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OVERALL ASSESSMENT The overall level of operating risk is high, with violent crime the primary concern. This takes the form of organised crime, gang violence, kidnapping and murder, which the authorities have had limited success in addressing. As a result, operating costs for business are high. Popular disaffection at the failure of public policy to reduce the level of social deprivation and improve employment prospects, results in sporadic public protest. The legal and regulatory regime are undermined by weak state institutions and insufficient fiscal resources, as well as high levels of corruption. Protest has also focused on the authorities' adherence to unpopular structural reform measures. Although corruption will continue to pose a risk, political transparency should improve and operating risk diminish as a result of Honduras quali fying for debt relief under the IMF/World Bank's HIPC initiative and participation in DR-CAFTA.
SECURITY RISK: High levels of unemployment and poverty have contributed to a high violent crime rate in recent years, with youth gangs, known as "maras", blamed for much of the crime wave. Kidnappings and murder are frequent occurrences in the major cities, with foreign and local industrialists sometimes targeted. The government is recruiting 1,000 new police officers a year during its term. Government plans for police reform, which would include the creation of a special forces battalion, have raised concerns over the possible militarisation of the police, alongside existing accusations...