By John McPhaul
SAN JOSE, Costa Rica (Reuters) - Deposed Honduran president Manuel Zelaya and the man who toppled him show no appetite for compromise as they head into make-or-break mediation talks set for Saturday in Costa Rica.
Zelaya, a leftist ousted in a June 28 military coup, and interim president Roberto Micheletti have agreed to a second round of talks in Costa Rica to try to resolve Central America's worst political crisis since the Cold War.
Costa Rica's Nobel Peace Prize-winning president, Oscar Arias, is trying to broker a compromise in the power struggle. He held out a glimmer of hope on Friday that progress could be made.
"I believe there has been a softening of the initial positions," he told reporters on Friday.
Arias said he will propose the creation of a coalition government to break the impasse. He will also suggest an amnesty for any alleged political crimes as a step towards a truce.
But both Zelaya and Micheletti, who was appointed by Congress after the coup, appeared entrenched in their positions, refusing to cede ground on key demands.
Zelaya, who has widespread international backing, has issued an ultimatum saying the talks will be a failure unless he is reinstated as president.
The military ousted Zelaya and whisked him out of the country on accusations of violating the constitution by trying to extend presidential term limits. Micheletti has said Zelaya will be arrested and face charges if he returns.
The two men will not meet face-to-face but are sending high-level delegations to San Jose instead.
Speaking to reporters in Nicaragua, Zelaya vowed to return home after nearly three weeks in exile. "I'm going back one way or another ... I have to do it," he said.
He would not say when or how he would return, but his wife, Xiomara Castro de Zelaya, told Reuters the return should not be clandestine. In an interview with Reuters on Friday she said, "Saturday is the deadline ... Time runs out tomorrow."
Both camps have said they would give diplomacy a chance, but Zelaya said he feared time was running out.
Failure to find a breakthrough agreement could potentially lead to more confrontation and riskier initiatives, such as an escalation of street protests in Honduras or violence upon Zelaya's return.
Arias, the Organisation of American States and the U.N. General Assembly have all said that any solution to the crisis must include power being handed back to Zelaya.
But that is the one thing Micheletti has said is non-negotiable. Micheletti said he would consider stepping down or calling early elections, but only if Zelaya stays away from the presidency.
"There is no possibility of negotiating a return of President Zelaya to the presidency, but there is a way for Congress to grant an amnesty," said Rafael Pineda, minister of the presidency.
Meanwhile, Zelaya's supporters staged a second day of highway blockades inside Honduras on Friday to demand his return. The International Transport Workers' Federation, which groups port workers around the world, called for a blockade of ships flying the Honduran flag to protest the coup.
(Additional reporting by Simon Gardner, Esteban Israel and Juana Casas in Tegucigalpa and Carlos Quiroga in La Paz; Writing by Louise Egan; Editing by Paul Simao)
