History of Honduras (1932–82)

Authoritarian General Tiburcio Carias Andino controlled Honduras during the Great Depression, until 1948. In 1955—after two authoritarian administrations and a general strike initiated banana workers—young military reformists staged a coup that installed a provisional junta and paved the way for constituent assembly elections in 1957. This assembly appointed Ramón Villeda Morales as President and transformed itself into a national legislature with a 6-year term.

In 1963, conservative military officers preempted constitutional elections and deposed Villeda in a bloody coup. The armed forces, led by Gen. Oswaldo López Arellano, governed until 1970. Popular discontent continued to rise after a 1969 border war with El Salvador, known as the "Soccer War". A civilian President—Ramón Ernesto Cruz of the National Party—took power briefly in 1970 but proved unable to manage the government.

In 1972, Gen. Lopez staged another coup. Lopez adopted more progressive policies, including land reform, but his regime was brought down in the mid-1970s by corruption scandals. The regimes of Gen. Juan Alberto Melgar Castro (1975–78) and Gen. Policarpo Paz García (1978–82) largely built the current physical infrastructure and telecommunications system of Honduras. The country also enjoyed its most rapid economic growth during this period, due to greater international demand for its products and the availability of foreign commercial lending.

Following the overthrow of Anastasio Somoza Debayle in Nicaragua in 1979 and general instability in El Salvador at the time, Hondurans elected a constituent assembly in 1980 and voted in general elections in 1981; the Liberal Party government of President Roberto Suazo Córdova took office.

The era of Tiburcio Carías Andino, 1932–1954

Despite growing unrest and severe economic strains, the 1932 presidential elections in Honduras were relatively peaceful and fair. The peaceful transition of power was surprising because the onset of the depression had led to the overthrow of governments elsewhere throughout Latin America, in nations with much stronger democratic traditions than those of Honduras. Vicente Mejía Colindres, however, resisted pressure from his own party to manipulate the results to favor the Liberal Party of Honduras (Partido Liberal de Honduras, PLH) candidate, Angel Zúñiga Huete. As a result, the National Party of Honduras (Partido Nacional de Honduras, PNH) candidate, Tiburcio Carías Andino, won the election by a margin of some 20,000 votes. On November 16, 1932, Carías assumed office, beginning what was to be the longest period of continuous rule by an individual in Honduran history.

Lacking was any immediate indication that the Carías administration was destined to survive any longer than most of its predecessors. Shortly before Carías's inauguration, dissident liberals, despite the opposition of Mejía Colindres, had risen in revolt. Carías had taken command of the government forces, obtained arms from El Salvador, and crushed the uprising in short order. Most of Carías's first term in office was devoted to efforts to avoid financial collapse, improve the military, engage in a limited program of road building, and lay the foundations for prolonging his own hold on power.

The economic situation remained extremely bad throughout the 1930s. In addition to the dramatic drop in banana exports caused by the depression, the Honduran banana industry was further threatened by the outbreak in 1935 of epidemics of Panama disease (a debilitating fungus) and black sigatoka (leaf blight) in banana-producing areas. Within a year, most of the country's production was threatened. Large areas, including most of those around Trujillo, were abandoned, and thousands of Hondurans were thrown out of work. By 1937 a means of controlling the disease had been found, but many of the affected areas remained out of production because a significant share of the market formerly held by Honduras had shifted to other nations.

Carías had made efforts to improve the military even before he became president. Once in office, both his capacity and his motivation to continue and to expand such improvements increased. He gave special attention to the fledgling air force, founding the Military Aviation School in 1934 and arranging for a United States colonel to serve as its commandant.

As months passed, Carías moved slowly but steadily to strengthen his hold on power. He gained the support of the banana companies through opposition to strikes and other labor disturbances. He strengthened his position with domestic and foreign financial circles through conservative economic policies. Even in the height of the depression, he continued to make regular payments on the Honduran debt, adhering strictly to the terms of the arrangement with the British bondholders and also satisfying other creditors. Two small loans were paid off completely in 1935.

Political controls were instituted slowly under Carías. The Communist Party of Honduras (Partido Comunista de Honduras, PCH) was outlawed, but the PLH continued to function, and even the leaders of a small uprising in 1935 were later offered free air transportation should they wish to return to Honduras from their exile abroad. At the end of 1935, however, stressing the need for peace and internal order, Carías began to crack down on the opposition press and political activities. Meanwhile, the PNH, at the president's direction, began a propaganda campaign stressing that only the continuance of Carías in office could give the nation continued peace and order. The constitution, however, prohibited immediate reelection of presidents.

