Democracy hangs by a thread in Honduras

The international group of right-wingers who staged the coup d'état against the democratic government of Honduras on 28 June are watching their plot fast unravel.

There is stiffening international opposition to their protégé, Roberto Micheletti, who, in his capacity as President of Congress, ordered President Manuel Zelaya to be expelled from the country by plane in his pyjamas.

Mr Zelaya gave negotiators meeting in Costa Rica until midnight yesterday to restore him to office, threatening to secretly return to Honduras and attempt to retake power on his own if no agreement is reached. At a news conference at the Honduran embassy in Nicaragua, he said: "I am going back to Honduras, but I am not going to give you the date, hour or place, or say if I'm going to enter through land, air or sea." But indications last night suggested the interim government would call his bluff.

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As the Acting President's support shrinks at home, the plotters are lobbying to have Mr Micheletti shored up from abroad by means of a declaration of legitimacy from the US Congress. That scheme is not prospering. Enrique Ortez Colindres, the supremely undiplomatic octogenarian appointed foreign minister by Mr Micheletti, has had to resign, but not before he called Barack Obama "a negrito who knows nothing about anything", on Honduran television.

For some of the plotters it is their second attempt to overthrow an elected reformist government in Latin America: the group includes prominent figures involved in the 2002 ousting of President Hugo Chavez of Venezuela, who was kidnapped for 48 hours and sent to a Caribbean island before being restored to office after widespread popular protest.

The temporary toppling of Mr Chavez was welcomed by the Bush administration, the Blair government and the International Monetary Fund. This weekend, the US seems destined for a replay of 2002's Operation Chaotic Coup. Amid a stream of contradictory messages it is clear that last month's putsch against Mr Zelaya was brewed up in Washington by a group of extreme conservatives from Venezuela, Honduras and the US. They appear to have hidden their plans from the White House, but hoped eventually to bounce President Obama into backing them and supporting the "interim president". They are making much of Mr Zelaya's alliance with Mr Chavez, whose sense of nationalism challenges US hegemony.

Financial backing for the coup is identified by some as coming from the pharmaceutical industry, which fears Mr Zelaya's plans to produce generic drugs and distribute them cheaply to the impoverished majority in Honduras, who lack all but the most primitive health facilities. Others point to big companies in the telecommunications industry opposed to Hondutel, Honduras's state-owned provider. Parallels are being made with ITT, the US telecommunications company that offered the Nixon government funds for the successful overthrow of President Salvador Allende of Chile in 1973.

A key figure is Robert Carmona-Borjas, a Venezuelan active against Mr Chavez in 2002, who later fled to the US. He runs the Washington-based Arcadia, which calls itself "an innovative 'next generation' anti-corruption organisation". Its website carries three video clips alleging, without evidence, that Mr Zelaya, his associates and Hondutel are deeply corrupt. Behind Arcadia are the US-funded National Endowment for Democracy (NED) and the International Republican Institute (IRI), the well-funded overseas arm of the Republican Party. Currently active among the Uighurs of western China, the NED has this year funnelled $1.2m (£740,000) for "political activity" in Honduras.

The focus of attention in the campaign against Mr Zelaya is now on the office of Senator John McCain, the defeated US presidential candidate, who is chairman of the IRI, takes an interest in telecoms affairs in the US Congress and has benefited handsomely from campaign contributions from US telecoms companies – which are said to have funded the abortive 2002 coup against Mr Chavez.

Mr McCain's former legislative counsel, John Timmons, arranged the visit of Micheletti supporters to Washington on 7 July where they met journalists at the National Press Club "to clarify any misunderstandings about Honduras's constitutional process and ... the preservation of the country's democratic institutions".

Meanwhile, within the US administration, difficulties in co-ordination have emerged between the State Department and the White House, with the Secretary of State, Hillary Clinton, issuing a low-key condemnation of the coup which was quickly superseded by stronger words from Mr Obama. The President called for Mr Zelaya's reinstatement, which Mrs Clinton had failed to demand.

