SAN JOSE, Costa Rica (Reuters) - Veteran mediator and Nobel peace laureate President Oscar Arias of Costa Rica hosts talks on Thursday between the rivals for power in Honduras, but neither side seems willing to yield following last month's coup.
Bolstered by world condemnation of his ouster in the June 28 coup, Manuel Zelaya says he wants those who toppled him to give up power in 24 hours to allow his reinstatement in the Central American nation, one of the poorest in the Americas.
But the interim president who replaced him, Roberto Micheletti, installed by Honduras' Congress after the coup, has said he will not negotiate Zelaya's return as head of state.
He says the deposed president, who had angered his country's traditional ruling elite with a political shift to the left, will face charges if he returns for illegally trying to lift limits on presidential terms in violation of the constitution.
The conflicting positions appear to herald no quick resolution to the political crisis that has gripped Honduras since the coup, raising tensions in Central America and posing a test for U.S. President Barack Obama's Latin American policy.
Obama, apparently looking to wipe clean Washington's past record of supporting often bloody military coups and regimes in Latin America when it suited U.S. interests, has condemned Zelaya's ouster and backed Arias' mediation between the rival sides.
On the eve of the talks, the U.S. Embassy in Tegucigalpa said Washington had suspended $16.5 million in military assistance programs to Honduras.
Micheletti's caretaker administration called the U.S. move "counterproductive."
The U.S. Embassy said a further $180 million in U.S. aid for Honduras could also be at risk, but said humanitarian assistance to the Honduran people such as food aid, AIDS prevention and help for children, would continue.
REGIONAL TENSIONS
Zelaya, arriving in Costa Rica on the eve of the talks, appeared to leave little margin for flexible dialogue by dismissing Micheletti as a "criminal" and demanding he announce in 24 hours that he was giving back power to him.
"I want to hear what that coup-mongerer (Micheletti) is going to say here in San Jose," Zelaya, wearing his trademark white cowboy hat, told reporters.
Late on Wednesday, a spokesman for Micheletti accused authorities in Nicaragua, a leftist ally of Zelaya, of refusing permission for Micheletti's plane to fly over Nicaraguan territory on the way to Costa Rica. A senior military official in Managua called the accusation "totally false."
Despite the apparent lack of willingness to reconcile, Arias, who won a Nobel Peace Prize in 1987 for helping to end civil wars and insurgencies in Central America during the Cold War, has said he hopes to persuade the two sides to reach a settlement.
Observers fear that failure to strike a deal could prompt Zelaya to renew attempts to return to his country to try to win back power with the help of his supporters and left-wing allies like Venezuela, Cuba and Nicaragua.
Firebrand Venezuelan President Hugo Chavez, who lent Zelaya a plane in which he made an abortive bid to return home on Sunday, has vowed to do everything possible to obtain his reinstatement.
Venezuelan Oil Minister Rafael Ramirez confirmed on Wednesday his country was suspending its supply to Honduras of 20,000 barrels a day of oil, provided under a regional energy alliance called PetroCaribe, until Zelaya was restored as president.
"We can't supply the benefits of PetroCaribe to a dictatorship, and even less to a small group of businessmen who carried out a coup," Ramirez said.
Analysts saw the Obama administration's quick condemnation of the coup as forestalling any possibility that leftist critics of Washington like Chavez could allege U.S. involvement or tacit support for the interim government that replaced Zelaya.
"I think that the fact the White House very rapidly condemned the coup and said that Zelaya should be put back in office, that sort of pulled the rug out from Chavez," said Julia Sweig, director for Latin America Studies at the U.S.-based Council on Foreign Relations.
(Additional reporting by Enrique Andres Pretel and Daniel Trotta in Tegucigalpa; Writing by Pascal Fletcher; Editing by Peter Cooney