The method chosen by Carías to extend his term of office was to call a constituent assembly that would write a new constitution and select the individual to serve for the first presidential term under that document. Except for the president's desire to perpetuate himself in office, there seemed little reason to alter the nation's basic charter. Earlier constituent assemblies had written thirteen constitutions (only ten of which had entered into force), and the latest had been adopted in 1924. The handpicked Constituent Assembly of 1936 incorporated thirty of the articles of the 1924 document into the 1936 constitution.

The major changes were the elimination of the prohibition on immediate reelection of a president and vice president and the extension of the presidential term from four to six years. Other changes included restoration of the death penalty, reductions in the powers of the legislature, and denial of citizenship and therefore the right to vote to women. Finally, the new constitution included an article specifying that the incumbent president and vice president would remain in office until 1943. But Carías, by then a virtual dictator, wanted even more, so in 1939 the legislature, now completely controlled by the PNH, obediently extended his term in office by another six years (to 1949).

The PLH and other opponents of the government reacted to these changes by attempting to overthrow Carías. Numerous efforts were made in 1936 and 1937, but all were successful only in further weakening the PNH's opponents. By the end of the 1930s, the PNH was the only organized functioning political party in the nation. Numerous opposition leaders had been imprisoned, and some had reportedly been chained and put to work in the streets of Tegucigalpa. Others, including the leader of the PLH, Zúñiga Huete, had fled into exile.

1940s

During his presidency, Carías cultivated close relations with his fellow Central American dictators, generals Jorge Ubico in Guatemala, Maximiliano Hernández Martínez in El Salvador, and Anastasio Somoza García in Nicaragua. Relations were particularly close with Ubico, who helped Carías reorganize his secret police and also captured and shot the leader of a Honduran uprising who had made the mistake of crossing into Guatemalan territory. Relations with Nicaragua were somewhat more strained as a result of the continuing border dispute, but Carías and Somoza managed to keep this dispute under control throughout the 1930s and 1940s.

The value of these ties became somewhat questionable in 1944 when popular revolts in Guatemala and El Salvador deposed Ubico and Hernández Martínez. For a time, it seemed as if revolutionary contagion might spread to Honduras as well. A plot, involving some military officers as well as opposition civilians, had already been discovered and crushed in late 1943. In May 1944, a group of women began demonstrating outside of the Presidential Palace in Tegucigalpa, demanding the release of political prisoners.

Despite strong government measures, tension continued to grow, and Carías was ultimately forced to release some prisoners. This gesture failed to satisfy the opposition, and antigovernment demonstrations continued to spread. In July several demonstrators were killed by troops in San Pedro Sula. In October a group of exiles invaded Honduras from El Salvador but were unsuccessful in their efforts to topple the government. The military remained loyal, and Carías continued in office.

Anxious to curb further disorders in the region, the United States began to urge Carías to step aside and allow free elections when his current term in office expired. Carías, who by then was in his early seventies, ultimately yielded to these pressures and announced October 1948 elections, in which he would refrain from being a candidate. He continued, however, to find ways to use his power. The PNH nominated Carías's choice for president—Juan Manuel Gálvez, who had been minister of war since 1933. Exiled opposition figures were allowed to return to Honduras, and the PLH, trying to overcome years of inactivity and division, nominated Zúñiga Huete, the same individual whom Carías had defeated in 1932. The PLH rapidly became convinced that it had no chance to win and, charging the government with manipulation of the electoral process, boycotted the elections. This act gave Gálvez a virtually unopposed victory, and in January 1949, he assumed the presidency.

Evaluating the Carías presidency is a difficult task. His tenure in office provided the nation with a badly needed period of relative peace and order. The country's fiscal situation improved steadily, education improved slightly, the road network expanded, and the armed forces were modernized. At the same time, nascent democratic institutions withered, opposition and labor activities were suppressed, and national interests at times were sacrificed to benefit supporters and relatives of Carías or major foreign interests.

