Honduras coup rivals on collision course

TEGUCIGALPA (Reuters) - Honduras' political foes are on a collision course after negotiations collapsed and deposed President Manuel Zelaya vowed to return home despite warnings from a defiant de facto government.

Zelaya says resistance is being organized in Honduras to pave the way for his return this weekend and that nobody can stop him. The interim government installed after the June 28 military coup has threatened to arrest Zelaya if he returns and crack down on any protesters who stir trouble.

The failure of negotiations between the two sides has raised fears of political violence in the impoverished Central American country.

"Insurrection and confrontation are not a good path to take, but I don't think we will avoid it unless the de facto government shows some flexibility," the chief of the Organisation of American States, Jose Miguel Insulza, said in an interview with a Chilean radio station on Monday.

Zelaya tried to return to Honduras earlier this month but soldiers blocked the runway and at least one protester was killed in clashes with the army.

Talks to end the crisis broke down on Sunday when the interim government's delegation told the mediator, Costa Rican President Oscar Arias, that his proposal to reinstate the left-leaning Zelaya was "unacceptable" and that he was meddling in Honduran affairs.

"I have no doubt that this will raise the tension levels," said Efrain Diaz, a political analyst with the Centre for Human Development, a Honduran aid group. "We could see violence if Zelaya tries to return by force."

Around 300 pro-Zelaya protesters marched peacefully towards Congress in the capital Tegucigalpa on Monday, and have called for a two-day national strike on Thursday and Friday.

A police spokesman appealed to children and the elderly to stay away from protests planned for this week, warning that the security forces would "not be tolerant with anyone who acts like a terrorist in our country."

A sombre-faced Arias, a Nobel Peace Prize winner, fretted that the collapse of talks could lead to bloodshed, and called on both sides to give him another 72 hours to try and solve the worst crisis in Central America since the end of the Cold War.

"What is the alternative to dialogue? ... What happens if, tomorrow, a Honduran shoots at a soldier and then a soldier shoots his gun at an armed citizen?," Arias said.

UNUSUAL COUP

Although shunned by foreign governments, interim President Roberto Micheletti, who was appointed by Honduras' Congress after the coup, has refused to give in to demands that Zelaya be allowed to return and finish his term.

Zelaya was expelled from the textile and coffee exporting country in his pyjamasin the middle of the night. He had upset his political rivals by seeking to lift presidential term limits, and the army moved against him after the Supreme ordered his arrest.

The crisis is widely seen as a litmus test for U.S. President Barack Obama as he seeks a fresh start with Latin America despite ideological differences with vocal U.S. foes like Venezuelan President Hugo Chavez, a close ally of the deposed Honduran leader.

The U.S. State Department put a positive spin on the crisis talks, issuing a statement on Sunday extolling "progress" made.

Insulza of the OAS was more sanguine on Monday. "It is almost impossible to call for calm when the dictatorship seeks to test everyone's patience and stay in power," he said.

The Honduran coup is an unusual case. Unlike those that battered Latin America in the 1970s and 1980s, Zelaya's ouster was approved by the Supreme Court and Congress as well as Catholic Church leaders in the country. There is also no military strongman in the picture this time.

Many Hondurans think Zelaya's removal was justified despite widespread disagreement with how it was done.

"They had no choice but to get rid of him. He became crazed with Chavez's ideas and his petro-dollars," said 54-year-old Angela Ramirez, tending her pastry stall in Tegucigalpa.

But Zelaya also has his supporters and he is vowing to return this weekend.

"Absolutely no one can stop me. I'm a Honduran, it is my right," Zelaya told Reuters in a telephone interview from exile in neighbouring Nicaragua after the talks in Costa Rica stalemated.

Analysts say Honduras' interim government is digging in its heels so that Zelaya's reinstatement becomes a moot point. His term was due to end in January, and elections were scheduled for November.

The interim government, which has been denied around $200 million (121 million pounds) in multilateral aid and $16.5 million in U.S. military aid and is at risk of regional trade sanctions, insists it can and will stand up to the international pressure.

(Additional reporting by Gustavo Palencia in Tegucigalpa, Juan Casas and John McPhaul in San Jose, Tim Gaynor in Washington and Rodrigo Martinez in Santiago; Writing by Simon Gardner; Editing by Kieran Murray)