Honduras pact crumbles over unity government

By Fiona Ortiz

TEGUCIGALPA (Reuters) - An agreement to end a four-month political crisis in Honduras collapsed on Friday after two rival leaders failed to form a unity cabinet to heal the damage from a June coup.

Ousted President Manuel Zelaya declared the pact dead just a week after it was signed and called on Hondurans to boycott presidential elections this month because, in a surprise move, de facto leader Roberto Micheletti said he would form a new government without him.

The failure of a U.S.-driven deal to end the crisis throws into question whether foreign governments will recognize the result of the Nov. 29 presidential election and means any incoming government could inherit a chaotic political situation and be cut off from vital international aid.

The United States and the Organization of American States, or OAS, which had pushed the two sides into their agreement after months of delays, urged them to return to the table.

Zelaya and Micheletti had agreed to form a unity government by Thursday, but then they clashed over who would lead the cabinet until Congress decided whether to reinstate Zelaya.

"It is urgent that this government be created immediately," State Department spokesman Ian Kelly said in a statement, noting U.S. disappointment with recent developments.

OAS head Jose Miguel Insulza deplored the breakdown and said the democratically elected president should be restored "without further subterfuges."

Zelaya, who was toppled and sent into exile in a June 28 coup, said he would not go back to the negotiating table.