Canada and the Honduran Coup
Semilla operates on the belief that transparency and traceability in coffee sourcing should encompass not only the individuals we purchase coffee from but also the local context that effects theirs daily lives. One particularly important aspect of this is understanding how both the Canadian public and private sectors operate in these regions. Over the last 15 years, the Canadian government has impacted the trajectory of Honduran democracy for the purposes of creating favourable conditions for Canadian corporations within the country, often to the detriment of the Honduran people.
We can trace this implication back to 2009 when the democratically elected President of Honduras, Manual Zelaya, was ousted in a coup d’etat. He was exiled in the middle of the night to Costa Rica, leaving a military-backed dictatorship in his place. Professors Jeffrey Webber and Todd Gordon explain that while Canada was not behind this coup attempt, the government had a vested interest in determining Honduran political leadership:
“Canada’s intervention has been marked…by the bold promotion of the interests of Canadian capital operating in Honduras, as part of a wider geopolitical concern of the Canadian state to reproduce a political environment in Latin America amenable to the interests of Canadian investors.”
In short, Canada used this abrupt change in leadership - only the second successful coup d’etat since 1992 in the Americas - to begin investing significantly into the country. Prior to the coup, in 2007, Canada invested $105m in the country. In August 2011, this figure was at $750m. The prevailing narrative of such a skyrocketing investment, put forth by Stephen Harper’s Conservative, is that Canada was only seeking to positively impact a Central American trade partner. The reality, of course, has much more to do with the Canadian government clearing the way for Canadian corporations in international jurisdictions that offer lowered costs of labour and goods, as well as a weak regulatory regime with few mechanisms to hold companies accountable. The result - massive profit margins, totally impossible to achieve on domestic soil.
Under the regimes put forth by the International Monetary Fund and the World Bank, it’s common to see Global South nations adapt structural adjustment programs or policies (SAP) in order to receive investment or loans from the IMF and World Bank, and Global North nations. These structural adjustments follow neoliberal ideologies - such as cutting public sector employment, privatizing state owned business, and easing regulations to incentivize foreign direct investment - and are believed to increase the economic performance of the country who enacts them.
Honduras had committed to multiple SAP throughout the 1990s and as a result, attracted huge increases in foreign direct investment (FDI). By 2007, FDI had broken records but even despite this, Honduras would leave the 90s in a period of negative growth. While all of Latin America would pass through a period of massive economic growth from 2003-2007, by 2011, 75% of the Honduran population lived below the global poverty line.
In the midst of this, was Canada’s enthusiastic support for the installation of new President Porfirio “Pepe” Lobo. After being exiled, Zelaya did return to the country as overtures were made that he would be allowed to continue to rule as a figurehead, while a new government took over. After interim president Robert Michelleti refused even the illusion of power, the accord that would make his ouster “legal” was never signed. Regardless, elections continued unabated despite a lack of observers and without international approval.
In the wake of the election in which Canada’s candidate Lobo won, Foreign Affairs Minister, Peter Kent, released a statement saying the election was a success (despite many claims of fraud locally) and pledged full support to Lobo. In the first seven month’s of Lobo’s regime, Kent visited twice for the clear purpose of supporting “Canadian capital’s push for greater access to the Honduran market.”
Fast forward to today and Lobo now figures on a list of more than 50 names of corrupt officials released by the United States State Department. In specific, the Department charges Lobo for having taken bribes from drug cartels when in office, while his wife was involved in fraud and the misappropriation of funds. Beyond that, Lobo was also associated with extreme repression within Honduras. The human rights organization, Committee of Family Members of the Disappeared of Honduras reported 250 human rights violations in the first three months of his presidency alone.
While on paper it can appear that Canada is a benevolent nation investing in poorer Global South trade partners, the reality is that little of this investment stays in the country. Rather, it is used to develop infrastructure for private businesses who then make massive profits and take the money back out of the country. The Economic Commission for Latin America and the Caribbean, in a 2011 report, found that in the Caribbean, outflows of FDI income back to Canada amounted to 92% of the original investment.
Stephen Harper and Porfirio Lobo
Canadian Direct Investment and Its Impacts
The manufacturing sector in Honduras has expanded massively in the era of SAP and FDI and one Canadian company who directly profited from the 2009 coup was Montreal’s Gildan. One of the biggest private employers in all of Honduras, it has come under repeated fire for its workplace practices in both Honduras and Haiti with allegations of 69 hour work weeks without air conditioning or breaks and a breakneck pace of production that leaves workers with permanent skeletal damage. Despite this, it continues to operate without paying taxes and claimed at gross profit of $705,000,000USD in 2019.
