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honduras
Economists See Honduras' Progressive Tax Plan as Model for Other Countries
"Such a law has implications far beyond Honduras' borders, setting an example of how states can assert sovereignty through taking action against tax injustice individually and collectively," 85 leading economists wrote.
Jul 31, 2024
Eighty five progressive economists from around the world on Wednesday issued a statement in support of a tax reform being considered in Honduras, arguing that it could be a model for other Global South countries, as it would tighten tax law for rich people and corporations while preventing the country from becoming a tax haven.
The Tax Justice Law, first proposed by the administration of leftist President Xiomara Castro in March 2023, has remained stuck in parliament due to opposition from conservative, pro-business forces in Honduras, one of the poorest and most unequal countries in the Western Hemisphere.
The proposed reforms include closing corporate tax loopholes; taxing companies' global profits, not just national profits; ending bank secrecy; and holding beneficial owners liable for their taxes. The law wouldn't create new taxes or raise current rates.
The 85 economists, including Joseph Stiglitz, Gabriel Zucman, Jeffrey Sachs, Ann Pettifor, and Yanis Varoufakis, published the statement in Progressive International, a left-wing network establish in 2020. They cited estimates that the country had lost about $20 billion in tax revenues between 2010 and 2023 due to tax loopholes—more than the entire $16.6 billion debt that the country faces, at crippling interest rates.
TEGUCIGALPA, Honduras 🇭🇳 — 85 of the world's leading economists, incl. @JosephEStiglitz, @Jayati1609, @JoseA_Ocampo, @AnnPettifor, @gabriel_zucman and @yanisvaroufakis, endorse the @PartidoLibre Tax Justice Law, "setting an example" for tax policy worldwide. Read the letter ⬇️ pic.twitter.com/9ogi9SlWtf
— Progressive International (@ProgIntl) July 31, 2024
Castro was elected in late 2021 and took office in January 2022 with an "inspiring agenda," but has faced opposition from conservative forces and the United States, according to Karen Spring, coordinator of the Honduras Solidarity Network.
Castro's husband Manuel Zelaya, also a leftist, led the country from 2006 until 2009 but was ousted in a coup, and the country descended into chaos in the 2010s, with drug gangs dominant and the government mired in corruption. The Intercept has reported that the U.S. may have encouraged the 2009 coup.
In 2022, Castro and the National Congress of Honduras reversed a conservative initiative to establish special economic zones, most notably one on the island of Roatán. However, Honduras Próspera, a U.S. company backed by billionaire libertarian Peter Thiel and others, has sued the government for $11 billion over the reversal, using the investor-state dispute settlement (ISDS) system that allows multinationals to sue nations that institute new laws that affect their profits and have the cases heard by private tribunals.
U.S. Sen. Elizabeth Warren (D-Mass.) and other progressive lawmakers cited the Honduras Próspera case when pushing to abolish the ISDS system last year.
As with Castro's efforts on special economic zones, her tax reforms face hurdles.
"Big capital and the media ecosystem close to it have launched a smear campaign against the Tax Justice Law," Ojalá, a digital nonprofit magazine based in Mexico, reported last year.
Every major union organization in Honduras supports the proposed law, a union leader told Ojalá. And the proposal has now gained international attention. Last week, the South Centre, a research institute based in Geneva, issued a report in favor of the law, calling it "timely and welcome," and arguing that it's in keeping with the global minimum tax agreement made by 137 countries in 2021, whose implementation is ongoing.
Similarly, the group of economists on Wednesday wrote that Honduras was "on the path to being labeled a tax haven" but could "turn the page" with the passage of the Tax Justice Law, which would "establish a fairer and more robust system of taxation and incentives that will provide a sounder footing for Honduran development."
The economists concluded that "such a law has implications far beyond Honduras' borders, setting an example of how states can assert sovereignty through taking action against tax injustice individually and collectively."
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Hillary Clinton's Man in Honduras: A Reflection on Juan Orlando Hernandéz
As head of the National Congress following the U.S.-supported coup in 2009, Hernandez—who later ascended to the presidency—was seen as particularly amenable to Washington's desires.
