The IMF and Privatization in Honduras: Impacts on the National Energy Company

Honduran public sector unions are in a crisis as a result of mass suspensions of over 5,000 public employees in the last few months. The largest suspensions to date – approximately 2,000 employees – occurred in the National Electrical Energy Company (ENEE) but job cuts were also made in the Honduran Telecommunications Company (HONDUTEL), the National Agrarian Institute (INA), and others. Thousands more are expected in state institutions already impacted, as well as others that have not yet been affected, such as the National Autonomous Water Supply and Sewerage Service (SANAA). A large majority of the suspensions were conducted in violation of the Honduran Labour Code, the Honduran constitution, General Law of Public Administration, and Conventions of the International Labor Organization (ILO).

Photo caption: ENEE lay-offs occurred weeks before Christmas. This sign in STENEE's office in Tegucigalpa reads "No Christmas in solidarity with the suspended comrades". December 2014.

The Sindicato de Trabajadores de la Empresa Nacional de Energia Electrica or the Workers’ Union of the National Electrical Energy Company (STENEE by its Spanish acronym), are calling the job cuts a “labour massacre”. STENEE is part of the recently formed National Platform of Public Unions that have held protests attended by thousands of Hondurans every Saturday for the last three weeks to demand the reintegration of employees that have recently lost their jobs.

Photo caption: Protest in San Pedro Sula against the suspensions in public institutions. September 13, 2014

The IMF, Neoliberalism and Poverty in Honduras

The on-going mass lay-offs in public institutions come as the International Monetary Fund (IMF) approves a three-year $188.6 million loan with the Honduran government. As part of the loan agreement, the IMF is insisting that the Honduran government reduce the country’s public deficit – the largest in Central America- from 7.5% of GDP to 2% of GDP by 2017. In order to reduce the deficit, Honduran people will face higher taxes (already increased one year ago), reduced subsidies particularly in the energy and transportation sector, and major changes and budget reductions in public institutions particularly in health and education.

In a country where 59% of the population lives below the poverty line and 36.2% in extreme poverty with very low employment rates – some of the major push factors of migration to the United States - mass public funding and jobs cuts will have dramatic impacts on the poorest sectors of Honduran society.

The threat to privatize ENEE has existed for years under neoliberal Central American integration plans –like MesoAmerican Project or Plan Puebla Panana (PPP) and the Central America Electrical Integration System (SIEPAC)- promoted by the World Bank, Inter-American Development Bank, and the Central American Bank for Economic Integration. The supposed 'new’ plan for the Central American region and ‘solution’ to the migration crisis- the Plan of the Alliance for the Prosperity of the Northern Triangle- is simply an extension of the integration plans proposed for the region. The Alliance for Prosperity plan calls for more private investment, the expansion of SIECAP, and major changes in the Honduran energy industry amongst other initiatives. Confronting the recent assault and the historical threat to the energy industry, the Honduran people and STENEE have strongly defended their national energy company and up until the past few months, small consumers in Honduras have received energy at much lower costs than neighbouring countries that have undergone privatization in their energy sectors.

IFIs, and the US Government In Bed With the Honduran Economic Elite

Some of the greatest proponents of privatizing ENEE are the economic and political elite of Honduras, a handful of families that have dominated the economy and Congress for decades. These same families orchestrated the June 2009 military coup in Honduras that ushered in enhanced neoliberal policies and shortly later, was accompanied by large, on-going increases in violence and poverty in the country.

The economic elite supported by international financial institutions, are very much behind the historical and current privatization efforts in ENEE. As early as 1999, meter reading services were contracted out to a Honduran financial services corporation owned by Arturo Corrales, currently the Honduran Ministry of Security and one of the key actors in the 2009 military coup. Under the Callejas Presidency in the early 1990s, private companies owned by the economic elite – the Nasser family being one - were given thermal energy contracts that requires ENEE to purchase over 50% of their energy supply from the private thermal generating companies despite its high costs. In 2011, the Honduran government signed a contract with a US-Honduran company – one representative being the nephew of former President Callejas - called PHP Energy, marking the beginning of what STENEE believes to be a slow hand-over of public assets to private companies. STENEE has since challenged the PHP contract in Honduran courts and is blocking the entrance of PHP Energy personnel into the installations where the project is proposed to be build.

