[House Hearing, 111 Congress]
[From the U.S. Government Publishing Office]


 
                        NEXT STEPS FOR HONDURAS 

=======================================================================

                                HEARING

                               BEFORE THE

                            SUBCOMMITTEE ON
                         THE WESTERN HEMISPHERE

                                 OF THE

                      COMMITTEE ON FOREIGN AFFAIRS
                        HOUSE OF REPRESENTATIVES

                     ONE HUNDRED ELEVENTH CONGRESS

                             SECOND SESSION

                               __________

                             MARCH 18, 2010

                               __________

                           Serial No. 111-94

                               __________

        Printed for the use of the Committee on Foreign Affairs


 Available via the World Wide Web: http://www.foreignaffairs.house.gov/

                               ----------
                         U.S. GOVERNMENT PRINTING OFFICE 

55-517 PDF                       WASHINGTON : 2010 

For sale by the Superintendent of Documents, U.S. Government Printing 
Office Internet: bookstore.gpo.gov Phone: toll free (866) 512-1800; 
DC area (202) 512-1800 Fax: (202) 512-2104 Mail: Stop IDCC, 
Washington, DC 20402-0001 














                                
                      COMMITTEE ON FOREIGN AFFAIRS

                 HOWARD L. BERMAN, California, Chairman
GARY L. ACKERMAN, New York           ILEANA ROS-LEHTINEN, Florida
ENI F.H. FALEOMAVAEGA, American      CHRISTOPHER H. SMITH, New Jersey
    Samoa                            DAN BURTON, Indiana
DONALD M. PAYNE, New Jersey          ELTON GALLEGLY, California
BRAD SHERMAN, California             DANA ROHRABACHER, California
ELIOT L. ENGEL, New York             DONALD A. MANZULLO, Illinois
BILL DELAHUNT, Massachusetts         EDWARD R. ROYCE, California
GREGORY W. MEEKS, New York           RON PAUL, Texas
DIANE E. WATSON, California          JEFF FLAKE, Arizona
RUSS CARNAHAN, Missouri              MIKE PENCE, Indiana
ALBIO SIRES, New Jersey              JOE WILSON, South Carolina
GERALD E. CONNOLLY, Virginia         JOHN BOOZMAN, Arkansas
MICHAEL E. McMAHON, New York         J. GRESHAM BARRETT, South Carolina
JOHN S. TANNER, Tennessee            CONNIE MACK, Florida
GENE GREEN, Texas                    JEFF FORTENBERRY, Nebraska
LYNN WOOLSEY, California             MICHAEL T. McCAUL, Texas
SHEILA JACKSON LEE, Texas            TED POE, Texas
BARBARA LEE, California              BOB INGLIS, South Carolina
SHELLEY BERKLEY, Nevada              GUS BILIRAKIS, Florida
JOSEPH CROWLEY, New York
MIKE ROSS, Arkansas
BRAD MILLER, North Carolina
DAVID SCOTT, Georgia
JIM COSTA, California
KEITH ELLISON, Minnesota
GABRIELLE GIFFORDS, Arizona
RON KLEIN, Florida
VACANT
                   Richard J. Kessler, Staff Director
                Yleem Poblete, Republican Staff Director
                                 ------                                

                 Subcommittee on the Western Hemisphere

                   ELIOT L. ENGEL, New York, Chairman
GREGORY W. MEEKS, New York           CONNIE MACK, Florida
ALBIO SIRES, New Jersey              MICHAEL T. McCAUL, Texas
GENE GREEN, Texas                    CHRISTOPHER H. SMITH, New Jersey
GABRIELLE GIFFORDS, Arizona          DAN BURTON, Indiana
ENI F. H. FALEOMAVAEGA, American     ELTON GALLEGLY, California
    Samoa                            RON PAUL, Texas
DONALD M. PAYNE, New Jersey          JEFF FORTENBERRY, Nebraska
JOHN S. TANNER, Tennessee            GUS BILIRAKIS, Florida
BARBARA LEE, California
JOSEPH CROWLEY, New York
RON KLEIN, Florida
              Jason Steinbaum, Subcommittee Staff Director
        Eric Jacobstein, Subcommittee Professional Staff Member
                  Julie Schoenthaler, Staff Associate
























                            C O N T E N T S

                              ----------                              
                                                                   Page

                               WITNESSES

The Honorable Craig A. Kelly, Principal Deputy Assistant 
  Secretary, Bureau of Western Hemisphere Affairs, U.S. 
  Department of State (Former U.S. Ambassador to Chile)..........    18
Ms. Vicki Gass, Senior Associate for Rights and Development, 
  Washington Office on Latin America (WOLA)......................    40
The Honorable Cresencio ``Cris'' Arcos (Former Assistant 
  Secretary of Homeland Security for International Affairs) 
  (Former U.S. Ambassador to Honduras)...........................    52
His Excellency Kevin Casas-Zamora, Senior Fellow, Foreign Policy 
  and Latin America Initiative, The Brookings Institution (Former 
  Minister of National Planning and Economic Policy and Second 
  Vice President of Costa Rica)..................................    60

          LETTERS, STATEMENTS, ETC., SUBMITTED FOR THE HEARING

The Honorable Eliot L. Engel, a Representative in Congress from 
  the State of New York, and Chairman, Subcommittee on the 
  Western Hemisphere: Prepared statement.........................     4
The Honorable Connie Mack, a Representative in Congress from the 
  State of Florida: Prepared statement...........................     8
The Honorable Craig A. Kelly: Prepared statement.................    20
Ms. Vicki Gass: Prepared statement...............................    43
The Honorable Cresencio ``Cris'' Arcos: Prepared statement.......    54
His Excellency Kevin Casas-Zamora: Prepared statement............    63

                                APPENDIX

Hearing notice...................................................    82
Hearing minutes..................................................    83
The Honorable Connie Mack, a Representative in Congress from the 
  State of Florida: Statement of Lanny J. Davis, Attorney........    84
The Honorable Eliot L. Engel: Letter dated March 17, 2010, to the 
  Honorable Hugo Llorens, U.S. Ambassador to Honduras............    86
The Honorable Eliot L. Engel: Letter dated March 18, 2010, from 
  the Honorable Hugo Llorens.....................................    88
The Honorable Barbara Lee, a Representative in Congress from the 
  State of California: Register of Politically Motivated Violent 
  Deaths of Individuals, June 2009 to February 2010..............    90
The Honorable Barbara Lee: Press Release, ``IACHR Deplores 
  Murders, Kidnappings, and Attacks in Honduras''................    94
The Honorable Barbara Lee: Letter dated March 3, 2010, to the 
  Attorney General of Honduras Urging Investigations into Attacks 
  on Coup Opponents..............................................    96
The Honorable Dan Burton, a Representative in Congress from the 
  State of Indiana: Report dated February 21, 2008, from the 
  Library of Congress on the Laws of Honduras....................    98
The Honorable Dan Burton: USTR Annual NTE Report 2006--Honduras..   104
The Honorable Dan Burton: USTR Annual NTE Report 2007--Honduras..   105
The Honorable Dan Burton: Letter dated September 23, 2004, from 
  Nelson Parks, Deputy Director for Production and Consumption, 
  Secretary of Industry and Commerce, Republic of Honduras and 
  Cement Investigation Report....................................   106
The Honorable Dan Burton: Inter-agency Memo Regarding Illegal 
  Practices Against CEMAR........................................   111
The Honorable Eliot L. Engel: Criminal Complaint against Acts of 
  Corruption.....................................................   113
The Honorable Dan Burton: Honduras Attorney General Position on 
  CEMAR Bankruptcy...............................................   115
The Honorable Dan Burton: Letter dated July 14, 2008, from the 
  Honorable Larry L. Palmer......................................   122
The Honorable Eliot L. Engel: Letter dated January 6, 2009, from 
  Stuart E. Eizenstat, Covington & Burling LLP...................   124
The Honorable Eliot L. Engel: Letter dated April 28, 2009, from 
  Oscar M. Cerna regarding State Department Response to 
  Congressional Letter...........................................   129
The Honorable Eliot L. Engel: Letter dated June 19, 2009, to the 
  Honorable Hillary Clinton, United States Department of State, 
  from Members of Congress.......................................   131
The Honorable Eliot L. Engel: Letter from Assistant Secretary 
  Richard R. Verma, United States Department of State, in 
  response to June 19 letter from Members of Congress............   138
The Honorable Eliot L. Engel: Letter dated January 11, 2010, to 
  the Honorable Hillary Rodham Clinton from the Honorable John 
  Conyers, Jr., a Representative in Congress from the State of 
  Michigan and Chairman, Committee on the Judiciary..............   140
The Honorable Eliot L. Engel: Letter dated March 17, 2010, to the 
  Honorable Hillary Rodham Clinton from the Honorable Charles B. 
  Rangel, a Representative in Congress from the State of New York   142
The Honorable Eliot L. Engel: Letter dated January 21, 2010, to 
  the Honorable Lugo Llorens.....................................   144
The Honorable Eliot L. Engel: Letter received March 11, 2010, 
  from Assistant Secretary Richard R. Verma to the Honorable 
  Eliot L. Engel.................................................   146
The Honorable Dan Burton: Chronological Sequence of Events in Mr. 
  Cortez Byrd vs. The Republic of Honduras.......................   147
The Honorable Dan Burton: Letter dated September 18, 2008, from 
  Cortez Byrd authorizing Mike Parker to make any and all 
  decisions on his behalf........................................   149
The Honorable Dan Burton: Letter dated May 13, 2009, from Cortez 
  Byrd to the Honorable Gregg Harper, a Representative in 
  Congress from the State of Mississippi.........................   150
The Honorable Eliot L. Engel: Final judgement of the United 
  States District Court, Southern District of Mississippi, 
  Jackson Division...............................................   152


                        NEXT STEPS FOR HONDURAS

                              ----------                              


                        THURSDAY, MARCH 18, 2010

                  House of Representatives,
            Subcommittee on the Western Hemisphere,
                              Committee on Foreign Affairs,
                                                    Washington, DC.
    The subcommittee met, pursuant to notice, at 2:56 p.m. in 
room 2172, Rayburn House Office Building, Hon. Eliot L. Engel 
(chairman of the subcommittee) presiding.
    Mr. Engel. A quorum being present, the Subcommittee on the 
Western Hemisphere will come to order.
    Last year, hemispheric affairs were dominated by the 
political crisis in Honduras. With today's hearing, I encourage 
my colleagues and our witnesses to be forward-looking in our 
discussion of Honduras.
    While I am certainly not asking anyone to forget the events 
that took place last year, this hearing is not intended to be a 
review of 2009. Suffice to say, and I have said this many 
times, that I believe that President Obama and Secretary 
Clinton's management of U.S. policy toward Honduras last year 
was excellent. The United States stuck to core democratic 
principles, while at the same time, looking forward to a post-
Micheletti Honduras.
    As we look ahead and focus on next steps for Honduras, I am 
pleased to see efforts by the Obama administration and several 
countries in the Americas to reach out to Honduran President 
Pepe Lobo. Working closely with President Lobo is crucial. At 
the same time, the inter-American community must ensure that 
steps are taken to implement key pieces of the Tegucigalpa-San 
Jose accord.
    I would like to briefly mention efforts that I believe 
should be taken both by the Honduran Government and the inter-
American community in the coming months.
    First and foremost, a robust Truth Commission must be 
established to investigate events from last year. I was pleased 
by the selection of my friend, former Guatemalan Vice President 
Eduardo Stein, to head the Truth Commission. The Commission's 
work must be done transparently, and it must ensure complete 
accountability.
    Secondly, we must continue to closely monitor the 
increasingly worrisome human rights situation in Honduras. 
Recent murders of Hondurans who were active in their resistance 
to the coup or related to activists must not go unnoticed.
    I am particularly troubled by the murders of three Honduran 
journalists this month. This past Sunday, Nahun Palacios, a 
journalist who covered demonstrations organized by the 
resistance of the coup and expressed his rejection of the 
removal of President Zelaya, was gunned down. I appreciate the 
strong statement of the Inter-American Commission on Human 
Rights, and believe that those responsible for these heinous 
crimes must be held accountable.
    Last year was especially brutal for Honduras' lesbian, gay, 
bisexual and transgender community. Attacks on that community 
escalated substantially, starting in June with 19 known murders 
of prominent members of the LGBT community. In addition, non-
lethal attacks and other violent acts against LGBT individuals 
were reported on an alarming scale, and additional murders have 
gone unreported.
    The human rights defenders who have documented these abuses 
have been threatened, and the atmosphere of intimidation for 
members of the LGBT community remains high.
    Yesterday, I sent a letter with Foreign Affairs Committee 
Ranking Member Ileana Ros-Lehtinen to U.S. Ambassador to 
Honduras Hugo Llorens, urging him to work with President Lobo 
to curb violence against the country's LGBT community. I was 
delighted to do it jointly with Ileana Ros-Lehtinen, and she 
and I have done many, many things jointly over the past many 
years.
    Ambassador Llorens responded to our letter this morning, 
stating his commitment to raise these issues with the Lobo 
administration. I am inserting a copy of this letter and 
Ambassador Llorens' response into the hearing record.
    Thirdly, I hope that we will act swiftly to re-admit 
Honduras to the Organization of American States. And I 
certainly believe that this must be done prior to the OAS 
General Assembly that will take place in Lima, Peru in June.
    Fourth, I have become increasingly concerned about the rule 
of law and the protection of the property rights of U.S. 
investors in Honduras.
    At the hearing we had last week, a number of us mentioned 
this. Mr. Burton was especially vocal, and I mentioned it, as 
well. We feel very strongly about this on both sides of the 
aisle.
    Several cases have been brought to my attention which paint 
a picture of an investment climate where assets of investors 
are not protected. In several cases, companies have been 
expropriated or driven out of business and U.S. owners never 
compensated.
    I present three examples. Firstly, I cite the case of the 
CEMAR cement company. In this instance, the Honduran military 
and Honduran cement manufacturers allegedly conspired to drive 
an American cement company out of business. The U.S. investor, 
Oscar Cerna, has ever since sought redress of this very 
legitimate claim. It is something that we cannot sweep under 
the rug. This is an American citizen, and we cannot allow our 
citizens to be treated this way.
    Secondly, I have learned about the case of Andreas Kafati, 
an American businessman whose partial ownership of a coffee 
business was taken through alleged manipulation of shares and 
the workings of a now-convicted Honduran judge.
    Also, there is the case of Cortez Byrd, an American citizen 
who won a $188 million judgment in a U.S. Federal court against 
a company which is 98 percent owned by the Government of 
Honduras. Honduras has not yet paid the legal judgment.
    If I were an American citizen or company looking at these 
and other cases, I would think twice before investing in 
Honduras. Honduras is a poor country which needs international 
investment if it is going to grow its economy and create jobs. 
But unless the assets of the United States and other 
international investors will be protected, scarce capital will 
go elsewhere.
    It is my hope that the new Government of Honduras will take 
a fresh look at these and other cases, and act without delay to 
make the investors whole while seeking to improve the 
investment climate for the future.
    Finally, these cases leave me with two open questions. 
First, while the State Department asserts that it assists 
American business, investors are reporting to me that advocacy 
by our embassy has been less than vigorous; and that is putting 
it generously.
    Secondly, resuming our foreign assistance to Honduras is 
important. But at the same time, the Honduran Government needs 
to respond to these serious cases of American citizens who are 
still seeking redress for their legitimate claims. I want to 
repeat that. Resuming our foreign assistance to Honduras is 
important. But at the same time, the Honduras Government needs 
to respond to these serious cases of American citizens who are 
still seeking redress for their legitimate claims. I will be 
asking Ambassador Kelly to address these points today.
    So in conclusion, I hope today's hearing will help us to 
create a framework to move forward our relationship with 
Honduras in the coming year. We all look forward to hearing the 
testimony of our excellent Principal Deputy Assistant Secretary 
of State for Western Hemisphere Affairs, Craig Kelly; as well 
as our private witnesses.
    I had the good fortune to visit Secretary Kelly at the 
State Department just a few days ago. We can rest comfortably 
knowing that his stewardship is at the helm, and I am delighted 
that he is here for us.
    I am now pleased to call on the ranking member for his 
opening statement.
    [The prepared statement of Mr. Engel 
follows:]Engel statement 