The conservative-minded Mrs Clinton retains John Negroponte, an ambassador to Honduras under Ronald Reagan, as an adviser. He also represented George W Bush at the UN and in Baghdad. Democratic Senator Chris Dodd attacked Mr Negroponte in 2001 for drawing a veil over atrocities committed in Tegucigalpa, the Honduran capital, by military forces trained by the US. Mr Dodd claimed that the forces had been "linked to death squad activities such as killings, disappearances and other human rights abuses".

During his time in Tegucigalpa, Mr Negroponte directed funds to the US-supported Contra terrorists seeking to overthrow the government of Nicaragua. He assured them of arms and supplies from the Palmerola airstrip, the main US base in Central America. As President Rafael Correa of Ecuador is in the final stages of closing the US base in his country, Mr Negroponte is conscious of what the US could lose if a Zelaya government banned its presence at Palmerola. For their part, Hondurans have noted that when Mr Zelaya tried to return on 6 July, and his plane was refused permission to land at Tegucigalpa airport, no room was found at Palmerola.

Since last July, the US ambassador in Tegucigalpa has been the Cuban-born Hugo Llorens. He was the principal National Security adviser to Mr Bush on Venezuela at the time of the failed 2002 coup, when he was working with two other well-known State Department hardliners, Otto Reich and Elliot Abrams.

Mr Reich, a former US ambassador to Venezuela, advised Mr McCain in his presidential bid and previously worked for AT&T, the US telecoms giant. As he goes into battle against Mr Zelaya, the website of his business consultancy, Otto Reich Associates, quotes Mr Reagan: "You understand the importance of fostering democracy and economic development among our closest neighbours."

Mr Abrams was also deep in the business of supplying the Contra terrorists. He tried to sabotage the Central American peace plans proposed by Oscar Arias, then the Costa Rican President, who later received a Nobel Peace Prize for his efforts. In 1991 Mr Abrams, a neoconservative passionately supportive of Ehud Olmert and other leading Israeli hawks, was convicted of hiding information from the US Congress investigation of the Iran-Contra affair. The New York Times reported in 2006 that he had strong ties to then vice-president Dick Cheney.

In a divided Washington, Mrs Clinton seems in recent days to have regained some advantage. Now Washington's strategy is to minimise the role of the pan-continent Organisation of American States which, under the leadership of the independent-minded Chilean José Miguel Insulza, took a strong line against the "interim president".

Washington is now relying on Mr Arias, a firm friend in Central America, to soften the line against Mr Micheletti. He is trying to "mediate" between Mr Zelaya and the coup's appointee by putting them on the same footing. On Friday he called for a "government of national reconciliation" with ministers from both camps, a proposal which it appeared Mr Zelaya would countenance but that the interim government would not.

Yet the outcome of the crisis is not likely to be worked out in huddles of foreign politicians outside Honduras, but on the streets of Tegucigalpa and in the country's forests – perhaps even this weekend.

Honduran voters have traditionally – and ineffectually – been organised into two parties, the Nationals and the Liberals, whose politics are almost indistinguishable. But repudiation of Mr Micheletti is widespread. The principal roads have been blocked by Mr Zelaya's supporters brandishing banners calling for his return.

Mr Micheletti has been forced to re-establish the curfew he imposed just after the putsch. He has even offered to resign in order to prevent civil war – provided Mr Zelaya does not return. Another worrying development for Mr Micheletti came on Friday, when the armed forces delivered a solemn and urgent message that they were totally united in favour of democracy. In the world of Latin American politics, this is a sign that they are deeply divided.

At the festivities on Friday commemorating the 200th anniversary of Bolivia breaking free from Spanish rule, Mr Chavez joined Bolivia's President, Evo Morales, President Fernando Lugo of Paraguay and President Correa in a declaration of support for the re-establishment of democracy in Honduras. All four leaders are strong supporters of demands for better treatment of Latin America's indigenous peoples.

Perhaps that's what is really worrying the plotters of Tegucigalpa.

Hugh O'Shaughnessy's study of President Fernando Lugo, 'The Priest of Paraguay', will be published next month by Zed Books