Photo caption: At the entrance of ENEE's El Nispero installations in Santa Barbara, STENEE hung a banner protesting the contract with PHP

The changes in ENEE are being facilitated by the National Electrical Industry Law that was approved in January 2014 and expected to be fully implemented in June 2015. The law splits ENEE into three sectors – energy distribution, public lighting, and transmission – and hands the management of these sectors over to three Honduran banks. Ficohsa, Banco Altantida, and Banco Continental are now managing ENEE’s finances through trust funds, and once the National Electrical Industry Law is fully implemented, will be responsible for seeking and managing investment in the three sectors. In other words, the latest reforms supported by the IFIs hollow out the Honduran state energy company and ENEE will be forced to compete with private companies offering similar services.

Ensuring the so-called ‘stability’ of the Honduran economy, the IMF loan will encourage foreign investment in Honduras for transnational corporations seeking new and ‘emerging’ markets in the so-called ‘Global South’. The United States currently has the greatest weight in the IMF. The Congressional Research Service reports, the US has a “voting share of 16.75%” the highest of all IMF members, followed by Japan at 6.23%. The US is the “only country able to unilaterally veto major IMF decisions” and one of the handful of countries that have a lot to gain from privatization of public institutions and market liberalization in Honduras.

Photo caption: Road blockade preventing the entrance of machinery attempting to build the Agua Zarca dam, Rio Blanco.

One of the most detrimental impacts of the privatization of ENEE and the financial ‘stability’ guaranteed by the IMF loan, will be the further push to construct and/or expand hydroelectric dams and energy substations around the country. Beginning in 2007 and picking up pace since the June 2009 military coup, various concessions of Honduran rivers were approved by the National Congress. The long and on-going struggle of the Lenca indigenous community of Rio Blanco is an example of how private, large-scale, internationally financed dam projects have serious social and environmental impacts. The attempt to construct the Agua Zarca dam in Rio Blanco violates the rights of indigenous peoples to be consulted about projects in their territories as mandated by ILO 169. Community resistance to the construction of the dam was met with repression, threats, and assassinations of community members and their supporters. Similar struggles of Lenca communities are occurring in Santa Elena, La Paz in south-western Honduras where communities are attempting to stop the construction of another dam project owned by Gladys Aurora Lopez, the Vice President of the Honduran National Congress. With a more “stable” environment for foreign investment and the relevant legislation in place, it is more likely that concessions to build dam projects will receive the financing needed to begin construction.

STENEE’s Attempt to Defend the Integrity of ENEE

Mismanagement, corrupt political dealings, and strong interests in privatization are at the center of the problem that STENEE is now confronting. Since the President of ENEE is appointed by the political party in power, management of ENEE is at the whim of strong political interests. Knowing well what they are up against, since the job cuts began underway STENEE has fueled the debate about the role of the economic elite and the IMF and their interests in privatization. STENEE President Miguel Aguilar announced in a recent press conference that 37 high paid employees in ENEE are family members of high-level officials and congressional representatives in the Honduran government including the daughter of the President of the National Congress and the niece of the Honduran President Juan Orlando Hernandez.

Since the June 2009 military coup, the IFIs and the political and economic elite in Honduras have had it out for public employees in Honduras. Since a major point of interest of the IMF in the agreement negotiations with the Honduran government is eliminating state energy subsidies and slashing public costs, STENEE is facing an assault on the integrity of a public institution that is set to undergo major changes and fragmentation in the coming months.

Quick note: At Least 22 U.S.-Vetted TIGRE Agents Suspended After Dividing up Drug Money During Raid

At least 22 agents of the TIGRES, a SWAT-style elite police unit were allegedly suspended after it was discovered that a team of TIGRES divided $1.3 million dollars amongst themselves. The money was found during a raid on property owned by the Valle Valle family in Copan. The United States is requesting the extradition of the Valle family who are facing drug trafficking charges in US courts.


