Monday, January 19, 2015

Permanent Parallel Police Forces?

Juan Orlando Hernandez would like to make the Policía Militar de Orden Público (PMOP) a permanent part of Honduras by modifying the Honduran constitution.  He seems to be having problems convincing anyone outside of his party that this is either necessary or a good idea.

In August, 2013 the Honduran Congress, led at that time by Juan Orlando Hernandez, passed a bill (decreto 168-2013) creating the PMOP as an added branch of the Honduran armed forces.  Their mission, as defined, is essentially the same as the National Police.   Rather than being Military Police, that is a police unit located in the military, policing military bases, they are a Militarized Police, soldiers policing the civilian population of Honduras.  The argument urging their creation was that they were needed because one could not have confidence in the National Police because so many of them were linked to organized crime or corrupt in other ways.  At the time the PMOP were created, it was going to take 5 years to review and vet the 12,000 National Police officers. 

Juan Orlando Hernandez now wants to make them permanent, called for from within the constitution, the same way the constitution mandates the existence of the Honduran Armed Forces.  This would make it harder for future legislators to dissolve the PMOP, because a constitutional amendment would require a 2/3 vote of Congress two years in a row.  Hernandez stated:
"For me its important that the Militarized Police be permanent, because today I am the President, but if tomorrow someone else comes along and for ideological reasons dissolves the Militarized Police, we will fall back into the pothole that we all suffered; the Honduran people are not mistaken, if you ask the people who know the subject of security, in which they live all their days, they will tell you of the enormous support that the Militarized Police have."

Hernandez has portrayed opposition to this as either being unmotivated, or linked to support for the drug traffickers.  But Hernandez faces a lot of opposition on this issue.

There's never been a unified opposition in Honduras, especially not since the 2009 coup, but on this issue the political parties not in power, PAC, Libre, PINU, and the Liberals, have all stated their opposition to this move.  Its not that they're against the PMOP, they all have emphasized, its that they are against there existing two parallel police forces in Honduras with the same mission.  Mauricio Villeda, who was the Liberal Party's Presidential candidate in the last election, argues that the PMOP does not need to be added to the Honduran constitution, that as part of the Military it already has all the status it needs.  Villeda pointed out that creating a mandate for the PMOP within the constitution would be like creating a second armed forces, equal to the existing armed forces.  He suggested that this move has more to do with Hernandez wanting to continue in power after his term runs out.

Manuel Zelaya (@manuelzr), leader of Libre, responded on Twitter:
"We are not opposed to the PMOP; yes to them having a parallel mission"

Salvador Nasralla, leader of PAC responded on his TV program saying:
"The Armed Forces are already in the constitution which clearly establishes their obligations, PAC is not against the Militarized Police who should work until the problem of insecurity in this country is resolved.  We are against including [the PMOP] in the constitution and that they convert into a branch loyal to the President to defend him in his eager desire to continue in power clearly expressed in all the media."

The opposition has said it would welcome Hernandez putting this measure to a public referendum, as Hernandez said he might do if Congress fails to act.

The National Party is completely behind Hernandez, but lacks sufficient members in Congress to make this happen without some participation by those in other parties. Oscar Alvarez, head of the National Party caucus in Congress, claimed on Sunday that they had 80 solid votes for the change.  Since there are only 76 National Party members in Congress, that must mean he's managed to convince 4 members of the opposition to vote with them.  However, this bill needs 86 votes to pass to become law.

The current Congress has until January 24, when their session ends, to act.

Thursday, January 1, 2015

Honduran Bond Sale

Honduras has finally succeeded in placing $250 million in bonds to be used to help pay down its debt to private energy providers, but first it had to sweeten the offering.  As of July, 2014, Honduras had a debt of $355 million with private power producers.

Honduras's state energy company, Empresa Nacional de Energia Electrica (ENEE) pays private companies for power generation. That's not to say it doesn't generate power as well, but it generates far less that the country uses.  It must therefore buy power from the Central American power grid, or pay private companies to generate the needed power in Honduras.  Until recently, it has primarily paid private companies to generate the the rest.

Specifically, ENEE generates a maximum of 2567 Gigawatt hours (GWh) of electricity (about 39%), while private producers generate a maximum of 3992 GWh (61 %).  Most of ENEE's generation is hydroelectric, which cannot produce full output in drought years like Honduras has seen over the last several years.

Furthermore, until this year ENEE, courtesy of a law passed by the Honduran Congress, subsidized the first 250 Kilowatt hours (KWh ) of power used by poor households to make it essentially free.  While the percentage of poor households has varied through time, its not dropped below 54% during the time this subsidy was in place and is currently around 63%. This policy encouraged increased electrical usage in the houses that were on the electrical grid, and it was only terminated in 2015.

