San José, Costa Rica, since 1956
Model Cities

Is Honduras heading for the privatization of parts of its territory?

Honduras, one of the poorest countries in Latin America, ridden by corruption, severely hit by violence, and showing some of the highest inequity levels in the region, seems on the verge of becoming the ground for a controversial experiment: the privatization of parts of its territory.

All is set in Honduras for the building of the first private city in that Central American nation’s history, to begin perhaps as early as next year.

Promoters of the enclaves called Employment and Economic Development Zones, or ZEDEs (Zonas de Empleo y Desarrollo Económico in Spanish), claim that through private investment – both foreign and local – in the zones, poverty will be reduced and security will improve.

Opponents say that, on the contrary, the ZEDEs – which they deem, among other things, unconstitutional – will benefit only the Honduran wealthy elite, foreign investors, and organized crime, leaving the country’s dispossessed worse off.

ZEDEs date back to 2011, when 126 of 128 lawmakers in the country’s single-chamber legislature passed a law creating Special Development Networks, or REDs, that are actual charter cities that locally came to be called “ciudades modelo,” or model cities.

Then-President Porfirio “Pepe” Lobo (2010-2014) and congressional head Juan Orlando Hernández – Lobo’s present successor (2014-2018) – described the initiative as a means to bring in an important flow of foreign investment, which in turn would guarantee development.

Honduran First Lady Ana de Hernández straightens President Juan Orlando Hernández’s eyebrows while waiting for the arrival of U.N. Secretary General Ban Ki-Moon at the presidential house in Tegucigalpa on Jan. 14, 2015.

Orlando Sierra/AFP

The RED plan was immediately questioned by civil society sectors that saw the law as an instrument for the legalized sale of parts of their country’s territory – and, therefore, its sovereignty.

They took their case to the Supreme Court, where they appealed the law as unconstitutional, and were backed in 2012 by four of the five magistrates in the court’s Constitutional Chamber, who ruled the law in effect went against the country’s constitution.

According to local sources, Hernández – a staunch supporter of REDs, and now of ZEDEs – twisted arms, had the four judges removed, and brought in obedient replacements.

JOH – as Hernández is known in Honduran media – then pushed for a new law, fine-tuning the original bill, re-labeling the RED as ZEDE, and passing it in Congress.

Civil society sectors opposed the new law and again took their case to the Constitutional Chamber. But this time, the appeal was unanimously turned down last year.

Honduran human rights activist Bertha Oliva told NotiCen, a publication of the University of New Mexico, that promoters of both REDs and ZEDEs “removed magistrates.”

They “brought in people at that time obedient to the president of Congress, who now is the president of Honduras,” she told the publication of the university’s Latin America Data Base.

Honduran peasants march to Tegucigalpa to demand the abolition of two laws – one promoting the mining industry and another allowing the creation of so-called “model cities,” on March 6, 2013.

Orlando Sierra/AFP

One of many features of the ZEDEs that is targeted by opponents is the makeup of the authority in charge of the cities, the Committee for the Adoption of Best Practices, described by some as the zones’ central government.

Known by its Spanish acronym CAMP, the committee has decision-making power on a variety of topics ranging from appointing a Honduran in each ZEDE as the zone’s technical secretary or administrator, to approving local regulations in the labor and legal fields.

A striking feature of the CAMP is the fact that barely four of its 21 government-appointed members are Honduran, and the majority are conservative foreigners –including several U.S. nationals.

Outstanding among the latter is Mark Klugmann, a political consultant who was a speechwriter for U.S. presidents Ronald Reagan (1981-1985, 1985-1989) and George H.W. Bush (1989-1993), as well as image consultant to Lobo.

Klugmann, who resides in the Honduran capital Tegucigalpa, is co-chair of the CAMP.

Other members include Reagan’s son Michael Reagan, former CIA economic analyst Mark Skousen, and ex-Chamber of Commerce Vice President Richard Kahn, who served in that position during the Reagan administration.