Once in office, Gálvez demonstrated more independence than had generally been anticipated. Some policies of the Carías administration, such as road building and the development of coffee exports, were continued and expanded. By 1953 nearly one-quarter of the government's budget was devoted to road construction. Gálvez also continued most of the prior administration's fiscal policies, reducing the external debt and ultimately paying off the last of the British bonds. The fruit companies continued to receive favorable treatment at the hands of the Gálvez administration; for example, the United Fruit Company received a highly favorable twenty-five-year contract in 1949.

Galvez, however, instituted some notable alterations from the preceding fifteen years. Education received increased attention and began to receive a larger share of the national budget. Congress actually passed an income tax law, although enforcement was sporadic at best. The most obvious change was in the political arena. A considerable degree of press freedom was restored, the PLH and other groups were allowed to organize, and even some labor organization was permitted. Labor also benefited from legislation during this period. Congress passed, and the president signed, legislation establishing the eight-hour workday, paid holidays for workers, limited employer responsibility for work-related injuries, and regulations for the employment of women and children.

Labor unrest and political transition 1954–1957

The relative peace that Honduras had enjoyed for nearly two decades was shattered by a series of events during 1954, Gálvez's last year in office. Tension throughout the region had been increasing steadily as a confrontation developed between the United States and the left-leaning government of President Jacobo Arbenz Guzmán in Guatemala. Part of the confrontation involved the expropriation of United Fruit Company lands and charges that the Guatemalan government was encouraging agitation among the banana workers.

In 1952, the United States had begun considering actions to overthrow the Guatemalan government. Honduras had given asylum to several exiled opponents of Arbenz, including Colonel Carlos Castillo Armas, but Gálvez was reluctant to cooperate in direct actions against Guatemala, and the plans were not activated. By early 1954, however, a major covert operation against Guatemala was being organized, this time with greater Honduran cooperation. One reason for the cooperation was the Honduran government's concern over increased labor tensions in the banana-producing areas, tensions that the fruit companies blamed, in part, on Guatemalan influence.

Starting in early May 1954, the tensions escalated to strikes. First, a series of strikes broke out against United Fruit Company operations on Honduras's Caribbean coast. Within a few days, the strike spread to include the Standard Fruit Company operations, bringing the banana industry in the country to a near standstill. The strikers presented a wide range of grievances, involving wages, working conditions, medical benefits, overtime pay, and the right to collective bargaining. Initial government efforts to end the strike failed, and work stoppages began to spread into other industries. By May 21, the number of strikers was approaching 30,000, and the nation's economy was under severe strain.

As the strike was spreading, Honduras was also becoming more deeply involved in the movement to topple the Arbenz government in Guatemala. In late May, a military assistance agreement was concluded between the United States and Honduras, and large quantities of United States arms were quickly shipped to Honduras. Much of this incoming assistance was passed on to anti-Arbenz rebels commanded by Castillo Armas. In June these forces crossed into Guatemala and after several days of political maneuvering but little actual fighting, Arbenz fled into exile, and Castillo Armas became president.

With the spectre of foreign influence over the strike thus removed, negotiations began, and the strike ended in early July. Labor leaders who had been accused of having ties with Guatemala were jailed, and the final settlement, which met few of the original demands, was signed with elements more acceptable to the government and the fruit companies than to the workers. Despite the limited gains, however, the strike did mark a major step toward greater influence for organized labor in Honduras and a decline in the power of the fruit companies.

1954 election

In the midst of these conflicts, the campaign for the 1954 elections continued. Unhappy with some of Gálvez's gestures toward liberalization, Carías, despite his advanced age, decided to run for president and secured the PNH nomination. This move, however, split the party, and more moderate members broke away to form the Revolutionary Nationalist Movement (Movimiento Nacional Revolucionario, MNR). Their nominee was former vice president Abraham Williams Calderón. The split in the ruling party encouraged the PLH, who united behind Ramón Villeda Morales, a Tegucigalpa physician who was seen as somewhat to the left of center in the party's political spectrum.

Both the campaign and the election were remarkably free and honest. On October 10, 1954, approximately 260,000 out of over 400,000 eligible voters went to the polls. Villeda Morales won a large plurality with 121,213 votes, Carías received 77,041, and Williams carried 53,041. The PLH also gained a plurality in the legislature. Under Honduran law, however, a majority of the total votes was required to be elected president; Villeda Morales lacked a majority by just over 8,000 votes. The stage was set for a repeat of the confusing paralysis of 1924 because the constitution required, first, that two-thirds of the members of the new legislature must be present and vote to choose a president and, second, that the victor must receive two-thirds of the legislature's vote. To complicate matters further, Gálvez left for Miami (reportedly to obtain medical treatment, although some sources claim he merely fled the country), leaving the government in the hands of Vice President Julio Lozano Díaz.