[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]


    Mr. Mack. Thank you, Mr. Chairman, and thank you for 
holding this important hearing today. Before I begin, I would 
like to recognize the former chair of the committee, Ben 
Gilman, for being here and for all your work you have done.
    I would also like to, before I begin my opening statement, 
take a moment to thank our witnesses who are here today, and 
also to inform the subcommittee that the Minority's witness, 
Mr. Lanny Davis, was called out of town at the last minute, and 
is unavailable to be here with us today. I have a copy of 
testimony, and I ask unanimous consent to submit his testimony 
for the record.
    Mr. Engel. Without objection, so ordered.
    Mr. Mack. Thank you, Mr. Chairman. A lot has changed in the 
past year in Honduras. We saw a Chavez croney and fellow 
thugacrat, Manuel Zelaya, try to change the Honduran 
Constitution to rule for life. We saw the Honduran Supreme 
Court and the Honduran Congress follow their Constitution in 
the rule of law by removing Zelaya from power.
    We saw the OAS, the U.N., and even the Obama administration 
come out on the wrong side of history and call Zelaya a coup. 
And to top it off, we saw our own State Department threaten 
Honduras to reinstate by withholding vital aid and revoking 
visas of Honduran officials.
    At this subcommittee last week, the Assistant Secretary 
referred to the situation in Honduras as a coup. His reasoning, 
President Zelaya was not given ``the most elementary due 
process of law.'' Nothing could be further from the truth.
    It is important to note that the Honduran military never 
took control over any of the levers of power. The Honduran 
Government institutions worked; and just so we have a clear 
understanding, in May 2009, President Zelaya worked with his 
friend, Hugo Chavez, and ordered a referendum to take place on 
November 29th, 2009 that would remove Presidential term limits. 
The Honduran Constitution specifically prohibits this; and 
thus, Zelaya violated Article 239 of the Honduran Constitution.
    On May 29th, 2009, the Attorney General recommended that 
the Honduran courts hold that Zelaya's referendum was illegal 
and unconstitutional. In late June, the Supreme Court ordered 
the Honduran forces not to provide support for the referendum. 
On June 27th, in opposition to the Supreme Court order, Zelaya 
led a violent mob to seize and distribute the ballots for the 
referendum. On June 28th, the Supreme Court issued an arrest 
order for Zelaya and removed him from the presidency. On June 
28th, the Honduran military acted on a warrant from the 
Honduran Supreme Court and removed Zelaya from power. He was 
later put on a plane out of the country for his own protection, 
as well as other security reasons.
    Later, the Honduran Congress, pursuant to the Honduran 
Constitution voted Micheletti as the President. Micheletti was 
constitutionally next in line for succession, and assumed the 
presidency on an interim basis. The military was never in 
control of Honduras. President Micheletti never interfered with 
the ongoing Presidential campaign, nor interfered with the 
previously planned November 29th Presidential election.
    On November 29th, 2009, Hondurans voted in the Presidential 
election for Mr. Lobo, who won with 56 percent of the vote. On 
December 2nd, the Honduran Congress voted again, 111 to 14, to 
not reinstate ousted President Zelaya. The Supreme Court and 
the Attorney General also recommended this outcome. I think 
these are important facts that, as we talk about Honduras, that 
we keep in mind.
    And while some have criticized the Honduran military for 
ushering Zelaya out of the country, his removal saved lives and 
prevented dangerous riots and violence in the streets. What 
happened in Honduras was not a coup, and the administration 
needs to stop calling it that.
    Honduras did all we could ever ask of a country faced with 
assault on its democracy. I am very proud of the Honduras 
people for standing up to the thugacrats of the region; and I 
want to take a moment to thank President Micheletti for his 
commitment to freedom.
    When I traveled to Honduras last July, I had a chance to 
meet with President Micheletti. I have also spoken to him on 
the phone a number of times since my trip. I was struck by his 
dedication to the ideals of freedom and his commitment to the 
Honduran people. He was a proven leader in the face of great 
adversity, and he should be applauded for his leadership during 
this crisis.
    The people of Honduran did their part, and now we must do 
ours. I am encouraged by the actions taken thus far by 
Secretary Clinton and the State Department. We have restored 
much of the military, humanitarian and anti-drug tracking 
assistance to Honduras.
    The administration has also recognized the legitimacy of 
the November elections and President Lobo's administration; but 
we must do more. Secretary Clinton has said earlier this month 
that the United States will be restoring aid to Honduras. This 
is welcome news. But it is my understanding that this aid will 
be restored incrementally.
    Any remaining withheld aid must be restored at once. The 
revoked visas of several Honduran officials, Supreme Court 
justices must be reinstated immediately by our State 
Department. And although I believe the OAS is dysfunctional, 
what message does it send to our allies in Latin America, if we 
will not even support normalizing relations with Honduras in 
the international community?
    It is no secret that some Latin American nations prefer to 
see Zelaya's return to power, and they still wrongly believe 
that recognizing the new government will endorse the great work 
of President Micheletti.
    The United States must now stand with these thugocrats. 
Instead, we should help our ally in Central America. We must 
support their continued struggle for democracy and freedom. We 
must support the democratic institutions. We must support the 
American business men and women in Honduras, and ensure they 
have a free environment to conduct their business.
    Honduras is a strong partner and friend of the United 
States; and for the freedom, security and prosperity of the 
hemisphere, we must be a strong partner and friend to them. 
Thank you, and I look forward to hearing from our witnesses 
today. Thank you, Mr. Chairman.
    [The prepared statement of Mr. Mack follows:]Mack 
statement 


[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]


    Mr. Engel. Thank you, Mr. Mack; and I, too, would like to 
extend a warm welcome to our former chairman of this committee, 
Ben Gilman, who sat in this seat many, many times. His portrait 
is--where is it, to the right. But he looks much better in 
person, actually. So thank you, Mr. Chairman, for gracing us 
with your presence; Mr. Sires?
    Mr. Sires. Thank you, Mr. Chairman, for holding today's 
hearing. The international recognition of Porfirio Lobo as 
President of Honduras offers a welcome contrast to the 
political distress and disorganization of Honduras last year. 
The political unrest illustrated how fragile democracy can be. 
In the aftermath of President Zelaya's presidency, his ousting, 
and the political climate that existed under Micheletti, 
Honduran must recommit itself to demonstrating solid democracy 
practices in upholding human rights.
    But internal steps by President Lobo and the Honduran 
Government may not be enough. The Western Hemisphere community 
needs to work to support countries that are making positive 
steps toward democratic practices, and speak up when countries 
drift from these principles.
    Unfortunately, the hemisphere's standards for human rights 
practices and democracy have been inconsistent. Honduras, with 
a newly recognized democratically elected President was 
excluded from the February of the Rio Group in Cancun; while 
the Cuban Regime was allowed to attend. Honduran continued to 
be isolated from the OAS, while Cuba is welcome.
    These signals are troubling and inconsistent with the OAS. 
It is clear that Western Hemisphere needs strong leadership and 
strong standards. I look forward to hearing from the witnesses 
about how the United States and the international community can 
help Honduras to build its human rights and democracy record; 
thank you.
    Mr. Smith. Thank you very much, Mr. Chairman. I would ask 
unanimous consent that my full statement be made a part of the 
record.
    Mr. Engel. Without objection, so ordered.
    Mr. Smith. First, I want to associate myself strongly with 
the comments made by our ranking member, Mr. Mack, and your 
comments, as well. But I want to thank him for being so very 
clear about what happened last year.
    Many of us, and I remember when we held the hearing last 
year here, we heard from Members of the Supreme Court, Lanny 
Davis, and many others. It could not have been more clear that 
President Zelaya's illegal moves to subvert the Constitution 
was selfish, petty, and was for his own personal advancement. 
It was to consolidate power in a Hugo Chavez style, which would 
have meant dictatorship, especially over time, for the people 
of Honduras.
    You know, the people rose up. The Congress, in an 
overwhelming vote, votes on all sides of the aisle; the Supreme 
Court, the Attorney General; and above all, the people, 
recognized that the real coup was coming from President Zelaya. 
And I want to commend Honduran people for demanding that human 
rights and especially democracy, and the rules of democracy and 
the rule of law be followed, and to be followed so very 
carefully.
    That said, I think we are also very happy that the crisis 
has transitioned, and the people have elected a new President 
and for the most part have accepted his leadership. Hopefully, 
Honduras is on a path now where the gains that have been 
gleaned the hard way can be consolidated so that country can 
take off economically, as well as every other way.
    I want to, like my colleagues before me, recognize the 
great work of Congressman Ben Gilman, our former chairman, who 
looks down upon us every day from that portrait. He was an 
outstanding chairman. I remember traveling with him to a number 
of trouble spots over the course of many years; having watched 
him shepherd one bill after another through in some very 
difficult times.
    I want to commend him for his outstanding leadership, 
especially in the realm of human rights and humanitarian law. 
Georgia, his wife, who is an ever present friend and advocate; 
thank you for gracing us with your presence today.
    Finally, I do want to raise the issue, like many of my 
colleagues are concerned, of an American property issue and 
appropriation issue in Honduras. The issue, many of us have 
raised it.
    I have sent letters over the course of many years. One of 
them that I sent, of all people, was to President Zelaya on 
July 17th, 2008, which was not adequately or in any way really 
responded to. But it has to do with the discriminatory 
treatment of the U.S.-owned Cementa America, or CEMAR, forcing 
it out of the Honduran cement market and causing the indirect 
ex-appropriation of CEMAR's cement plant.
    The principal shareholder, Mr. Oscar Cerna, asserts--and he 
has many of us on both sides of the aisle look into this; and 
we joined with him because we think this is an illegality, as 
well as a close unfairness--that he has been subjected to 
illegal prosecution, improper confiscation of CEMAR's assets 
without a warrant or court order. And I do hope that at long 
last, now that the issues in Honduras appear to be on the mend, 
that the State Department and all parties, especially the 
Government of Honduras, will look for--speedy is not the right 
word, because it has certainly been many years in the making--
but at this time forward, a very expeditious resolution of this 
ex-appropriation of those properties.
    And I thank you, Mr. Chairman, and yield back.
    Mr. Engel. Thank you, Mr. Smith; Mr. Faleomavaega?
    Mr. Faleomavaega. Thank you, Mr. Chairman; and I want to 
certainly commend you for your leadership and initiative in 
again holding this important hearing concerning Honduras.
    And I, too, would like to echo the sentiments of our 
colleagues, as well as you, Mr. Chairman, in personally 
welcoming a former chairman of this important committee, my 
good friend, Ben Gilman, and his better half, Mrs. Gilman, for 
being with us this afternoon. Thank you so much, and we deeply 
appreciate your presence.
    Mr. Chairman, if I may, I would like to submit this for the 
record, a copy of the letter addressed to Secretary Clinton 
from Chairman John Conyers of the Judiciary Committee. I, along 
with 90 other Members of Congress, submitted this letter to 
Secretary Clinton concerning this U.S. citizen, Mr. Oscar 
Cerna, who is an owner of a cement company, I believe, along 
with 14 other companies, Mr. Secretary.
    We really are very serious about the fact that our newly 
elected President of Honduran really needs to look at this. The 
rights of U.S. citizens and their investments that are made in 
Honduras should be taken seriously; and I sincerely hope, Mr. 
Secretary, that you will take that message.
    Mr. Engel. Mr. Faleomavaega, without objection, so ordered.
    Mr. Faleomavaega. Thank you; and I just want to say, I was 
going to ask the question about the history of Mr. Zelaya. I 
deeply appreciated the gentleman from Florida, our ranking 
member, for his eloquent and most precise recount of the 
history of what happened to this question of whether or not Mr. 
Zelaya followed the spirit as well as the letter of the 
Constitution of the laws of Honduras.
    I will be asking some more questions concerning this, 
Secretary Kelly, and one other issue that I notice you may have 
not touched upon. I am sure it was probably just a little 
oversight, and that is the rights and the welfare of the 
indigenous people that make up Honduras.
    I say this, Mr. Secretary, not just in passing in terms of 
Honduras; but the absolute failure of Latin American countries 
in dealing with right, political and economic, as well as the 
social needs of the indigenous Indian populations in those 
countries. And I will be asking you more questions concerning 
that issue.
    With that, Mr. Chairman, thank you for allowing me the 
time; and I yield back.
    Mr. Engel. Thank you very much, Mr. Faleomavaega; Mr. 
Burton?
    Mr. Burton. Thank you, Mr. Chairman. First of all, I want 
to congratulate Mr. Lobo for being elected President. I do not 
know if anybody is here from the Honduran Embassy, but if they 
are, I would like for them, as well as our Ambassador, to take 
a message back to President Lobo.
    That is that you just heard unanimously that the members of 
this subcommittee, and I believe most Members of Congress, 
believe that the previous administration should have taken 
positive action to deal with confiscated property and ex-
appropriation of property by the government or other companies 
down there that were working with the Government of Honduras.
    One of those, I think, that the chairman mentioned, Mr. 
Cortez Byrd versus the Republic of Honduras, was a settlement 
that was reached in a court. It was not a settlement. It was a 
judgment reached in a court, which has never been honored.
    I realize Honduras is in a very difficult situation 
economically; and I recognize that President Lobo has serious 
problems that he is facing. I believe he is an honorable man, 
as do my colleagues, and we believe that he is going to do a 
good job.
    But I think one of the first things that he should do in 
his administration, and I hope you will convey this, Mr. 
Ambassador, as well as anyone else who might be here from the 
Honduran Embassy, that I think that these issues ought to be 
addressed. Obviously, they may not be able to come up with all 
the money that would be required immediately. But there ought 
to be some kind of a approach between the companies and the 
government.
    For them to continue to ignore these obligations only 
causes a boil to fester. More and more Members of Congress 
realize that this is something that is not going to go away. 
And since they now have what the people of Honduras believe is 
a truly fair and freely elected President and government that 
they have great respect for--I mean, he won overwhelmingly, 56 
percent to 38 percent--the people are finally believing and 
feel that they have a very highly regarded government, and the 
United States should feel the same way.
    We are one of the major contributors to the economic 
problems that Honduras faces, and we understand that. But to 
leave these companies that have been mistreated hanging out to 
dry, Mr. Ambassador, just ain't going to fly. Pardon my 
English. And so I really hope that the message goes back loud 
and clear that every member who has testified here today, 
Democrat and Republican, feel extremely strongly that the 
Government of Honduras needs to sit down with these people and 
work out some kind of a solution to the problems.
    You know, I understand the financial problems that they 
face. Even the former Attorney General of Honduras has said 
very clearly that CEMAR should be compensated. And the other 
case we talked about, Cortez Byrd versus Honduras, that was 
cited in a court of law. So both of these cases, by officials 
and by courts, have said very clearly that there ought to be a 
solution found, and there ought to be compensation paid.
    So I would urge you, Mr. Ambassador, to convey this message 
to the government. And like I said, if any other Honduran 
officials are here, I hope you will convey it, as well. Because 
we want this government to succeed. We want to work with the 
government to make sure it succeeds. But in order for that to 
happen and for us all to be on the same page, we need to 
confront these issues and get them solved.
    With that, Mr. Chairman, thank you very much; and I 
appreciate the chairman and the ranking member for their 
comments. You guys are right on point. Ben, you never get any 
older, buddy. You look just as young as ever; and I think it is 
because of that good looking woman you married.
    Mr. Engel. Well, he is smiling, so that must mean it is 
true. Thank you very much, Mr. Burton; Ms. Lee.
    Ms. Lee. Thank you very much, Mr. Chairman. Let me, too, 
welcome Chairman Gilman. I served on this committee with 
Chairman Gilman as chair. I just want to say how much I enjoyed 
serving with you, and that you were a very fair chair. It is 
good to see you again and congratulations.
    I want to welcome Deputy Assistant Secretary Kelly, as well 
as all of our panelists who will be joining us later. I want to 
draw your attention to, again, the troubling human rights 
situation in Honduras.
    According to the respected Committee for the Defense of 
Human Rights in Honduras, at least political activists and 
opponents have been murdered since the coup of June 28th of 
last year which, of course, included multiple assassinations 
since the inauguration of Mr. Lobo.
    I have a document here that sort of details the 
circumstances under which each person was killed. Also, 
according to a release from, I think it is a March 8 document 
the Inter-American Commission on Human Rights, and let me just 
quote from that. It says,

