In 1979, the country returned to civilian rule. A constituent assembly was popularly elected in April 1980 and general elections were held in November 1981. A new constitution was approved in 1982 and the PLH government of Roberto Suazo assumed power.
Roberto Suazo won the elections with a promise to carry out an ambitious program of economic and social development in Honduras in order to tackle the country's recession. During this time, Honduras also assisted the Contra guerillas.
President launched ambitious social and economic development projects sponsored by American development aid. Honduras became host to the largest Peace Corps mission in the world, and nongovernmental and international voluntary agencies proliferated.
Between 1979 and 1985, under John Negroponte's appointment as U.S. diplomat from 1981 to 1985, U.S. military and economic aid to Honduras jumped from $31 million to $282 million. Between 1979 and 1985, U.S. development aid fell from 80% of the total to 6%. The United States established a continuing military presence in Honduras with the purpose of supporting the Contra guerillas fighting the Nicaraguan government and also developed an air strip and a modern port in Honduras. Though spared the bloody civil wars wracking its neighbors, the Honduran army quietly waged a campaign against Marxist-Leninist militias such as Cinchoneros Popular Liberation Movement, notorious for kidnappings and bombings, and many non-militants. The operation included a CIA-backed campaign of extrajudicial killings by government-backed units, most notably Battalion 316.
Suazo, relying on U.S. support, created ambitious social and economic development projects to help with a severe economic recession and with the perceived threats of regional instability. Honduras became host to the largest Peace Corps mission in the world and non-governmental organizations and international voluntary agencies proliferated.
As the November 1985 election approached, the PLH could not settle on a presidential candidate and interpreted election law as permitting multiple candidates from any one party. The PLH claimed victory when its presidential candidates collectively outpolled the PNH candidate, Rafael Leonardo Callejas, who received 42% of the total vote. José Azcona, the candidate receiving the most votes (27%) among the PLH, assumed the presidency in January 1986. With strong endorsement and support from the Honduran military, the Suazo Administration ushered in the first peaceful transfer of power between civilian presidents in more than 30 years. In 1989 he oversaw the dismantling of Contras which were based in Honduras.
In 1988, as a result of threatening actions by the forces of the Nicaraguans, US forces were deployed to Honduras.
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