ENEE owns the power grid in Honduras, but lacks the funding, technical skills, and equipment to properly maintain it so that measured loss in the power grid is sometimes over 25%.  Loss is the difference between the power placed on the grid, and that paid for by customers.  El Salvador has a 13% loss rate, Guatemala a 7% loss rate, and Nicaragua a 19% loss rate.  Only about 10% of the loss is due to the transmission network itself; the rest is due to illegal connections and billing errors.   ENEE historically has not disconnected users for non-payment, nor does it have the equipment to track electrical losses in particular circuits and thus know about illegal electrical connections.  ENEE also has trouble getting customers to pay for electricity.

With the private power producers, ENEE has typically had contracts where it paid for the petroleum used to generate the power, and then paid another $0.06 to $0.20 per KWh to buy the generated power.

Its the above practices that drove ENEE deep into debt with the private power generators.  In 2013 Honduras sold $215 million in ENEE bonds principally to help pay off its debt with private energy providers.  Last August, Honduras attempted to place a further 5,268.8 million lempiras ($250 million) in bonds with a fixed interest rate of 10.5% but only was able to sell abut $34 million (728 million lempiras).  Marlon Tabora, the President of the Honduran Central Bank, said that the market found the offered interest rate too low.

The sale results announced today were for a a different financial instrument, inflation indexed bonds of 5 and 10 years, some at 4% above inflation, and some at 4.5% above inflation.  Honduras had averaged an inflation rate of 6.41% in November 2014.

Tuesday, December 30, 2014

Fewer Murders

For the last two years Honduras has been the murder capital of the world, far outstripping any other country, but that is changing.  

This year, Venezuela will close out the year with the highest frequency in the world, with 82 murders per 100.000 population. 

Honduras, on the other hand, will show its first major reduction in homicides in the last 3 years.  According to the Observatorio de Violencia of the Universidad Nacional Autonoma de Honduras, Honduras will end the year with a murder rate of 67 to 69 per 100,000 population.

That, according to the Observatorio de Violencia director Migdonia Ayestas, is a reduction of 10-12 murders per 100,000 population.  In 2013 the Observatorio de Violencia reported that Honduras had a murder rate of 79 per 100,000 population.  To reduce that to 67-69 per 100,000 population is real progress.

This, however, is only a start.  The UN considers a murder rate of less than 8.8 per 100.000 population to be the goal for protecting citizens against violence.  Honduras has a long way to go to reach that.

Thursday, December 4, 2014

Falsified Supreme Court Decision

On November 25th the Constitutional branch of the Honduran Supreme Court emitted a ruling finding the government responsible for defaulting on a payment to a Honduran pharmaceutical company, and ordering it to pay immediately 126 million lempiras.

Or did they?

On December 3 of this year, the Honduran press covered the release of a Constitutional Branch of the Supreme Court legal decision, upholding a lower court ruling that the government of Honduras owed Farmasula S.A. de C.V. 126 million lempiras (about $6 million) based on the government defaulting on a payment of about 61.5 million lempiras (about $2.9 million)  to the company.

The order was "signed" by Justices Silvia Trinidad Santos Moncada (president of the Constitutional branch of the Supreme Court), Jose Elmer Lizardo Carranza, Jorge Alberto Rivera Aviles, Tomas Arita Valle, Reina Sagrario Solarzano Juarez, and Lidia Estela Cardona Padilla.

Now, there are several problems with this order.  First, it supposedly has six signatures of justices, but each branch of the Honduran Supreme Court consists of five justices, not six.  Where did that sixth justice come from?

Second, there are the names of several justices there that don't ordinarily belong on a Constitutional branch opinion.  I refer of course to justices Alberto Rivera Aviles, Tomas Arita Valle, and Reina Sagrario Solarzano Juarez.  They are not listed as members of the Constitutional branch, and so could come to sign an opinion there only if some of the assigned justices were absent.

This turns out to be the case.  Three of the justices assigned to the case, Lidia Estela Cardona Padilla, German Padilla, and Victor Lozano, were out of the country the day the case was supposedly decided, attending a judicial seminar.

By being out the country with her colleagues at a judicial seminar, Lidia Estela Cardona Padilla could not have participated in any debate or signed the decision on November 25th.  She flat out denies that her legitimate signature appears on the document.

The accuracy of the order is supposedly guaranteed by the signature and seal of Carlos Alberto Almendarez Calix, secretary of the Constitutional branch.  Did he goof and add her name to the list of signatories?

