U.S. pressures Honduras to pay U.S. firm

During the past year, U.S. foreign policy-makers have bestowed a "strategic" importance on Honduras, stationing about 100 U.S. military advisers there and using it as a staging area for anti-Sandinista activities. But in spite of Honduras' new-found status, the U.S. government still squeezes the Central American ally for not knuckling under to the demands of a U.S. corporation.

The U.S. ambassador to Honduras, the U.S. Overseas Private Investment Corporation, and a committee of the House of Representatives have all pressured the Honduran government - even threatening to cut off U.S. aid - if it does not settle its dispute with Construction Aggregates, a little known U.S. company.

Construction Aggregates of Chicago was hired in 1977 by Honduras' National Port Enterprise, a semi-governmental agency, to build a port for the sum of $12 million. Located at Puerto Castilla on the Atlantic Coast, the port was to be the shipping point for Honduras' agricultural and wood exports.

Port construction - and contract problems - began in March 1978.

"The project experienced significant delays and cost over-runs," explains economic officer Moises Starkman at the Honduran embassy in Washington. The National Port Enterprise "said work wasn't done to its satisfaction," Starkman adds.

"We weren't being paid properly," counters Construction Aggregates' A1 Goldfarb. "According to the contract, within 30 days of the period of work, we were supposed to get paid," said Goldfarb, but payments "were taking 85 and 90 days."

Construction Aggregates suspended work on the port in March 1980, finding the pay situation "literally intolerable," says Goldfarb.

The Honduran government was also upset. "Only 40-45% of the construction was done," Starkman says. "There is no ; port; you cannot use it." , After halting construction, , the U.S. company filed a claim with the Interamerican Commercial Arbitration Commission, an entity of the Organization of American States that was designated as dispute arbitrator in the original contract. The Commission ruled in November 1981 that the Honduran port enterprise was in breach of contract, and ordered an award of $5.5 million to Construction Aggregates.

But Honduras questions the legality of the award, and has refused to pay Construction Aggregates.

In return, Construction Aggregates has called on the forces of the U.S. government to recover its claim.

The company has solicited support from the U.S. Overseas Private Investment Corporation (OPIC), which insured the project. According to Goldfarb, Construction Aggregates has asked OPIC to "put pressure on the government of Honduras to honor the award of $5.5 million."

OPIC has heeded Construction Aggregates' request, threatening to suspend insurance in Honduras unless the port enterprise pays up, Guatemalan news reports say. "If Honduras should refuse to honor the arbitration ruling... OPIC has indicated it would `cease to conduct (further) normal operations' in Honduras - spelling an end to insurance coverage for potential U.S. investing companies and financial agreements," wrote This Week, an independent Guatemalan newsletter.

OPIC spokesperson Robert Jordan said that while he had heard allegations of the OPIC threat, "as far as I know" they were untrue.

Construction Aggregates has also found an ally in U.S. ambassador to Honduras, John Negroponte. In a letter to the Honduran government dated May 14, Negroponte reportedly pushed Construction Aggregates' payment demand.

If Honduras doesn't come up with the money, "we see ourselves obliged to revise (OPIC's) insurance policy in Honduras and to contemplate bringing a request for sanctions before the Secretary of State," Negroponte said in his letter, according to Inforpress Centroamericana, a Guatemalan-based independent newsletter.

U.S. State Department desk officer for Honduras, Manual Rocha, said the letter's "contents are still confidential," and that in fact he "can not even confirm the letter" exists.

Not content with organizing OPIC and State Department pressure, Construction Aggregates has enlisted aid from the House of Representatives. On July 29, the House Appropriations Committee passed a statement by Congressman Sidney Yates (D-IL) threatening Honduras with a cut-off of aid. "Unless there is prompt action by Honduras in settling the judgement, the Committee will seriously consider acting to deny future funds for Honduran participation in U.S. assistance programs," the statement warns.