Military Rule and Reform
During the autumn of 1972, with the support of the military, the two parties attempted to revise the arrangements between the parties and the major labor and business groups. These efforts were not unsuccessful, and opposition to what was increasingly perceived as an ineffectual and divisive administration spread steadily. The virtual halting of agrarian reform and the killing of several peasants by the military in the department of Olancho had angered peasant groups. Labor and business were alienated by the ineffective efforts to deal with the problems of the economy. The PLH felt that its position within the government was steadily eroding and that its agreement with the PNH was regularly violated. In December peasant and labor organizations announced a hunger march by 20,000 individuals to Tegucigalpa to protest the government's agrarian policies. Supported by a prior agreement with the labor movement, the military on December 4, 1972, overthrew Cruz in a bloodless coup and once again installed López Arellano as the president.
Problems for the López Arellano regime began to increase in 1974. The economy was still growing at a slow pace, partly because of the immense damage caused to the Caribbean coast by Hurricane Fifi in September 1974. The storm was the most devastating natural disaster in recent Honduran history, claiming 10,000 or more lives and destroying a vast number of banana plants. The disaster also increased calls for agrarian reform.
The government's greatest problem, however, centered on another aspect of the banana industry. Honduras had joined other bananaexporting nations in a joint agreement to levy an export tax on that fruit. The Honduran tax had taken effect in April 1974 but was suddenly canceled four months later. Shortly thereafter, reports began to circulate that the United Fruit Company had paid more than US$1 million to Honduran officials to secure the repeal of the tax. Prominently implicated in these accusations were López Arellano and his minister of economy and commerce.
Reacting to these charges on March 31, 1975, the military relieved López Arellano of his position as chief of the armed forces, replacing him with Colonel Juan Alberto Melgar Castro. Just over three weeks later, they completed the process by removing López Arellano from the presidency and replacing him with Melgar Castro. These decisions had been made by the increasingly powerful Supreme Council of the Armed Forces (Consejo Superior de las Fuerzas Armadas--Consuffaa), a group of approximately twenty to twenty-five key colonels of the armed forces who provided the institution with a form of collective leadership.
In July 1976 the border with El Salvador was still disputed. In July a minor upsurge of conflict there brought prompt OAS intervention, which helped to keep the conflict from escalating. In October both nations agreed to submit their dispute to arbitration. This development raised hopes for a rapid peace settlement. Progress, however, proved slow; and tensions were raised again, briefly, in 1978, when the Honduran government abruptly canceled all permits for travel to El Salvador. The rise of guerrilla conflict in El Salvador, plus strong pressures from other nations, made a settlement increasingly urgent in subsequent months. In October 1980, with Peruvian mediation, the bilateral General Peace Treaty was finally signed in Lima, Peru. Trade and travel were soon resumed, but numerous problems, including final adjudication of some small parcels of territory along the frontier, remained for later consideration.
Relations with Nicaragua had also become more difficult, especially after civil conflict had increased in that nation in the late 1970s. In March 1978, Honduran soldiers captured Germán Pomares, a leader of the Sandinista National Liberation Front (Frente Sandinista de Liberación Nacional--FSLN), the guerrilla force fighting against the regime of Anastasio Somoza Debayle in Nicaragua. Pomares was held until the end of June, but Nicaraguan requests for extradition were denied, and he was ultimately flown to Panama. As fighting in Nicaragua escalated in 1978 and early 1979, Honduras found itself in a difficult position. Honduras did not want to support the unpopular Somoza regime but feared the Marxist leanings of the FSLN. In addition, beginning in September 1978, Honduras had become burdened with an ever-growing number of refugees from Nicaragua.
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