Honduras and Israel: Two small countries with huge collaboration opportunities.

Honduras’ history is not an easy one. During the 20th century, multiple military coups had ruled the country until 1982. That year, the country was ruled by Roberto Suazo Córdova and started its democratic way [1]. However, that mission was difficult, because, during those years, the country was in conflict, until 1987, with Nicaragua [2]. Since then, the country enjoyed a democratic order that was challenged by Manuel Zelaya in 2009.

In 2006, Manuel Zelaya assumed the role of the Presidency. During his first year, he conducted a liberal policy. However, since 2007, he started to be closer to the socialist axis of the continent (Venezuela, Nicaragua, Cuba, and more) and, in 2008, joined ALBA, the regional organization of these regimes.

The next year, in 2009, Zelaya wanted to hold a referendum to change the Constitution, which will allow him to be reelected. The Congress and the Supreme Court rejected this measure, but Zelaya refused to cancel the ballots. On July 28th, the Supreme Court issues an order to detain Mr. Zelaya. The Honduran Army fulfilled the request, but instead of arresting him, he was expulsed to Costa Rica.

Many countries condemned the, and Honduras was banned from the Organization of American States until 2011 when new elections were held. Since 2014, the country is governed by Juan Orlando Hernandez [3].

Honduras and Israel Relationship

In 1948, Honduras recognized the State of Israel, and in 1955, Israel sent his first diplomatic to the country [4]. Thirty years later, in 1985, Honduras opened its Embassy in Israel [5]. The next year, Carlos Lopez Contreras, the Foreign Minister of Honduras, visited the country [6].

The diplomatic relations were already excellent between the countries, but it was under the Hernandez government when they flourished. One of the reasons for that is that he is an Alumni of MASHAV, Israel’s Agency for International Development Cooperation. In this regard, he was invited in 2018 to take part in the celebrations of Israel’s independence. However, because of political controversies, he canceled the plan [7].

President Rivlin together with President Hernandez during a visit to Israel in 2015. Credit: Mark Neyman / Government Press Office (Israel) / CC BY-SA (https://creativecommons.org/licenses/by-sa/3.0)

In 2019, after the US decided to recognize Jerusalem as the Capital of Israel, Honduras did the same. However, the country decided to keep its Embassy in Rishon Letzion and to open a commercial office in the holy city [8]. Recently, Hernandez declared that the country was ready to move the Embassy, but it was waiting for Israel to reopen its Embassy in Teguaciulpa [9]. Honduras has also recently declared Hezbollah as a terrorist organization, on a said praised by the US and Israel [10].

All of these steps were condemned by the Palestinian Community of Honduras, the second-largest in Latin America after Chile [11]. It is important to highlight that in 2011, Honduras recognized the State of Palestine and, in 2013, allowed the Palestinian Authority to establish an Embassy in the country [12].

Doing Business in Honduras

As said before, Honduras has a lot of challenges, that can transform into tremendous opportunities. Before the pandemic, the GDP was projected to grow over 3% per year until 2024, rising from 23 billion in 2018 to over 30 billion in 2024 [13]. Nowadays, the GDP is expected to contract 6.1% according to the ECLAC [14] and the debt is expected to grow to over 60% of the GDP (a 12% increase from the actual 48%) [15]. To make things harder for the local population, also the remises from Honduran citizens abroad are expected to decrease sharply.

Tegucigalpa, Capital of Honduras
Credit: Kaskascumel

The country is working to transform into a more industrial and service economy, and the agriculture share of the economy declined over the years. In this regard, the agro-industry provides over 45% of the GDP of the country and about 66% of its exportations [16]. This agriculture profile had mixed effects on the economy of the country. The exports between January and April of 2020 grew 8% compared with the same period of 2019, due to an increase in the international price of Bananas (+22% than last year) [17].

However, the coffee sector, one of the biggest in the country, is in a huge crisis. The exports of this commodity decreased by 15% due to a lower demand, which is expected to continue due to the closure of coffee shops worldwide. Also, the international price is lower than the production cost, making the production unprofitable. Given the fact that 92% of the 120 thousand coffee growers are small producers, this will probably increase the poverty in the country [18].

In the manufacturing industry, the most significant sector is textiles. The industry provides over 150 thousand jobs, and Honduras expects to quadruple this number in the next years. To do so, it offers many fiscal benefits [19]. And now, after COVID-19, many countries will search for closer importers of goods, so having a cheap labor force and easy accessibility to the US and Mexican markets, make it an excellent asset for the sector.

Another important area for the country, which was a hard hit is tourism. The country’s location, between the Pacific and the Atlantic Ocean, and its close distance to the US, make it a great tourist destination. Honduras offers multiple opportunities for all types of tourists: archeologic, ecotourism, beaches, scuba diving, and more. Most of the tourists are usually from the region, but the country was seeking to expand the number and origin of the visitors[19].

This sector is responsible for over 8% of the country’s GDP. During the current crisis, the industry is expected to lose over a billion dollars in 2020, and the works of many of the 200 thousand families that work in the section, most of them SMEs [20].

Copán, a Mayan archeological site, Honduras

Areas for Opportunities between Honduras and Israel

There are many areas of cooperation. One of the main ones is development. Honduras is one of the poorest nations in the continent, with over 60% of poverty. Israel has been collaborating with Honduras through MASHAV, forming hundreds of Hondurans in areas such as agriculture, education, and Public Health.

However, the most critical area of cooperation is security. The country has the second-highest homicides in Latin America (42.8 per 100 thousand people), and one of the highest in the world [21]. In this regard, the Honduran and Israeli government signed in 2016 a security agreement, that according to President Hernandez, will improve the army’s capabilities “like never before.” [22] It is important to highlight than over 90% of the population agrees to the use of cameras, drones, and sensors to prevent crimes [23].

In conclusion, these are hard times for Honduras and for the region. The country’s GDP is expected to decrease over 8% in 2020, and even though this is lower than the regional average (about 9% according to ECLAC), it will affect Honduras harder than others because it is one of the poorest countries in the region.

Still, there are business opportunities. For example, probably many families will start Bananas growing instead of coffee, and agriculture companies who can work with SME, have opportunities to enter the sector. Also, as stated, the textile industry may prosper due to the close borders to Mexico and the US. The economic crisis will bring a rise in security issues, and Israeli companies in the field have an opportunity to expand to a new market.

The COVID will ultimately pass, and tourism will start flowing again, as well as remises from abroad. If done correctly, the country can use this time to focus on its productive sectors and get a strong recovery after the pandemic.

References

Uriel Hiskin Yuffe

On a Latin American experience

Honduras and Israel: Two small countries with huge collaboration opportunities.

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Honduras and Israel: Two small countries with huge collaboration opportunities.

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