But more importantly, why was this case, which had been tabled for further study and not scheduled to be decided, suddenly brought up and replacement justices assigned while the three normal members of the Constitutional branch were out of the country attending a legal seminar? 

Someone needs to ask Justice Silvia Santos Moncada that question.

Tuesday, November 18, 2014

Honduras's Millennium Challege Scorecard, 2015 Edition.

Honduras once again failed to resolve issues that prevent it from obtaining a Millennium Challenge Compact from the US Government.  Honduras failed to score a passing grade on 10 criteria, though not the same 10 criteria it failed to score a passing grade on last year.  These yearly scorecards determine a country's eligibility for a Millennium Challenge Compact.

The Millennium Challenge Corporation (MCC) uses what it describes as"objective and quantifiable policy in­dicators in three broad policy categories: Ruling Justly, Investing in People, and Encouraging Economic Freedom".  These broad areas are broken down into several measures in each area, each listed with the third party that developed and scored the countries.
Ruling Justly
     Civil Liberties (Freedom House)
     Political Rights (Freedom House)
     Control of Corruption (World Bank/Brookings Institution WGI)
     Government Effectiveness (World Bank/Brookings Institution WGI)
     Rule of Law (World Bank/Brookings Institution WGI)
     Freedom of Information (Freedom House / FRINGE Special/ Open Net Initiative)
Investing in People
     Immunization Rates (World Health Organization and UNICEF)
     Public Expenditure on Health (World Health Organization)
     Girls’ Education (UNESCO)
     Primary Education Completion (Scorecard LICs)
     Secondary Education Enrolment (Scorecards LMICs)
     Public Expenditure on Primary Education (UNESCO)
     Child Health (CIESIN and YCELP)
     Natural Resource Protection (CIESIN and YCELP)
Encouraging Economic Freedom
     Business Start-Up (IFC)
     Land Rights and Access (IFAD and IFC)
     Trade Policy (Heritage Foundation)
     Regulatory Quality (World Bank/Brookings Institution WGI)
     Inflation (IMF WEO)
     Fiscal Policy (IMF WEO)
     Access to Credit (IFC)
     Gender in the Economy (IFC)
This set of criteria was adopted in 2012. 

The Millennium Challenge Corporation board then selects five countries from those that receive passing scores on all indicators and allows them to develop a compact, based on available moneys allocated by the US Congress.  These compacts can be worth up to $250 million to a country.  In addition, a few countries each year get a 1-3 year grant called a Threshold grant designed to help them improve their score where they fall below the 50% threshold.  Threshold grants are $10-$30 million.

In August, 2013 Honduras received a 3 year, $15.6 million,  Threshold grant to "to improve public financial management and create more effective and transparent public-private partnerships."  This program had a number of concrete programs designed to improve Honduras's scores in several areas:
Public Financial Management
     1. Budget and Treasury Management
     2. Improve Procurement Capacity, Planning, and Controls
     3.  Improve the Capabilities of the Tribunal Superior de Cuentas
     4. Grants to Civil Society Organizations to Foster Accountability
Public - Private Partnerships
     1. Enhance COALIANZA's capabilities to Select, Finance, and Manage Risk.
     2. Fund Fundación para la Inversión y Desarrollo de Exportaciones to provide government solutions supported by user fees and manage exports through an eregulations.org government platform.
Depending on the statistic, the years 2012 and 2013 form the baseline for evaluating the effectiveness of the Threshold program. 

The 2013 scorecard forms the basis of assigning Honduras to the Threshold program, so lets look at the areas where Honduras was deficient (below average) on that scorecard and see what's happened since then. 

Under the rubric of scoring Economic Freedom, the MCC uses a number of indicators.  Honduras in 2013 had deficient scores (below the median score) in four of them:  Fiscal Policy, Gender in the Economy, Land Rights and Access, and Business Start-Ups.  In 2013 Honduras scored a 50% in Fiscal Policy.  That meant that 50% of the countries scored better, and 50% scored worse than Honduras.  Its ranking on this criterion worsened in 2014, to 46% and plunged on the 2015 scorecard to 26%.  That plunge can directly be attributed to the economic policies of the Porfirio Lobo Sosa government, whose last year in office forms the basis of the 2015 score.  The Threshold program has not yet had a chance to affect this indicator.

Honduras was deficient in 2013 in women's participation in the economy, called Gender in the Economy.  Here Honduras started with a score of 21% on the 2013 scorecard, improved its score in 2014 to 41% then saw its score decline again in 2015 to 37%.  No Threshold grant goals sought to address this criterion.

