A supporter of Honduran interim President Roberto Micheletti holds a poster during a demonstration in front of the local UN office in Tegucigalpa July 1, 2009. The interim government continues to defy international pressure and vows that ousted president Manuel Zelaya has no chance of ever returning to office. (Henry Romero/Reuters News Agency)The United States is turning up pressure on the interim Honduran government — and the businessmen who support it — warning that they will face severe sanctions if ousted President Manuel Zelaya is not restored to power.

U.S. Secretary of State Hillary Clinton called interim President Roberto Micheletti, who was installed last month following a military coup, to say there would be serious consequences if his government ignores international mediation for Zelaya's return.

Her call on Sunday came as talks mediated by Costa Rican President Oscar Arias stalled because of the refusal of Micheletti's delegates to accept demands for Zelaya's return.

State Department spokesman P.J. Crowley said that Clinton "helped him understand the potential consequences of a failure to take advantage of this mediation."

Sanctions could cripple economy

Honduran business leaders, meanwhile, say U.S. Ambassador Hugo Llorens has called them into meetings to warn that Honduras — impoverished and highly dependent on exports to the United States — could face tough sanctions if the interim government continues to refuse Arias's compromise proposal for Zelaya to return as head of a coalition government.

The European Union added to the pressure on Monday by announcing it was suspending $93.1 million US in aid to Honduras.

No government has recognized Micheletti, and the United Nations and the Organization of American States (OAS) have called for the return of Zelaya, who was arrested and hustled out of the country by the army on June 28.

But Micheletti vowed not to stand down — and implied that the United States is betraying one of its staunchest allies. Honduras allowed its territory to be used as a staging area for U.S.-backed Contra rebels in Nicaragua during the 1980s, and more recently, it sent troops to Iraq.

"We have received pressure from all sides," Micheletti said in a speech before cheering supporters Monday. "One learns in life that people who seem to be friends are not really friends but are only interested in what you can do for them or give to them."

Micheletti refutes allegations of political violence

Referring to Clinton's call, Micheletti suggested she send an envoy to Honduras to verify that his government is not persecuting opponents.

"I told her to please send someone she has confidence in, someone she can really talk to, down here to say whether it was really true that people are being killed all the time," he said.

He vowed to stay in power until the scheduled Nov. 29 elections. The United States has suggested it may not recognize that vote because it will be held under a de facto government.

"We are going to go with life, we are going to go on with our government, we are going to go on with the next presidential elections on Nov. 29," he said. "They have to respect us."

Business leaders — a key sector of support for Micheletti — also vowed to tough it out, hoping that the U.S. government is as wary as they are of Zelaya, who has aligned himself with leftist Venezuelan President Hugo Chavez, one of Washington's biggest antagonists in the region.

The interim government has launched a lobbying effort against sanctions, betting they wouldn't play well with U.S. conservatives or business interests.

"Honduras is a small, poor country," said Amilcar Bulnes, the head of the Honduran Council of Private Business. "The world would look very bad if it takes out its wrath on this country."

Bulnes attended one of the meetings with Llorens last week and said the U.S. ambassador told businessmen that "there could be consequences for Honduras. …They could be very tough."

"Implicitly, he was saying there may be U.S. economic sanctions within the framework of an action by [OAS]," Bulnes said.

He said such sanctions could draw resistance from investors in the country's key assembly plant sector, who are overwhelmingly American.

"I imagine there would be some reaction from them," Bulnes said.

The U.S. Embassy said it would not comment on the meetings.

On July 8, the U.S. government announced it had suspended $16.5 million in military aid, and had placed a hold on development aid expected to total about $180 million. But it has not yet threatened to cut off trade or remittances, a move that analysts say could quickly bring down Honduras's economy.

"The U.S. could make this be over in a second if it imposed strong sanctions," said Mark Jones, a professor of political science at Rice University. "But in doing so, it would hurt the poor; it would hurt our allies."

EU External Relations Commissioner Benita Ferrero-Waldner announced the aid cut from Brussels, calling the standoff "a crisis which Honduras can ill afford."

Adolfo Facusse, the head of Honduras's National Association of Industries, was defiant: "We prefer sanctions to Zelaya's return," which he said would bring the "loss of liberty, dictatorship, communism."

Zelaya angered many here by ignoring the objections of the courts and Congress to try to hold a referendum on changing the constitution, which many saw as an attempt to extend his presidential term and impose a Chavez-style socialist government.

Bulnes said the damage to Honduras's image since Zelaya's ouster had already hurt the country's tourism, hotel and restaurant industries, but he said that farms and factories were still operating normally.

Seventy percent of Hondurans live in poverty, and the per capita gross domestic product is just under $4,000 per year.

"Neither Micheletti nor Zelaya gives me anything to eat," said street vendor Oscar Quintanilla, who is struggling to raise four children amid constant protests. "I don't care about constitutional referendums; all I care about is the welfare of my family."