Mining is the other major sector of the economy where Canadian corporations have brought in major profits while leaving a trail of damage in their wake. In fact, mining interests draw the closest connection to the actions of the Canadian state in the coup.
While Zelaya and the Honduras Supreme Court moved towards banning open pit mining prior to the coup, Canada was looking to change mining laws to be more favourable to Canadian companies like Goldcorp, already operating in the country. Lobo was seen as one who would be amenable to such changes, a revelation that came about via meetings between Canada’s Minister of International Cooperation Bev Oda and Yamana Gold. As soon as Lobo was elected, the Canadian government played matchmaker, with even the Ambassador to Honduras connecting officials in the Lobo regime with Canadian mining representatives.
The results were the adoption of a congressional commission to implement new national mining law that “establishes an extremely favourable environment for Canadian and other international capital.” It was adopted in 2012.
Since then, the myriad of abuses inflicted on the Honduran people by mining companies Goldcorp and Aura Minerals.
Goldcorp’s San Martin mine was accused of deforestation and overuse of scarce water resources, as well as releasing heavy metals like arsenic and lead into the local environment in such quantity that 62 people tested were found to have elevated levels in their blood stream. Not only did Goldcorp deny culpability, there is evidence that the Honduras government and Goldcorp worked to cover up this fact since 2007.
Aura Minerals was accused of two cyanide spills in La Union that led to the relocation of community members who were offered compensation for this forced move, but never received it. More recently, in 2016, Aura’s open pit gold mine in Copan came under fire when they went out of the realm of their concession and in the process, exhumed bodies from a 200 year old cemetery. This led to an occupation of the mine site by locals who demanded they cease all activities. To our knowledge, no one was held accountable for this as Aura Minerals claims this land is within their allotted concession.
Siria Valley Honduras - Credit James Rodriguez Mi Mundo
Doing Direct Investment Differently
While this information may seem excessive or not important to the subject of specialty coffee, we see a direct linkage in that manufacturing, mining, and coffee all function as forms of extractive economies. As Eduard Gudynas describes in his book "Extractivisms: Politics, Economy, and Ecology" the definition of extractive industries, as laid out by the United Nations Statistics Division, goes beyond traditional concepts of extraction like mining to include all "natural resources in the form of raw materials or commodities."
Herein then, we find coffee, which is remove from the countries of origin in its raw, green coffee, state and imported to consuming countries where additional value is added to it in its sale. As many have noted over recent years, anyone in the Global North who profits off of coffee is indeed profiting off the labour of Black and Brown bodies. Even when we seek to do right by producers, we benefit from low labour and living costs that allow for us move this product across the world at a low enough price to then sell it for a significant profit. While we believe that this process can be managed in an ethical and just manner, it would be dangerous for any of us to lose sight of or deny extractivism to be at the core of the coffee industry. We must recognize the system we work within first and foremost, or else we risk committing grave and potentially harmful errors.
Knowing how our own government uses direct investment to support the elite interests of corporations both at home and abroad motivates us to think about how our work can push back against this. If -- despite being an extractive project -- we know those we work with believe we are adding value support to them it should be seen as an opportunity to undermine the prevailing model of Canadian direct investment in which major corporations rely on inter-governmental agreements to receive beneficial conditions that allow them to gross massive profits, virtually none of which is returned to the local worker.
In a what we hope can be a positive model of Canadian direct investment, Semilla connects directly with communities of Honduran coffee growers like those in Selguapa and Chaguite and pays them directly at 5-6 times the going local rate. We then seek to expand our purchasing power within these communities until as many growers as possible are receiving this price, thereby injecting large capital sums directly into remote rural coffee growing communities.
In the process, we ensure that there are no unnecessary intermediaries such as co-operatives, coyotes, or agents. Rather, the only excess costs come in paying for dry milling and in a flat fee paid to our on the ground support network, Cafe Raga.
In addition to this, we run our ongoing micro-financing programs in which from our own profits and from the donations of roasters, baristas, or coffee drinkers, we send funds directly to the personal bank accounts of the Honduran growers we work with so that they can invest these funds where they see fit.
We firmly believe that by focusing our efforts in true community level sourcing, in which the end goal is the purchase of an entire community’s annual production, we can use direct investment in a way that beneficially impacts the lives of those who are typically used up in the process of capital accumulation and profit generation.
If you've been part of this effort thus far, thank you for your support. If you'd like to be involved in Semilla's work, to purchase green coffee or know more about what we do, please contact us.