JUAN GONZALEZ: We begin the show with the latest news on the coup in Honduras.On Thursday, the Obama administration formally cut more than $30 million in aid to Honduras and suggested it will not recognize the Honduran elections scheduled for November unless the vote is free and open.

The State Department also acknowledged President Manuel Zelaya’s ouster on June 28th was a coup, but it refused to formally describe it as a military coup. Under the US Foreign Operations Bill, such a declaration would force an immediate suspension of most aid until rule of law is restored.

This is State Department spokesperson Philip Crowley.

PHILIP CROWLEY: The Department of State announces the termination of a broad range of assistance to the government of Honduras as result of the coup d’état that took place on June 28. The Secretary already had suspended assistance shortly after the coup. The Secretary of State has made the decision consistent with US legislation, recognizing the need for strong measures in light of the continued resistance of the adoption of the San Jose Accord by the de facto regime and continuing failure to restore democratic, constitutional rule to Honduras. At this point, what’s vitally important is that in order for Honduras to have a restoration of a normal relationship with the United States, a normal relationship with the rest of the region, and a resumption of aid, they’re going to have to produce a government that comes into office through a free, fair and transparent and democratic process.

JUAN GONZALEZ: That was State Department spokesperson Philip Crowley, speaking shortly after Secretary of State Hillary Clinton met with ousted Honduran leader Manuel Zelaya in Washington. Zelaya has repeatedly called on the Obama administration to do more to force the coup government to step down.

Well, joining us in the firehouse studio now is Greg Grandin, professor of Latin American history at New York University. He recently returned from Honduras and wrote about it for The Nation magazine in the article “Battle for Honduras — and the Region.” His latest book is Fordlandia: The Rise and Fall of Henry Ford’s Forgotten Jungle City.

Welcome to Democracy Now!, Greg.

GREG GRANDIN: Thanks for having me.

JUAN GONZALEZ: Well, the importance of the latest news from Washington and the declaration by the government yesterday?

GREG GRANDIN: Well, it’s a step in the right direction, and it’s another indication that the United States is playing catch-up with Latin America, with South America, the Organization of American States, the Union of South American Nations, which have long ago, months ago, said that they won’t recognize any election and the outcome of any election held under the current regime. And it’s also an indication we’re entering the endgame of the current coup. It’s two months to the November 29th election, and it’s clear that free and fair elections can’t be held under the current situation. The country is being militarized. Institutions of state are being militarized. There’s a low-level constant violence that protesters and everyday citizens are living under. Violence against women have increased 60 percent in the last two months. And we’re seeing a purging of cultural institutions. So it’s clear that free and fair elections can’t be held. And it’s the United States coming around to that and desperate to figure out a way to end this before we get to the November 29th elections.

JUAN GONZALEZ: But this distinction between calling it a coup but not a military overthrow, what’s —-

GREG GRANDIN: Well, what’s at stake with this is that it would, aside from what you mentioned, that it would automatically trigger certain cutoffs, financial cutoffs, it also would have to be certified by Congress. And that’s a fight that I think Barack Obama and Hillary Clinton don’t want, because the Republicans, led by Connie Mack and other foreign policy conservatives, regime change conservatives, Republicans, have seized on this issue to basically try to link Obama with Hugo Chavez and the Latin American left. And they certainly don’t want to kick it into Congress, where it’ll be debated, because to call it a coup would have to be certified by Congress.

JUAN GONZALEZ: And the question of the government raising now the possibility of not recognizing the November 29th elections, what will -— what impact could that possibly have? Or is there any indication that there’ll be any change before the election?

GREG GRANDIN: Well, just let me say that it’s a step in the right direction, but it wasn’t as strong a statement as the Organization of American States. There was a qualifying clause to the State Department: at this time, the State Department can’t recognize the current elections held under the prevailing system. But it is a step in the right direction.

