Honduras, From Banana Republic to Narco State

Diego Solis
Field Researcher, Stratfor
8 MINS READFeb 12, 2017 | 14:12 GMT
Honduras, From Banana to Narco Republic
Anti-narcotics and military police officers prepare to destroy more than 200 kilos of cocaine seized in southern Honduras on the outskirts of Tegucigalpa. Despite its best efforts, Honduras will not easily overcome drug trafficking.

Most Central American countries fought bloody, ideologically driven civil wars from the 1960s to 1990s, but Honduras escaped that fate — mostly because of its weak and divided leftist movements. In fact, Honduras was so stable and so strategically located that U.S. military planners used it as an intelligence and operations base from which to counter the Soviet-backed guerrillas waging war in the rest of Central America. But now, as one of Central America's most violent nations, Honduras is a far cry from the bastion of stability it once was. Understanding how it fell so far requires a look at its geography and its history.

A Tale of Two Cities

Most Central American countries have one major city, serving as both their capital and financial hub. But Honduras has two: the capital city of Tegucigalpa and the financial hub of San Pedro Sula, both of which have competed for control since the country's independence in 1821. The two cities are products of different times.

In the mid 16th-century, Spanish soldiers hungry for gold and silver pushed into the Honduran Sierra Madre Mountains from Guatemala and founded Tegucigalpa where there was an established indigenous population, which could be exploited for labor. But in time, as both mining prospects and the indigenous population declined, the Spaniards left, and the geographically isolated Tegucigalpa became increasingly cut off from the rest of the country.

Most Central American countries have one major city, serving as both their capital and financial hub. But Honduras has two: the capital city of Tegucigalpa and the financial hub of San Pedro Sula, both of which have competed for control since the country's independence in 1821

In contrast, by the late 19th century, the city of San Pedro Sula — located in the fertile Sula Valley close to the country's Caribbean coast — had attracted a swarm of European and Middle Eastern immigrants. From the 1870s to the 1930s, these entrepreneurial migrant communities contributed to the development of San Pedro Sula. The U.S.-based United Fruit Company and Cuyamel dominated the banana business and grew to have enormous power in the country, while domestic landholders dominated the coffee business. Thanks to the revenue they generated exporting these goods to the United States and Europe, San Pedro Sula rose to be the most important city in Honduras. Over time, it became well connected to Puerto Cortes and to neighboring Guatemala.

Consequently, since the 1950s, San Pedro Sula-based elites have had an outsize role in Honduran politics. It was they who pushed the government in Tegucigalpa to support Washington during the Cold War years and they who worked to squelch any burgeoning leftist movements that popped up on the northern coast during that time. But from the 1960s through the 1990s, as the Honduran political establishment was preoccupied with Cold War struggles, a different kind of threat was quietly taking root.

Drug Roots

Tegucigalpa-native Ramon Matta Ballesteros began his criminal career in the early 1970s by distributing marijuana in the capital city. He consolidated his power after the death of kingpins Mary and Mario Ferrari in 1977 and eventually became the most powerful drug lord in Honduras. As such, Ballesteros worked as a middleman between the Guadalajara cartel operating out of Mexico and the Medellin cartel operating out of Colombia. But in 1985, after the death of DEA agent Enrique "Kiki" Camarena at the hands of the Guadalajara cartel, Ballesteros was arrested and extradited to the United States. With Ballesteros out of the picture and Colombia's Pablo Escobar soon to be out as well, smaller family-based "transportista" organizations began to emerge in Honduras.

From 2000 to 2010, these clan-based organizations gained a steady foothold — particularly the Cachiros from the northeastern department of Colon and the Copan-based organization led by brothers Miguel and Luis Valle. When a military coup deposed President Manuel Zelaya in 2009, the groups took advantage of the fragile political situation to further infiltrate vulnerable institutions and expand their businesses. The government was ill equipped to counter the organizations, especially considering the lapse in U.S. security cooperation because of the coup. And with the empowerment of drug organizations and the proliferation of gangs in both San Pedro Sula and Tegucigalpa there came a spike in violence: According to the National Violence Observatory (NVO), in 2011 Honduras became the world's most dangerous country, with 86.5 homicides per 100,000 residents.


