By Daniel Trotta
TEGUCIGALPA (Reuters) - Honduras' interim government on Sunday lifted a curfew imposed since the June 28 coup that ousted President Manuel Zelaya, saying it had succeeded in restoring calm and reducing crime.
The announcement by the caretaker administration of President Roberto Micheletti, installed by Honduras' Congress after the coup, came as a relief for the already battered economy and for people struggling to return to normal life.
Isolated by the international community after Zelaya's ouster, Honduras is bracing for austerity under the weight of economic sanctions, and the lifting of the curfew indicated Micheletti's government felt it could control the Central American nation despite frequent pro-Zelaya demonstrations.
Ordinary Hondurans have sought to put a brave face on the coup crisis, from a village that forged ahead regardless with its annual fiesta, complete with a brass band and fireworks, to the gang-plagued slums surrounding the capital, where the poor are bracing for higher prices and unemployment.
Even the wealthy have felt the pinch. At the upscale restaurant El Patio, where Saturday nights are normally a rollicking affair of mariachi music and rum-fuelled laughter, the neon lights were dimmed early on a dining terrace that was half-filled even though the national soccer team was on TV.
"Nobody knows how this is going to turn out," El Patio manager Dolores de Jesus Ordonez said. "I have a lot of faith in the dialogue going on in Costa Rica."
Micheletti's interim government is holding talks with Zelaya's representatives under the auspices of Costa Rican President Oscar Arias. But he says Zelaya's reinstatement is not negotiable because he contravened the constitution by seeking to illegally extend his rule.
The talks have resulted in little apparent progress, aside from an agreement to keep talking.
Zelaya, now travelling the Americas in search of support, also ran afoul of his political base and ruling elites in the conservative country by allying himself with Venezuela's firebrand leftist president, Hugo Chavez.
Zelaya told Caracas-based Telesur television on Sunday he intended to return "at any time, on any day, anywhere" even though the new government vows to arrest him.
At least one pro-Zelaya protester was killed in clashes at Tegucigalpa's airport a week ago when Honduran troops blocked an attempt by Zelaya to return in a plane provided by Chavez.
TENSION WITH VENEZUELA
In a sign that tensions with Venezuela remained, Honduran police on Saturday night detained for several hours members of TV crews of the Venezuelan state channel VTV and Caracas-based Telesur, which have been extensively covering pro-Zelaya protests and other news developments.
Speaking in Caracas, Chavez condemned the detention.
"Is this the path they want to take?" Chavez said.
He said he was convinced it was the "Yankee empire" (United States) behind Zelaya's ouster in Honduras, even though U.S. President Barack Obama's administration quickly condemned the coup and has called for Zelaya's restoration, drawing praise from Zelaya himself.
Reflecting widespread international condemnation of the coup, foreign ministers and diplomats from 50 democracies on Sunday urged the reinstatement of Zelaya and said his overthrow represented a threat to democracy.
The call came from a meeting in Portugal of the Community of Democracies, an intergovernmental organisation that seeks to strengthen democratic institutions.
Micheletti is due to hand over power after scheduled November elections, which he says will go ahead as planned.
He has asked citizens to prepare for austerity after foreign lenders suspended about $200 million in credits and the United States cut off $16.5 million in military assistance while threatening to halt a further $180 million in aid.
In the Santa Cecilia slum in hills above Tegucigalpa, where unemployment and crime are rife, the people are familiar with hardship.
"The men go out to steal and the women stay at home waiting for their husbands to come back from stealing," said Fedelina Zepeda, 52, who makes 80 lempiras (about $4) a day selling hand-made tortillas from her brick and corrugated tin house.
The coup was triggered by a planned voted on June 28 called by Zelaya to measure support for convening a constitutional assembly that could have lifted limits on presidential terms. The Supreme Court and Congress had deemed the vote unconstitutional and ordered Zelaya's removal.
A day before the national plebiscite, the village of San Buenaventura was preoccupied by another vote -- one to choose the child queen of the annual fiestas in honour of the saint bearing the name of the farming enclave of 2,300 people tucked in a forest-covered valley 20 miles (35 km) from the capital.
Seven-year-old Jessy Ordonez prevailed, but the next day's coup suddenly cast doubt on whether the fiesta could be held.
"She got very sad. Every day she asked what was going to happen," said her father, Jorge Ordonez.
In the event, Jessy got her moment of glory as the fiesta went ahead despite the political crisis, accompanied by a band of ancient, beat-up instruments played by elderly musicians
"This is what the people want," Mayor Jose Andres Amador said, "not all the political games."
(Additional reporting by Simon Gardner, Enrique Andres Pretel, Juana Casas in Tegucigalpa, Patricia Zengerle in Caracas, Shrikesh Laxmidas in Lisbon; Editing by Pascal Fletcher)