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My Profile Top News Reuters top ten news stories delivered to your inbox each day. Subscribe You are here: Home > News > International > Article Home Business & Finance News U.S. Politics International Technology Entertainment Sports Lifestyle Oddly Enough Health Science Special Coverage Video Pictures Your View The Great Debate Blogs Weather Reader Feedback Do More With Reuters RSS Widgets Mobile Podcasts Newsletters Your View Make Reuters My Homepage Partner Services CareerBuilder Affiliate Network Professional Products Support (Customer Zone) Reuters Media Financial Products About Thomson Reuters Isolated Honduras hunkers down Sat Jul 11, 2009 8:12pm EDT Email | Print | Share | Reprints | Single Page [-] Text [+] By Juana Casas TEGUCIGALPA (Reuters) - Politically isolated Honduras braced on Saturday for months of austerity under the weight of economic sanctions imposed after a June coup and ousted President Manuel Zelaya vowed actions to support his reinstatement. With the textiles and coffee exporting economy seen contracting this year amid a global economic crisis, the interim government that replaced Zelaya estimates it already has been denied about $200 million in suspended credits. The United States has cut $16.5 million in military assistance and warned a further $180 million in other aid is at risk; and any repeat of a brief boycott by neighboring trade partners would choke one of Latin America's poorest countries. "We have to think in terms of austerity and we want to ask the people to do the same," interim president Roberto Micheletti said on Friday. He had asked his finance minister to find ways to cut state spending to ride out the coming months. The interim government, installed by Congress after widely unpopular Zelaya was booted out of the country in his pajamas last month by soldiers, has resisted international pressure and says Zelaya's reinstatement is not negotiable. It accuses Zelaya, who ran afoul of his political base and ruling elites in the conservative country by allying himself with Venezuela's firebrand leftist President Hugo Chavez, of contravening the constitution and seeking to illegally extend his rule. LITTLE CLEAR PROGRESS That has left little wriggle room for talks brokered by Costa Rica aimed at defusing one of the worst crises in Central America since the Cold War. The talks have resulted in little apparent progress, aside from an agreement to keep talking. "Here we are, with irreconcilable positions, but I believe that these positions will ease as we advance in the dialogue," Costa Rican President Oscar Arias, who is acting as mediator in the Honduras crisis talks, told CNN Espanol in an interview. Arias, who won the 1987 Nobel Peace Prize for his work in ending Central American conflicts, said talks held so far between the rival delegations had been frank but respectful. Zelaya's term was due to end in January and local commentators suspect the interim government is seeking to buy time to make his reinstatement obsolete. The United States, facing a major test of President Barack Obama's promise of a fresh start in relations with Latin America, has joined many regional governments in strongly condemning Zelaya's ouster but has urged him against trying to return unilaterally to avoid stoking tensions and violence. At least one pro-Zelaya protester was killed in clashes at Tegucigalpa's airport last Sunday when Honduran troops blocked an attempt by Zelaya to return in a plane provided by Chavez. Around 1,000 protesters marched to the airport on Saturday for a ceremony to remember the clashes and victims, complete with music and theater and attended by Zelaya's wife, Xiomara. Zelaya flew from the Dominican Republic to Washington on Saturday, where he met senior State Department officials who a White House official said reaffirmed U.S. support for restoring democratic order in Honduras and for Arias' mediation efforts. Continued... View article on single page Share: Del.icio.us Digg Mixx Yahoo! Facebook LinkedIn Next Article: Nigeria rebels, government agree amnesty: lawyer Also on Reuters Obama says stimulus plan to kick in later this year Goldman Sachs profit bonanza could stoke anger Drug companies fight the tide, and may win More International News Obama: Africa aid must be matched by good governance | Video Australia warns of risks to delay in China spy case Palestinians reject any Israel-U.S. settlement deal China raises Xinjiang death toll, adds ethnic detail Bosnia buries Srebrenica massacre victims More International News... Editor's Choice Slideshow A selection of our best photos from the past 24 hours. 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