Breakthrough with Honduran charter cities

by on June 13, 2013 at 11:22 am in Current Affairs, Economics, Law | Permalink

Written reports from Central America often require Straussian skills, but at least on the surface it would appear that Honduras will go forward with some version of the free city/charter city idea.  A translation passing through Google, Tom Bell, and Lotta Moberg (not holding any one of them responsible for it, but to my eye it appears acceptably close) indicates:

“The Law complements the amendments to Articles 294, 303 and 329 of the Constitution which paved the way for the creation of these special areas. [Those amendments fixed the problems that caused the Honduran S.Ct. to strike down the earlier version of the statute, which aimed to establish REDE.] The ZEDE legislation authorizes the establishment of courts with exclusive jurisdiction, which may adopt legal systems and traditions of other parts of the world, provided that they ensure equal or better protection of constitutional human rights protected under Honduran law.”

The legislation was hardly crammed down the legislature’s throat. As I mentioned, the Honduran S.Ct. struck down an earlier version of the statute. The ZEDE legislation sparked “a fierce debate because several municipalities fear losing their autonomy and tax collection.” (The answer to those objections, in floor debate: You can arrange annexation by the ZEDE, winning the same legal status.)

Interested in moving there? “The ZEDE may establish coexistence agreements with people who wish to live or reside freely within their jurisdiction.”

There is a Honduran Spanish-language link here (it doesn’t work in every browser, but experiment).  It starts with this, which seems clear enough:

La ley orgánica especial que regulará las Zonas de Empleo y Desarrollo Económico (ZEDE), la nueva versión de las “ciudades modelos”, fue aprobada ayer por el Congreso Nacional en su último debate, lo que deja las puertas abiertas para que empresarios extranjeros inviertan en regiones específicas con reglas diferentes al resto del país y con autonomía propia.

Developing…

And for the pointer I thank Lotta Moberg.

Alexei Sadeski June 13, 2013 at 11:27 am

After hearing This American Life’s coverage of the Honduran charter city, a broadcast which had a pretty ambivalent take on the project’s chances, I actually adjusted my personal expectations for the project way up.

Happy to see that things are looking good!

prior_approval June 13, 2013 at 11:32 am

Free market colonialism is certainly looking like a golden investment opportunity for those unconcerned about death squads – well, as long as the death squads see a mutually synergistic relationship blossoming, that is.

Milton June 13, 2013 at 11:41 am

I’m pretty sure free market colonialists can afford better death squads.

8 June 13, 2013 at 11:57 am

Who needs a death squad when there is the Honduran army? Viva Pinochet!

Leon June 13, 2013 at 2:08 pm

Not all Latin American countries are the same you know…

Barry June 14, 2013 at 3:23 pm

True, but IIRC, the Honduran Army racked up quite an impressive body count in the 1980’s.

ladderff June 13, 2013 at 11:40 am

Here we go again. When they are done selling land in the charter city I have an iconic bridge over the East River for sale.

Brock June 13, 2013 at 12:16 pm

You don’t think the risk premium is priced into the cost of land? Or do you think the market is irrational relative to your own opinion of the situation?

Just checking for EMH adherence.

Zach June 13, 2013 at 12:17 pm

It’s important to note that this is not a charter city. The author’s characterization is incorrect, and the terms are not interchangeable.

Charter cities require the foreign ownership and administration of land by a ‘guarantor nation’. This is what leads people to conclude ‘colonialism’. What’s going on in Honduras are small privately-developed communities similar to private housing developments or multiple-tenant income properties like marinas or shopping malls. They have autonomy, but are not taking sovereignty.

The talk about ‘death squads’ and colonialism is misplaced. This is a project by Honduras and for the Honduran people. Even the model they are following was pioneered by a Honduran lawyer who is currently in the government.

More responsive institutions, fairer administration of justice, and more open commercial law for Honduran entrepreneurs could do an incredible amount of good for a poor and violent country like Honduras. Perhaps it’s worth considering this before trotting out the scare tactics.