Land rights and Access was another criterion where Honduras was deficient.  Here Honduras began 2013 with a score of 32% and saw it decline on the 2014 scorecard to 23%.  On the 2015 scorecard it improved slightly to 25%.  No Threshold grant goals seek to address this criterion.

The final Economic Freedom indicator where Honduras was deficient was in Business Start-Ups.  In 2013 Honduras scored 28%.  That improved to 50% on the 2014 scorecard, but decreased to 43% on the 2015 scorecard.  No Threshold grant goals addressed this criterion.

Honduras was also judged deficient in Girls Secondary Education Enrollment Rate.  Here Honduras began with a score of 16% and actually managed to improve it in the 2014 and 2015 scorecards, so that in the latest scorecard its 31%, nearly double what it was two years ago.  Still there's a lot of room for improvement here.  No Threshold grant money had improving this indicator as a goal.

Under the rubric of Investing in People, Honduras had two areas of concern:  Girl's Secondary Education Enrollment Rate and Children's Health.  Honduras scored 16% on the 2013 scorecard in Girl's Secondary Education Enrollment Rate.  This continued to improve in 2014, where Honduras scored 22% and 2015 where Honduras scored 31%.  Children's Health scored 43% in 2013 but improved to good levels in 2014 and 2015 (56% in each) and is not currently an area of concern.  By comparison, another criterion, the Immunization Rate, became of concern in 2014 and continues to be of concern as Honduras's ranking plummets.  Honduras scored 87% on the 2013 scorecard.  It scored 44% on the 2014 scorecard, and 37% on the 2015 scorecard.  No Threshold grant goals address any of these three criteria.

Under the rubric of Ruling Justly, the MCC found Honduras deficient in four of the six criteria in 2013:  Freedom of Information, Government Effectiveness, Rule of Law, and Control of Corruption.  Honduras scored just 28% in Freedom of Information on the 2013 scorecard.  Its score has decreased on each subsequent scorecard to 27% in 2014 and 21% in 2015.  Government Effectiveness follows the same trajectory.  Honduras scored 44% on the 2013 scorecard, and its score declined in each subsequent scorecard, to 27% in 2014, and 25% in 2015.  The criterion Rule of Law scored 44% on the 2013 scorecard, but only 4% on the 2014 scorecard, and 7% on the 2015 scorecard.  Finally, in Control of Corruption, Honduras scored only 16% on the 2013 scorecard, 15% on the 2014 scorecard, and 21% on the 2015 scorecard.  The Threshold grant was designed to affect both the Government Effectiveness and Control of Corruption criteria, but because these measures only reflect the years of the Porfirio Lobo Sosa government, it has yet to show any results.

So Honduras is still deficient in 10 criteria though not the same 10 criteria that were deficient in 2013.  Child Health was eliminated as a concern, and Immunization Rates became a concern during the last two years.  The Threshold grant has yet to be able to show any results, but that is to be expected.  The scorecard has yet to report on years in which the Threshold Grant was active.  Honduras's deficiencies are directly attributable to the Porfirio Lobo Sosa government's actions, not the drug trade, not gangs.

Whether the Hernandez government can use the Threshold grant to turn some of these scores around remains to be seen.


Monday, November 10, 2014

Dueling Murder Rates

Good News.  Honduras's murder rate has fallen significantly, though the magnitude of the drop depends on who you believe.  The Security Minister reports a homicide rate of 65.55 per 100,000 population, or 15.67 murders per day.  The Observatorio de Violencia, indicates that Honduras is on track to have a murder rate of 71.82 per 100,000, or 17.17 per day.  Still, either of these rates lets Honduras remain the murder capital of the world for nations not a war.


The difference again comes down to what you count as a murder.  Arturo Corrales, the Security Minister, changed the definition of murder back in 2013 to require both a police report and a coroner's report indicating the case is a homicide.  Corrales claims he was just following the recommendations of the Inter-American Development Bank (IADB0 on how to construct a comparable murder statistic between countries.  See our previous posting on this topic for a link to that IADB "standard".  We point out in that post some of the shortcomings of the standard.

The Observatorio de Violencia, on the other hand, gathers both the police reports and the coroner's reports and reconcile the two.  There are bodies that lack a police report but have a coroner's report.  There are bodies that have a police report but no coroners report.  The Observatorio, using internationally recognized techniques attempts to determine based on the information available, if those bodies represent a homicide, and if so, include it in their statistics.