Former US Ambassador Lisa Kubiske in Lepaterique, Francisco Morazan, Honduras where TIGRES unit completed training provided by Columbian and US forces. Source and photo credit: La Tribuna

The TIGRES are vetted and trained by the United States. This is just another example of how 'vetting' units - a strategy promoted by the US - is a deeply flawed concept that will never work. Another example of the failure of 'vetting' is the Honduran vetted unit that accompanied the Drug Enforcement Administration (DEA) during a drug interdiction operation in La Moskitia where four innocent indigenous Miskitu people were killed and three badly injured.

The Honduran press reports that two TIGRES captains permitted the team to divide the money up and describe the way they avoided disclosing the amount of money that was found during the raid. La Prensa is also reporting how some spent the money including buying sports cars, houses, and prostitution.

Although this is another case describing corruption in Honduran police units, its suspicious (in my opinion) that the press is reporting it in such detail. The Honduran government and those in favour of further militarizing Honduran society will likely try anything possible to make police units look terrible in the next few months. Having said that, I'm also not promoting the Honduran police and do agree that the level of corruption and impunity in which they operate is a huge problem.

The Future of Honduran Public Insecurity: Violations of the Military Police of Public Order

The militarization of Honduran streets shows no signs of stopping. On November 11th, the Honduran press announced that one thousand additional Military Police – a new, elite, hybrid military-police force – would be trained and sent to the streets. Four days later, the National Defense and Security Council headed by Honduran President Juan Orlando Hernandez asked the National Congress to take the necessary measures to approve the Military Police as a permanent security force under the Honduran Constitution.

The recent push to consolidate the Military Police contributed to a minor police scandal that erupted last week when the National Director of the Police, Ramon Sabillon refused to step down after being illegally fired from his position. The scandal was partially caused by fears amongst the National Police and some sectors of Honduran society that the permanent and growing status of the Military Police will render the National Police force obsolete.

With more soldiers in the streets, Honduras is becoming more and more militarized by the day. To date, there have been limited results in generating security and safer streets for it’s citizens.

Creation of Military Police Linked to Canada and US Regional Security Strategies

The Honduran Congress approved a temporary decree that created the Military Police for Public Order (PMOP) on August 22, 2013. Beginning early October of the same year, the hybrid military-police force was sent to the streets under the command of the Honduran Armed Forces. Known as the special security unit of Honduran President Juan Orlando Hernandez, its biggest promoter, the Military Police are military soldiers with military training funded by a Security Tax or the Tasa de Seguridad. Approved in June 2011, the Honduran Security Tax is believed to have been created to fund the security initiatives proposed under the Central American Security Strategy (CASS) of the Central American Integration System (SICA). Interestingly, the Tasa de Seguridad was approved by the Honduran Congress in the same month that SICA countries adopted the Central American Security Strategy. The Security Tax is used to fund Honduran security institutions and strategy of the Hernandez government, supported by the U.S. and Canada.

SICA-CASS is an umbrella, multilateral security initiative formed under the leadership of former Secretary of State Hilary Clinton. Two major North American security initiatives in Central America are aligned with CASS: the US Central American Regional Security Initiative (CARSI) and the Canadian Initiative for Security in Central America (CISCA). Both Canada and the US are joined by other countries committed to SICA-CASS including Japan, Columbia, and Germany, as well as International Financial Institutions like the World Bank and the Inter-American Development Bank.

Juan Orlando Hernandez argues that the Military Police will ensure citizen security and safer streets particularly as the National Police are undergoing a purging or depuración process. According to the President, Hondurans no longer trust the police, and the Military Police can stop the violence and insecurity rampant in what some now call Honduras, the “murder capital of the world”.