Brett June 13, 2013 at 12:51 pm

Agreed. This is more like a kind of special economic zone, where Honduras can experiment with some different rule set-ups to see if they pan out in a Honduran setting. Hats off to them, and I really wish we could be trying some stuff like this in troubled areas of the US (like Detroit, where there have been some proposals for it).

mulp June 13, 2013 at 1:22 pm

Will the homeless poor be able to move into the charter city and find room in homeless shelters and food at soup kitchens and then free health care at the ER when they suffer a psychotic break? Or they have an epileptic fit? Or a drug overdose?

If the point of a charter city is to draw a line between the individuals who are net assets and those who are net liabilities, and then dump the liabilities on the host nation while the corporation makes money from all the human assets if the nation, is that really the solution?

Is the next step to sell the unwanted parts of a nation to Soylent Green Inc?

Zach June 13, 2013 at 1:39 pm

One of the most promising pieces of projects like this is the potential for innovation in social services. It’s not like the poor or homeless in Honduras (or most countries, really) are well served by the current system.

There are countless ways to finance and create good healthcare, drug rehabilitation, and soup kitchens — and nothing about reform city projects is against them. In fact, they provide fertile ground for us to learn even better ways to provide good services.

You are imputing a ‘point’ to the ‘charter city’ that doesn’t exist, but simply is an elaboration of your own preconceptions.

Tommy June 13, 2013 at 1:27 pm

By Honduras and for the Honduran people? More like a good idea (albeit not widely supported by the Honduran populace) from a well-intentioned Honduran advisor…which will be co-opted by legislators looking to turn a quick buck on land sales and investment. I don’t see this turning into a long-term success.

Carlos July 2, 2013 at 10:56 am

actually, latest polls show a support of over 75% of the people. However, agreement doesnt make a good headline, so the media seeks those on the margins and get them to say whatever idiotic or ideology based thought comes into their minds.

Brett June 13, 2013 at 12:49 pm

You’ve got to do a post sometime about what you mean when you call something “Straussian”. You’ve used that term a lot.

Erthel June 13, 2013 at 1:46 pm

Hi, I’ve made a rough translation of a more expanded article, with info about the location of the first two ZEDE and specific dates (would paste it here but it’s too long):

http://libertapolis.blogspot.com.es/2013/06/honduras-aprueba-las-zede.html

Steve Sailer June 13, 2013 at 5:40 pm

“the location of the first two ZEDE”

What’s the average daily high temperature and humidity in the hot and/or rainy seasons in these two locations?

Erthel June 13, 2013 at 6:06 pm

Not sure, but expect something tropical. Peña Blanca is actually a quite popular touristic location, between mountains and next to a big lake.

Jacob A. Geller June 13, 2013 at 2:26 pm

I would seriously consider putting my life on hold for a few months and getting an apartment there if this thing were to actually happen.

Ladderff, I would also consider buying your iconic bridge.

Steve Sailer June 13, 2013 at 5:43 pm

There was a military coup in Honduras less than four years ago.

http://en.wikipedia.org/wiki/2009_Honduran_coup_d'%C3%A9tat

The first thing I’d want to know is what is the attitude of the Honduran Army toward this project, including the attitude of the more dynamic junior officers. Are the men with guns backing this project? Or do they resent it?

Erthel June 13, 2013 at 6:03 pm

Actually, the coup is somewhat ambiguous, as it was backed by the whole congress and the supreme court of Honduras, because Zelaya, the deposed president, intended to rule for longer than the law allowed. Is as if the congress and supreme court of the USA removed Obama after he pretended for a third mandate.

But yes, still, that means there is some political inestability around there.

Mark Klugmann June 14, 2013 at 3:52 am

Steve, the north coast of Honduras is hot and humid (like Singapore?); however Tegucigalpa — where I am writing this from — has a wonderful mild, non-humid climate. There will be multiple zones, so let the climates compete!
With regard to the coup, Erthel is correct: the ouster of Mel Zelaya was supported by all important institutions in Honduras, including the members of Congress from his own party and by his own Supreme Court judicial appointments, and even the Catholic Church and the left-wing Ombudsman for human rights. The posture of the military in Central America is quite different than it was 20 years ago; with regard to politics, generally quite subdued. So, the military is not an issue with regard to the ZEDEs.
Zach is right: the Honduran reform is not based on the Charter Cities model, so attempts to interpret it in that light will be unproductive.