The difference so far this year is 623 bodies in the first half of the year that the Security Ministry does not recognize as homicides because they lack a coroner's report.  The Director of the National Police, Ramon Sabillon,  told El Heraldo that until there's a coroner's report the body cannot be incorporated into his database.  His database is the Sistema Estadistico Policial en linia (SEPOL), the official public face of crime statistics in Honduras.

Then too, there's confusion among the official government sources about how many homicides there have been in the first half of 2014.  FUSINA, the inter-institutional police force (combined military and police) says 2442 murders in the first half of the year, while the Police report 2720 homicides.  The coroner's office reports 2442 homicides.

Still, despite the innumeracy of the Honduran government, this is good news.  Murders are decreasing, though slowly. 





Thursday, October 9, 2014

A Cartel del Pacifico Network in Guatemala Linked to Honduras

As I was writing the previous three posts outlining what is known about the Honduran side of the drug trade, the Guatemalan newspaper, El Periodico, was reporting on the Guatemalan connections of the Valle Valle family.  The central focus in Guatemala is on José Manuel Lopez Morales, alias El Ché, a drug trafficker identified by the US Drug Enforcement Agency (DEA) as the main Valle Valle connection in Guatemala.

On September 27, 2014, Guatemalan security forces and the DEA raided a variety of homes and businesses in Chiquimula, Guatemala, looking for José Manuel Lopez Morales.  Lopez Morales, they contend, is linked to a number of other known drug traffickers and transportistas believed to control the drug trade from along the Honduran border into Guatemala, Belize, and El Salvador.  The raids failed to capture Lopez Morales, although they did capture both his wife, Deidy Gisleny Nufio Franco, and one of his bodyguards.

Lopez Morales is the nephew of the mayor of Chiquimula, Mario Rolando Lemus Martinez, whom the DEA has identified as being in charge of the logistics of the drug trade in the region.  Lopez Morales is also alleged by the DEA to be the godson of an unnamed town official in San Jose La Arada, near Chiquimula.  In addition, Lopez Morales has benefited from the political support of the Mayor of Concepcion, Las Minas, Juan Banegas.  In the communities around Chiqiumula, El Periodico reports that Lopez Morales is said to be helpful in funding social projects, and this includes having the arena in San Jose Ermita named after him.  Further, Lopez Morales was connected with the owner of a bus line that runs from the Honduran border crossing near Ocotepeque, Honduras, to Quezaltepeque, Guatemala.  That bus line is said to have hidden caches in the buses where drugs are smuggled within Guatemala.

Without looking at a map, its not immediately evident that these towns named above are all strategically located for the transhipment of drugs from Honduras into Guatemala and El Salvador.  San Jose Ermita is located along the road between Copan Ruinas, in Honduras, and Chiquimula.  San Jose La Arada is located along the route from Chiquimula to El Salvador, passing through the Ipala region.  Concepcion Las Minas is near Esquipulas, on the border of a large forest preserve along a highway that leads into El Salvador.  Quezaltepeque is located along the road that runs from Ocotepeque, Honduras, further into Guatemala, or over into El Salvador.

El Periodico reported that some in Guatemala believe the Valle Valle family articulated with the Cartel de Ipala, who run the drug trade in Guatemala's Jutiapa Department, along the Salvadoran border, but the Guatemalan Interior Minister, Mauricio López Bonilla, in a recent statement to the press indicated that Lopez Morales was the Valle Valle family's contact in Guatemala.

Lopez Morales reportedly escaped the DEA raid by hiding in one of 10 ambulances seen cruising the roads around Chiquimula all day with their sirens on; an unusual sight.  Because they had their sirens on, they were not detained by the police roadblocks, and Lopez Morales escaped.  He's said to have gone to the owner of the bus company mentioned above to have himself smuggled into Honduras.

While what El Periodico reports is sketchy, what they seem to be reporting is a Guatemalan crime family with ties to one or more transportista families.  The article briefly mentions cartels in adjacent parts of Guatemala.  The Ipala cartel tranships drugs from El Salvador into Mexico's Pacific Coast, and moves some drugs from Guatemala into El Salvador.  The Rodriguez cartel, mentioned as controlling the drug trade around Bodegas and Zacapa, moves drugs into Belize and the Guatemalan Peten.

What's beginning to emerge in both Guatemala and Honduras is an image of a number of small, territorial families linked to moving drugs from specific counterparts further along the path to the United States.  As drug interdiction succeeds in Honduras, there will be smaller and smaller amounts to move, leading to competition and consolidation of these crime families.  This particular network works for the Cartel del Pacifico (formerly the Sinaloa Cartel).

Stay tuned for even more violence.