With just over 8.5 million people – some 60 percent of whom live below the poverty line – Honduras has one of the world’s most blatant levels of deficient citizen safety, reflected in the United Nations’ homicide estimate of approximately 90.4 per 100,000 citizens.

Violence has dramatically worsened since a bloody June 2009 coup toppled President Manuel “Mel” Zelaya, now an opposition congressman for the center-left Partido Libertad y Refundación (Libre), which he cofounded in 2009 following his return to Honduras from exile.

Within this context, ZEDEs are officially portrayed as prosperity and safety islands within the country.

According to the ZEDE official website, the zones “are designed to be the most competitive new jurisdictions in CAFTA space.”

“The Honduran ZEDE considers four critical dimensions and addresses the legal, economic, administrative, and political (LEAP) factors that in the CAFTA region are vital for winning investment leadership,” it adds.

This is “unlike traditional special zones that just address a single dimension by using only economic incentives,” it states.

“The design of the Honduran ZEDE is to create an investment/employment jurisdiction that meets international standards for rule of law, efficiency, security, and transparency to a degree that surpasses any competing investment zone in the CAFTA region,” it points out.

Ousted Honduran President Manuel Zelaya, left, talks with Costa Rica’s then-President Óscar Arias on July 9, 2009, in front of the latter’s residence in San José. Zelaya arrived to begin two days of tense mediated talks with his country’s interim leader following a coup.

Mayela López/AFP

Also, “the advantage for Honduran workers is real,” because, “by building competitiveness across all the LEAP factors, the Honduran ZEDE avoids the “race to the bottom” that is driven by the lowest wage countries of Asia and Africa,” it assures.

“Instead [it] adds greater value and security for investors seeking the most credible ‘near-shore’ production and employment platform in a new, first-class jurisdiction in the CAFTA region,” it further points out.

“In addition to attractive, WTO-compliant [World Trade Organization] economic incentives, the Honduran ZEDE jurisdiction competes for world investment with additional advantages unique in the CAFTA region,” according to the information.

These include “international legal standards, dispute resolution mechanisms and institutions, using Common Law, mandatory arbitration, and special judges,” adds the website.

It offers “a 21st century, business-efficient, non-politicized, transparent, stable, system of administration, plus a special police and institutional security to overcome regional issues and meet world standards,” the website states.

All of which is topped by “a distinguished 21-member international committee working to assure the adoption in the Honduran ZEDE of best international practices.”

But the official picture painted about ZEDEs causes skepticism.

Quoted last month by the U.S. magazine The New Republic, Eugenio Sosa, a sociologist with the public Autonomous National University of Honduras, said, “what’s attractive to some about the ZEDE is the extreme extent to which it takes freedom.”

“But that’s the same part that will let in illicit groups and mafias,” he immediately warned.

Also quoted by The New Republic, veteran Honduran journalist Sandra Maribel Sánchez assured that, “I’ve seen all sorts of horrific things in my time, but none as detrimental to the country as this.”

And in Oliva’s view, ZEDEs are now a key national issue because “it’s the business, and it’s not anywhere they’re going to be built, but in key places with access to the sea, but the other thing is places where it’s known there’s oil.”

Potential ZEDE locations.

(Via http://zede.gob.hn)

Thus, the ZEDE initiative “must go forward, because it’s the business of the year, not for the country’s development, because, on the contrary, a country handing out its territory in pieces, and building city enclaves with separate justice systems, and all else, is a country handing out its sovereignty,” she told NotiCen.

“That goes against the people, but, yes, it’s going to benefit the commercial sector, those who have sold the country because they’ve seen it as a private business,” including “the president of the republic,” she added.

“Those are the locals, the local negotiators, but all the others are international investors who are going to come and set up their ‘ciudades modelo’ because of the oil,” said Oliva, head of a human rights organization.

