Honduras News - Daily News about Honduras

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.

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.

by: Mario Posas