(Publicly Known) Abuses Committed by the Military Police Since Their Creation

The Military Police are anything but a solution to the corrupt National Police force. Since being sent to the streets in October of last year, Military Police have been involved in various human rights violations, some against members of the political opposition. The following is a short list of these publicly known abuses:

* Raided the house of union leader and LIBRE member Marco Antonio Rodriguez, October 10, 2013.
In a Special Operation and within one week of being on the street, the Military Police (MP) raided the house of the Vice President of the National Child Welfare Union (SITRAPANI), Marco Antonio Rodriguez. MP pointing weapons at Rodriguez and his family members and forcing them to lie face down on the street. When asked to see the search warrant, the MP responded, “What search warrant, here we can do what we want.”

* Raided the house of FNRP activist, Edwin Espinal, October 23, 2013.
In another Special Operation, the MP broke down the doors to Espinal’s house accusing him of possessing illegal weapons and drugs. The search warrant presented to Espinal read “Robelo [as Espinal is known in his community] belongs to the LIBRE party and is one of the leaders of that area.” Along with GPS coordinates of the location of his house, the warrant also noted that: “outside, [the house] has a LIBRE flag."

* Evicted former President Zelaya, LIBRE Congressional representatives, and supporters from Congress, May 13, 2014.
Protesting the silencing of political debate in Congress, the political opposition in Congress led by President Manual Zelaya, ousted in a military coup in June 2009, were violently evicted by the MP. The MP shot several cans of tear gas and beat protestors and some LIBRE Congressional representatives.

* Beat up, mistreated, and detained children’s rights defender, Jose Guadalupe Ruelas, Director of Casa Alianza, May 8, 2014.

Source: HonduPresa

Driving home from a human rights forum, Ruelas was beaten and detained by MP after being ordered to stop at an MP check-point in Tegucigalpa. After stopping, a police motorcycle colliding with Ruelas’ vehicle. Ruelas was violently removed from his vehicle, struck on his head, back, and legs, and detained.

* Two Military Police were arrested in western Honduras for permitting the escape of two individuals taking contraband into Guatemala, July 2014.
Two Military Police were arrested by Honduran police on charges of violation of official duties and evasion after allowing two individuals driving a truck carrying contraband to escape and cross the border into Guatemala.

*Shot at a public bus in Tegucigalpa after it failed to stop at a Military Police check-point, October 1, 2014

Source: El Heraldo

After failing to stop at a checkpoint managed by the Military Police in Tegucigalpa, the MP fired at the back window of a public bus carrying fourteen passengers. Four people were injured – two with bullet wounds, and two from broken glass.

* Gang raped a female sweatshop worker in San Pedro Sula, November 2014
A woman reported that she was picked up by the Military Police while waiting for a bus after leaving work in the northern Honduran city, San Pedro Sula. She was forced to get into the back of the truck and taken to an isolated area where she was raped by eight MP.

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Within one year of being present in the streets, the variety and quantity of abuses committed by the Military Police are concerning, particularly as their presence is likely to increase. The promotion of the Military Police by the Honduran President and the National Defense and Security Council, is undoubtedly causing major tension between the National Police and the MP on the streets of Honduras. One example is a recent public shoot out that occurred between the military and the police, the result of a dispute over the police not permitting the military vehicle to pass. This tension has the potential to create serious security concerns for Honduran citizens on top of the already grave insecurity crisis in the country.

In Memory of Adolfo Castañeda, Campesino Leader in the Aguan Valley, Honduras

Adolfo Castañeda, May 2012.


I have an unforgettable moment of Adolfo Castañeda, an amazing campesino leader from the Bajo Aguan region of Honduras that died recently of natural causes (based on what is reported at the moment). Adolfo was a founding leader of the campesino movement in the 70s, a major opponent of the illegal land transfers under the Modernization Law in the 1990s, and lost his son who was murdered in Colon in 2014. He was a founding member of the United Campesino Movement of the Aguan (MUCA).

One day, I took a group to talk to him roughly an hour before dusk in northern Honduras. He stood under the African palm trees in La Aurora finca that he and the United Campesino Movement of Aguan (MUCA) were farming, occupying, and recuperating from large land owners in the Aguan Valley. He spoke with passion about his years of being part of a campesino movement fighting for land rights and a better life for his children, something that he insisted, he would never stop doing until the day he died.