        ``Observes with dismay that it appears that sons and 
        daughters of leaders of the resistance front are being 
        killed, kidnapped, attacked, and threatened as a 
        strategy to silence to silence the activists.''

    As an example, they cite Claudia Brizuela, who is 36 years 
old. She was killed in her home; daughter of a union and 
community leader, who participates actively in the political 
opposition movement. Two unknown individuals came to her door; 
and when she opened it, she was shot and killed in front of her 
children, ages two and eight.
    There are many examples. According to Human Rights Watch, 
these cases are not investigated and those responsible brought 
to justice. It could generate really a chilling effect that 
would limit the basic exercise of basic political rights in 
Honduras.
    Also in your testimony, I hope you talk about the Truth 
Commission, and where the government is and where President 
Lobo is on that, and where these charges of human rights 
violations are going to be investigated within the context of 
this commission.
    I do not understand how such a body could carry on an 
internationally respected mandated when opposition leaders and 
family members continued to be targeted for harassment and 
violence. So I have these documents, Mr. Chairman. I would like 
to ask unanimous consent to place them in the record.
    Mr. Engel. Without objection, so ordered.
    Ms. Lee. Thank you very much.
    Mr. Engel. Thank you, Ms. Lee; Mr. Rohrabacher?
    Mr. Rohrabacher. Well, thank you very much, Mr. Chairman.
    I should start off with the important business, which is, 
of course, welcoming Chairman Ben Gilman back, which I join 
with my colleagues in offering accolades to a man who has done 
so much, not only for this committee, but for our country and 
for the cause of human freedom.
    It was an honor serving with him; and actually it was 
really a benefit to receive his leadership, and we are very 
happy he has still got his finger in things here. So welcome, 
Ben, and we are very, very happy to see you here. Ben, I think 
you are handsome as you ever were, and there you are right 
there, up there. Thank you, Ben, for all you did.
    Last year, there was a crisis in Honduras. A would be 
caudillo was thwarted by courageous, principled, and legal 
actions taken by a broad coalition of Hondurans. Unfortunately, 
our government sided with the would-be caudillo, and undercut 
those who were trying to thwart this power grab.
    We do not need to see this incident ever repeated again. We 
do not have to dwell on it; but that is what it comes down to. 
We expect the United States Government, no matter who is 
President, to be siding with those who believe in the rule of 
law and believe in democratic government; not on the side of 
people who worship at the feet of Fidel Castro and Chavez and 
all these other would-be dictators.
    This chapter, however, is over. And as I recently said upon 
a visit that I took to Honduras, it is time to close the book 
on what happened last year. So that would mean--and we will 
talk about that today or I hope we hear about this today--any 
policies that were put in place as part of the mistaken stand 
against those who were thwarting this power grab by would be 
caudillo Zelaya, I guess his name is, any of those policies in 
place should be immediately de-activated, if not totally 
rescinded. So we can just leave that behind us; a sign for the 
United States and Honduras to look together to the future, 
rather than be caught up in anything in the past. That is what 
I said when I visited down there, and that is something we need 
to do.
    We can leave this chapter. It would be a benefit to our 
country and to the people there. One thing the Government of 
Honduras can do to help shut the book and move forward is to 
deal with the property claims that have been talked about on 
both sides of the aisle today, which I think were very 
justified, that there are claims by U.S. citizens, like Oscar 
Cerna, who have claims that need to be dealt with.
    So we would send the message to our Government, let us put 
last year's actions behind us. The message to the current 
government, President Lobo in Honduras is, let us deal with 
these property issues and get them out of the way.
    My colleagues expressed deep concern about this lack of 
progress on these claims. And while Honduras is a recipient of 
U.S. foreign aid, it has got to expect that we cannot just say, 
oh, well, you are going to get foreign aid. But you are not 
going to deal with legitimate claims of U.S. citizens, like 
those of Oscar Cerna.
    So, Mr. Chairman, thank you very much for your leadership 
in this hemisphere and the activities, and also as a great 
friend of freedom; and I would say one of the best chairman of 
subcommittees that we have had in this Congress for the 
responsibility. And actually, your activism is so appreciated, 
Mr. Chairman. So thank you for calling this hearing today.
    Mr. Engel. Thank you, Mr. Rohrabacher; I appreciate your 
kind words. Everybody sitting out there, the truth is that Mr. 
Rohrabacher and I are classmates. We came to Congress together 
in 1988, so we have had a deal since then. He says nice things 
about me, and I say nice things about him; but thank you, thank 
you very much.
    It is now my pleasure to introduce our distinguished 
Principal Deputy Assistant Secretary of State for Western 
Hemisphere Affairs, Craig Kelly. Craig also served as 
Ambassador to Chile in 2007 before starting his current post. 
That is why his sign says, Ambassador Kelly.
    Ambassador Kelly, as I have told you before and as I have 
mentioned, I was extremely impressed by your excellent work in 
helping to guide U.S. policy toward Honduras last year; and I 
have been very impressed by your excellent work generally.
    It is people like you who really make us feel proud. The 
work that you do at the State Department, the dedication, it 
really makes us feel proud that we can work together and that 
the United States has such dedicated public servants as 
yourself.
    As you know, we both participated in an inter-American 
dialogue dinner on the Honduras crisis in the fall. And as I 
told you a few days ago, I saw you put your excellent 
diplomatic skills to work there, and I was very impressed and 
let everybody know it. So we look forward to having you with us 
today, and the floor is yours.

  STATEMENT OF THE HONORABLE CRAIG A. KELLY, PRINCIPAL DEPUTY 
ASSISTANT SECRETARY, BUREAU OF WESTERN HEMISPHERE AFFAIRS, U.S. 
     DEPARTMENT OF STATE (FORMER U.S. AMBASSADOR TO CHILE)

    Ambassador Kelly. Thank you very much, Mr. Chairman and 
members of the committee. Mr. Chairman, I thank you for your 
very generous words. I recall very fondly, not only that event 
hosted by the Inter-American Dialogue in October, but also our 
conversation at the State Department earlier this week. Thank 
you very much for that. And again, I join others in welcoming 
Chairman and Mrs. Gilman, as well.
    I appreciate this opportunity to discuss the recent 
political crisis in Honduras, the U.S. response and next steps. 
I might add, Congressman Mack and others who have expressed 
opinions about the events of the 28th, that in my statement I 
will talk about why we attributed it a coup. But I will be 
happy in questions to get more into that about, you know, why 
we reached that conclusion.
    Honduras has come a long way since the coup that ousted the 
democratically elected government of former President Zelaya 
last June. We can be proud of the role that the United States 
played under the leadership of President Obama and Secretary 
Clinton in helping to restore constitutional and democratic 
governance in a country with which we have enjoyed strong, 
historic ties.
    From the beginning of the crisis, we underscored the 
important principles of democracy and due process that were at 
stake in the Honduran crisis. At the same time, we rolled up 
our sleeves and worked with the Honduran people and the 
international community to help find a way forward.
    Mr. Chairman, even before June 28th, the United States was 
concerned about he increasing polarization in Honduran 
politics. Our Ambassador, Hugo Llorens, spared no effort in 
urging all parties to resolve their conflicts through dialogue 
and respect for democratic processes.
    After June 28th, the United States pursued a principle 
policy, consistent with our unwavering support for democratic 
governance, the rule of law, and human rights, and was among 
the first in the international community to condemn the coup. 
We formed part of the unanimous suspension of Honduras from the 
OAS for its violation of the Inter-American Democratic Charter. 
I might add that not one country in the world recognized the de 
facto government.
    I would just like to emphasize, in light of today's 
comments, that this is not about who President Zelaya was or 
what he had done before June 28th, which we are very much aware 
of. This is about the manner of his removal, and that is why we 
reached the conclusion that we did.
    Our implementation of this policy included termination of 
approximately $37 million in U.S. foreign assistance, and 
suspension of visas for senior de facto officials and 
supporters. At the same time, our policy also involved intense 
engagement with key elements in Honduran society of all sectors 
to promise dialogue and peaceful resolution.
    Discussions facilitated by Costa Rican President Arias 
during the summer led first to the San Jose Accord, and then to 
a national dialogue inside Honduras, which the OAS facilitated. 
This so-called Guaymuras dialogue gave the Hondurans more 
ownership of the problem, which was a good thing, and produced 
progress on several issues, until the talks reached an impasse 
in October.
    At that point, Secretary Clinton decided to send a team to 
help finalize the Tegucigalpa-San Jose Accord, leading to an 
agreement on October 30th. Once the Accord was signed, we 
determined that the November 29 elections, in preparation long 
before the coup, were a vital part of a solution in Honduras.
    In short, the Tegucigalpa-San Jose Accord and the November 
29 elections, which were considered free and fair by local and 
international observers, together formed the basis for the 
return of Honduras to constitutional and democratic order.
    Since assuming office on January 27, President Lobo has 
taken important additional steps to bring about national 
reconciliation: Installing a national unity government; working 
to establish a Truth Commission; replacing senior military 
leadership that had been involved in the coup; and pledging to 
investigate fully all alleged human rights violations.
    Now that democratic governance has been restored in 
Honduras, the United States is resuming assistance that will 
promote economic and social development, strengthen democratic 
institutions and respect for human rights, and enhance 
Honduras' capacity to combat crime and drug trafficking.
    Re-engagement with the Honduran military will be conducted 
in a deliberate and focused manner that will advance our common 
aim of developing a professional and non-political military.
    We are not the only ones who believe it is time to move 
forward in Honduras. The International Monetary Fund, the World 
Bank, and the Inter-American Development Bank have re-engaged 
with Honduras; and many, many countries have sent back 
ambassadors to resume productive ties.
    Secretary Clinton, stopping in Guatemala 2 weeks ago, 
welcomed the leadership of the Central American Presidents in 
promoting the re-incorporation of Honduras in regional bodies, 
including the Organization of American States.
    Mr. Chairman, we will continue to support the new Honduran 
Government as it fulfills its commitment to transparent, 
inclusive, and accountable institutions. The United States has 
deep and abiding interest in Honduras, and will continue to 
work closely with the government and people there, as they 
strive to build a better future.
    As our hemisphere thrives increasingly on integration on 
integration based on democratic principles and open economies, 
having Honduras regain its seat at the table is in the interest 
of all of us.
    In closing, I might add, Mr. Chairman, that in reference to 
that session we had on October 21st here in the Congress, that 
as you gathered people from all sides of the debate--from the 
United States, from Honduras, and from the region--and we had a 
very spirited discussion about Honduras, I remember thinking as 
I left the room, what a great country we are in, that we can 
have this debate in a civil and spirited fashion, looking for a 
way forward.
    And if I heard correctly the comments that you all made 
today, while there are differences over what happened leading 
up to and during the night of June 28th, there is a great sense 
that it is time to move forward and that we have a lot at stake 
in helping Honduras as it addresses several of the challenges, 
but also opportunities in the future. With that, I welcome 
questions.
    There are several questions that you raise that I will be 
happy to address. I could start in with that, or I can wait for 
follow-up questions from you, Mr. Chairman, as you wish.
    [The prepared statement of Ambassador Kelly 
follows:]Craig Kelly 

