The European Commission has upped pressure on Honduras' interim leader to reinstate ousted President Manuel Zelaya by suspending all budgetary support payments.
Supporters of Honduras' ousted president
The Commission made the decision after efforts to resolve Honduras' political crisis failed on Sunday with interim leader Roberto Micheletti's refusal to hand power back to Zelaya. The security situation in Honduras has been deteriorating since Zelaya's government was overthrown in a military coup on June 28.
"In view of the circumstances, I have taken the difficult decision to suspend all budgetary support payments," EU External Relations Commissioner Benita Ferrero-Waldner said in a statement. "I strongly appeal to both parties to refrain from any action or declaration which might further escalate tension, thus making the prospect of a solution more difficult."
"This is a crisis Honduras can ill afford," she added.
The European Commission had earmarked 65.5 million euros ($92.73 million) for budgetary support payments for the 2007-2010 period.
Costa Rica's President Oscar Arias, center, was unable to broker a solution
On Sunday, representatives of Honduras' de facto government rejected a proposal by mediator and Costa Rican President Oscar Arias for Zelaya to return as president in charge of a "reconciliation" government. He is currently in exile in Nicaragua.
Arias, who has won a Nobel Peace Prize for his conflict resolution efforts in Central America, has warned that Honduras is now on the brink of civil war.
The EU has backed efforts by the Organization of American States for a peaceful solution aimed at restoring constitutional order by reinstating Zelaya.
Editor: Susan Houlton