Extortion Shuts Down 1/3 of Businesses in Honduran Capital

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Extortion has reportedly forced 30 percent of small businesses in the Honduran capital of Tegucigalpa to close, demonstrating the economic cost of insecurity in the country.

According to an El Heraldo report, 30 percent of Tegucigalpa’s small businesses — some 10,800 — active in the beginning of 2012 have closed due to frequent threats from criminals attempting to extort money.

Some business owners have elected to move to Nicaragua, where they believe the government does a better job of providing security, reported El Heraldo, whose survey showed that there is a general distrust of the police in Tegucigalpa. Some Hondurans worry that corrupt police officers might even be assisting criminals in extortion schemes making victims hesitant to come forward to police for fear of retaliation.

Tegucigalpa’s Deputy Police Commissioner Elvis Bonilla Andara explained to the newspaper that steps have been taken to make reporting the crime easier. According to Bonilla Andara, Hondurans can now make complaints anonymously via telephone, a policy that has helped police to capture five alleged extortioners so far in July.

InSight Crime Analysis

In an attempt to combat extortion nationwide, the Honduran government passed legislation in March that increased prison terms for the crime from nine years to 20 years, making the penalty one of the highest in the region for extortion. Honduran security forces also launched an operation that month to patrol the most dangerous bus and taxi routes to help protect drivers from extortion gangs.

Other Central American countries struggle similarly with the crime. In Guatemala, police arrested seven people in June for allegedly extorting close to $500,000 from bus drivers in the capital. This phenomenon reached such levels in El Salvador that bus drivers went on strike in August 2011 to put pressure on their government to increase security against gangs’ extortion demands.

Extortion is not just a threat to security, but to development as well. El Heraldo’s report notes that extortion has adverse long term effects on the Honduran economy, causing rising bankruptcy, unemployment, and capital flight.

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