Help CoDev’s partners oppose Charter Cities in Honduras: neoliberalism with a healthy dose of neocolonialism

On September 4th 2012, the Honduran government signed a Memorandum of Understanding with MGK group to build the first in a series of so-called Charter Cities, or Special Development Regions (SDRs). This marks the latest stage in the Honduran government’s and Charter City proponents’ plan to “kick-start” the Honduran economy and to provide a “path to prosperity” for Honduras’ poor. According to them, this will happen by creating independent city states where investors will create everything from the physical infrastructure itself to the laws, regulations, police forces, courts, schools, healthcare, taxation, or lack thereof. In essence, this is a return to neocolonial days of company towns where companies controlled towns, states, and sometimes government policy.

Numerous Honduran civil society groups are actively opposing the creation of Charter Cities, including CoDev partner CODEMUH, which has lodged 22 appeals, arguing that the reforms to the constitution are unconstitutional given the intrinsic challenge to sovereignty Charter Cities represent. The good news is that on October 3rd the Supreme Court ruled in a 4-1 vote that charter cities are indeed unconstitutional, as they would require the transfer of state lands, which is prohibited by the constitution. However, because the vote was not unanimous, the issue now goes to the full 15-member Supreme Court. CODEMUH is urging us to help get as many signatures as possible on a petition organized by OFRANEH, an organization of indigenous communities directly affected by the proposed location of the cities. The page is in Spanish, but please take the time to add your name to Honduran voices opposing the plan – international pressure is important in a fight such as this.

Charter Cities, model cities, or Special Development Regions, have been in the works for some time in Honduras. In February 2011 the Honduran government ratified a legislative decree which reformed Honduran constitution to allow for the creation of SDRs. The reform means that the Honduran Constitution, system of laws, police force, state institutions, and any international treaties or agreements between Honduras and other countries would not apply in Charter Cities.

The concept of Charter Cities as a path for development comes from Paul Romer, a New York University economist who has been promoting the idea of Charter Cities for several years, including to Canadian companies and government. According to Romer, the problem in countries in crisis like Honduras is inefficient institutions blocking “development”, which to them means foreign investment. Instead of working to reform those institutions, he and other Charter City proponents argue countries can increase development by creating cities from scratch on “uninhabited” territory.

While the Honduran state will have very little jurisdiction over the city state, transparency and accountability will (according to proponents) be guaranteed by the creation of an independent Transparency Commission. This Commission will be made up of individuals named by the President of Honduras, and it will then oversee a governor, also named by the President of Honduras. These cities will be able to partner with “credible” foreign governments to contract services such as policing. By establishing safe cities with clear rules for investment, Honduras will remove barriers to large-scale foreign investment. As for the question of democracy and democratic public institutions, Romer argues that people will vote with their feet – there may not be elections, but people can choose to leave the Charter City if they don’t like it.

The notion of Charter Cities is problematic on numerous levels. First, the very concept of “uninhabited” territory poses a problem. The Vallecito region of Honduras’ Atlantic coast is the proposed site of the first Charter City, and according to the President of Honduras, is uninhabited land. However, Garífuna communities have lived there since before Honduran Independence. Land titled to Garifuna communities is supposedly not available for use, but land titles in the coastal region are incredibly murky and highly contested, and Garífuna groups have ancestral claims to much land that is considered “uninhabited”.

Secondly, the transparency of the process is also highly questionable. Numerous articles have pointed out that there is virtually no information available on MGK Group, the corporation investing $14 million dollars in the first phase of Honduras’ first Charter City. Indeed, Paul Romer, who was one of five members named by the Honduran government to the Transparency Commission, stated that he and the commission knew nothing of the deal with MGK Group, and that when he asked the government for information on the agreement, they told him he was not allowed to see it. He has now left his role with the Commission.

Lastly, the idea of replacing democratic rights with the right to vote with one’s feet is problematic. With almost two thirds of Hondurans living below the poverty line and one third of Hondurans unemployed, saying that people can simply choose to leave if they don’t like conditions is simplistic at best. Assuming that people will simply leave if conditions are not to their liking raises the question of what choice people really have when the option is terrible employment or none at all.

The whole issue of charter cities is complex and murky. For fascinating reading, visit the following links – some arguing for Charter Cities, many arguing against.

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