Palmerola Airport Contract Bad for Honduras?

On March 18, 2016, President Juan Orlando Hernandez representing the Government of Honduras, and Lenir Perez, representing the bid winner, EMCO, signed a contract to build an international air terminal and supporting facilities in Soto Cano Air Base (also known as Palmerola) in Comayagua.  Such an airport is necessary since Toncontin airport in the capitol city of Tegucigalpa has a dangerous approach and short runway which cannot be lengthened.  The contract was negotiated by COALIANZA, which if past practice is any evidence, makes it suspicious.  COALIANZA has negotiated a number of contracts that are not financially good for Honduras, but great for the company receiving them.

Palmerola air base was built from nothing during the 1980s by the US military to become a staging area for air support missions for the Contra's then trying to overthrow the Sandanista government of Nicaragua.  I still remember the twice weekly flights of C5a and later C17 cargo planes landing at Ramon Villeda Morales International Airport near San Pedro Sula and offloading truckloads of military supplies and equipment onto the staging area to be ferried up to Palmerola for its construction.  Today it is a key strategic foothold of the US Southern Command (SOUTHCOM) in Latin America, and home of Joint Taskforce Bravo with an 8000 foot runway.

At the time of the signing the contract terms were not publicly disclosed, but government statements outlined some of the terms.  First, the concession period in which EMCO would have the right to operate it was 30 years.  The contract required $23 million in funding from the Honduran government, and a further $53 million provided by the government of Spain.  EMCO will supply $87 million.

However, as the contract is now before Congress for ratification, terms are becoming public that lead one to question what Honduran authorities were thinking when they signed this contract, and raise questions about whether it can be ratified, even by this Congress controlled by the National party.

Salvador Nasralla pointed out that if the government of Honduras decides to keep Toncontin airport open, even if just for flights within Honduras, it will have to pay EMCO 20 million Lempiras (about $953,000) a month until Toncontin is closed .  Eduardo Facussé noted that the concession can be automatically renewed by EMCO for an additional 30 years, making it a 60 year concession, not the 30 mentioned in the press releases.  Facussé also pointed out that the contract obligates the Honduran government to close not just Toncontin International Airport in Tegucigalpa, but also Ramon Villeda Morales airport in San Pedro Sula, or face paying even higher monthly charges to EMCO.  A financial analysis of the income from the airport indicates that EMCO will not have to pay anything to the government of Honduras for the concession until years 27 or 28.  Facussé continued:

"I'd like to be in this type of business.  I don't know what kind of advisors the President of the Republic has who have told him that this is profitable for the country....The concessionary has all the advantages; that is to say that the owner of the contract for Palmerola, and the Government has a series of [financial] obligations."

Inversiones EMCO is a subsidiary of Grupo EMCO, a company founded in 2003 in Honduras.  It consists of a number of subsidiaries (Alutech, EMCO Mining, Inversiones EMCO, Constructora EMCO).Company owner  Lenir Perez is the son-in-law of Miguel Facussé, who before his recent death was the richest man in Honduras.  Perez is married to Ana Isabel Facussé.  Its subsidiary, EMCO mining began operations in San Pedro, Tocoa, Olancho in April of this year without the permission of the communities in which the mine resides, a clear violation of Honduran law.
 Another mining subsidiary, Minerales Victoria, with an iron mine in Nueva Esperanza, Atlantida has a history of human rights violations.  Perez's firm admits it kidnapped two international observers in 2014 and threatened their lives.

If Eduardo Facussé's statements about the clauses of the contract are correct, one wonders what President Hernandez's advisors were thinking in advising him to sign such a disadvantageous contract, but then, it was negotiated by COALIANZA, so we should have expected that.

Fissures in the Nationalist Party

Ex-president Rafael Leonardo Callejas acknowledged the necessity of working on the unity of the Nationalist party in light of the latest decisions of the president, Porfirio Lobo...

With these words, La Tribuna highlighted what we've been observing for a while: there is a division in the Nationalist Party, in its own way perhaps as bad as the divisions within the Liberal party in Honduras.

Nowhere is this more apparent than in the deep rift that has developed between Ricardo Alvarez, head of the Nationalist party and Mayor of Tegucigalpa, and Porfirio Lobo Sosa.

It is normal in Honduran politics for the president to appoint only members of his party to ministerial positions, and to then pack their employment rolls with party loyalists as well. Under pressure to manufacture a "government of unity and reconciliation", Lobo Sosa didn't do that. He not only appointed opposition party members to Ministerial posts, but also allowed them to hire whomever they pleased. And some of those appointments have brought him criticism from party loyalists.

Most visibly, for weeks, Ricardo Alvarez has been calling for Cesar Ham's head, demanding Lobo Sosa replace him and all the other "reconciliation" government members from other parties with National party loyalists. This concern also seeped into his response to Lobo Sosa's recent removal of Oscar Alvarez, Mario Canahuati, and other government officials.

In reaction, Ricardo Alvarez is reported to have said

"With respect to the changes I can say that I respect the decisions (but) I cannot say in this moment whether I share them or not because I do not understand them, because we are talking about five ex-officials of the first order, good Hondurans, excellent employees, and extraordinary Nationalist party members."

Two of those dismissed (Oswaldo Guillén and Nasry Asfura) are followers of Ricardo Alvarez's movement within the National party, and Oscar Alvarez was widely rumored to be a protege.

Lobo Sosa and Ricardo Alvarez were supposed to meet this morning to discuss the firings, but at the last minute, Lobo Sosa canceled out.

(He opted instead to attend a ceremony at which he was awarded an honorary doctorate for his "support of non-discrimination" for hosting the Summit of Afrodescendent Peoples in August. The honorary degree was conferred by the Centro de Estudios para la Democracia Popular of Chile, la Universidad Internacional Euroamericana de España y la Universidad de la República de Chile. You can see why that would be more important than meeting with the leader of a major movement in the party of which he is the sitting president.)

He attributed the criticism from his fellow party members to "ambitions and economic interests."

Oscar Alvarez and Mario Canahuati, like Ricardo Alvarez, have presidential aspirations. This is a complication in relationships within the Nationalist party, including those to Porfirio Lobo Sosa. While a Honduran president cannot run for re-election, he certainly can extend his influence through relationships with candidates vying within his party for nomination.

Exhibit A: ex-president Callejas, stepping in to try to promote party unity, he says. No fan of Lobo Sosa's "government of reconciliation", he called on Lobo to rethink it before the end of the year and undo it.

So are Ricardo Alvarez and Rafael Callejas being unfair to Lobo Sosa? Maybe not.

While Lobo Sosa states that those dismissed were fired because they failed to meet his goals for them, Eduardo Facussé noted that the dismissals favor the presidential candidacy of the head of the Congress, Juan Orlando Hernandez, to the detriment of Ricardo Alvarez.

Although his critics within the Nationalist party are not his rivals for office, because he cannot be re-elected, they are potential rivals for leadership within the party. Lobo Sosa has promoted positioning of the Nationalist party as a force of "Christian humanism" since before he was inaugurated, a position also endorsed by Ricardo Alvarez.

More distinctive has been his allegiance to the idea of what originally was called a "government of unity and reconciliation" when the US promoted it as evidence of unification after the coup. Long after there is anything to gain from this concept, long after it has become a problem for him with his own party, and despite a lack of effectiveness on the part of some of his "unity" appointees, Lobo Sosa seems to think this distinction is worth defending.

Hence his reply to the harangues from his own party:

"It's not important to me, the price I have to pay for the intolerance of a few leaders of my party who question constantly my government of integration...they will not vanquish me."