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

    Mr. Engel. Well, thank you, Secretary Kelly. I will ask a 
few; and then I will have Mr. Mack and then the rest of us will 
ask a few.
    I just want to first state what I actually told you in your 
office the other day; that I think that the State Department's 
handling of what happened in Honduras was really excellent. I 
think you struck the right balance. I think you took a position 
in the middle of the road; and I think it helped move things 
along in Honduras.
    Mr. Mack and I may disagree over whether it is called a 
coup or not, but we do not disagree over the fact that former 
President Zelaya tried to usurp power, and tried to violate his 
country's Constitution.
    The problem that I have with it is the way it was done; you 
know, whisking him in his pajamas at 2 o'clock in the morning 
under gun point out of the country--I think that that strikes a 
very bad memory for too many people in that region of the world 
who do remember coups like that. It was not a military coup in 
the purest sense of the word, because the military did not take 
over, but the removal was done that way.
    But as I said in my opening statement, I think we need to 
look forward. I was very happy--even though I was not pleased 
with the way Zelaya was removed--I was very happy to support 
elections in that country. And I was very happy, as you know, 
to issue a statement saying that if there are international 
observers, and the elections are held freely and fairly, then 
we and the international community need to recognize those 
elections.
    So Mr. Mack and I really do not disagree on where we, I 
think, go from here; and really on what should have happened in 
Honduras. So I just wanted to state that. I think that 
elections were our way out, and now we have to look.
    As you can tell, practically everybody who spoke on both 
sides of the aisle mentioned those cases of American citizens 
who have claims against the Government of Honduras. I am 
wondering if you can comment on it.
    You know, one of the persons, Mr. Cerna from CEMAR, his 
company, he is actually in the room here today; and I know he 
has obviously an interest in it. But above and beyond his 
interest, you know, we all have an interest. Because if 
Americans are treated that way, you know, it does not really 
bode well, as I said, for investment in the country.
    But it does not make us want to help. You know, if our 
people are treated so poorly with such disrespect and disregard 
then, you know, you just kind of feel, well, why are we 
knocking ourselves out to help Honduras, when Hondurans do not 
treat Americans fairly?
    So I wish you can comment on some of those; and what are we 
doing, what will we do, what can we do, to make these people 
whole?
    Ambassador Kelly. Thank you, Mr. Chairman. Having had, as 
you noted, the privilege of being U.S. Ambassador in Chile, I 
can state very directly that one of the key elements of Chile's 
success has been the environment it created for foreign 
investors--the transparency, the rule of law, the sense of 
consistency and so forth that investors look for when they 
invest in foreign countries. And this is something that we talk 
to many countries about in the region, the need for creating an 
investment climate that is good for everybody concerned.
    I had the pleasure of meeting Mr. Cerna before the opening 
of the hearing, and I said I would be delighted to have him 
come by the office so we can talk specifically about his case. 
I know we have had a lot of contact with him through the years, 
and we have a strong commitment to working with him to see, you 
know, what is the best way forward.
    I have talked repeatedly with Ambassador Llorens about 
this, with whom Mr. Cerna has met. We agree completely that it 
is essential to pursue these cases in a way that seeks 
transparency and protects interests of investors.
    We have communicated to Mr. Cerna, and I will look forward 
to a direct conversation soon, that we believe the best channel 
right now for his case is the mechanism provided in the 
bilateral investment treaty. I understand he has concerns about 
that mechanism, and I will be delighted to talk to him directly 
about those concerns.
    But we happen to think that that offers the best way 
forward. That has been used many, many times in investment 
disputes around the world, and has been used successfully. So 
that is the path that we encourage. I will be, as I said, happy 
to talk with him further about that.
    The other cases, as well, the Embassy has stayed in very 
close touch with Mr. Kafati, and also the case of Cortez Byrd. 
The Embassy has followed those very closely, and we will 
continue to do so. We completely agree with all of you on the 
principle of creating an investment climate that is favorable.
    Mr. Engel. Well, let me thank you. But let me just say that 
we have done some looking into the Bilateral Investment Treaty 
(BIT). And the problem, as I see it, the international 
arbitration under the BIT is very expensive and time consuming. 
You know, a large multi-national corporation can certainly set 
aside the millions of dollars it needs to keep challenging 
this, with multiple years, you know, to pursue these cases in 
an arbitral panel.
    A small investor does not have the time or resources to 
follow such a course. And that is a very real problem; not only 
for Mr. Cerna, and it is a problem for him, but others, as 
well.
    So I would hope that the State Department, you know, would 
consider or change its position, and consider the difficulty 
that a small investor has to move forward under the BIT.
    Considering that, I think that the U.S. Embassy and the 
State Department should make extra effort to advocate on behalf 
of such an investor. Because I think the BIT does not 
adequately address the needs. So I believe changes are needed, 
and I hope that you will come to the conclusion, as well.
    Ambassador Kelly. Thank you, Mr. Chairman. I certainly will 
take all that on board. Our embassy has spoken to the 
government, and the previous government, as well, already with 
President Lobo and his administration about these cases. And I 
assure you, when I go back, I will relay to Ambassador Llorens 
our conversation and the committee's concern.
    Mr. Engel. Thank you; let me ask you one other question, 
and then I will turn it over Mr. Mack. As I mentioned in my 
opening statement, there have been a number of recent murders 
of Hondurans who were active in the resistance to what was 
happening.
    Three journalists were murdered this month alone. I 
mentioned Nahun Palacios. He was a supporter. He expressed his 
rejection of the removal of President Zelaya. He was gunned 
down. I do not really think it is important as to what his 
beliefs were. I think we need to have the rule of law.
    And so what I wanted to ask you is, is the Lobo 
administration doing enough to respond to recent politically 
motivated violence? The murder of these three journalists, what 
does it say about freedom of expression in Honduras; and what 
is the Obama administration doing to bring attention to these 
human rights problems?
    Ambassador Kelly. Thank you. The terms bring attention. I 
think are very important. You may have seen yesterday our 
representative in the Organization of American States referred 
to the latest killing in Honduras, and urged the authorities to 
investigate to help to create the climate which, you know, does 
not condone this sort of activity.
    I agree with you completely that it does not matter what 
people's beliefs are. If they are being targeted because of 
their beliefs, it is unacceptable.
    We believe that President Lobo is very committed to making 
headway on human rights. It is a country which has a history of 
violence, one of the highest murder rates in the world, 
unfortunately. But when people are targeted for their beliefs, 
this is a particularly serious sort of abuse, and one that we 
are very serious about.
    In our human rights report which was just issued a few days 
ago, which of course covers last year, it relates several 
incidents of a similar nature that we are concerned about. 
President Lobo has appointed a sort of minister level advisor 
named Miguel Bonilla, whose full-time job will be to address 
human rights issues. I think that high profile is welcome.
    After the very first of these cases since January 27, 
Ambassador Llorens and his embassy issued a statement calling 
for prompt and thorough investigation of these cases.
    So this is something that is very much at the top of our 
agenda, Mr. Chairman, and I assure you that it will continue to 
be so.
    Mr. Engel. Thank you, and I want to say that I think 
everyone at this table, on both sides of the aisle, wish Mr. 
Lobo the best. I think that the steps he has initially taken, 
in terms of reaching across to all political persuasions in 
trying to have a coalition--I think the way he handled the 
Zelaya incident, being holed up in the Brazilian Embassy, was 
very positive.
    I think all those things are very positive; and I would 
hope that in the countries that are still skittish about 
recognizing him and helping him, including the OAS, would 
understand that, you know, help is in the best interests of the 
people of Honduras; Mr. Mack?
    Okay, Mr. Smith, Mr. Mack is going to pass for now; Mr. 
Smith?
    Mr. Smith. Thank you; I thank my ranking member. There are 
a number of state legislators in my office that have been there 
since 3:30. So I thank him for his courtesy; and I will just 
bring it down to one question, although I have several.
    Like my colleagues, we are all very, very supportive of Mr. 
Lobo. We hope that the President can really being about true, 
lasting and positive change; and he is showing every indication 
that he is going to do it. But I would like to ask again, 
because this is a festering sore, on these property seizures 
that occurred.
    Are you aware, and if not, could you get back to us on 
this, whether or not any of the new government officials, 
senior officials, senior military officials, include anyone who 
may have been involved in the abuse of Mr. Cerna and his 
rights; and can you tell us what the State Department has done 
to assist him in securing his rights in Honduras?
    You know, the arbitration is out there. I know you are 
exhausting all your remedies. I have read all the letters that 
have been sent back. But at some point, you know, when you are 
looking at a process that will go on in perpetuity; that is 
what his belief is, and that I think it is what is the belief 
of many members of this committee.
    It seems that this could be a time when we say, let us 
resolve this. I had a case out of Saudi Arabia once that went 
on forever. It was in arbitration. We talked to the Ambassador 
here in Washington. I talked to people in Saudi Arabia and 
ongoing, our Ambassador; and it never went anywhere, and I 
ended up losing, you know, a New Jersey company. So arbitration 
sounds good; but in practice, it is usually a dead end.
    Ambassador Kelly. Thank you, Congressman; on the factual 
question, we will be happy to get back to you on the fact of 
whether there are current members of the government who have 
had involvement in the case.
    [The information referred to follows:]
Written Response Received from the Honorable Craig A. Kelly to Question 
     Asked During the Hearing by the Honorable Christopher H. Smith
    An external tax audit, commissioned by the Honduran tax authority, 
Direccion Ejecutiva de Ingresos (DEI), and carried out in 2004 by Palao 
William y Asociados, determined that CEMAR had underpaid on its taxes. 
Based on the audit, DEI found CEMAR liable for non-payment of taxes. 
One of the partners at Palao William was William Chong Wong, who was 
also a Sub-Secretary in the Ministry of Finance from 2002-2004 and 
Minister of Finance from 2004-2006. DEI is part of the Ministry of 
Finance. Chong Wong is currently Minister of Finance. We are not aware 
of any other current government officials or senior members of the 
military who were involved in this case.

    Ambassador Kelly. And on the second one, as I indicated, as 
I said, we will look forward to speaking soon to Mr. Cerna, and 
to go over the pros and cons of also other methods of going 
through the Department of Justice route and all that. I know 
that has been in the correspondence, as well. So I do not need 
to belabor it here. But we will be very happy to discuss that 
directly with him, and I understand that time and money are a 
concern.
    [The information referred to follows:]
Written Response Received from the Honorable Craig A. Kelly to Question 
     Asked During the Hearing by the Honorable Christopher H. Smith
    While the United States government is not in a position to take 
sides on the merits of Mr. Cerna's investment claim against the 
Government of Honduras, the State Department has been very active over 
the last several years in trying to help him resolve it. The U.S. 
Ambassador to Honduras, Hugo Llorens, has personally raised this issue 
at the highest level of government, including with President of 
Honduras Porfirio Lobo and Minister of Industry and Commerce Oscar 
Escalante in February of 2010, as well as with former President of 
Honduras Ricardo Maduro in March of 2010. Previous U.S. Ambassadors to 
Honduras Larry Palmer and Charles Ford also raised the case at the 
highest levels of the Honduran government on several occasions. We will 
continue to do everything we can to encourage the prompt resolution of 
this dispute. At the same time, we have on several occasions encouraged 
Mr. Cerna to take steps to exercise all available rights he may have in 
the Honduran courts or under the U.S.-Honduras Bilateral Investment 
Treaty.

