World Bank and Honduras

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Honduras is approximately 1000 miles southwest of Miami and has a mainly mountainous area of 48,200 square miles. To the North it has a large coastal line with the Caribbean sea and to the South it enjoys a small access to the Pacific.

Honduras lies at what was the southern tip of the Mayan civilization that spread southwards from the Yucatán peninsula through modern Guatemala to the city of Copán, now in north-west Honduras. The Mayan civilization collapsed long before the arrival of Christopher Columbus, who visited Trujillo in north-east Honduras in 1502 on his third voyage to the new world. The country was colonized by Spain after some resistance by the Lenca peoples of the central highlands. Their chief, Lempira, who was murdered by the Spaniards, became a national symbol after independence. On independence in 1821 Honduras joined the Central American Federation, and the Honduran general, Francisco Morazán, became its first president. He also entered the phatheon of national heroes after he was killed in the break-up of the federation in 1839. Honduras' liberal revolution took place in the 1870s under the presidency of Marco Aurelio Soto. In 1899 the first banana concession was granted to the Vacarro brothers; their company would later become Standard Fruit. In 1907 Sam Zemurray set up the Cuyamel Fruit Company; later bought by United Fruit. The unequal relationship that would exist between the companies and the Honduran state for the first half of the 20th century gave rise to the description "banana republic." Between 1932 and 1948 Honduras was ruled by a dictator, Tiburcio Carias Andino. After the fall of Carias, Honduras began an uneven process of political and economic modernization. In 1954, Honduras signed a military treaty with the US government, which was concerned for its strategic interests in the region following the rise of the Arbenz government in Guatemala. In 1957 a Liberal president, Ramón Villeda Morales, was elected. His administration promoted the first agrarian reform and saw the beginning of social welfare legislation. He also took Honduras into the Central American Common Market, the Mercado Común Centroaméricano which was founded in 1960. President Villeda was ousted from power by a military coup in 1963 and General Oswaldo López Arellano became president. General López Arellano tried to resolve growing land conflicts in the West at the cost of Salvadorian immigrants, and as a result, Honduras fought a brief war with El Salvador in 1967 that went into the history books as the "soccer war" since it was triggered by abusive treatment of the Honduran team during a World Cup qualifying game in San Salvador. In his second presidency, from 1972 to 1975, General López Arellano supervised the most radical phase of the agrarian reform, which took the form of a colonization movement in the Aguán valley, during which rangers were cleared from the valley to make way for peasant cooperatives dedicated to bananas and African palm. A state forestry corporation, Corporación Hondureia de Desarrollo Forestal , was established, marking the start of a period of military government that also saw the foundation of the Corporatión Nacional de Inversiones. These initiatives led to a rapid increase in external debt, to US$1.5bn by the end of the 1970s. The 1980s was a period of political and economic crisis in Honduras. The world recession of 1979 and the debt crisis of 1982 revealed the flaw in a development strategy that relied on foreign borrowing to pay for public spending. The first half of the 1980s were dominated by the Contra war in Nicaragua. The Honduran army turned a blind eye to the Contras' presence in southern Honduras, and in return the liberal government of Roberto Suazo Córdova received economic and military aid from the USA. This was a period of internal repression by the armed forces under the command of General Gustavo Alvarez Martínez, during which approximately 170...
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