Apr 02, 2024
On March 8, a Manhattan federal court found Juan Orlando Hernández, president of Honduras from 2014 to 2022, guilty of conspiracy to import large amounts of cocaine into the United States over nearly two decades.
Mainstream U.S. media generally framed the ex-president’s trial and conviction as a triumph of justice, a service rendered by the impartial U.S. justice system to the people of Honduras.
The great majority of such accounts, however, ignored and obscured context crucial for understanding Hernández’s rise and rule; in particular, how Washington contributed to both. Though the mainstream narrative around the ex-president rightly connects his tenure in office with massive emigration from Honduras, it has elided the degree to which U.S. influence enabled Hernández’s career and thus partially drove the migration that arose in response.
For roughly two centuries, Honduras, the original “banana republic,” has suffered a deeply unequal relationship with the far more powerful United States. One of the poorest countries in the Western Hemisphere, Honduras and its people have endured frequent American military interventions, U.S.-backed coups, and a corrupt, rapacious local oligarchy closely tied to U.S. corporate interests.
Despite Hernández’s ultimate conviction on U.S. soil, he served Washington for many years as a loyal client. The single most important event in the ex-president’s political career was a 2009 coup, which overthrew center-left president Manuel Zelaya (whose wife, Xiomara Castro, won election in 2021 and currently occupies the presidency). Zelaya raised the minimum wage, subsidized small farmers, and authorized the morning-after pill, infuriating the country’s business elite and, in the last case, ultra-conservative religious leaders. Moreover, to Washington’s consternation, he made overtures toward Hugo Chavez’s socialist Venezuela and sought to convert a crucial U.S. airbase entirely to civilian use.
Joint action by Honduras’ military and judiciary — in a manner the U.S. ambassador called “clearly illegal” and “totally illegitimate” at the time — forced Zelaya to pay for these sins in late June 2009. While the White House’s reaction to the coup initially appeared confused, Washington soon recovered its footing. Even as huge protests raged, the Obama administration played a key role in ultimately compelling Honduras’ people and the region’s governments to acquiesce to the regime change as a fait accompli.
Despite widespread repression by the post-coup de facto government, accounts of fraud, and the condemnation of many countries and international organizations (including the normally deferential Organization of American States), U.S.-endorsed elections in November 2009 received Washington’s imprimatur. In her memoirs (the passage excised from the book’s paperback edition with no explanation), then-Secretary of State Hillary Clinton explained that the U.S. sought to “render the question of Zelaya moot and give the Honduran people a chance to choose their own future.”
It was in this context that Hernández catapulted into power. After Porfirio Lobo won the 2009 presidential race, Hernández became President of the National Congress as a member of Lobo’s National Party — an institution historically closely linked to U.S. agribusiness. Lobo was Hernández’s mentor and groomed his protege to succeed him. But while Hernández enjoyed success, the coup’s consequences constituted disaster for ordinary Hondurans.
Political violence and repression became routine. The murder rate, much of it due to cartel-related gang violence, soared — it was the world’s highest for three years running. As the economic situation also deteriorated, and Lobo and his son allied with major narcotics syndicates, a huge surge of emigration swelled out of Honduras, with desperate citizens flooding northward. The total number of Hondurans apprehended at the U.S. border exploded — from less than 25,000 in 2009 to nearly 100,000 in 2014 — reaching 250,000 by 2020.
In Washington’s eyes, however, such concerns took a back seat to longstanding strategic needs: above all, Honduras’ openness to foreign investment and its role as a base for American military power. And, as head of the National Congress, Hernandez was seen as particularly amenable to U.S. desires.
“The State Department loved Hernandez,” according to Dana Frank, an expert on Honduras at UC Santa Cruz. As Lobo’s heir apparent, “he was young and could stay in power for a long time.” Frank cites a 2010 cable from the U.S. embassy in Tegucigalpa asserting that “He has consistently supported U.S. interests.”