Unable to reconcile their differences and unwilling to accept Villeda Morales as president, the PNH and MNR deputies boycotted the legislature, producing a national crisis. The constitution provided that in case of congressional deadlock the Supreme Court of Justice would select the president. Dominated as the court was by Carías appointees, the PLH opposed such a course of action. At this juncture, Lozano Díaz suddenly suspended the legislature and announced that he would act as president until new elections could be held. He declared that he would form a national government with cabinet members taken from all major parties and received pledges of support from all three candidates in the 1954 election. A Council of State, headed by a PLH member but including members of all three major parties, was appointed to replace the suspended congress until a constituent assembly could be chosen to write yet another constitution.

Lozano Díaz began his period as president with a broad base of support that eroded rapidly. He unveiled an ambitious development plan to be financed by international loans and increased taxes and also introduced the nation's first labor code. This document guaranteed workers the right to organize and strike but gave employers the right of lockout and forbade strikes in public services. The code also embodied some social welfare and minimum-wage provisions and regulated hours and working conditions. All these provisions gained him some labor support, but in later months relations between the president and labor began to sour.

As time passed, it became clear that Lozano Díaz had ambitions to replace the traditional parties with one that he controlled and could use to help prolong his hold on power. He reduced the Council of State to a consultative body, postponed elections, and set about forming his own party, the National Unity Party (Partido de Unidad Nacional, PUN). The activities of other parties were limited, and, in July 1956, Villeda Morales and other PLH leaders were suddenly arrested and flown into exile. A few weeks later, the government crushed an uprising by 400 troops in the capital. Public opinion, however, was becoming increasingly hostile to the president, and rumors of his imminent fall had begun to circulate.

Following the August 1956 uprising, Lozano Díaz's health began to deteriorate, but he clung stubbornly to power. Elections for the legislature in October were boycotted by most of the opposition, who charged that the process was openly rigged to favor the president's supporters. The results seemed to confirm this charge, as the PUN candidates were declared the winners of all fifty-six seats in the congress. The joy of their victories was short, however. On October 21, the armed forces, led by the commanders of the army and air force academies and by Major Roberto Gálvez, the son of the former president, ousted Lozano Díaz and set up a military junta to rule the country.

This coup marked a turning point in Honduran history. For the first time, the armed forces had acted as an institution rather than as the instrument of a political party or of an individual leader. The new rulers represented younger, more nationalistic, and reform-minded elements in the military. They were products of the increased professionalization of the 1940s and 1950s. Most had received some training by United States military advisers, either in Honduras or abroad. For decades to come, the military would act as the final arbiter of Honduran politics.

The military's largest problem was the holding of elections for a legislature and the selection of a new president. A system of proportional representation was agreed upon, and elections were held in October. The PLH won a majority, and in November, by a vote of thirty-seven to twenty, the assembly selected Villeda Morales as president for a six-year term beginning January 1, 1958.

Villeda Morales government, 1958–1963

The new PLH administration undertook several major efforts to improve and modernize Honduran life. Funds were obtained from the International Monetary Fund to stabilize the currency and from the World Bank to begin paving a highway from the Caribbean coast to the capital. Other efforts were undertaken to expand education. The greatest attention was devoted to passing a new labor code, establishing a social security system, and beginning a program of agrarian reform.

The reform program produced increasing opposition among the more conservative elements in Honduran society. There were scattered uprisings during Villeda Morales's initial years in power, but the military remained loyal and quickly crushed the disturbances. Military support began to evaporate in the early 1960s, however. Waning military support was in part a result of rising criticism of the government by conservative organizations such as the National Federation of Agriculturists and Stockraisers of Honduras (Federación Nacional de Agricultores y Ganaderos de Honduras, Fenagh), which represented the large landowners.

The shift in the military's attitude also reflected concern over what were viewed as more frequent rural disorder and growing radical influences in labor and peasant groups. Deteriorating relations with neighboring states, notably Nicaragua, also contributed to the tension. The major causes of friction, however, were the president's 1957 creation of the Civil Guard (Guardia Civil)—a militarized police commanded directly by the president rather than the chief of the armed forces—and the prospect of another PLH victory in the 1963 elections.