    Mr. Sires [presiding]. Welcome Ambassador, and I will 
recognize myself, since I was next.
    The situation in Honduras, can you tell me how fragile is 
it right now? Is it fragile; is it solid? How do you see it? 
Because I still see that there were three deaths last month. So 
how fragile is the democratic situation in Honduras?
    Ambassador Kelly. I believe that there is a sense in the 
country that the country is moving forward. There is strong 
support for President Lobo, and there is strong support for the 
type of government he has set up, which includes three of the 
four people he ran against in the election.
    So this very sincere effort to create a government of 
national unity and reconciliation has been welcomed. Yet, it is 
a society which still has a certain level of polarization; and 
I think that is at the root of some of the violence. So that 
has to be a concern.
    I do think that the best way for us to address that is to 
stand with him, not just the United States--but other countries 
in the region--which is why it was very impressive to hear. Two 
weeks ago, I was with the Secretary in Guatemala, when the 
Presidents in the room spoke up of the need for all of them in 
the region to stand with the current Honduran Government and 
with the Honduran people as they address these challenges.
    I think that the country has gone through a traumatic 
political experience. It lasted 7 months, and that has left 
some wounds. So, yes, there are concerns out there. There are 
sensitivities and a certain polarization, and I think the best 
thing we can do is to stand with them.
    That is why we welcomed the re-integration that is 
occurring with the international financial institutions, and 
with the many, many countries around the world that have sent 
ambassadors back. We think this is very important, and we think 
that it is growing, and that is a trend that will continue.
    Mr. Sires. Mr. Ambassador, one of the things that led to 
the Zelaya removal was the influence of Chavez, supposedly. We 
had, in Spain, the judge's stated decision that Chavez 
supposedly was involved with the terrorists, the FARC.
    I was just wondering if the State Department has changed 
its approach to Honduras, in terms of calling a coup; realizing 
that Chavez is interfering in Colombia. He is interfering in 
Honduras. He is interfering in all the other countries in South 
America. Has the administration re-thought the approach?
    Ambassador Kelly. Thank you, Mr. Chairman. As I indicated 
in my opening statement, our position on what happened on June 
28th had nothing to do with the ideas that Mr. Zelaya 
represented in the run-up to the 28th. It had everything to do 
with how his removal took place, and the fact that there was no 
due process.
    You know, the Honduran Constitution has three different 
Articles that guarantee right of self-defense, due process, and 
so forth. And what happened during the night of the 28th did 
not allow for any of those steps.
    So while we have studied all of the arguments in favor of 
the removal, we found that none of them allowed for due 
process. And due process being such a fundamental element of 
democracy, that is why we called what happened a coup. But this 
had nothing to do with the issues you are citing: The influence 
of Chavez in the region and so forth.
    I would note in Honduras, that is a complicated issue, as 
well. I mean, the entry of Honduras into ALBA, the sort of 
Chavez affiliated alliance in the region, was actually 
supported by Mr. Micheletti when he was head of the Congress. 
So, you know, that part has a complicated history in Honduras, 
which is why we focused entirely on the process and what took 
place in the run-up to the 28th.
    As for, you know, Mr. Chavez's influence in the region, we 
have a vision about how we think the majority of countries in 
the region feel they can best move ahead to secure a more 
inclusive prosperity and greater and stronger democracy for 
their citizens, and we have a positive message to work with the 
majority of countries that share that vision.
    We are convinced that it is the overwhelming majority of 
people in the region who believe in strong democratic 
institutions and open economies that want to integrate with the 
rest of the world and underscore human rights and programs that 
help people achieve greater social cohesion and greater social 
mobility.
    You know, we sometimes cite the example of Chile, which 
between 1990 and 2006 lowered its poverty rate from 40 percent 
to 14 percent. It did so with strong democratic institutions, 
negotiating free trade agreements with the whole world, but 
also implementing social safety net programs to give people a 
chance at social mobility. And I think this is the vision that 
most people in the region embrace.
    Mr. Sires. Mr. Ambassador, how stern has been your comments 
to the Honduras Government in terms of confiscating American 
properties?
    I mean, have you pointed out that even in some countries, 
50 years later, it is still an issue when they confiscate 
American properties? I mean, we really frown upon the fact that 
our business people go and invest, go and help those countries. 
And yet, it seems like in a blink of an eye, they just 
confiscate the properties.
    So, I mean, for us, it is very difficult to accept that and 
provide assistance and all the other things that we provide to 
those countries. So how stern have you been with the 
government?
    Ambassador Kelly. Well, as I mentioned, Ambassador Llorens 
has already raised this issue with President Lobo, indicating 
that the creation of this climate of protection of investors is 
very important. We obviously have to look at each case 
individually.
    You know, whether a particular problem that a company has--
is it expropriation; is it a confiscation; you know, what kind 
of a dispute is it? That, again, is why we tend to favor the 
mechanisms that are provided under the bilateral investment 
treaties, because we do think they are the clearest way 
forward; again, fully understanding the concern that has been 
expressed by some members and by Mr. Cerna and others about the 
cost and so forth involved in that. But when we are looking at 
what else is available to address those, we still find that 
that is the best path.
    Mr. Sires. Thank you very much. I would like to recognize 
Congressman Mack from Florida.
    Mr. Mack. Thank you, Mr. Chairman. Well, I guess we need to 
talk a little bit more about this. Because it is an offense to 
me and to a lot of people in some way the re-writing of history 
in Honduras.
    It was not until the administration called it a coup were 
there concerns with the democracy in Honduras. And it was 
precisely the actions of the United States by the Obama 
administration that created the conditions to create the 
crisis.
    And what do I mean by that? Up until the administration 
called it a coup, all of the different government institutions 
were working as they were supposed to. You have the Attorney 
General. You have the Congress. You have the Supreme Court; all 
acting within the Constitution and the rule of law.
    And so to now say that we are happy that we helped restore 
democracy, it is a bit offensive. Because democracy was not in 
question until the administration labeled it a coup. And 
frankly, I think once that happened, it took a lot of work to 
try to find a way to save face.
    So what we saw down the road and what we still continue to 
see today is an attempt by, I believe, the administration to 
try to save face on the debacle it created by calling it a 
coup.
    And what do I mean by that? Well, now we are hearing about 
all of the restoring of aid and other things; that it is going 
to be incremental. That somehow Honduras and the government has 
to do something to earn back the right to get some of this 
back; when in fact, they did everything as to their 
Constitution and the rule of law.
    I believe yourself and the witness last week, the Under 
Secretary talked about due process. Well, Zelaya was free to 
come back to Honduras and face charges. Instead, he played a 
game, trying to insight violence at the border and other 
things.
    But he was more than welcome to come back to Honduras and 
face the charges that were brought against him; and he chose 
not to. Instead, he tried to do an international media game to 
try to get support to get back in power.
    Throughout your testimony, both orally and what you have 
written and submitted to the committee, we continue to talk 
about or you continue to talk about, and the administration 
continues to talk about a coup; and I am going to give you an 
opportunity to answer this.
    So I would like to know, how do you define a coup? That is 
one. Then I would like to know, when are we going to restore 
aid, to the full extent, and not continue this little game of, 
well, they have not done enough to make us look like we have 
saved face, yet.
    Then does that also include restoring visas? Because 
frankly, I think President Micheletti and others, it might be a 
good idea for them to come to the United States and share with 
us what happened. Since it appears that some are trying to re-
write history, maybe it would be good that they should be able 
to travel to the United States.
    So those are the three questions. How do you define a coup; 
when are we going restore aid; and does that include the visas, 
as well?
    Ambassador Kelly. Thank you, Congressman. With respect to 
the coup, you cited the events that occurred after the 28th. 
And I think it is certainly true that what happened in Honduras 
was not your sort of classic military coup, where the military 
took over the government. I think everybody recognizes that.
    And just as I said that the determination in our decision 
about the nature of the events of the 28th was not determined 
by President Zelaya's policies before the 28th; nor was it 
determined by the way Mr. Micheletti conducted himself after 
the 28th, it really focused on the manner of the removal of the 
elected President of Honduras. This has nothing to do with the 
ideology of either person involved.
    I made six trips to Honduras during this crisis. I met for 
hours with both President Zelaya, Mr. Micheletti, and then 
later with President Lobo, and with many, many representatives 
in Honduran society. Our aim was to help work with the country, 
with the precepts that were negotiated in the San Jose Accord 
and in the Tegucigalpa-San Jose Accord, which both sides agreed 
to, that also referred to restoration.
    The fact is, many people who supported Mr. Micheletti 
acknowledged privately that what happened on the night of the 
28th was a mistake; that this was not the way they should have 
done this.
    What is difficult in Honduras is that the Honduran 
Constitution lays out no specific path for an impeachment 
procedure. They used to have one. It was taken. It was removed 
from their Constitution. It is, I suspect, something that the 
Truth Commission may take up. It is up to them. But I suspect 
they will look at this; that, you know, why was there no 
mechanism to address this crisis.
    In a sense, they were sort of playing it by ear. Because 
there was no set procedure in the Honduran Constitution.
    Mr. Mack. Can I suggest that instead of playing it by ear, 
maybe they were acting in a way that they thought was 
constitutional, the rule of law, and that would ensure that 
there was not violence.
    I mean, you have been there. If you talk to those in the 
military; both the United States military and the Honduran 
military, they will tell you that there was great concern about 
the actions of Zelaya and what to do. And it was Zelaya's 
friend in the military that made the decision to try to make 
sure that there was not going to be any violence.
    You know, it is one thing for us now to say that, well, we 
did not like the way it happened. Well, then we should have 
addressed that; but not to come out, call it a coup, take aid 
away, and create this issue. It had a severe impact on the 
Honduran people, and is what created the crisis in the first 
place.
    If we had not, the elections would have happened, just as 
they did. Basically, I think what happened is, you had to have 
a negotiation, again, to make it look like we did something. 
And now you want to re-write history and say that we have 
helped restore democracy; when, in fact, our actions were 
irresponsible.
    Ambassador Kelly. Again, I might add that both parties, as 
we approached the Tegucigalpa-San Jose Accord, did talk about 
restoration. I mean, there was acknowledgement that something 
had gone wrong and something needed to be fixed, even on the 
part of those who supported the de factos. But we created that.
    Well, I think that if we had not called the events of the 
28th a coup, we likely would have been the only country in the 
world that did not. I think it is important to keep in mind 
that not one country in the world recognized the Micheletti 
government.
    Now I want to add at the same time that one reason I think 
that we were recognized as an honest broker in this dispute is 
that we did not question the motives of people on either side. 
Our view was, there has been an interruption. Even according to 
the Honduran Constitution, there has been an interruption in 
democratic governance. We want to help work with the country to 
find a way forward.
    But we also felt it was important to declare what we saw, 
which was that a democratically elected President was removed 
without due process.
    Mr. Sires. Mr. Ambassador, I have to cut you off, because I 
have some of the other members, and Congressman Mack, I am 
sorry; Congressman Faleomavaega?
    Mr. Faleomavaega. Thank you, Mr. Chairman; and thank you, 
again, Secretary Kelly, for being here this afternoon.
    Before proceeding, I would like to submit this to you; a 
copy of the letter that was written by Chairman Conyers of the 
Judiciary Committee 2 months ago, reminding again Secretary 
Clinton that 1 year ago, some 90 Members of Congress submitted 
this letter on behalf of Mr. Cerna, that we have all discussed 
earlier today; and still, there has been no acknowledgment from 
the State Department of this letter. I would like to have staff 
give this to you personally, to give to Secretary Clinton's 
staff person, to find out why there has not even been any 
acknowledgment of this.
    But I think all my colleagues have already given you the 
picture in terms of why the rights of U.S. citizens under the 
U.S. Honduras bilateral investment treaty has not been honored. 
And I would think that U.S. investors who invest in Honduras, 
they should be honored; and certainly, the rule of law, we 
hope, is being followed truthfully. Go ahead and give that to 
him.
    But Mr. Secretary, I was listening with interest to my good 
friend from Florida's line of questions, which I think has 
very, very far reaching implications. The reason for my saying 
this is, when we talk about coups, things automatically come 
up.
    For example, we have a Federal law in place. Whenever there 
is a military coup, automatically we put sanctions. The 
Congress puts sanctions or the President puts sanctions on that 
country that committed a military coup. The question that comes 
to mind, and as stated earlier by the chairman, is the manner 
in which President Zelaya was removed.
    Now correct me if I am right in recalling what happened. 
Basically, the military physically went to the President's 
residence at gun point; took President Zelaya and members of 
his family physically, put them in the airplane and took them 
to Costa Rica with the mandate never to come back to Honduras.
    And I think this is where we are getting a little fuzzy 
here as to exactly what is our position. Because I can tell 
you, we also had a military coup in Pakistan by a General by 
the name of Musharraf. And because of our national security 
interests, we waived that coup against Musharraf for some 8 
years and paid them billions of dollars; and where did we end 
up with that, as a result of that coup?
    We also had another example of Fuji. There were four 
military coups and one civilian coup, all within 20 years that 
took place. Here, again, we put sanctions on Fuji. We put 
sanctions on Thailand when there was a coup that was committed 
there, with no real reason at least I could feel justified the 
way that was implemented.
    So there is a serious question in there and I was 
wondering, did the military act according to authority, or did 
the General just act on his own to physically get rid of Zelaya 
at that point in time?
    Ambassador Kelly. The question of who gave the order to the 
military is, I think, one of the issues that the Truth 
Commission will actually investigate. Because it is not 
entirely clear how they acted.
    Mr. Faleomavaega. I am sorry; my time is up. But let us 
wait for the Truth Commission on that, then. I think maybe that 
will explain it better.
    I have another serious question I wanted to share with you. 
I am told that the population of Honduras is about 7.8 million. 
Out of that population, some 546,000 are indigenous Indians or 
Amerindians. I want to know what educational, what social, what 
economic assistance our Government gives specifically to the 
needs of indigenous Indians.
    You know, we have some 565 tribes in our own country. Five 
million indigenous Native Americans live in our country. And I 
want to know if the Honduran Government, if the State 
Department is doing anything seriously to meet the economic and 
social needs of the 546,000 indigenous Indians that we have 
living in Honduras; and are they given the same civil rights, 
economic opportunities as others?
    I believe in the population breakdown I have here, there 
are some 7 million who are mixed European/Amerindians. Is that 
the new term they use now for mixed Indians? I know there is a 
subtly going on in Latin America that some people do not even 
want to classify themselves as having indigenous Indian blood.
    Evo Morales is the first indigenous Indian elected in 
Bolivia. Mr. Alejandra Toledo is the first Inca individual 
indigenous Indian elected in Peru. There are a lot of issues 
pertaining to this. So I would gather there are some 200-300 
million Indians; and I am very, very serious in wanting to ask 
you, Mr. Secretary. I would like to know exactly what our 
country is doing to give assistance to the indigenous 
populations of this country.
    I know my time is up, Mr. Chairman; thank you and I yield 
back.
    Ambassador Kelly. Congressman, I would be happy to give you 
a detailed follow-up in writing. But let me just say very 
briefly that this is one of our major priorities in the region. 
Actually, the Western Hemisphere is far more ethnically diverse 
than people realize. And we have a lot of programs, both in our 
public diplomacy and in our economic assistance, including in 
our initiative called, Pathways to Prosperity in the Americas, 
which is an effort to create greater social mobility through 
the countries with which we have free trade agreements in the 
region.
    All these things have as one of their key focuses 
populations which have marginalized from the economic 
integration, which is going on in the region. I would be 
delighted to give you more detailed information. But it is a 
very important priority of ours.
    [The information referred to follows:]
Written Response Received from the Honorable Craig A. Kelly to Question 
    Asked During the Hearing by the Honorable Eni F.H. Faleomavaega
    Consistent with its desire to promote inclusive economic 
development that meets the needs of traditionally marginalized ethnic 
groups, the United States has targeted some of its assistance to 
Honduras to benefit the country's indigenous people. Over the past 
several years, the United States Embassy in Tegucigalpa has worked 
closely with the indigenous communities on several projects that 
respond to their needs. Ongoing projects and the amount of funding for 
each are described below:

        1)  Currently, our USAID mission in Tegucigalpa has provided 
        aid in the form of decentralized technical assistance and 
        teacher training, standards, curriculum calendars and monthly 
        standardized formative tests for all Honduran children in 
        primary school, including indigenous and Garifuna (Afro-
        Hondurans). Indigenous and Garifuna youth and adults also 
        benefit from the USAID supported EDUCATODOS program. The 
        EDUCATODOS program provides an alternative education system for 
        out-of-school youth and adults, who number 7,387 indigenous 
        participants in 640 centers located in ten of Honduras' 
        eighteen departments. ($387,117)

        2)  Twenty-one Garifuna and indigenous participants were 
        approved to travel to the United States for training in 2009, 
        under USAID's Cooperative Association of States for 
        Scholarships (CASS) Program. An additional thirty Garifuna and 
        indigenous participants have been selected for training in 
        2010. These participants are expected to travel to the United 
        States for training later in 2010. ($1,303,000)

        3)  Additionally, the MIRA project in coordination with the 
        USFS has established an alliance with the NGO Green Wood to 
        improve the household incomes of approximately 100 Pech 
        families (some 800 people) by teaching them how to utilize 
        their natural resources more efficiently, linking them to 
        markets, and helping to implement sustainable forest management 
        plans. These communities are located in the municipalities of 
        San Esteban, Olancho and Bonito Oriental, Colon. ($60,000)

        4)  USAID's Rural Enterprise Development Project has assisted 
        approximately 1,150 indigenous people per year in strengthening 
        and diversifying their agricultural production. This 
        agricultural diversification program focuses on the production 
        of high-value crops and value-added products for export and 
        regional markets. ($1,250,000)

        5)  USAID's health program provides assistance to the 
        Government of Honduras at the central, departmental, and local 
        levels to improve family planning and maternal and child 
        services in rural areas of Honduras where most indigenous 
        communities are located (Intibuca, Copan, La Paz, and Lempira). 
         Through the USAID-supported decentralization of health 
        services, about 20,000 indigenous people (Lencas and Chortis) 
        have access to a defined basic package of services. ($176,000)

        6)  Through the USAID Title II Food for Peace program, over 
        120,000 indigenous people received $1.07 million in food 
        commodities to address the multiple causes and effects of food 
        insecurity by focusing on maternal and child health, 
        agricultural productivity, and local capacities development and 
        strengthening.