The Honduran — the coup leaders in Honduras, the coup government are caught in a bit of a bind. On the one hand, the best they can hope for is apathy and disillusionment among the citizenship, which have made it very difficult for them to rule and consolidate power within Honduras. On the other hand, they have to show that the elections are legitimate, and they have to encourage participation. So Congress just passed a law saying that they’re going to prosecute anybody who doesn’t vote in the November 29th election, because the opposition to the coup is calling a boycott.

JUAN GONZALEZ: What about Zelaya himself? Obviously, weeks ago he attempted twice to get back into the country, once by — in a flight and then at the border. It does seem increasingly that he will not be returning to power. Is that yours sense from being down there and reporting on it?

GREG GRANDIN: Or if he returns, it will be a purely symbolic return, which would be something. If he does return, even symbolically, I think it would galvanize the resistance movement, which basically formed as a result of the coup. The coup leaders basically — the coup — people who staged the coup basically managed to achieve everything they accused Zelaya of doing. They’ve polarized the country. They’ve delegitimized political institutions. And they’ve created a popular movement that is growing in strength every day. And Zelaya, at this point, is more of a symbolic figure. And so, even if he were to return just for a week or just for two weeks, I think it would be an indication of the strength of the popular movement, which is actually applying much more pressure than the United States is — internally than the United States is externally.

JUAN GONZALEZ: What do you make of the decision of the International Monetary Fund recently to give Honduras about $160 million in aid?

GREG GRANDIN: Yeah. Well, one hand takes away; the other one gives. The United States controls, largely controls, the IMF and the fact that the IMF — pretty much concurrently with the State Department’s much heralded decision to cut off $30 million, the IMF announced that it was granting $150 million. I mean, even the World Bank, the Inter-American Development Fund, all of these institutions have declared that they’re cutting off loans and aid to Honduras, but the IMF went forward. This also is largely symbolic.

Honduras is currently hemorrhaging about $20 million a day in currency in its reserves, in its central bank, by the — about a half-a-billion dollars has dissipated over the last two months since the coup started. Whoever comes into office in December, in January, is going to be presiding over what is in effect a bankrupted country, and that’s another aspect. Not only will aid resume, I think that the political elite and economic elite in Honduras realize that they’re going to have to reestablish good relation with the rest of the world in order just to stay afloat.

JUAN GONZALEZ: And the impact of this continuing — at least until now, the continuing success of this coup for the region?

GREG GRANDIN: Well, I think that it is a — it has to be seen in the context of the rise of the South American left in one country after another. And I think conservatives and a lot of people, who maybe understood themselves as centrists but are very scared by what they imagine as the rise of the populist left, see Honduras as a line in the sand, the first push back against the rising tide of populism. The coup leaders in Honduras explicitly justify it as such, as the first rollback of Chavismo. And I think it’s being understood as a battle for which way Latin America turns. There’s a whole new series of elections coming up in Uruguay and Chile and Brazil and Argentina that may give conservatives wins, and I think that they — or may push back on the left a little bit in this next round of elections. And a lot of anti-Chavistas, for lack of a better word, see Honduras as a potential turning point.

JUAN GONZALEZ: And speaking of the battle for the region, the continuing controversy over President Uribe of Colombia agreeing to more involvement by US military forces in bases in Colombia that’s been condemned widely by the other governments of the region, your assessment of this, in terms of the battle for the region?

GREG GRANDIN: Well, in South America, under the current political alignment, both Honduras and the current — both the United States’s waffling and dithering on Honduras and the announcement that the United States military is going to expand, have access to seven military bases running from the Caribbean to the Andes, has united South America. This is not just an issue about Venezuela, although Venezuela gets all the attention in the press, but Brazil and the Brazilian military is very concerned about this ability of the United States now to project its military power into the Amazon, deep into South America. And there’s been a large unification among most South American states against this, and it’s an indication of the further isolation of the United States in terms of political — its political influence, its institutional influence and increasing dependence on military influence in order to project its power into the
region. It’s a dangerous precedent.

JUAN GONZALEZ: Well, Greg Grandin, I want to thank you for being with us, professor of Latin American history at New York University. His article, “Battle for Honduras — and the Region” appears in The Nation magazine.