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Honduras: ‘Charter cities’ Plans in chaos

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Honduras enjoys the sad privilege of the highest murder rate in the world, worse even than Mexico. Its cities are run-down, surrounded by poor shanty-towns, and lacking in investment or proper infrastructure.

In consequence, the government of Porfirio Lobo was attracted to the idea of ‘charter’ or model cities, the brainchild of radical neo-liberal US economist Paul Romer.

His idea is to create new cities from scratch, and allow them to operate in special development regions within national territory, with special tax allowances to attract foreign investors, their own laws and law enforcement. The aim is to create employment as well as 21st century cities with proper facilities that would help lift Honduras, one of the poorest countries in Latin America, out of poverty.

Neo-liberal US economist Paul Romer

Romer, who teaches economics at the Stern Business School in New York, claims that these ‘charter cities’ can create thousands of jobs and bring economic growth that will benefit the entire country.

The plan to build three of these charter cities in Honduras was given the green light in 2011 when the Congress voted to change the national constitution to allow for them to be set up.

Carlos Piñeda, chairman of the governmental Commission to Promote Public-Private Partnerships hailed the move as ‘a development instrument typical of first-world countries,’ and claimed it could turn Honduras, one of the poorest countries in Latin America, into an ‘engine of wealth’.

Government spokesman Osvaldo Sánchez explained that the Lobo government had sent teams to South Korea and Singapore to see how similar ideas worked there. They also went to Georgia, where they found a model in the brand-new city of Lazika, inspired by the charter-city concept.

Three sites were chosen in Honduras, and the search for investors began. One of the new centres was planned for the Sula Valley; another in Agalta Valley, and the third on Caribbean coast.

It was not long before the scheme ran into difficulties. As many as 76 legal challenges have so far been presented, contesting the constitutional amendment. Civic society groups want the initiative declared illegal, arguing that it would create a state within a state, abolish hard-won labour rights, and create a 21st-century foreign enclave.

The two Hondurases, according to the NY Times

One of those mounting a legal challenge was Sandra Marybel Sanchez, who was quoted in The Guardian as claiming: ‘this would violate the rights of very citizen because it means the cession of part of our territory to a city that would have its own police, its own juridical power, and tis own tax system.’

Some ethnic communities, including the Garifuna living on the Caribbean coast near the proposed city at Cabo Cortés, have also lodged legal challenges.

Despite an increasing number of protests, the Honduran government pressed ahead with the project. In September 2012, it announced that the first agreement had been signed with US-based investment group MGK to start construction on the first of the cities. The Honduran government claimed that this phase would start as soon as October 2012, and would immediately create some 5,000 jobs.

But any euphoria at getting the project off the ground proved short-lived.

The MGK group has only promised some US$15 million for the first model city. The South Korean government is offering a further US4 million. The group claims this is enough to begin a small pilot project, and that it is already negotiating with potential tenants, but these sums are minimal when compared to the billions needed to make the project a reality.

Then on 22 September 2012, a lawyer leading some of the legal challenges to the project was murdered. Antonio Trejo Cabrera was gunned down in the capital Tegucigalpa. Although his death has not been directly linked to his work on behalf of the protestors, it caused further unease among local politicians and civil society groups.

Even more damaging however was the resignation of Paul Romer and the other four members of the transitional overseeing committee. Romer claimed that neither he nor anyone else on the committee had been consulted on the choice of the first investors.  ‘The one absolute principle must be a commitment to transparency,’ Romer said, to justify his resignation.

At the start of October 2012, the scheme was dealt yet another blow, when five members of the Honduran Supreme Court declared that the legislation establishing Special Development Regions was unconstitutional. However, as one of the five disagreed, the question now has to be considered by the 15 justices who make up the plenary of the Supreme Court.

President Porfirio Lobo responded to the initial ruling by declaring that: ‘If Honduran society today is afraid to make the leap, we’ve talked with the Supreme Court of Justice about sitting down to dialogue and about what changes would have to be made for the Special Development Regions to be compliant with the law.”

For his part, following his resignation from the overseeing committee, Mr. Romer was philosophical: ‘If it were easy to undertake social reform, it would have happened,’ he said. ‘You just have to keep trying.’