But the government has made progress. Since President Juan Orlando Hernandez was elected in 2014, the homicide rate in Honduras has decreased. According to the National Autonomous University of Honduras, in 2014 the country's homicide rate was 68 per 100,000 residents, but by 2015 that rate had declined to 60 homicides per 100,000 residents. This can partly be attributed to new security policies approved between 2010 and 2013 while Hernandez was president of congress and which are just now being implemented. The new policies include allowing the use of military force in anti-gang operations and working to improve coordination between Honduran police divisions and between Honduran security forces and others in the region.

The most important factor for success, though, has been the National Inter-Institutional Security Task Force (FUSINA), created in 2014 to serve as an operational arm of the state's National Security Council. Currently, FUSINA is led by defense and security ministers. They have led prominent cases against notorious drug lords such as the Valle brothers in 2014, the Rivera Maradiaga brothers (leaders of the Cachiros) in 2015, and most recently in 2016, the violent drug lord Wilter Blanco, who led a hit against Drug Enforcement Administration officers, according to San Pedro Sula-based sources. FUSINA's effectiveness lies in its two national intelligence networks: The National Directorate of Intelligence and Investigation and the National Directorate of Criminal Investigation. Both agencies depend on human intelligence networks and coordinate with other government anti-crime bodies such as the Military Police for Public Order and the Tigres, a special national police unit.

Because of its structural robustness, FUSINA has been able to coordinate efforts throughout the crackdown process, from policing to investigation and prosecution. In particular, the agency has made it harder to corrupt prosecutors, by inserting its officers into interrogation rooms while suspects are being questioned. However, despite FUSINA's success, corruption at the highest levels of government persists. Venezuela's military-led Cartel de los Soles allegedly had ties to deposed President Manuel Zelaya, former President Porfirio Lobo's son was arrested by a DEA-led operation in Haiti and even the president's own brother, Tony Hernandez, has been accused of being linked to drug trafficking groups.

FUSINA will continue most of its anti-narcotics efforts already in operation since 2014. The effort, known as Operation Morazan, is intended to dismantle drug trafficking organizations and to improve public safety through four phases of implementation, the last of which is scheduled to conclude in January 2018, prior to the start of the next presidential term.

The president is taking a deliberate stance against drug trafficking, but geography will work against his security efforts. Mountains cover over 55 percent of Honduras' territory, creating numerous isolated regions for hotbeds of drug trafficking to endure. The northeastern department of Gracias a Dios is emblematic of the country's disconnected landscape and of the autonomy it breeds. Drug trafficking organizations have taken advantage of the department's isolation, using Puerto Lempira as a key entryway for Venezuelan cocaine.

Gangs and Migration

How well Hernandez is able to counter the drug trade will also depend on whether the United States continues to deport Central American gang members back to Honduras. Gangs MS13 and Barrio 18 are involved in the drug trade but also carry out other violent crimes, such as extortion, in Tegucigalpa, San Pedro Sula and La Ceiba. The violence they impose has been a major driver of migration north to Mexico and to the United States. According to Honduras' Casa Alianza, Mexico deported more than 90,000 Honduran child migrants in 2016, and the United States apprehended an estimated 410,000 migrants mainly from Central America.

It is in Honduras and the United States' interest to stem immigration in 2017. And if Hernandez is re-elected in November, he will likely continue implementing his U.S.-backed efforts against drug traffickers and domestic criminal gangs. But if a new government wins, it could alter the focus of Operation Morazan or do away with it completely. Regardless of policy, though, Honduras will remain a central link in the cocaine trade because of its location and its isolated northeastern regions. The groups in the country best positioned to take advantage of this trade are the transportista organizations that specialize in transporting cocaine across the country's land routes toward Guatemala and into Mexico.

The United States will keep providing financial and security resources to counter these groups, but corrupt Honduran officials at the highest echelons of government are, and will continue to be, a problem for Honduras. Apart from the drug concern, the mass outflow of people from Honduras will continue to be an issue. Even if Honduras makes progress, its weak economy as well as enduring violence by drug traffickers and local criminal groups will continue to push Hondurans northward.

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