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President Porfirio Lobo’s flagship plan for Honduras – a model cities project – has been approved by congress. The government is reportedly in talks with investors from Canada, South Korea and the UK about various projects, all of which on paper look more like large commercial enterprises rather than the charter cities along the lines of Hong Kong envisaged by Paul Romer, the ex-Stanford economist who first convinced Lobo that Honduras could benefit from such self administered enclaves. Lobo hopes to get the ball rolling on the first charter city before his term ends in 2013.
On 29 July the national assembly approved by qualified majority the founding charter for the proposed special development regions, aka self governing and largely autonomous private ‘model cities’. The final statutes, containing 72 articles, were substantially modified to better define the legal framework, which is largely concerned with fiscal autonomy, but the entire project is still rather vague, and thus very controversial.
The model cities seem are spun by President Lobo as more advanced, sophisticated versions of the so-called ‘free (trade) zones’ or ‘special administrative regions’ that are already in place to facilitate industrial zones/clusters (like the maquila sector) in many countries in Latin America and elsewhere. Similar ventures have worked successfully in places like South Korea, where they are sited around major air/sea ports and communications hubs, chiefly to boost trade and industrial development, but it’s questionable whether Honduras has any of the same conditions in place (including an educated workforce) to emulate this success.
The full draft text of the new statutes was not yet available online as we went to press, but according to what we could gather from various local press reports, the new Regiones Especiales de Desarrollo (RED) are carefully defined as “an inalienable” part of Honduras. They will be subject to the Honduran constitution on issues of: sovereignty, national defence, external relations, electoral issues and the issuance of passports and national ID documents. The REDS will be subject to the national penal code, but will likely also have local laws in place. They will have an independent police force and judiciary, with primary responsibility for enforcing the national penal code.
The new cities will elect their own ‘executive governor’, for a seven year term. The governor will be answerable to an elected governing council, or ‘Transparency Commission’. Some blogs have reported that this council, controversially, may comprise exclusively of foreigners residing in the REDS, though LatinNews could not verify that. The governing authority will be permitted to establish its own currency and levy its own taxes, though certain taxes will also be imposed by the Honduran government.
The RED authorities will be able to draft their own labour laws, with the stipulation that 90% of jobs in a RED must be filled by Honduran citizens. Honduran citizens will be entitled to travel freely into a RED, but foreigners will be subject to immigration regulations specific to each RED. The local authorities will also freely control maritime navigation, ports and airports, as well as things like automotive imports. Finally, the REDS can also create their own health and education systems.
The Honduran Left in particular is deeply suspicious, accusing President Lobo of effectively selling off tracts of the country (potentially without consultation with local residents) to potentially shady foreign investors. Sceptics argue that handing over control of parts of a country to private investors will merely create independently wealthy ‘enclaves’ subject to very little control and with dubious benefit to the country’s socio-economic development. Critics point out, for instance, that it’s not at all clear whether Honduran workers and their families will have access to the health and education systems in the REDS, while they also question the apparent lack of any labour law provisions or other social protections in the approved statutes.
Even more notably, the main local business council, Consejo Hondureño de la Empresa Privado (Cohep), which might be expected to welcome the foreign investment, has also raised several concerns, citing a lack of transparency over things like guarantees for investors (foreign and local) and no clear definition of land/property titles. Honduras bans foreign land ownership. In a statement dated 28 July, Armando Urtecho, the Cohep president complained that the statutes are full of “incongruities, inconsistencies, ambiguities and vaguenesses”, arguing that the whole thing is “unconstitutional and an attack on Honduran sovereignty”.
Trujillo first up?
Trujillo, on the northern Caribbean coast of Honduras, has been provisionally mooted as the site of the first model city. Left-wing blogs are full of conspiracy theories about several rounds of talks over the past eight months between President Lobo and Canadian investors, reportedly including, Canadian Shield Asset Management (CSAM), Barrick Golf, Toronto Dominion Bank and Randy Jorgensen, the rather controversial CEO of Life Vision Development, for the construction of a large scale tourist project/private model city-port in Trujillo. In partnership with the Lobo government, the Canadians are reportedly proposing to build an international airport, a power plant, hospitals, schools, toll roads and even a prison, in addition to tourist centres and resorts. The exact location of the site is unknown. South Korea's Agency for International Cooperation (KOICA) is also said to be developing a plan for construction of a model city in or around Trujillo. The Garifunas in Trujillo have already begun a campaign against the reported proposal, citing fears that they will be nothing more than domestic staff for rich foreigners (potentially including tax exiles or even criminal elements).
- The 2013 elections swim into view
While Lobo is busy with his lofty ideas for model cities, his rivals in the ruling Partido Nacional (PN) have already begun jockeying for position for the November 2013 presidential race, in which (barring a constitutional reform) Lobo cannot stand. Among the PN forerunners are the mayor of Tegucigalpa, Ricardo Alvarez, and the president of the national congress, Juan Orlando Hernández. Ambitious cabinet members include the public works, transport and housing minister, Miguel Pastór and the security minister Oscar Alvarez. Primaries are due in November-December 2012 but the electoral law requires parties and individual candidates to register with the national electoral court by end-2011.
That was the reaction of the Israeli ambassador to Honduras, Elihau López, to President Porfirio Lobo’s declaration on 28 July that Honduras would support Palestine's efforts to achieve recognition as a member of the United Nations at the organization's next General Assembly meeting in New York, scheduled for September. The announcement came as a surprise not only to Israel but also the Honduran foreign ministry, which tried to soften Lobo’s statement by suggesting it was merely a plea for mutual dialogue between Israel and Palestine. A clearly rankled López noted that Israel was one of the only countries to support Honduras during the coup crisis in 2009, and said that “these things are not done between friendly governments”. Israel has long supported Honduras with aid and military support.
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