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ACTION ARA-10
INFO OCT-01 NEA-10 ISO-00 EB-07 AID-05 TRSE-00 CIAE-00
DODE-00 PM-04 H-02 INR-07 L-03 NSAE-00 NSC-05 PA-01
PRS-01 SP-02 SS-15 USIA-06 COME-00 /079 W
--------------------- 129903
R 232145Z JUL 76
FM AMEMBASSY TEGUCIGALPA
TO SECSTATE WASHDC 4034
AMEMBASSY TEL AVIV
C O N F I D E N T I A L TEGUCIGALPA 3590
E.O. 11652: GDS
TAGS: EFIN, PINT, HO
SUBJECT: CALL ON CENTRAL BANK PRESIDENT
SUMMARY: PRESIDENT OF CENTRAL BANK GUILLERMO BUESO RECEIVED
CHARGE AND ECOMOFF JULY 22. PRIMARY PURPOSE OF CALL WAS FOR
INTRODUCTION. DISCUSSION RANGED OVER FINANCIAL CONDITIONS,
MILITARY PURCHASES, SALVADOR BORDER PROBLEM AND TEXACO STOCK
QUESTION. END SUMMARY.
1. AFTER INTRODUCTIONS AND OFFER TO SR. BUESO OF A LEADER
GRANT, SR. BUESO PROVIDED HIS VIEWS ON SEVERAL TOPICS. THE
FIRST WAS GENRAL FINANCIAL CONDITONS WHICH HE FINDS VERY GOOD
FOR HONDURAS AS LONG AS A CERTAIN AMOUNT OF CAUTION IS EXERCISED
TO PREVENT EXCESSIVE SPENDING PRELIMINARY BUDGET EXERCISES
HAVE COMMENCED WITH THE CENTRAL BANK AND THE CABINET. SR. BUESO
IS EXERCISING MUCH CARE TO AVOID A CONTINUATION OF RANDOM AND
UNCONTROLLED SPENDING BY GOVERNMENT AGENCIES. WHEN ASKED IF
MILITARY EXPENDITURES WERE TO BE INCLUDED IN THE BUDGET FIGURES,
SR. BUESO RESPONDED AFFIRMATIVELY AND SAID THAT THERE WAS NO
OTHER WAY THE MONEY COULD BE PROVIDED TO THE MILITARY. WHEN
ASKED HOW THE REPORTED $30 MILLION SPENT IN ISRAEL WAS TO BE
BUDGETED, SR. BUESO RESPONDED THAT THE PURCHASES IN ISRAEL WERE
NO SUCH FIGURE. "MUCH, MUCH LESS," HE STATED. HE ADDED THAT HE
DID NOT BELIEVE THAT THE MILITARY IN HONDURAS HAD SPENT MUCH
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MORE THAN $30 MILLION FOR ARMS PURCHASES SINCE THE 1969 CONFLICT
WITH SALVADOR. HE SAID THE MILITARY WOULD LIKE TO SPEND TWO OR
THREE TIMES THAT AMOUNT, BUT THAT THE CABINET HAD MADE CLEAR THAT
THE FINANCIAL RESOUR-
CES DO NOT EXIST TO SUPPORT SUCH EXPENDITURES.
2. ON SALVADOR, SR. BUESO STATED THAT THE MILITARY BELIEVE THE
SIPIATION TO BE WEL IN HAND. SR. BUESO STATED THAT THE NEW
MINISTER OF FOREIGN RELATIONS WILL BE SUPPORTED BY A STROMV
UNDER-
STANDING WITHIN THE CABINET AND A GROUP OF ADVISERS. HE SAID
THE
PAST FOUR OR FIVE MONTHS UNDER FORMIN PERDOMO HAD NOT BEEN FRUITFUL
AND THE LATTER DID NOT COMMUNICATE WELL WITH THE CABINET, WHEREAS
PALMA WILL.
3. SR. BUESO REFERRED TO THE TEXACO SHARES PROBLEM, STATING THAT
TEXACO SHOULD MAKE ITS DECISION AND INFORM THE GOVERNMENT HOW MANY
MONTHS, THREE OR SIX, IT WILL TAKE TO LEGALIZE THE OWNERSHIP OF
THE PREFERRED SHARES IN HONDURAN HANDS. HE SAID HE FULLY RE-
COGNIZES THAT A VIOLATION OF LAW MUST OCCUR BUT TEXACO CANNOT EXPECT
THE GOH TO VIOLATE THE LAW SO AS TO TAKE TEXACO OFF THE HOOK. THE
IMPORTANT ELEMENT IS THAT TEXACO KEEP BUESO ADVISED OF ITS ACTIONS.
COMMENT: IMPRESSIVE AS ALWAYS, SR. BUESO EXPLICITLY GAVE GREATER
WEIGHT TO THE CABINET RELATIVE TO THE MILITARY THAN WE WOULD
HAVE EXPECTED. HE IMPLIED THAT THE CABINET, UNDER MELGAR, HAS
FULL CONTROL OVER MILITARY SPENDING, AND THAT COMPLETE RESPONSI-
BILITY FOR NEGOTIATIONS WITH SALVADOR LIES WITHIN THE CABINET.
THE EMBASSY BELIEVES THAT BUESO EXAGGERATES THE
EXTENT OF CABINET CONTROL OVER MILITARY SPENDING AND
NEGOTIATIONS WITH EL SALVADOR. IN OUR VIEW, THE CABINET
INFLUENCES MILITARY DECISIONS BUT DOES NOT EXERCISE FULL
CONTROL OVER SPENDING DECISIONS. IN REGARD TO NEGOTIATIONS WITH
EL SALVABUR, THE CABINET PARTICIPATES IN THE DEVELOPMENT OF
POSITIONS BUT IT DOEYDKOT HAVE COMPLETE RESPONSIBILITY FOR
THE MAKING OF POLICY REGARDINLNEL SALVADOR. THIS
RESPONSIBILITY IS SHARED WITH THE SUPERIOR DEFENSE COUNCIL
AND WITH THE FOREIGN POLICY ADVISORY GROUP.
BARTCH
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