Looking harder at model cities in Honduras

By Arthur Phillips   

Centre for Economic and Policy Research

On Feb. 22, the Canadian Broadcasting Corporation (CBC) Radio’s The Current aired a nearly half-hour story about the Honduras government’s plans to create private, so-called “charter cities.” The show’s featured guest was Honduras president Pepe Lobo’s chief of staff, Octavio Sánchez. For some background, just days after the 2009 coup, Sánchez penned an opinion piece for the Christian Science Monitor in which he argued that democratically elected president Manuel Zelaya’s exile at gunpoint was constitutional. More recently, Sánchez has worked feverishly to make the same case for charter cities.

Sánchez’s pitch was briefly contested with a sound bite from Keane Bhatt, creator of the blog Manufacturing Contempt. Bhatt called the plan “social engineering at the behest of an international group of investors,” a point on which he elaborated in an article in the current print edition of the NACLA Report on the Americas. Also, later in the show Rights Action’s co-director Grahame Russell debated the merits of the proposed private cities with Carlo Dade, a professor at the University of Ottawa who endorses the concept.

As has been examined elsewhere, the charter cities concept is attributed to NYU economics professor Paul Romer, who envisions it as a path toward a rules-based, law-abiding society. In practice, though, the idea would take advantage of Honduras’ institutional breakdown to invite private corporations to build new cities on already-inhabited land, and to establish lax legal systems and tax codes to further attract foreign capital for low-cost production. Critics, such as economics professor and former Executive Director of the Institute for Fraud Prevention William K. Black, say the charter cities would lead to greater inequality. “Oligarchs . . . see this as yet another way to increase their wealth at the expense of other folks,” Black explained on Al Jazeera’s Inside Story Americas earlier this month.

Last September, Romer unexpectedly removed himself from the project after the Honduras government signed its first agreement with a group of private investors, a process which Romer claims should have first been approved by the transparency commission of which he was an appointed member (though the body was never formalized due to challenges in the Supreme Court). The NYU professor considered this an unforgivable affront and divorced himself from his nearly realized utopia.

The project has received renewed attention following the removal of four of the Supreme Court judges who deemed the original private cities legislation unconstitutional.  In a move widely considered to be illegal, the country’s congress replaced these judges with individuals who appear to be closely aligned with National Party leaders who are supportive of the charter cities. In January the Honduran Congress voted overwhelming to pass an updated version of the legislation that the new Court is expected to approve. Many media outlets have failed to inform their audiences that the charter cities project is controversial and widely contested in Honduras. And as we recently detailed here, much of the international coverage ignores the politically motivated violence and lack of accountability that engulf the country.

One recent example of this violence was the February 16 assassination of José Trejo. As described in an Amnesty International press release, Trejo was killed one day after meeting with officials in Tegucigalpa to seek justice for the assassination of his brother, Antonio, who was among the lawyers who challenged the charter cities’ constitutionality just weeks before his death. On September 22, 2012, the day Antonio was murdered, he had reportedly accused elected officials during a televised debate of using the charter cities to raise campaign funding. In response to news of the lawyer’s death, the director of the consortium that was set to build the first private cities issued a condescending statement to the AP, in which he expressed his belief that “had he lived long enough to get to know us, [Antonio Trejo] would have concluded that our approach is 100 percent beneficial to Honduras and Hondurans.”

Many proponents of private cities, including Dade, hail them as a new model for economic growth and suggest that such developments can be a sort of petri dish to test out radical new ideas. Dade emphasizes the proposed cities’ potential for “changing thinking, bringing new ideas, breaking failed models that really haven’t worked, and . . . forcing people to confront the realities of the failures that we’ve seen with most development.” 

Others have suggested that they may be the key to reducing violence in what is the world’s deadliest country. Yet these perspectives seem to completely overlook the fact that the project only further undermines the country’s broken institutions—institutions that have failed to address both the ubiquitous violence and rampant impunity throughout the country.