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In Honduras, a toy factory's quest for profit

Can a toy factory and other foreign businesses survive in post-coup Honduras?

In January, President Zelaya boosted the monthly minimum wage by 60 percent to about $300. He also decreed that domestic workers are entitled to social security pensions. Those moves were triumphs for the labor movement but prompted a wave of layoffs and turned the business community firmly against Zelaya.

Then came the coup, which was supported by many business leaders. But the World Bank, the United States and several other nations reduced their aid programs to the de facto government. Now, many Hondurans are only buying essential items.

“We’ve had protests and curfews and it seemed like war was about to break out,” said Alba Castaneda, who has seen her printing press business lose 40 percents of its sales and has laid off five of her 18 employees. “So people are only buying what they need, like food.”

Through it all, Haughey remains upbeat. He was born in New Zealand, grew up in Missouri and first came to Honduras in 2006 as a volunteer worker with homeless children. His company, called Tegu, will build classic wooden toys embedded with magnets so they’ll fit together like Legos.

But he’s one of the exceptions.

“There’s no new foreign direct investment going on in Honduras,” Haughey said. “Any plans that were being made to put in new industry have either been put on hold or have been cancelled.”

Hotel owners claim the coup has been even worse for business than Hurricane Mitch, which laid waste to much of Honduras in 1998.

After the storm, legions of aid workers flooded Honduras and stayed in hotels for months. But in the aftermath of the June coup, street protests and the temporary closure of the country’s main international airport led to an exodus of tourists and a wave of cancellations. In addition, the U.S. State Department issued a travel alert recommending that Americans defer all non-essential travel to Honduras.

“Tegucigalpa was completely empty,” said Ana Maria Maradiaga, who runs a training school for hotel and restaurant workers. “Big hotels, small hotels, restaurants … . Tourism was dead.”

The crisis has also put much needed aid projects on hold.

“There are constantly groups coming down from the U.S., from Canada and other nations to assist with water and health projects and poverty alleviation,” Haughey said. “And those groups have put their plans on hold.”

Haughey and other business owners are crossing their fingers that people will eventually forget about the coup and that the incoming Lobo government will be recognized by the international community. The United States gave the election its seal of approval.

“Our hope is that democracy can be restored and the country’s situation can be normalized,” said Llorens, the U.S. ambassador.

Critics argue that such a policy would set a bad example by allowing the plotters to get away with an illegal coup. But others, especially those who cheered Zelaya's ouster, argue that turning the page will be good for business.