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Honduras is facing increased violence by gangs such as Mara Salvatrucha and other

criminal organizations. The judicial system is weak and corruption is widespread. The
newly signed free trade agreement with the United States could help generate
improvements in regulatory controls. Macroeconomic policy has been stable.
Political Stability/Environment
Honduras has a weak, backlogged judicial system that lacks coordination and
leadership.The government has had trouble enforcing laws against child labor, a problem
the unions, due to their weakness, cannot help to resolve. Human rights groups have
accused business security forces of forming death squads to intimidate and kill their
opponents, but have not provided proof.
Regulatory Environement
Recently inaugurated President Manuel Zelaya has promised to continue economic and
political reforms aimed at shrinking the bureaucracy, increasing education and improving
security with the goal of making the country more attractive to domestic and foreign
investment. NGOs are well organized in Honduras, and receive government cooperation.
Honduras has ratified the U.S.-Central American-Dominican Republic Free Trade
Agreement.
About 8 percent of the general labor force and 13 percent of the maquiladora work force
is unionized. Public-sector unions are militant and well-organized, but their influence is
declining. Strikes and protests escalated after the International Monetary Fund demanded
the country decrease wages for teachers in 2003, but the strikes have since died down.
Labor has criticized industry-initiated "solidarity" associations for workers, calling them
a ploy to replace real unions.
International Profile
Honduras has some unsolved border and maritime disputes with Nicaragua, El Salvador
and Belize, which are being addressed by the International Court of Justice. Other
international problems involve the Mara Salvatrucha gangs and drug trafficking, issues of
concern throughout the region. There is an ongoing trade dispute with the European
Union about banana tariffs.
Security
No international or domestic terrorist group and no organized insurgent groups operate in
Honduras. Most of the violence is associated with criminal gangs such as Mara
Salvatrucha, though violence also can occur during political demonstrations.
Mara Salvatrucha gangs, whose targets include tourists and businesses, are largely
responsible for the high crime and violence that currently plague Honduras. The previous
administrations heavy-handed approach failed to make a dent in gang activity, which has
continued to grow. Although the administration of President Manuel Zelaya, which began
in January, has announced a more conciliatory policy, gang violence continues.
Infrastructure

Honduras suffers frequent and potentially devastating hurricanes along its Caribbean
coast, while flooding is a problem throughout the country. The governments response
capability is moderate, but damage to infrastructure often takes years to repair.

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