And regardless “of whether you’ve owned the land for 30, 50 years, or whether you have ownership documents,” the ZEDE law “says that if there are owners, they’re going to be evicted if there’s an investor interested in that place,” she explained.

Among the first to take an opposing stand, the rights group Organización Fraternal Negra Hondureña, or Ofraneh, warned last year, in an article posted on its website, against what it described as the prosperity illusion being created with the ZEDEs.

“The Honduran people are susceptible to the illusion of job creation and economic growth,” it pointed out, and added that, “over the past several years handing territory over has been sold as attractive in order to bring in the necessary economic investment leading up to ‘development.’”

Ofraneh is a Honduran Garífuna rights organization based in Sambo Creek, in northern Honduras.

Meanwhile, the Korean International Cooperation Agency (KOICA) is drafting a feasibility study to be presented to the Honduran government early this year, in what the Hernández administration considers the start of the building process for the first of the ZEDEs.

KOICA is centering attention on three towns – Amapala, Alianza and Nacaome – in southern Honduras, in the Gulf of Fonseca region, on the Atlantic side of the country.

With their borders coinciding in its waters, El Salvador, Honduras and Nicaragua share the gulf.

Amapala is an island town in the gulf; Alianza is a community close to the southern end of the Honduras-El Salvador Border; and Nacaome is the capital of the Valle department, bordering El Salvador.

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henry montoya

I could agree about what has been said in respect to the zede in Honduras…..I could agree about Honduras being the poorest country in the world,but I will not agree in any of both, why?….for the simple reason that as Honduran I prefer for my brothers citizens to subject to some regulations in their own land than to be discriminated and suppress in a foreign country……in respect to poverty only ignorance has kept people poor……but the country it’s very rich, the only problem is that there has been foreign goberments trying to keep them ignaorants and set in their mind that the country is poor…..that there will be different rules with the zede, yes….but I rather subject myself to these rules and have a job in my own country……which of you really knows about Honduras and its. people?……I have seen the so clled freedom beign diminish in USA, its citizen are subjects to these same laws but nobody knows…..there are people who has up to three jobs in order to survive, and still not have enough to take a trip to the beach whenever they want to…..there are many, many laws and regulations they have to subject and obey, but they do not know or understand being that they were born into it……so, let Honduras be, and try new things so at least the people have a job and be able to enjoy even more this beautiful land…..

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Bobpiazza

This sound like one of those terrible science fiction movies created by the Hollywood gurus.
Then when you list the US CAMP persons involved I believe the Hollywood-tied scenario more realistic. I only wish you had listed the other foreign CAMP persons providing a better understanding of the global involvement.
“The design of the Honduran ZEDE is to create an investment/employment jurisdiction that meets international standards for rule of law, efficiency, security, and transparency to a degree that surpasses any competing investment zone in the CAFTA region,” That sounds good, however, who defines these standards? There doesn’t seem to be a real tie to existing standard(s).
So, you create zones tied to commercial requirements. Look at those countries that rely heavily on commercialism (most pointedly, my home country, the US). Commercialism has evolved to demand an unrealistic return on the investment regardless of the effect to other sectors.
How would anyone feel if the powers to be could take your land without proper compensation?
I know Honduras is a frustrating problem; this is not the answer but merely a means to create Dictator Districts beholding to nothing other than their whim and to hell with all the other people of Honduras residency.
Let’s see, China will own Nicaragua, Ultra Rich will dominate Honduras …….Look out Costa Rica!

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Rick Nelson

Many Ticos already feel very sad that the Government has, decades ago, confiscated their lands and with the stroke of a pen, declared them national parks or protected areas, WITHOUT COMPENSATION OF ANY KIND. Then making sure they cannot sell or mortage or obtain loans for anything on these lands. ECO-terrorism plain and simple. Then they pass laws making it ilegal to hunt, to use the minerals or anything realistic for them while huge deserts of pineapple are being formed, but hey the preach conservation and tourism to all, while people are going hungry and the state keeps growing.

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