NCPA - National Center for Policy Analysis

Honduras Sets Stage for Three Privately Run Cities

September 11, 2012

In six months, investors will begin constructing three cities in Honduras that are privately run with their own government, laws and tax systems. The government in Honduras approved the project in the face of its weak government and crippled infrastructure as a result of corruption, drug-related crimes and general instability after the coup in 2009, says the Associated Press.

In hopes of reviving the country, the three cities are poised to bring in waves of economic activity into Honduras with the help of private investors and other countries.

  • The investment group MGK will invest $15 million in the first city.
  • This is projected to bring in over 200,000 new jobs in the future.
  • Additionally, South Korea has given Honduras $4 million to conduct a feasibility study, which will also create new jobs.

These cities are immune from Honduran laws. Instead, the president of Honduras will appoint "globally respected international figures" to independent boards that will oversee the running of the cities. These board members, who will not have financial interests in the projects, will also appoint governors and future board members.

  • The governors are responsible for establishing rules in conjunction with the developers.
  • However, the rules are subject to change by popular votes among all residents of the cities.
  • Even though Honduran law doesn't apply, these cities will still adhere to international norms on human rights and other principles.

The cities will be completely independent and responsible for providing hospitals, schools, restaurants and other important functions of a community. Additionally, the cities will be free to set their own international agreements and immigration policies. But Honduran laws setting up the private cities guarantee that any citizen of the country can also live there.

Opponents of the proposed plan, which include civic groups and the indigenous Garifuna people, say that they do not want the land used for commercial interests. Additionally, a constitutional prosecutor argued that the project is unconstitutional because it involves the creation of a state within a state, which is outside the jurisdiction of the government. The Honduran Supreme Court has not taken up the case.

Source: Alberto Arce, "Honduras Sets Stage for 3 Privately Run Cities," Associated Press, September 6, 2012.


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