The elections were scheduled for October 1963. As in 1954, the PLH was confronting a divided opposition. The PNH nominated Ramón Ernesto Cruz, but a faction split off and ran the son of ex-president Carías. The PLH ignored the wishes of their president and nominated Modesto Rodas Alvarado, a charismatic, highly partisan figure believed to be to the left of Villeda Morales. All signs pointed to an overwhelming victory for the PLH, an outcome that the military found increasingly unpalatable.

1963 Honduran coup d'état

Further information: 1963 Honduran coup d'état

Rumors of a coup began circulating in late summer of 1963. The United States endeavored to make clear its opposition to such action—even dispatching a high-ranking officer from the United States Southern Command in the Panama Canal Zone to try to convince the chief of the armed forces, Air Force Colonel Oswaldo López Arellano, to call off the coup. Villeda Morales also tried to calm military fears, taking the carbines away from the Civil Guard and opposing plans for a constitutional amendment to restore direct command of the military to the president. All these efforts failed.

Before dawn on October 3, 1963, the military moved to seize power. The president and the PLH's 1963 presidential candidates were flown into exile, Congress was dissolved, the constitution was suspended, and the planned elections were canceled. Colonel López Arellano proclaimed himself president, and the United States promptly broke diplomatic relations.

Military rule and international conflict, 1963–78

1963–1968

López Arellano rapidly moved to consolidate his hold on power. Growing radical influence had been one of the reasons advanced to justify the coup. Once in power the government disbanded or otherwise attacked communist, pro-Castro, and other elements on the left. The Agrarian Reform Law was effectively nullified, in part by the regime's refusal to appropriate money for the National Agrarian Institute (Instituto Nacional Agrario, INA).

The country's two peasant unions were harassed, although a new organization of rural workers, the National Union of Peasants (Unión Nacional de Campesinos, UNC), which had Christian Democratic ties, actually expanded in the mid- and late-1960s. López Arellano promised to call elections for yet another legislature, and early in 1964 his government was recognized by the new United States administration of President Lyndon B. Johnson. Shortly thereafter, military assistance, which had been suspended following the coup, was resumed.

Close ties soon developed between the military government and the PNH. A key factor in the development of these links was PNH leader Ricardo Zúñiga Augustinius, who became secretary of state for the presidency, the key cabinet position. Numerous other party members served in the government, giving it a civil-military character but widening the gap between the administration and the PLH. Also linked to the government was a secret organization used to attack the left and intimidate political opponents. Known as the Mancha Brava (Tough Spot), it reputedly drew much of its membership from the ranks of public employees.

To give a semblance of legality to his government, López Arellano promulgated a new constitution with a unicameral Congress. He then called elections for this new Congress. A general amnesty for political figures was decreed in November, exiles were allowed to return, and the PLH resumed political activity. The PNH had pledged throughout the campaign that if it gained control of the Congress, its members would select López Arellano as president. The vote was held on February 16, 1965; the PNH won 35 seats, the PLH 29. The PLH charged the government with fraudulently manipulating the results, and some party leaders urged their supporters to boycott meetings of the assembly. The PLH was unable to agree on this tactic, and enough PLH members took their seats when the Congress convened on March 15 to provide the necessary quorum. The PNH delegates kept their promise and elected López Arellano as president for a new six-year term, from 1965 to 1971.

For a time, López Arellano had success in foreign affairs. One of his government's first acts had been to join with Guatemala and Nicaragua in establishing the Central American Defense Council (Consejo de Defensa Centroamericana, Condeca), which was a military pact among these Central American states and the United States for coordination of counterinsurgency activities. El Salvador joined shortly thereafter, and in 1965 Condeca held its first joint military exercise on the Caribbean coast of Honduras. That same year, Honduras contributed a small contingent of troops to the Organization of American States (OAS) forces monitoring the election in the Dominican Republic.

As the 1960s progressed, Honduras's relations with Nicaragua and with the United States improved, but increasing problems developed between Honduras and El Salvador. In May and June 1967, a series of incidents along the border aggravated tensions considerably. One incident involved the capture of two Salvadoran officers and thirty-nine enlisted men whose truck convoy had penetrated several kilometers into Honduras. The Salvadoran troops were finally returned over a year later, but the tensions continued to mount.

