What do Ronald Reagan’s son, Michael, Americans for Tax Reform founder and president Grover Norquist and Mark Skouson, a former CIA economic analyst running a yearly “Freedom Fest” in Las Vegas, have in common aside from ideology? They're among the conservative Americans dominating the 21-member Committee for the Application of Best Practices, which is creating the rules for new “charter cities” in Honduras, one of the poorest and most violent nations in the Western Hemisphere.
These charter, or “model” cities, significantly expand on the idea of free trade areas as they currently exist in places like Panama and Singapore. Unlike the zones in those countries, the ones planned in Honduras will not only be economically independent, but they'll be exclusively governed by corporations, both local and international, which will create and enforce their own laws in the territories ceded to them by the state.
These Special Economic Development Zones (the Spanish language acronym is ZEDE) are based on the ideas of Paul Romer, an economist at New York University, whose initial plan was that “the charter city should be established in abandoned territory,” not only to develop these unused areas but also to ensure that people would not be displaced when they’re created. The current government in Honduras has instead decided to create the first ZEDE – with $40 million in seed money provided by the government of South Korea – in Amapala, an island town in the Gulf of Fonseca whose mostly poor citizens will become charges of a newly created corporate “mini-state” with its own courts, laws and police force.
Many of those who support the creation of these zones compare them to Hong Kong, a nominally independent state within China. A better comparison might be the historical role played by companies like Dole and United Fruit in Central America, which, until relatively recently, themselves operated like states within the state and were more powerful in the areas they controlled than any central government in the region.
In order to make these charter cities a reality, current Honduran President Juan Orlando Hernandez had to remove four of the country's five Supreme Court Justices who declared the cities unconstitutional in a 2012 decision. After making minor cosmetic changes, Orlando's government passed new legislation to recreate the zones a year later. As always, it appears that a tiny elite in Honduras, along with investors from abroad, are likely to be the main beneficiaries of a policy that is being sold as lifting up the Honduran people, almost 30% of whom live on $2 or less a day.
“This is nothing more than a plan to get rid of the national debt by auctioning off the country,” was the assessment of former President Manuel Zelaya, a left-leaning populist deposed in a 2009 coup that was cheered by conservatives in Washington and tacitly encouraged by the Obama Administration. Other announced areas for later ZEDE development close to the borders of Nicaragua and El Salvador, according to the libertarian magazine Reason, which generally favors the plans. With their desperately poor rural populations, Honduras and other countries like it are now being considered ideal laboratories in an experiment to create corporate mini-states.
One person who should give ZEDE supporters pause, however, is the interest shown by perennial regional villain Michael Facusse, who heads the Dinant Corporation and who already has his own private army within the country. Facusse, whose fortune comes from palm oil plantations, famously fights against land rights for the country’s peasant farmers, so it’s alarming that according to Honduran human rights activist Bertha Oliva, ZEDE law clearly states that “whether you’ve owned the land for 30, 50 years, or whether you have ownership documents... if there are owners, they’re going to be evicted if there’s an investor interested in that place.” In a country where land is still the greatest indicator of economic well-being, throwing small farmers off of theirs doesn’t seem like a smart road to creating prosperity for all.
And its not just property rights that are usually championed by the same people who so favor creating these charter cities. Even more worrying is that “ZEDE law does not protect basic rights like Habeas Corpus, the inviolable right to life, freedom of religion, protection for free press and freedom from non-legal detainment, among many others.”
These independent economic zones are also being sold as a way to create a safe environment for business in a country riven by increasing violence and crime since the 2009 coup. That Honduras has a security crisis is true by any measure, but ZEDE opponents say the solutions to the complicated problems should be undertaken throughout the country and not simply in a few areas controlled by corporations. Lawmakers in the country should also be wary of giving private U.S. security companies police powers considering their dubious record from Iraq to New Orleans.
Although the idea of a true corporate state may appeal to some on the libertarian right, and could seem like a worthwhile “experiment” to neo-liberals who see it as a possible solution to the scourge of poverty, it terrifies most of the rest of us. If ZEDEs are deemed a success in Honduras, who knows where charter cities will be proposed next?
Corporations are, by their nature, amoral entities. Their motivation is to enrich themselves and their shareholders, which is why they spend so much money lobbying for changes to things like environmental law, regardless of the real world consequences. ZEDEs could allow oil companies and others to create their own regulations in the territories they control, while leaving the people no recourse to any authority higher than the corporation itself. From the perspective of democracy, the scheme is a recipe for disaster.
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