Harry Bushwitz June 14, 2013 at 8:54 am

Mark Klugmann appreciate your enlightened comments. Could you provide a copy of the law text, Spanish or English version would be welcomed?

Steve Sailer June 14, 2013 at 8:27 pm

You should probably get somebody to edit the Wikipedia page, then, because it’s not terribly reassuring about Rule of Law in Honduras:

“On 28 June 2009, the country’s Supreme Court issued an order to detain President Zelaya, who was subsequently seized by the military.[47] He was then brought to the air force base Hernan Acosta Mejia,[48][49][50][dead link] and taken into exile in Costa Rica,[51] precipitating the 2009 Honduran constitutional crisis.

The reason given for the arrest order were charges brought by the Attorney General, and the order was to enable a statement to be made to the Supreme Court. The decision to expatriate him was, however, taken by the military themselves, knowing full well that it violated the constitution, ‘to avoid mob violence.'[52][53]

Following the coup, Zelaya spoke to the media from his forced exile in San Jose, and identified the events as a coup and a kidnapping. He stated that soldiers pulled him from his bed and assaulted his guards. …

The National Congress voted unanimously to accept what they said was Zelaya’s letter of resignation, but Zelaya said he did not write the letter.[56][dead link] …

The world — including international bodies like the United Nations, the Organization of American States, and the European Union – publicly condemned the events. U.S. President Barack Obama said, “We believe that the coup was not legal and that President Zelaya remains the President of Honduras.”[60][61] …A one-page United Nations resolution, passed by acclamation in the then 192-member body, condemned the events and demanded Zelaya’s “immediate and unconditional restoration” as president.[64] The resolution calls “firmly and categorically on all states to recognise no government other than that” of Mr. Zelaya.[65]

http://en.wikipedia.org/wiki/Manuel_Zelaya#Constitutional_crisis

Careless June 15, 2013 at 5:49 pm

There’s a long history of edit wars there, Steve. But when the MSM calls it one way, that’s what Wikipedia will go with, even when they’re wrong.

Can’t have a coup against an ex-president.

Carlos July 2, 2013 at 11:05 am

Problem is the only ones that aren’t busy holding jobs are the leftists, so they get to do the editing.

Mark Klugmann June 14, 2013 at 4:43 am

Tyler, not intending to be provocative (well, maybe just a little, but in a very friendly way and with a tip of my hat to your wife) it is interesting to note that the key Honduran figures behind this reform are not economists; they are *lawyers* (very smart, very talented lawyers! — Octavio Sanchez, Ebal Diaz, and Carlos Pineda). Though President Porfirio Lobo is not a lawyer, Juan Orlando Hernandez, the president of the Congress, and a key figure in the reform, is a lawyer. You will see in the text of the ZEDE law the precise detail they provide on judicial and arbitration matters, for example. I am a co-author of the law, though not a lawyer; though you may find that the political governance model (through the start-up phase, it is something similar to a board of trustees) is not something seen with a free trade zone or enterprise zone.
Integrating multiple core elements, Honduras is creating special Legal, Economic, Administrative, Political (LEAP) zones, as opposed to the rather ubiquitous “free zones”.
A LEAP analysis of a special zone identifies the manner in which each of these four core components is being addressed. In the typical “free zone”, the box for the Political dimension would simply say “same as the general, national regime.” In a Charter City, the box for the Political dimension would say “under the guarantee and administration of some foreign country”, as was the case of pre-1997 Hong Kong. With a seasteading development, the Political box might say “governed by the owner of the ship,” or “governed by one person, one vote of those residing on the ship”, or “governed by one share, one vote..” and so forth.

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