War with El Salvador (1969)

Further information: Football War

By 1968, the López Arellano regime seemed to be in serious trouble. The economic situation was producing growing labor conflicts, political unrest, and even criticism from conservative groups such as Fenagh. Municipal elections were held in March 1968 to the accompaniment of violence and charges of open fraud, producing PNH victories but also fueling public discontent and raising the concern of the United States Embassy. Efforts at opening up a dialogue were made in mid-1968 but had little success. Later in the year a general strike was kept brief by government action that helped break the strike and exiled the leader of the major Caribbean coast labor federation. Unrest continued, however; in the spring of 1969 new strikes broke out among teachers and other groups.

As the political situation deteriorated, the Honduran government and some private groups came increasingly to place blame for the nation's economic problems on the approximately 300,000 undocumented Salvadoran immigrants in Honduras. Fenagh began to associate Salvadoran immigrants with illegal land invasions, and in January 1969, the Honduran government refused to renew the 1967 Bilateral Treaty on Immigration with El Salvador that had been designed to regulate the flow of individuals across their common border. In April INA announced that it would begin to expel from their lands those who had acquired property under agrarian reform without fulfilling the legal requirement that they be Honduran by birth. Attacks were also launched in the media on the impact of Salvadoran immigrant labor on unemployment and wages on the Caribbean coast. By late May, Salvadorans began to stream out of Honduras back to an overpopulated El Salvador.

Tensions continued to mount during June 1969. The soccer teams of the two nations were engaged that month in a three-game elimination match as a preliminary to the World Cup. Disturbances broke out during the first game in Tegucigalpa, but the situation got considerably worse during the second match in San Salvador. Honduran fans were roughed up, the Honduran flag and national anthem were insulted, and the emotions of both nations became considerably agitated. Actions against Salvadoran residents in Honduras, including several vice consuls, became increasingly violent. An unknown number of Salvadorans were killed or brutalized, and tens of thousands began fleeing the country. The press of both nations contributed to a growing climate of near- hysteria, and on June 27, 1969, Honduras broke diplomatic relations with El Salvador.

The Mancha Brava, during the war with El Salvador had other purposes besides intimidating political party's. With the membership of Honduran civilians it was used against Salvadorian residents and temporary workers to exterminate any Salvadorian presence. Methods used against the Salvadorians was being hanged, castrated, removal of females breast and genital and burned alived during the early days of the war.

Early on the morning of July 14, 1969, concerted military action began in what came to be known as the Soccer War. The Salvadoran air force attacked targets inside Honduras and the Salvadoran army launched major offensives along the main road connecting the two nations and against the Honduran islands in the Golfo de Fonseca. At first, the Salvadorans made fairly rapid progress. By the evening of July 15, the Salvadoran army, which was considerably larger and better equipped than its Honduran opponent, pushed the Honduran army back over eight kilometers and captured the departmental capital of Nueva Ocotepeque. Thereafter, the attack bogged down, and the Salvadorans began to experience fuel and ammunition shortages. A major reason for the fuel shortage was the action of the Honduran air force, which—in addition to largely destroying the smaller Salvadoran air force—had severely damaged El Salvador's oil storage facilities.

The day after the fighting had begun, the OAS met in an urgent session and called for an immediate cease-fire and a withdrawal of El Salvador's forces from Honduras. El Salvador resisted the pressures from the OAS for several days, demanding that Honduras first agree to pay reparations for the attacks on Salvadoran citizens and guarantee the safety of those Salvadorans remaining in Honduras. A cease-fire was arranged on the night of July 18; it took full effect only on July 20. El Salvador continued until July 29 to resist pressures to withdraw its troops. Then a combination of pressures led El Salvador to agree to a withdrawal in the first days of August. Those persuasive pressures included the possibility of OAS economic sanctions against El Salvador and the dispatch of OAS observers to Honduras to oversee the security of Salvadorans remaining in that country. The actual war had lasted just over four days, but it would take more than a decade to arrive at a final peace settlement.