    Mr. Faleomavaega. If I could have just 5 seconds, Mr. 
Chairman. I just wanted to note an interesting fact. The 
population of the Hispanic population here in America--out of 
some 310 million, it is 45.5 million Hispanics. And out of 
that, 58 percent are Mexican Americans.
    Now it seems to be the trend that everybody who is Mexican 
America can claim their ancestry to some Aztec prince or 
princess or some tribe in Mexico with tremendous pride as a 
descendent of many of the tribes that come out of Mexico. I 
think it is something that we ought to take notice for. Thank 
you, Mr. Chairman; thank you.
    Mr. Sires. Thank you, Congressman. I recognize Congressman 
Rohrabacher.
    Mr. Rohrabacher. Thank you very much, Mr. Chairman. Just 
right off the bat, just to make sure that you understand the 
importance of the three journalists who were murdered, that is 
not something that is just on their side of the aisle.
    We are very concerned about any journalists or human rights 
crimes such as that. If there is evidence somebody in the 
government was responsible, we do know that Honduras has a very 
high murder rate; and that in other countries where you have 
high murder rates and high crime, that sometimes journalists 
are murdered by other than the government.
    But if there is any indication that the government was 
involved in this, we would like you to let us know immediately; 
notify the embassy. Because that, of course, is something that 
we cannot in any way compromise that standard. That is 
unacceptable, and we will follow through on that to make sure 
that we get information about that.
    By the way, in terms of the debate back and forth about the 
removal of this would-be caudillo, let us just note that due 
process was followed. The military did not just proceed with 
guns. They had an order from the Supreme Court of that country, 
which was a legal order saying that the President was violating 
the law in a power grab that would have basically abrogated 
their Constitution.
    That seems to me to be fine due process. And to call that a 
coup, like in other areas, is something that I believe, and I 
agree with Mr. Mack, brought on this whole crisis.
    So with that said, we need to shut the book and move 
forward. Let me ask you this. Is Honduras right now permitted 
to participate in the Organization of American States meetings?
    Ambassador Kelly. They are not now. The re-entry into the 
Organization of American States requires a two-thirds vote of 
its members.
    Mr. Rohrabacher. All right.
    Ambassador Kelly. We strongly support their re-entry; and 
as I noted, at the meeting with Secretary Clinton in Guatemala 
with the Central American Presidents, she noted with great 
satisfaction that the Presidents spoke up in favor of this.
    Mr. Rohrabacher. Okay, I have only got a couple of minutes, 
sir. So your answer is no, they are not participating; but yes, 
we are backing their request to continue to participate. What 
are we doing to ensure that, besides just mouthing off a couple 
of words? Are we suggesting the United States might not sit in 
on meetings, if Honduras' democracy is not able to sit in?
    Ambassador Kelly. Well, Congressman, actually, we see a 
trend of countries that are moving toward normalizing their 
relations with Honduras; and in our view, that is going to lead 
us to the result we want to see. We are talking with all the 
countries in the region with that end in mind.
    Mr. Rohrabacher. I would suggest that our commitment to 
democracy in the Organization of American States, at a time 
when you have countries like Cuba and other dictatorships 
permitted to participate, we should stand firm and make sure 
there is a penalty to pay for organizations that discriminate 
against democratic governments; while permitting dictatorships 
like Cuba to be involved.
    In terms of these still pending cases, like we have heard 
about today with Oscar Cerna, let me just note that we need to 
close the book on what happened last year. We need to close the 
book on these cases. And the government in Honduras needs to 
understand that, again, there is a penalty to pay if they are 
making the wrong decision.
    Just for the record, I have a piece of legislation that we 
will be submitting for myself, asking for us to make sure that 
we, you know, leave the past behind and get on with the good 
relationship with Honduras. Mr. Mack, Mr. Burton, and Ileana 
Ros-Lehtinen are all co-sponsors of the bill.
    But in the bill, it does suggest that those property claims 
be acted on. And if not, there will be another piece of 
legislation that cuts off our aid to Honduras 1 year from now, 
if it is not acted upon; and it is not acceptable simply to 
say, well, this guy has got to go through and all these other 
people who have been waiting--not just this one--but they have 
to go through some bureaucratic process that they have already 
been through.
    These are not claims that were made last year. These are 
claims have been going on and on and on. They have already been 
through the process; and just us pointing them, they will now 
go through the process some more, this is actually draining the 
wealth and rights of these people. Some of them are U.S. 
citizens.
    So let us get those property claims dealt with; and as I 
submit this, getting back to normal with the Honduras bill. 
Next year, there will be another bill that indicates that there 
will be a penalty to pay, unless we see that case and other 
cases like it dealt with by the Honduran Government.
    And if you would indulge me just one more question, Mr. 
Chairman, after this whole fiasco last year, there was a policy 
by our Government of revoking the visas of those people who 
were engaged in this conflict, okay--this controversy that was 
going on. Well, we want to put the controversy behind us and 
move forward.
    Are those government officials, whose passports were 
revoked--are they going to either be issued new passports or 
have those passports renewed, or visas I should say? What is 
our policy on that? Have we now been able to shut that book and 
move forward; or are we so stuck in trying to punish these guys 
for something that we now consider to be old news?
    Ambassador Kelly. Thank you, Congressman; a couple of good 
things, on the property cases--absolutely, I have heard this 
message loud and clear today. It is one we do take seriously. 
But hearing again from you is very helpful, and we will take 
that as we move forward; thank you.
    Mr. Rohrabacher. Okay.
    Ambassador Kelly. On Cuba and the OAS, Cuba is not in the 
OAS. The suspension on Cuba was lifted. But what was said in 
Honduras actually in early June, largely at our working, was 
that this had to be accordance with the principles, purposes, 
and procedures of the OAS, including human rights and 
democracy.
    Mr. Rohrabacher. Good; thank you.
    Ambassador Kelly. And on your final point about visas, 
visas were never meant to punish people. Visas were a policy 
tool to make a point about the effort to work toward a 
restoration of constitutional and democratic order. We are 
looking at those, and we will be moving on those.
    But we will look at them in terms of, you know, they are 
not one group. They are individual human beings we will be 
looking at.
    Mr. Rohrabacher. But the constitutional government has been 
restored; and so there is no excuse any more to keep that issue 
alive. So I would hope that that is acted upon quickly, because 
it is a stumbling block. These people are influential people in 
Honduras. Why are we kicking them around, when we have already 
said that that is old news and we want to move beyond it? Thank 
you very much.
    Ambassador Kelly. Thank you.
    Mr. Sires. Thank you, Congressman. I just have one short 
question. How concerned was the administration that although 
Honduras had said that they were going to hold elections in 
November, that they were not going to hold elections in 
November, after they removed Zelaya.
    Ambassador Kelly. I am sorry. I did not quite catch that.
    Mr. Sires. During the events, I always understood that 
Honduras always had the intention of having an election in 
November.
    Ambassador Kelly. Yes.
    Mr. Sires. How concerned was the administration that 
Honduras was not going to keep their word?
    Ambassador Kelly. The de facto government said right from 
the beginning that they intended to hold elections.
    Mr. Sires. Right.
    Ambassador Kelly. As I mentioned in my statement, we 
believe that the combination of a movement toward some sort of 
an internal agreement and the elections was the basis for the 
way forward.
    Mr. Sires. So you never had any doubt that they were going 
to hold elections in November?
    Ambassador Kelly. I am not aware of any threat on the part 
of the authorities after June 28th to say that elections would 
not be held. I could be mistaken on the facts.
    But we assumed all along; I know there were statements on 
the part of Mr. Micheletti, that elections would be held. Our 
position, as you know, is that the elections were planned. The 
candidates were chosen in primaries 1 year before the election, 
long before June 28th, and so we supported that process.
    Mr. Sires. Well, Mr. Ambassador, I want to thank you for 
coming. I am sure the chairman, had he been here, would thank 
you for coming and answering your questions. I appreciated 
them; thank you very much.
    Ambassador Kelly. Thank you very much.
    Mr. Sires. We will now hear from our second panel. Thank 
you for your patience. I am now pleased to introduce our 
distinguished private witnesses.
    Cris Arcos is a former U.S. Ambassador to Honduras. He also 
served as Assistant Secretary of Homeland Security for 
International Affairs during the George W. Bush administration; 
Mr. Arcos, welcome.
    Vicki Gass is a Senior Associate for Rights and Development 
at the Washington Office on Latin America (WOLA). And last, but 
certainly not least, Kevin Casas-Zamora is a Senior Fellow for 
Foreign Policy and Latin American Initiative at The Brookings 
Institution. He is also a former Costa Rican Second Vice 
President and Minister of National Planning and Economic 
Policies; welcome. We will start with you, Ms. Gass.

 STATEMENT OF MS. VICKI GASS, SENIOR ASSOCIATE FOR RIGHTS AND 
     DEVELOPMENT, WASHINGTON OFFICE ON LATIN AMERICA (WOLA)

    Ms. Gass. Thank you very much for this opportunity. Let me 
begin with saying that Honduras is in crisis. Let me also be 
very clear that this is not a crisis that originated in June of 
last year or ended with the inauguration of President Lobo in 
January.
    The new government faces a crisis of credibility, long in 
the making, because 30 years of democracy has done little to 
reduce poverty and inequality in Honduras, which makes it one 
of the poorest countries in the Hemisphere; nor has it 
curtailed the seemingly entrenched culture of corruption and 
impunity.
    Citizen belief in the democratic system is at an all time 
low. A recent poll conducted by FOPRIDEH revealed that 60 
percent of Hondurans no longer believe in democracy.
    Compounding this crisis, violations of human rights have 
escalated since the coup, and have continued since President 
Lobo's inauguration. We have heard about some of those today.
    The State Department also released just last week its human 
rights report, which indicates the following types of human 
rights violations: Unlawful killing by current and former 
government security forces--at least 50, according to COFADEH; 
arbitrary detentions, attacks against the press, and 
disproportionate use of force. These attacks were directed 
against citizens actively opposed to the coup and/or their 
family members.
    Let me share with you some concrete examples. In august 
2009, Irma Villanueva was arbitrarily detailed by Honduran 
Policy after participating in a peaceful demonstration. While 
detained, she was raped by four police officers, who later 
inserted their batons into her vagina. Sadly, that was not the 
only case that was reported.
    On December 4th, lesbian, gay, bisexual, and transgendered 
Walter Trochez was kidnapped and physically assaulted by 
unknown people. Nine days later, he was assassinated.
    And as we have heard today, three reporters in the last 2 
weeks have been assassinated; reporters who were outspoken 
against the coup. The last one, Nahun Palacios, was shot to 
death in broad daylight last Sunday.
    These last attacks are just a sampling of reported 
associations, kidnapping, and beating that have occurred since 
the inauguration. In Honduras, there is widespread concern that 
the military has emerged stronger from this crisis, and that 
death squads are once again on the prowl.
    The popular reaction against the coup has to be understood 
in the context of the ongoing poverty and inequality in 
Honduras, and the pervasive corruption and impunity. Honduras 
is rich in natural resources. Yet, the majority of the people 
are poor. The poorest 10 percent account for only 1 percent of 
the county's income; while the richest 10 percent account for 
42 percent.
    Hondurans are tired of this, and as tired of the corruption 
and impunity. According to the Honduran Anti-National Anti-
Corruption Commission in its December 2009 report, corruption 
pervades every level of the state, and particularly in bidding 
for public state contracts, especially in the last 6 months 
under the Micheletti government.
    This is not a new phenomenon in Honduras. It has happened 
with debt relief funds, and reconstruction funds have been 
diverted to fulfill campaign promises. The National Congress 
awards contracts to its members or members of their family to 
build roads or bus stations that are never built; and 
international loans are brokered and debt assumed for projects 
that are never completed, even though the creditors must still 
be paid.
    The level of corruption has an enormous social cost; 
roughly $500 million are lost every year due to corruption. 
This is not a new phenomenon, but one that has been going on 
for decades.
    Unfortunately, prosecutions and convictions of those who 
participate in corruption are extremely rare. If Americans are 
unable to get their problems resolved in Honduras, even less so 
Honduran people. Only 2.2 percent of the 2,000 corruption cases 
that reached the court between 2002 and 2006 resulted in an 
actual conviction. Corruption and impunity are also problem 
within the armed forces.
    What could be done to reconcile a deeply divided country 
whose government institutions do not work and lack credibility? 
There are three immediate things that President Lobo must do. 
He must make clear, publicly and privately, that violations of 
human rights are unacceptable and will be punished, whatever 
the rank or position of those involved. He must guarantee that 
the Truth Commission has complete and independent power to 
thoroughly investigate and charge those responsible for coup 
and for human rights abuses.
    Finally, he must carry out a meaningful national dialogue 
across Honduras, drawing on the extensive experience of 
organizations that have worked on local development and civil 
society participation. I would refer members to my written 
testimony, which has more detailed, concrete suggestions for 
these three areas.
    President Lobo's ability to do this will depend in many 
ways on the support of the international community. As is often 
said out of any crisis, there is opportunity. This is a 
critical moment for Honduras. The United States and other 
donors must play a key role to press President Lobo to carry 
out these steps and offer him assistance to do so.
    Secretary Clinton recently announced her intentions to 
restore aid to Honduras. But WOLA urges the Secretary to not 
release all the aid at once, but gradually based on significant 
progress in the three areas mentioned in my testimony.
    In addition, WOLA recommends that all aid to Honduras be 
subject to Congressional notification, so that the committees 
can conduct oversight, as needed. In particular, the 
subcommittee and the appropriators should ask the 
administration to report to them on progress in the areas 
outlined above.
    The Hondurans I work with are a hard working and noble 
people. They deserve no less; thank you.
    [The prepared statement of Ms. Gass follows:]Vicki 
Gass 

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

    Mr. Sires. Thank you, Ms. Gass; Ambassador Arcos?