Adolfo told us the way in which the US continued to support the Honduran government and military. He described all the repression he had faced over the years as a campesino leader fighting for land in Honduras including how he learned how to stand against the trunks of the African palm trees and slowly circulating under them to avoid the bright light that helicopters would shine into the fincas in search of campesinos occupying the land.

He told us that he wasn't angry at us (American and Canadian citizens) for what our governments do on their imperialist missions to promote their economic interests but insisted that we go home and tell everyone what was happening in Honduras and how land was being stolen from poor campesinos for agrobusiness. He was so articulate and so proud to share his analysis - understanding what was happening inside his finca against his compañer@s and land while connecting it with US foreign policy in Honduras.

After hearing such powerful words, myself and other members of the group, got back into the car. It was almost dark but we could still make out the African palm trees inside the finca. As we started the vehicle and drove away, Adolfo walked back into the palm trees. He didn't look back at us, just simply walked into the haunting shadows of the large trees planted on the land that he had spent his life fighting for and defending.

RIP Adolfo Castañeda. Memories of you will live on in the struggles of the campesinos in the Aguan Valley.

Canada-based Aura Minerals Ready to Dig up the Dead in Honduras

In April 2014, the community of Azacualpa blocked the entrance of the San Andres mine in La Unión, Copan, in western Honduras. The open-pit gold mine is owned by Minerales de Occidente, a subsidiary of Toronto-based mining company, Aura Minerals who acquired the mine in August 2009.

A few weeks after initiating the blockade, the community was violently evicted by Honduran military and police who beat protesters including minors, shot tear gas, and arrested those that stuck around to fight the evict or that lived close to where it took place. Radio Progreso reports that various people were arrested and 21 community members face charges requiring them to sign before a Honduran judge every month.

According to a community member that asked that her name not be revealed because of the delicate security situation in the area: "A large group from the community and former employees of the mine blocked the entrance of the mine for .. some days, 15 days. The company refused to negotiate, they told us that they had nothing to say to us. The military arrived, beat, and captured some people .. I think 15 people, but I'm not sure, many were injured"

A 20-minute video shot on a community member's cell phone (that is shaky and needs some editing) caught and recorded the eviction:




Upon initiating the blockade, the residents of Azacualpa were protesting the expansion of the mining operation, including a potential threat that operations would expand into the community's cemetery. According to Radio Progreso's report, the Azacualpa residents agreed to be relocated to a new area before the operations expanded, but since the agreement was reached the company's commitment failed to materialized. However, despite the relocation agreement, the community leadership says that they did not want the company to operate in the cemetery, where approximately 400 families lay their loved ones to rest.

As Orlando Rodriguez, the Vice President of the patronato (the community leadership) told Radio Progreso:

"They [the mining company] want to exploit the land of the cemetery but the community is not in agreement, we have our public deed that gives us the power to prevent it. They claim that they have permission to exploit 50 metres from the cemetery, we as the elected community leadership decided to consult the people house-by-house and the majority do not agree that the remains in the cemetery are removed, but they have used force because they have militarized the area and continue to exploit."

Following the eviction, Honduran military remained in the community for approximately three weeks and Aura Minerals continues its operations that a community member described as "very close to the boundaries of the cemetery."

"They put military soldiers in the cemetery, there are only guards now but yes, after that, a lot of time passed, I think three weeks, that the military was patrolling. There were a lot of military cars patrolling the area. They were going to put up a big gate so that people could not enter [the cemetery]."

Ending a seven-year mining moratorium, the law was approved in January 2013. Mining operations - many of which are owned by transnational corporations - are expanding and/or beginning in various parts of Honduras. Canadian companies like Aura Minerals have directly benefited from the new legal framework that was written with support and assistance from the Canadian government and the Canadian International Development Agency (CIDA). Since its approval last year, two legal challenges have been presented against the law and various communities and organizations argue that the process in which the law was written and the law itself, completely ignore the demands of communities that have and will be affected by mining operations in their territory.