal. Elites are in fact in the Liberal Party, and control that party, so when Zelaya was removed by the court, he was in fact removed by the very elites who back the court.
As for Dr. Padgett, he seems like another sock puppet of the right wing party who always maintains that Zelaya was removed legally, when in fact this was not actually true.
Jose comments that he is an Ivy League person who has family in Honduras that fall under the poverty line, yet at the same time backs the coup itself. I will say this, Jose may not be a part of the elites, but none the less he supports a court backed by elites and businessmen who feared a loss of power due to Zelaya’s actions. Those actions caused a great shift in the balance of power and continue to cause many deaths and beatings and many more disappearances than what was considered normal during Zelaya’s term.
As for him saying that commentators seemingly being dismissive of Honduran Institutions, I disagree. A majority of them see through those fake ideals and into the reality of Honduras and the intense grip that wealthy corporations have on Honduras. Not to mention those very same corporations who go to Honduras not to help the country, but to plunder its labor and resources for themselves and other countries, as well as its riches.
I often see how the business element in Honduras always says how they need these greedy corporations to provide jobs, but they seldom talk about how those jobs provide only slave wages to the people who work at them, thus forcing those into abject slavery with no hope of getting out from under it. Therefore to support these companies that invest there and come there to make money, they often fail to discuss just how easy it is to pay someone 30.00 dollars a month for hard labor, because that very same corporation cannot pay someone a living wage because profits are more important.
Remember, those very same corporations could not get away with the working conditions and pay in their home countries such as the United States, so they see an opportunity to plunder and enslave the people of Honduras with wages that no one could live on, and they get away with it, and are even praised for their efforts to provide jobs.
Only the business elites understand this economic model and can tell exactly why it is important to offer such working conditions as they have there, as well as the terrible wages. And even when Zelaya raised the wages, they complained loudly that there wasn’t enough to pay for them, yet, those very same companies in Honduras are making billions in profits. So to complain about a wage that goes from 30.00 USD per month to say 45.00 USD per month or even 60.00 USD per month shows just how bad these companies truly are there.
As far as investor expectations, how about those investors explaining why they would come to Honduras in the first place? The same investors always come there for the same things, slaves, cheap labor, maids, servants to clean and cook for them, and large estates in which they would never be able to have elsewhere. They then go on to complain loudly about how the servants are uneducated, stupid, don’t know how to do this or do that or even be a servant, and then they fire them routinely just because they can get someone else. Those are the reasons why investors come to Honduras. They don’t come there to help people, they come there to make money, and they come because more money can be made there by paying such wages that they cannot get away paying with elsewhere.
Those are the real IVY League Facts Jose, and if your family truly lived in poverty, then you would agree that this is the primary number one problem in Honduras, INVESTORS, Corporations and the greedy Ex-Pats who come to Honduras on a daily basis to enslave its people.
And to top it off, Zelaya was not draining the treasury with his initiatives, he was draining those greedy companies and investors of money to pay a living wage and to economically help those very same people you claim to come from, which is the poor.
http://www.hondurancampesino.org
“And to top it off, Zelaya was not draining the treasury with his initiatives” – so you are saying that the Honduran debt did not increase under Zelaya? Only that taxes on the rich increased? That is just plain false. And the fact that the debt increased goes against a major point of the article above (that Zelaya did nothing to actually scare off foreign investors).
I am for supporting any form of elitism, but I realize that socialism only creates new elites while not allowing for true social mobility. There may be elites under capitalism, but at least, there is the chance for mobility.
Further, those “slave wages” are more money than some of my family in Honduras could make slaving away in the countryside. Honduras is in dire poverty and what is a “slave wage” to you is survival to another.
Regardless, Honduras certainly needs reform, but I only comment on this article and the fact that Zelaya was removed as President of Honduras under a process governed by the Honduran Constitution, whether you agree with the outcome or not.
Very interesting discussion on Dr. Cuestas’ article. I think the time has come to point out that the role of Micheletti, Zelaya, the army, the 10 or so powerful families that control the country and the role that traditional political parties have in Honduras will go the way of the walkman. Whatever happens in Honduras the newly organized resistance against the status quo will lead the way to a change of national politics, starting with the change of the petrified constitution. The quality and efficiency of organizing makes the poor oppressed masses in the countryside, small towns and urban “cuarterias” a veritable foe of the empresarial oligarchy, the army, political parties and their supporters. Hence, I would not worry about the future of Zelaya and the other groups I have mentioned as they will rhave a reduced role in the new more equitable Honduras.
nice. Thanks
Very good Article, José. As a young student and a a witness of everything that happened in Honduras, all I can say is that I totally agree with this analysis.