The depth of American support for Hernández became clear after his 2013 election to the presidency. Despite credible reports of fraud, his National Party’s control over the counting process, and a wave of threats and sometimes lethal violence against opposition candidates and activists during the campaign, the State Department commended the election as “transparent, free, and fair.”
In 2015, a major corruption scandal centered on the misappropriation of funds from Honduras’ Social Security Institute exploded, prompting unprecedented popular demonstrations against Hernandez and calling for his resignation, “There was a real sense that Hernández could fall,” according to Alexander Main, a Latin America expert at the Washington-based Center for Economic and Policy Research. Fortunately for Hernández, however, the U.S. swooped in, helping to defuse the unrest by prodding the OAS to organize a local anti-corruption body known as MACCIH.
In that same year, according to Frank, Washington gave an “official green light” to a “completely criminal” power grab by Hernández whereby his hand-picked Supreme Court ruled that he was eligible to run for a second term in clear violation of Honduras’ constitution. Washington’s complacent reaction — “It is up to the Honduran people to determine their political future” — stood in remarkable contrast to 2009, when Zelaya’s mere suggestion that the constitution might be amended to permit a second term served as the pretext for the coup that the U.S. subsequently legitimized.
In Hernández’s 2017 reelection bid, the fraud was so blatant and widespread that even the generally conservative OAS declared the incumbent’s victory an example of “extreme statistical improbability” and called for new elections. The State Department, however, stood by Hernández, prodding Mexico and other OAS members to recognize the results, even as security forces suppressed massive and prolonged protests with live ammunition.
Indeed, U.S. training and funding also proved crucial in the creation of the brutal special operations units Hernández’s government used to terrorize opposition and environmental activists. Particularly significant in the military sphere was the role of U.S. Southern Command (SOUTHCOM), the American combatant command responsible for Latin America. Hernández was a particular favorite of John Kelly, SOUTHCOM’s head during Obama’s second term (and then White House chief of staff for Donald Trump), who, as Dana Frank noted, once referred to the convicted drug trafficker as a “great guy” and “good friend.”
Considering the U.S. relationship with Hernández, it is perhaps unsurprising that U.S. officials seemingly turned a blind eye to his deep involvement in narcotics trafficking. As both Hernández’s recent trial — during which a witness claimed Hernandez had privately vowed to “stuff drugs up the noses of the gringos” — and that of his brother in 2019 showed, the drug trade’s reach into the Honduran government was unmistakable, with numerous high-ranking security officials repeatedly implicated.
CEPR’s Main argues that it was “highly unlikely American officials were unaware” of Hernández’s criminality. Indeed, as a document from his brother’s trial revealed, the DEA began investigating the ex-president as early as 2013. As noted in Hernández’s trial, just weeks after his inauguration in 2014, the agency reportedly obtained video evidence indicating his involvement with major drug traffickers. Even after his brother’s 2019 conviction, when it became apparent that millions of dollars in drug money helped underwrite Hernández’s political career, President Donald Trump publicly praised him for “working with the United States very closely” and for his help in “stopping drugs at a level that has never happened.”
Given all this, the U.S. media’s failure to probe the influence of American policy on Hernández’s career begins to look less like an anomalous oversight and more like a manifestation of structural dynamics that tend to reinforce the notion of American innocence. We can see the same logic apply to the frenzied media accounts detailing “caravans” of Central American migrants headed to the U.S. While mainstream news outlets rightly note the relationship between Hernández’s presidency and increased migration from Honduras, they nevertheless fail to connect the two to the impact of U.S. policymaking. Without Washington’s complicity and assistance, Hernandez might have spent 2014 to 2022 in prison, rather than the presidency. Unfortunately, it was the Honduran people who paid the price.
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US Hegemony From Haiti to Honduras
Missing from corporate news coverage of the crises facing both nations is the role of US intervention that brought them to this point.
Mar 20, 2024
Haiti and Honduras have made headlines in the last few weeks. Honduras’ former president, Juan Orlando Hernández, was just convicted in a US court of drug trafficking. He faces life in prison. Haiti is a nation without a government, as armed groups have united against the US-backed, unelected Prime Minister installed after the assassination of their president in 2021. In both cases, what is missing from mainstream news coverage is the role of US intervention that brought them to this point.