  STATEMENT OF THE HONORABLE CRESENCIO ``CRIS'' ARCOS (FORMER 
  ASSISTANT SECRETARY OF HOMELAND SECURITY FOR INTERNATIONAL 
         AFFAIRS) (FORMER U.S. AMBASSADOR TO HONDURAS)

    Ambassador Arcos. Thank you, Mr. Chairman. Mr. Chairman, 
members, and ranking member, I have had a few years experience 
with Honduras, having served there from 1980 to 1985 and then 
again in 1989 to 1993. I have watched Honduras as it started 
its path to democracy and development.
    Honduras has had an exceptional history during the Cold 
War. It had a key role in the 1980s Central American Crisis, 
which was one of the last two flash points of the Cold War. 
Afghanistan was the other area. United States policy went 
beyond containment in its successful roll back efforts to drive 
the Soviets from these two regions.
    Honduras' unique history explains why it was not engulfed 
by civil war or insurrection. Henry Kissinger, as head of the 
U.S. Commission on Central America, asked, ``Why was Honduras 
able to avoid the acute instability of its three neighbors?'' 
The answer was simple. Honduras' history and topography 
precluded the development of a traditional repressive 
oligarchy.
    Honduras escaped civil upheaval. Its democratic process, 
however, was less than transparent. The rule of law remains a 
misunderstood concept. Recently elected Porfirio Lobo as 
President faces a similar challenge. The region's movers and 
shakers continue to seek too often impunity. Unfortunately, in 
Honduras, a culture of impunity continues alongside the equally 
undesired practice of conflict of interest.
    President Lobo faces several other hurdles. Income 
inequity, as we mentioned, is creating unsettling new political 
challenges. Increased dependence on foreign remittances is 
being driven by uncontrolled Hondurans migrating to the United 
States.
    Additionally, unenforced foreign investment guarantees 
remain problematic. In Honduras, egregious U.S. investor claims 
remain unsolved or unsettled by the Honduran Government or its 
justice system, as noted in the CEMAR case being expropriated.
    The Bilateral Reinvestment Treaty does not appear to be a 
practical solution for these neglected cases. This requires a 
response from the Department of State in demanding resolution 
and a more cooperative Honduran Government.
    Another impediment that President Lobo faces is a poorly 
funded and administrated educational system, originally 
designed to lift the county's poor out of extreme poverty. This 
educational crisis contributes to unsettling social conditions 
and dwindling opportunities for a better future.
    Criminal gang activity has created widespread fear. This 
criminal activity includes homicide, kidnapping, rape, 
narcotics trafficking, and too often, public corruption. 
Together with narcotics trafficking, youth gang warfare has 
become a national security threat to Honduras.
    Lastly, institutional weakness is common in Honduras. 
Governmental institutions invariable are ineffective or 
inefficient. Corruption is often cited as the cause.
    Honduras has nonetheless come a long way. However, the 
recent political crisis was a shattering and surprisingly 
polarizing event. This involved the removal of President 
Zelaya. He recklessly ignited severe censure among the 
Hondurans with his so-called unconstitutional behavior.
    The episode was complicated by the blurred role of the 
Hondurans Supreme Court and its National Congress. This 
provoked basic constitutional questions. The role of the 
military became controversial to the democratic process. Re-
introducing the military into a political role is most 
disquieting.
    Additionally, the subsequent widespread human rights 
violations that included loss of life, violence against 
journalists, critics, and other dissidents, the closing down of 
mass media outlets; the ongoing Bajo Aguan peasant land dispute 
crisis has spiraled into daily violence that is symptomatic of 
the recent political crisis.
    Clearly, President Lobo faces his first real challenge. The 
sum of this recent democratic disruption has unleased 
challenges for Honduras and specifically for the new President. 
These include, as I mentioned, increased human rights 
violations as reported by media sources and documented by the 
human rights community. The concentration of power in a plainly 
victorious political party may tempt perpetuation in power.
    Removal of a President by the Army without the presence of 
civilian authorities presents a dangerous precedent, and 
wrongfully signals the acceptance of the military/civilian 
role.
    Mr. Sires. Mr. Ambassador, we are going to have to cut you 
short. Because we have votes, and I want to hear from Dr. 
Casas-Zamora.
    Ambassador Arcos. Okay.
    Mr. Sires. Thank you; my apologies.
    Ambassador Arcos. Okay, let me just finish it up then. 
Frankly and finally, President Lobo must demonstrate political 
will to address these challenges. It is premature to make a 
judgment.
    The new President appears to have a good sense of his 
people's right. The establishment of the Truth Commission is 
imperative to help to identify what ails Honduras and offers a 
roadmap toward a way forward. Thank you very much, Mr. 
Chairman.
    [The prepared statement of Ambassador Arcos 
follows:]Cresencio Arcos 

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

    Mr. Sires. Thank you, Mr. Ambassador.
    Dr. Casa-Zamora, you are on.

STATEMENT OF HIS EXCELLENCY KEVIN CASAS-ZAMORA, SENIOR FELLOW, 
  FOREIGN POLICY AND LATIN AMERICA INITIATIVE, THE BROOKINGS 
INSTITUTION (FORMER MINISTER OF NATIONAL PLANNING AND ECONOMIC 
        POLICY AND SECOND VICE PRESIDENT OF COSTA RICA)

    Mr. Casas-Zamora. Thank you, Mr. Chairman. Mr. Chairman and 
Members of Congress, ladies and gentlemen, the crisis in 
Honduras is the most important incident in inter-American 
relations of the past year. The interpretation of the events 
that led to former President Manuel Zelaya's ousting from power 
remains contentious to this day. I will avoid re-revisiting 
that discussion here.
    Indeed, the debate about the constitutional nuances 
surrounding what happened on June 28 of 2009 was of limited 
value when the crisis was raging, and is of even less value 
now. For what was missing though was some reflection about how 
Honduras got to that point, and what should be done to present 
a similar episode in the future.
    The election of Porfirio Lobo as President in a free and 
fair contest was an important part of the solution to the 
immediate crisis in this small nation. The deeper causes of the 
meltdown remain, however, untouched to this day.
    To his credit, President Lobo has given hints that he 
understands the complexity of the situation. He grasps that 
political actors in Honduras have two crucial endeavors in 
their hands. The first is giving the country a sense of 
political normalcy. The second is dealing with the underlying 
causes of the crisis.
    If Honduras is to return to normalcy, nothing is more 
urgent than fostering reconciliation. A significant part of the 
road map to do this is laid out in the San Jose and Tegucigalpa 
Accords. President Lobo's record of implementing this accord is 
mixed. He made a commendable effort to integrate a national 
unity government and played a decisive role in pressing for a 
controversial, but necessary amnesty for political offenses.
    Another key clause of the agreements, i.e., installing a 
truth commission to inquire into the events before and after 
June 28th has proved problematic. The concern here is the 
Honduran Government's ambivalence toward allowing the 
Commission to investigate the human rights abuses that took 
place after June 28. These abuses have been denounced, among 
others, by the Inter-American Commission of Human Rights. There 
is no justification whatsoever for leaving these transgressions 
outside of the Truth Commission's purview.
    The second endeavor for the country's political elite is 
dealing with three issues that lie beneath the 2009 debacle; 
namely social exclusion, deep distrust in political 
institutions and a problematic constitutional design. Seventy 
percent of the Honduran population lives in poverty. Moreover, 
the wealthiest 10 percent of the population concentrates six 
times more income than the bottom 40 percent. This is bad, even 
for Latin American standards.
    These figures can hardly be dented if the fiscal base of 
the state is precarious. Honduras' current tax burden stands at 
14.8 percent of GBP; below the average for Latin America and 
less than half the median for industrialized countries.
    Two things are known to happen when a society harbors such 
levels of social exclusion. First, it becomes a violent 
society. Second, it nurtures a political style in which 
populism becomes a permanent temptation.
    Honduras needs a serious effort to negotiate a fiscal pact 
that allows for an increasing taxation and a fair distribution 
of the tax burden.
    Equally dismal is the distrust in political institutions. 
Surveys show that trust in Congress, the Judiciary in partisan 
Honduras is below the already low figures for Latin America. 
This is related to pervasive corruption. Honduras stands at the 
bottom of Central America in the Corruption Perception Index 
elaborated by Transparency International.
    President Lobo should make an effort to de-politicize the 
institutions charged with controlling the exercise of power, 
including the Supreme Court, the General Comptroller, the 
National Ombudsman, and the Supreme Electoral Tribunal.
    The third issue is constitutional design. The days leading 
up to June 28th provided ample evidence that some aspects of 
Honduras' 1982 Constitution are problematic. One such aspect is 
the lack of an impeachment process against the President, which 
introduces an element of rigidity in a regime that already 
lacks flexibility to deal with political upheavals.
    Re-tooling these norms is, of course, a task for the 
Honduran people alone. Yet, the reluctance to engage in a 
conversation about the country's constitutional architecture is 
an odd reaction to an episode in which the shortcomings of that 
design were rendered all too evident.
    All these issues require broad based agreements. Honduras 
needs a process of national dialogue in which sectors that 
supports Zelaya ought to participate. While President Lobo 
should take the lead in convening this process, international 
organizations could play a role in facilitating the discussion.
    What are the next steps for the international community? 
First, it should end Honduras' diplomatic isolation. It is hard 
to see any justification in prolonging this isolation, 
particularly from the OAS. Regardless of what may have happened 
on June 28th, the current government is a result of an election 
that while not devoid of problems was widely considered free 
and fair.
    Moreover, there is no evidence that Lobo's government is 
exercising powers in ways incompatible with democracy. 
Chastising Honduras after a new government is in place is not 
the way to protect democracy, if that co-exists with Latin 
America's deafening silence regarding serious threats to 
democracy in countries such as Venezuela or Nicaragua, or with 
the region's apparent eagerness for revoking Cuba's suspension 
from the OAS with very few questions asked. This kind of 
hypocrisy undermines the legitimacy of any international forum.
    Normalizing diplomatic relations with Honduras and 
admitting the country back into the OAS' fold as soon as 
possible is a contribution that the international community 
could certainly make.
    The second task is nudging Honduras political actors toward 
dealing with some of the tasks outlined before. There are a few 
levers that could be used. The agreement between the IMF and 
Honduras that is currently under negotiation presents an 
interesting opportunity.
    It is desirable that the United States and the European 
Union member states use their leverage in the IMF to postpone 
the normalization of economic relations with Honduras until the 
Truth Commission is guaranteed an untrammeled mandate to 
inquire on the events leading up and following June 28th, 
including the human rights abuses perpetrated after that date.
    The road to democratic health in Honduran is long and 
steep. President Lobo should be commended for making gestures 
toward reconciliation; but a lot remains to be done. 
Proclaiming that the crisis is over is simply a poor service to 
the Honduran people and an invitation for future democratic 
breakdowns. Thank you very much.
    [The prepared statement of Mr. Casas-Zamora 
follows:]Kevin Casas-Zamora 