The war produced only losses for both sides. Between 60,000 and 130,000 Salvadorans had been forcibly expelled or had fled from Honduras, producing serious economic disruption in some areas. Trade between the two nations had been totally disrupted and the border closed, damaging the economies of both nations and threatening the future of the Central American Common Market (CACM). Up to 2,000 people, the majority Honduran civilians, had been killed, and thousands of other Hondurans in the border area had been made homeless. Airline service between the two nations was also disrupted for over a decade.

Post-war (1969-1972)

After the war, public support for the military plummeted. Although the air force had performed well the army had not. Criticism of the army was not limited to the public; junior officers were often vocal in their criticism of superiors, and a rift developed between junior and senior officers.

The war, however, led to a new sense of Honduran nationalism and national pride. Tens of thousands of Honduran workers and peasants had gone to the government to beg for arms to defend their nation. Local defense committees had sprung up, with thousands of ordinary citizens, often armed only with machetes, taking over local security duties. This response to the fighting made a strong impression on a sector of the officer corps and contributed to an increased concern over national development and social welfare among the armed forces.

The main key figure in the Salvadorian military victory was General Jose Alberto "Chele" Medrano. In charged and being main head of the National Guard (GN) he was the first to lead the wave of guards into Honduras. In order to infiltrate the Honduran government and reach the Honduran president Osvaldo Lopex Arellano, General Jose Alberto "Chele" Medrano disguised himself as a priest in order to have the Honduran president Confess with him. Disguised as a member of the Catholic Church with orders to go to the president himself he was able to gather information straight from the president himself, as the president confessed his intentions, struggles and fears to General Medrano. Once the information was gathered he returned to El Salvador with first hand information about the conflict, with those plans he was able to move quickly and where to move. Eventually He was the hero to the Salvadorian Military community and Salvadorian people.

The internal political struggle had been briefly suspended during the conflict with El Salvador, but by the start of 1970 it was again in full swing. The government was under pressure to initiate administrative and electoral reforms, allow open elections in 1971, reorganize the military, and adopt new economic programs, including a revision of Honduran relations with the CACM. Labor, peasant, and business organizations were meeting together in what were known as the fuerzas vivas (living forces). Their representatives met with López Arellano and proposed a Plan of National Unity, calling for free elections, a coalition cabinet, and a division of government posts and congressional seats. These proposals failed to elicit immediate response, but discussions continued. Meanwhile, a general political amnesty was decreed, the creation of the Honduran Christian Democratic Party (Partido Demócrata Cristiano de Honduras, PDCH) was announced, and a decree was issued calling for presidential and congressional elections on March 28, 1971.

After considerable discussion and debate the PHL and PNH parties responded to pressures from labor, business and the military. On January 7, 1971, they signed a political pact agreeing to establish a national-unity government after the March elections. The purposes of the pact were twofold. The first was to present a single slate of congressional candidates that would divide the Congress equally between the PLH and PNH (each party would run its own candidate for the presidency).

The second goal was to promote the Minimum Government Plan (Plan Mínimo de Gobierno), which included achieving agrarian reform, increasing technical education, passing a civil service law, attempting to resolve the conflict with El Salvador, restructuring the CACM, and reforming government administration. A later agreement between the parties—the "little pact" (pactito)—agreed to a division of government posts, including those in the Supreme Court of Justice.

The 1971 elections were relatively free and honest. Both parties offered presidential candidates who were compromise choices of the major party factions. The PLH ran Jorge Bueso Arias, and the PNH nominated Ramón Ernesto Cruz. Most observers anticipated a PLH victory, but the PNH ran a more aggressive campaign, making use of the mass media and of modern campaign techniques for the first time in Honduran history. On election day, Cruz scored an impressive victory, gaining 299,807 votes to 269,989 for Bueso Arias. However, a disturbing note for the PNH was that popular participation in the election had declined significantly from 1965. Only slightly over two-thirds of those registered to vote had done so, although the constitution made voting obligatory.

At first, Cruz appeared to be living up to the terms of the agreements between the parties. He appointed five PLH members, five PNH members, and one military officer to his cabinet. López Arellano remained as chief of the armed forces. As time passed, however, the split between PLH and PNH widened steadily. In order to deal with the budget crisis, Cruz pushed through a reluctant Congress a bill that cut tax benefits and import exemptions. This bill produced opposition from both business and labor sectors. In the area of agrarian reform, the president soon removed INA's dynamic director, Roberto Sandoval, and replaced him with a PNH member, Horacio Moya Posas, who slowed the pace of reform. The PLH protested this action and also argued that the appointment of PNH supporters to the Supreme Court of Justice violated the agreement. Finally, in March 1972, the president dismissed two of the PLH cabinet members. By mid-1972, the government had lost most of its non-PNH support.