“The crisis in Haiti is a crisis of imperialism,” University of British Columbia Professor Jemima Pierre, a Haitian American scholar, explained on the Democracy Now! news hour. In her NACLA Report article headlined, Haiti as Empire’s Laboratory, she describes her home country as “the site of the longest and most brutal neocolonial experiment in the modern world.”
Haiti was the world’s first Black republic, founded in 1804 following a slave revolt. France demanded Haiti pay reparations, for the loss of slave labor when Haiti’s enslaved people freed themselves. For more than a century, Haiti’s debt payments to France, then later to the US, hobbled its economy. The United States refused to recognize Haiti for decades, until 1862, fearful that the example of a slave uprising would inspire the same in the US.
In 1915, the US invaded Haiti, occupying it until 1934. The U.S. also backed the brutal Duvalier dictatorships from 1957 to 1986. Jean-Bertand Aristide became Haiti’s first democratically-elected president in 1991, only to be ousted in a violent coup eight months later. The coup was supported by President George H.W. Bush and later by President Bill Clinton. Public pressure forced Clinton to allow Aristide’s return in 1994, to finish his presidential term in 1996. Aristide was reelected in 2001.
“In 2004…the U.S., France and Canada got together and backed a coup d’état against the country’s first democratically elected president, Jean-Bertrand Aristide,” Jemima Pierre continued. “The U.S. Marines…put him on a plane with his security officials, his wife and aide, and flew them to the Central African Republic.”Democracy Now! traveled to C.A.R. in 2004 covering a delegation led by Transafrica founder Randall Robinson and U.S. Congressmember Maxine Waters who defied US policy and escorted the Aristides back to the Western Hemisphere. Aristide confirmed to Democracy Now! then that he had been ousted in a coup d’état backed by the United States. Aristide then went to live in exile in South Africa for the next seven years.
In response to allegations that gangs are currently controlling Haiti, Professor Pierre said, “The so-called gang violence is actually not the main problem in Haiti. The main problem in Haiti is the constant interference of the international community, and the international community here is, very explicitly, the U.S., France and Canada.”
The Biden administration is reportedly now considering the transfer of Haitian asylum seekers to the controversial U.S. Navy base at Guantanamo Bay, Cuba – a repeat of some of the worst U.S. policies in its long history of exploitation of Haitians.
Honduras, meanwhile, currently has a democratically-elected president, Xiomara Castro. Her husband, Manuel “Mel” Zelaya, was elected president in 2006, then ousted in a US-backed coup in 2009. In the following years, Honduras descended into a narco-state, forcing hundreds of thousands to flee violence, seeking asylum in the United States and elsewhere.
In 2013, Juan Orlando Hernández was elected president amidst allegations of campaign finance violations, then again in 2017 in an election widely considered fraudulent. Shortly thereafter, his brother Juan Antonio Hernández was arrested in Miami for drug trafficking. Then, following Xiomara Castro’s election, Juan Orlando Hernández himself was arrested and extradited to the US for cocaine trafficking. On March 8th, he was convicted in US federal court, and is currently awaiting sentencing.
“The evidence was chilling,” history professor Dana Frank, who was in the courtroom, said on Democracy Now! “This litany of assassinations of prosecutors, assassinations of journalists, corruption of the police, the military, politicians, the president, his brother, you name it. And it was like the curtain was drawn back, and you could see the day-to-day workings of this tremendous violent, corrupt mechanism that was the Juan Orlando Hernández administration…this was what happened after the 2009 coup that opened the door for the destruction of the rule of law in Honduras.”
US intervention in Haiti, Honduras and other countries is one of the principal drivers of people seeking asylum in the United States, as they flee violence, poverty and persecution at home. This point is almost never mentioned in the US press. To understand and ultimately solve the “immigration crisis,” Americans need to understand what their government has long done in their name, with their tax dollars–arming and propping up brutal regimes abroad.
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