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

    Mr. Engel [presiding]. Thank you very much. I am going to 
defer for the first question to Mr. Sires.
    Mr. Sires. Thank you, Mr. Chairman, and this is for anyone 
that wants to take a crack at this. Over the past couple of 
years, we have seen a closing of democratic space in the 
Americas. For example, the deteriorating human rights situation 
in Venezuela, and the Supreme Court decision in Nicaragua to 
lift the Constitution ban on re-election.
    I was just wondering, in your opinion, is the 
administration effectively dealing with the closing of 
democratic space in the Americas--this administration?
    Ms. Gass. Thank you; I would add from WOLA's perspective 
that there is actually more of a tendency for countries to move 
toward referendums, which is a demonstration for people's wish 
to participate in democracy as a result of their disappointment 
in the democratic process thus far to end issues of poverty and 
equality.
    Mr. Sires. So you are telling me that there is no closing 
of democratic space; that the referendum is the vehicle?
    Ms. Gass. No, I did not say that there was not any closure. 
I said I think there is a greater tendency toward pushing for 
referendums, because people want to participate in politics. 
They want to participate in democracy.
    Mr. Sires. Does anyone else want to comment; Mr. Arcos?
    Ambassador Arcos. Clearly there are examples; most recently 
1 year ago in Nicaragua. It was alleged in pretty much a 
consensus that the Sandinistas stole the local elections. 
Clearly that tells us that there is something wrong there.
    Mr. Sires. But how are we handling this, Mr. Ambassador?
    Ambassador Arcos. Well, I am not in the administration any 
longer, in this administration.
    Mr. Sires. Well, you have an opinion.
    Ambassador Arcos. But I would say that what we need to 
understand is, first of all, I think there was a consensus on 
this particular case. We need to make sure that the Nicaraguan 
Government knows our concern; not only ours, but the OAS or 
anybody else, of what is going on there. Because basically, 
what they are doing is basically setting it up for a 
perpetuation of power. That is my opinion; thank you.
    Mr. Engel. Thank you, Mr. Sires; Mr. Mack?
    Mr. Mack. Thank you, Mr. Chairman. You know, I listened 
with great interest from all of your testimony. Well, let me 
just find a point that I would like to probe a little bit more.
    Moving forward, what type of activities do you think that 
the United States should engage in on issues of poverty, human 
rights? What types of things, looking forward is it that you 
think that the United States can do to help show that we 
support the people of Latin America; and that we might not 
necessarily support some of the governments in Latin American; 
but that we support the people of Latin America.
    So if you want to just go down the line and each of you 
give me a quick thought on that, I would appreciate it.
    Ms. Gass. Well, I think there are several things that the 
administration can do. First is, if military and police aid are 
restored, they can use that to strengthen the institution 
perhaps by investigating the human rights violations that have 
taken place since the coup in June; and use that to strengthen 
an institution that is incredibly weak.
    And then secondly, I would say that they really need to 
work hand in hand in pushing a meaningful dialogue over a 
longer period of time--not a consultation of 2 or 3 days; but 
do something that is de-centralized in the regions, and 
supporting that financially, because that is a cost.
    Mr. Mack. Mr. Ambassador?
    Ambassador Arcos. Frankly, Mr. Congressman, let me say 
this. I think having been a Cold Warrior in the foreign 
service, this is dear to my heart--your question about what do 
we do in Latin America. I started off as a Sovietologist, and I 
wound up in Central America. So that taught me something.
    But let me say this. I think that after the Cold War ended, 
quite frankly favoring us, we tended to forget about Latin 
America. We had other concerns, and then ultimately we had 9/
11, and then we were even more distant, in a way, from Latin 
America. I think the Latin Americans really feel that we should 
be closer--not necessarily run their lives or tell them what to 
do; but basically be more supportive.
    I think that the perception in Latin America right now is 
sort of distorted about the United States in many ways. Most 
recently, when you see this new organization that will exclude 
Canada and Mexico; where you will see Colombia and Mexico and 
El Salvador, traditional friends of the United States, joining 
this.
    It tells me this, and I was quoted some time ago on this, 
where what has happened, it seems like the left has lost its 
fear of the United States; and the right, its respect. Because 
I think both thought we were going to react and squash the 
left, quite frankly. I think they see that as the explanation 
for Chavez.
    I am not advocating here any violence or anything against 
anybody or any country. But I think we have to understand how 
we are seen in the wake of the end of the Cold War, which has 
now been 20 years; and that we have been somewhat negligent in 
coming up with a solid, continuous, clear policy toward the 
region.
    Mr. Mack. Doctor?
    Mr. Casas-Zamora. Thank you, Congressman; that is a really 
important question. The first part of my answer would be that 
perhaps the United States should qualify the message that for a 
long time became standard; that lifting Latin America's poor 
was just about trade and investment. It is a much more 
complicated story.
    I would say that the agenda that Secretary Clinton took to 
Latin America in her last trip was a very good one. By the way, 
you could definitely see the hand of Assistant Secretary 
Venezuela in crafting that agenda. Because he is someone that 
understands profoundly the really deep development issues that 
are at stake in Latin America.
    And when we talk about social inclusion, it is inevitable 
to think of some issues in which the United States could 
certainly do a lot in the region. Tax reform--I mean, you 
certainly know how to charge taxes and to collect taxes in this 
country. That is something that we are not very good at in 
Latin America.
    The other issue is about supporting small and medium 
enterprises. I mean, there are wonderful things that the United 
States could do to support small and medium enterprises in the 
region. And the other part of my answer would be about having 
perhaps a more subtle understanding of the nature of the 
political changes that are taking place in some countries in 
the region.
    I am pretty convinced that some of the things that are 
happening in some countries regarding the way some governments 
are exercising power are not acceptable. But somebody mentioned 
here the issue of indigenous people.
    Well, I mean, the one country in which I can think that 
something significant has been done about indigenous people is 
Bolivia. I mean, I happen not to like the regime of Evo 
Morales. But there is an issue there; and that tells you that 
there is a problem of political inclusion that is trying to be 
sold in some of the countries. And oftentimes the process 
whereby populations that have not been included in the 
political system, it is not pretty.
    So a more subtle understanding about what underlies beneath 
some of the political change that is taking place in some 
countries would certainly help; thank you.
    Mr. Mack. Thank you very much.
    Mr. Engel. Thank you; as you can hear, we have votes just 
starting, so I am going to try to speed this up. Let me first 
ask a general question, and anyone who would care to answer it, 
I would be delighted to hear what you have to say.
    Pepe Lobo, when he became President, pledged to implement 
the two remaining pieces of the Tegucigalpa-San Jose Accord; 
and that is the formation of a national unity government and 
the creation of a Truth Commission to investigate the events 
before, during, and after the ouster of President Zelaya.
    What to an extent, in your opinion, have these pieces of 
this accord been implemented. The Lobo administration, would 
you describe them as a national unity government; why or why 
not? And how would you assess the Lobo administration's efforts 
to foster political reconciliation in Honduras; what more would 
need to be done? Does anybody want to try it? It is a big 
question. But essentially, how do you think Lobo has been doing 
in all those things?
    Mr. Casas-Zamora. As I said in my statement, I think the 
record is mixed. I think he did great when it came to putting a 
lot of pressure to have an amnesty voted by the Honduran 
Congress. The amnesty is not pretty; but it is necessary. It 
was, you know, the right thing to do. And amnesty for political 
offenses--I mean, of course there is a discussion on all this.
    I think he did well and should be commended for trying to 
integrate a national unity government. My only issue with that 
is that some of the people that he called on to serve in his 
administration, people from other parties, are there on a 
personal capacity. They are not there because they represent 
political sectors. Some people might say that that is not a 
national unity government. All the same, I think he should be 
commended. I think it is a courageous thing to do.
    And the third point, which is the one that concerns me the 
most is the ambivalence with regards to the mandate of the 
Truth Commission. I think that is a burdening issue, quite 
frankly.
    And I think the attempts to live outside of the 
Commission's purview, the human rights abuses that have been 
documented to have occurred after June 28th, is unacceptable; 
and the international community and hopefully the U.S. 
Government should rebuke that attempt to life those abuses 
outside of the workings of the Commission.
    Mr. Engel. What more would need to be done, in your 
opinion, for the Truth Commission to get started with its work?
    Mr. Casas-Zamora. Well, they need to appoint the members, 
and I think they are making some progress in that regard. And I 
think the crucial discussion here is about the mandate of the 
Commission, and the Commission's ability to make proper 
recommendations about what they find as a result of their 
investigation.
    It is my impression that the agreement between the IMF and 
the Government of Honduras that is currently under negotiation 
offers a very interesting lever to nudge the Honduran 
Government toward complying with a mandate for the Truth 
Commission that includes the investigation of human rights 
abuse.
    Because I do not think the normalization of economic 
relations with Honduras should take place until there is an 
explicit commitment by the Honduran Government to cooperate 
fully with the Truth Commission in whatever direction their 
investigation takes them.
    Mr. Engel. Thank you; Ambassador, did I see your hand up?
    Ambassador Arcos. Yes, Mr. Chairman; I would just like to 
add to what Dr. Casas said. Personally knowing Pepe Lobo, I 
think that he has the best of intentions and great political 
instincts in the sense of his people.
    I think the Truth Commission is certainly the first vehicle 
he will use. I think my guess is that he will keep it from 
becoming a sort of Sectarian, let us get one side or another. I 
think he is going to try to keep it away from becoming that 
politicized. Because there is a tendency, and I think the 
debate is the country is, we should go after ``x'' and not 
``y'' or ``y'' over ``x.''
    So I think that he will be a moderating factor in that. But 
I think he has to be very clear of his own expectations 
publicly, so he can lay the markers out.
    Mr. Engel. Thank you; let me ask you, Mr. Ambassador, a 
question on another subject. You heard all of us speak to 
Ambassador Kelly and talk about these cases that were held out 
by American citizens. We mentioned, in particular, Mr. Cerna's 
case, the CEMAR plant case.
    Do you know if, in fact, it is true that the military holds 
a very significant ownership and management stake in the 
largest cement company currently in Honduras; and is this the 
same company accused by Honduras' own Attorney General of, and 
I am quoting him, ``eliminating and bankrupting the CEMAR 
plant''?
    Ambassador Arcos. What I know, Mr. Chairman, is the 
following. When I was there, they had what they called an 
institute. But the military had a pension fund, quite frankly, 
which was the largest owner of one of the cement companies 
which grew to be one of two major cement companies. When Mr. 
Cerna entered the market, he competed with them.
    So they did have that, and I think they had it up until 
recently. I am not aware of whether they have it yet; still 
have it or not have it. But certainly at the time of what 
happened to Mr. Cerna, they did have an interest in it, as far 
as I understand.
    I think that this has been a problem. But you know, quite 
frankly, there is a distance between the actually military 
general or colonel running the company. It is when it is the 
pension fund that has a tremendous influence; but it represents 
the military.
    So there would be a discussion here that would not be very 
clear. Because the implication is that the military sort of 
runs it like it runs a unit. It does not do that. But there is 
interest there. There is clearly interest, and that needs to be 
clarified.
    Mr. Engel. Thank you; and let me ask a final question, 
based on something that I mentioned in my opening statement. 
That is the attacks on the LGBT community in Honduras.
    In June, I am told that the attacks on that community 
escalated substantially in June with 19 murders of prominent 
members of that community. What can the Obama administration do 
to encourage the Honduran Government to help prevent future 
violence against this community; and are there activities we 
could financially support in Honduras to strengthen these 
groups operating in the country? I do not know, Ms. Gass, would 
you want to try that one?
    Ms. Gass. I think that is a complicated question, Mr. 
Chairman, given the level of impunity and corruption that 
exists in Honduras.
    I think certainly that the Embassy and Tegucigalpa have 
spoken out very strongly against the murder of Walter Trochez, 
as well as others, since the June coup.
    I think I would encourage them to continue to do that; and 
again, use aid that is reinstated to strengthen institutions--
the judicial system, the investigatory capacity of the police, 
and others.
    Mr. Engel. Thank you; I think that will have to be the last 
word, because Mr. Mack and I have to take a series of three or 
four votes.
    But I want to thank the three of you for excellent 
testimony. I apologize that I had to leave for a little while; 
because what I was doing here was trying to juggle five balls 
in the air at the same time.
    But obviously this is something that is of great concern to 
Mr. Mack and myself and our entire committee. I think that 
there are, as I said before, not a lot of difference when it 
comes to Honduras between the two parties.
    I know that the United States wants to help that country 
get back on its feet, and I think that this subcommittee will 
continue to monitor that progress, with consideration of all 
the important issues that we raised today. So I thank the three 
of you for excellent testimony, and the hearing is now 
adjourned.
    [Whereupon, at 5:01 p.m., the subcommittee was adjourned.]
                                     

                                     

                            A P P E N D I X

                              ----------                              


     Material Submitted for the Hearing Record Notice 

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

                               Meeting  

                               [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
                               
                               Mack 

Submitted for the record by the Honorable Connie Mack, a Representative 
                 in Congress from the State of Florida

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

                               Engel 

      Submitted for the record by the Honorable Eliot L. Engel, a 
 Representative in Congress from the State of New York, and Chairman, 
                 Subcommittee on the Western Hemisphere

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]


                               Engel 
                               
      Submitted for the record by the Honorable Eliot L. Engel, a 
 Representative in Congress from the State of New York, and Chairman, 
                 Subcommittee on the Western Hemisphere
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]


                               Lee 
Submitted for the record by the Honorable Barbara Lee, a Representative 
                in Congress from the State of California

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]


                               Lee

Submitted for the record by the Honorable Barbara Lee, a Representative 
                in Congress from the State of California

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]


                               Lee 
Submitted for the record by the Honorable Barbara Lee, a Representative 
                in Congress from the State of California

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

                               Burton 
                               
Submitted for the record by the Honorable Dan Burton, a Representative 
                 in Congress from the State of Indiana

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

                               Burton 
                              
 Submitted for the record by the Honorable Dan Burton, a Representative 
                 in Congress from the State of Indiana

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

                               Burton 
                               
Submitted for the record by the Honorable Dan Burton, a Representative 
                 in Congress from the State of Indiana

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

                               Burton 
                              
Submitted for the record by the Honorable Dan Burton, a Representative 
                 in Congress from the State of Indiana

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]


                               Burton 
                               
Submitted for the record by the Honorable Dan Burton, a Representative 
                 in Congress from the State of Indiana

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

                               Engel 
                               
      Submitted for the record by the Honorable Eliot L. Engel, a 
 Representative in Congress from the State of New York, and Chairman, 
                 Subcommittee on the Western Hemisphere

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

                               Burton 
                               
Submitted for the record by the Honorable Dan Burton, a Representative 
                 in Congress from the State of Indiana

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]


                               Burton 
                               
Submitted for the record by the Honorable Dan Burton, a Representative 
                 in Congress from the State of Indiana

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

                               Engel 
           Submitted for the record by the Honorable Eliot L. Engel, a 
 Representative in Congress from the State of New York, and Chairman, 
                 Subcommittee on the Western Hemisphere

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

                               Engel 
                               
      Submitted for the record by the Honorable Eliot L. Engel, a 
 Representative in Congress from the State of New York, and Chairman, 
                 Subcommittee on the Western Hemisphere

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

                               Engel 
                              
      Submitted for the record by the Honorable Eliot L. Engel, a 
 Representative in Congress from the State of New York, and Chairman, 
                 Subcommittee on the Western Hemisphere

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]


                               Engel 
                               
      Submitted for the record by the Honorable Eliot L. Engel, a 
 Representative in Congress from the State of New York, and Chairman, 
                 Subcommittee on the Western Hemisphere

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

                               Engel 
                               
      Submitted for the record by the Honorable Eliot L. Engel, a 
 Representative in Congress from the State of New York, and Chairman, 
                 Subcommittee on the Western Hemisphere

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

                               Engel 
                               
      Submitted for the record by the Honorable Eliot L. Engel, a 
 Representative in Congress from the State of New York, and Chairman, 
                 Subcommittee on the Western Hemisphere

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

                               Engel 
                               
      Submitted for the record by the Honorable Eliot L. Engel, a 
 Representative in Congress from the State of New York, and Chairman, 
                 Subcommittee on the Western Hemisphere

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]


                               Engel 
                               

      Submitted for the record by the Honorable Eliot L. Engel, a 
 Representative in Congress from the State of New York, and Chairman, 
                 Subcommittee on the Western Hemisphere

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

                               Burton 
                               
Submitted for the record by the Honorable Dan Burton, a Representative 
                 in Congress from the State of Indiana

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]


                               Burton 
                               
Submitted for the record by the Honorable Dan Burton, a Representative 
                 in Congress from the State of Indiana

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

                               Burton 
                               
Submitted for the record by the Honorable Dan Burton, a Representative 
                 in Congress from the State of Indiana

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

                               Engel 
                               
      Submitted for the record by the Honorable Eliot L. Engel, a 
 Representative in Congress from the State of New York, and Chairman, 
                 Subcommittee on the Western Hemisphere

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]


                               __________
[Note: A submission for the record by the Honorable Eliot L. 
Engel consisting of court papers from the United States 
District Court, Southern District of Mississippi, Jackson 
Division, of Byrd vs. Forestal, filed February 24, 2003, is not 
reprinted here but is available in committee records.]

                                 [all]