Military rule and reform (1972-1978)

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 banana-exporting 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.

Return to civilian rule, 1978–82

Melgar Castro's hold on power began to dissolve in 1978. Charges of government corruption and of military links with narcotics traffic had become increasingly widespread, leading to accusations that the government had failed to adequately defend the country. Melgar's hold on power had weakened because he lacked support among large landowners. In addition, the Melgar government had seemed to be making little progress toward promised elections, leading to suspicions that it hoped to prolong its time in office.

Right-wing political forces criticized the Melgar administration's handling of the Ferrari Case, which involved drug trafficking and murder of civilians and in which members of the military had been implicated. Unions and student organizations correctly interpreted the right wing's criticism as a prelude to a coup. When demonstrators took to the streets to support Melgar, right-wing elements within the military charged Melgar had lost control of public order and ousted him.

On August 7, 1978, Melgar Castro and his cabinet were replaced by a three-member junta. Led by General Policarpo Paz García, chief of the armed forces, and including the air force commander and the chief of military security, the junta had close ties to the large landowners and moved to protect the military men involved in the Ferrari Case.

From its inception, the government of Paz García had promised to return Honduras to civilian rule. In April 1980, the Honduran citizenry was summoned to the polls to choose delegates for a new Congress. The Congress would select an interim government and would establish procedures for presidential and congressional elections in 1981.

Early indications for the 1980 elections pointed toward a victory for the PNH, headed by Ricardo Zúñiga. The PNH appeared more unified and organized than the rival PLH, and most people assumed that the PNH would be favored by the ruling military. The PLH suffered from internal divisions and a lack of leadership. Former president Villeda Morales had died in 1971, and the party's leader after his death, Modesto Rodas Alvarado, had died in 1979.

A split had developed between the more conservative followers of Rodas and the party's left wing, which had formed the Popular Liberal Alliance (Alianza Liberal del Pueblo, Alipo). In addition, a third party, the Innovation and Unity Party (Partido de Inovación y Unidad, Pinu) had been registered and was expected to draw support away from the PLH. The PNH had succeeded in blocking the inscription of the PDCH, leading the PDCH adherents to join with groups further to the left in denouncing the elections as a farce and a fraud and urging popular abstention.

The April 1980 election produced a record registration and voter turnout. More than 1.2 million Hondurans registered, and over 1 million voted—over 81 percent of those eligible. The high number of voters evidently favored the PLH, which won 49.4 percent of the votes cast. Under a complex apportionment system, the PLH won thirty-five seats in the Congress; the PNH, thirty-three; and Pinu, three. This result produced considerable debate over the composition of the next government.

There was general agreement on naming Paz García as interim president, and the disputes centered on the composition of the cabinet. Ultimately, a PLH leader, Roberto Suazo Córdova, was made president of the Congress, while the PLH also gained five of the seats on the new Supreme Court of Justice. The cabinet was divided among all three parties and the military; the armed forces received the Ministry of National Defense and Public Security, as well as the Ministry of Foreign Affairs, and the PNH acquired key economic positions.

The Congress took more than a year to draft a new constitution and an electoral law for the 1981 presidential and congressional elections. The work went slowly, and the elections originally scheduled for August 1981 had to be postponed until November. In the interim, the National Elections Tribunal (Tribunal Nacional de Elecciones, TNE) unanimously granted the PDCH the legal status needed for a place on the 1981 ballot.

Despite the presence of candidates for the Pinu and the PDCH on the November 1981 ballot, it was clear that the election would be essentially a two-party affair between the PLH and PNH. On November 29, 1981, a total of 1,214,735 Hondurans, 80.7 percent of those registered, voted, giving the PLH a sweeping victory. Suazo Córdova won 636,392 votes (52.4 percent), the PNH 491,089 votes, and 48,582 votes were divided between the Pinu and the PDCH. The PLH also took control of Congress, winning forty-four seats; the PNH, thirty-four; the Pinu, three; and the PDCH, one. The PLH also won 61 percent of the municipal councils. Suazo Córdova was inaugurated as president of Honduras in January 1982, ending nearly a decade of military presidents.