A recent article in Foreign Policy has gained attention for its negative portrayal of Próspera, the charter city on the Honduran island of Roatán. For context, Próspera operates as an “employment and economic development zone” (ZEDE), creating a semiautonomous jurisdiction that can establish some of its own laws. The project is supported by prominent Silicon Valley investors like Marc Andreessen and Peter Thiel. Similar initiatives around the globe include Shenzhen, often referred to as China’s Silicon Valley, and Dubai, a luxurious hub in the UAE.
The authors assert that Próspera enjoys an “astonishing” level of autonomy with minimal oversight from the Honduran government; however, these claims appear exaggerated. According to the project’s legal representatives, it is subject to the Honduran Constitution, national treaties, criminal laws, and other aspects of sovereign law. Próspera can create local regulations concerning commercial and civil law, labor law (in compliance with International Labour Organization standards ratified by Honduras), and environmental law; however, these must be approved by the national oversight body, CAMP (Committee for the Adoption of Best Practices).
For some, granting even this level of autonomy is unconscionable; however, for those familiar with Honduras’s historical challenges, it may represent a promising experiment. Teaching experiences in Honduras last year indicated that it is a remarkably untroubled place. Yet, Honduras is undeniably impoverished. The town where teaching occurred generally lacked paved roads, suffered frequent power outages, and had irregular waste management services that led many residents to burn their trash. Travel inland was often prolonged due to poorly maintained two-lane roads shared with large trucks.
There is hope for Honduras’s economic improvement. As economists like Paul Romer suggest, one effective strategy for a nation plagued by corruption is to adopt better governance models from abroad. This is precisely what Próspera seeks to achieve. Its success remains uncertain amid current opposition, but it does provide Hondurans with an alternative governance model and labor market.
Próspera’s approach includes making residency affordable for locals at $260 per year compared to $1,300 for foreigners. Under its labor regulations, workers must earn at least 25% more than the national minimum wage for their respective industries and retain the right to unionize. However, the article notes that President Xiomara Castro is undermining these initiatives. In 2022, Congress repealed the ZEDE laws established by former President Juan Orlando Hernández as part of Castro’s campaign promises to rectify “neoliberal injustices.” Nevertheless, Congress has yet to ratify anti-ZEDE reforms, leaving Próspera in a precarious legal situation due to the original ZEDE law’s guarantee of 50 years of legal stability.
Currently, Próspera is suing the Honduran government for $11 billion—a case projected to succeed—but its future as a charter city appears uncertain. The authors emphasize that those who created the ZEDE laws were corrupt individuals who rose to power following a coup in 2009. With Hernández’s assistance, President Porfirio Lobo orchestrated a judicial purge to implement ZEDE laws. Castro’s efforts are portrayed as attempts to dismantle this undemocratic legacy; however, it is worth noting that her husband was removed during the coup while attempting to extend his term limits.
Moreover, Honduras is not solely engaged in conflict with Silicon Valley investors; other claimants at the International Center for the Settlement of Investment Disputes (ICSID) include wealthy families from Guatemala and various banks and companies from multiple countries. Following Castro’s reforms in 2022 that curtailed private investment in energy production, additional claims emerged from private energy firms. The state-run National Electric Energy Company currently incurs losses exceeding $30 million monthly and holds debts exceeding 10% of Honduras’s GDP.
This ongoing dispute with Próspera reflects a broader trend of reneging on investor obligations while expanding state control rather than being merely a reaction against Silicon Valley billionaires. Notably absent from the article is mention of Castro’s self-identification as a socialist aligned with Venezuela and her administration’s actions that mirror those taken by Venezuela when it withdrew from ICSID in 2012 due to claims favoring corporations over states.
Honduras’s recent diplomatic shift towards China—following its severance of ties with Taiwan—has resulted in a $275 million investment in public school infrastructure but raises concerns about entrenching corrupt governance patterns similar to those seen elsewhere in the Global South. Unlike Próspera’s investments that could potentially improve governance standards, Chinese investment tends to reward poor practices.
Castro has also terminated Honduras’s long-standing extradition agreement with the US amid allegations of conspiracies against her government due to criticism over her anti-business stance from US officials. Evidence suggests ties between Castro and drug traffickers; her brother-in-law was recorded receiving bribes linked to her presidential campaign.
In summary, while the article attributes instability in Honduras primarily to US support for Próspera’s legal actions, it overlooks how socialist narco-governance poses a far greater barrier to both democratic stability and economic growth. A viable resolution would involve reinstating Próspera’s legal autonomy rather than opposing US investors.
Ultimately, regardless of US policy changes regarding Próspera’s lawsuit, Honduras seems poised towards increasing alignment with Venezuela under Castro’s leadership amidst ongoing investor disputes. Accommodating the Honduran government could signal discouragement to potential charter city investors in the US.
For those advocating socialism—particularly those identifying as “center-left”—the pressing question remains: when will they acknowledge that aligning with foreign investors may be more beneficial for Hondurans than joining forces with impoverished dictatorships facing crises? History shows that nations fostering relationships with the US and embracing foreign investment—such as Panama and Chile—have generally achieved better living conditions than those rejecting global capitalism like Cuba and Venezuela.
The decline of Cuba’s healthcare system amid population loss underscores this point: how many lives must suffer due to rigid ideology? Even critics of capitalism must recognize practical realities; aligning with investors like Peter Thiel may be preferable over supporting figures like Nicolás Maduro.
It remains crucial not to overlook that socialist movements have previously swept through Central America; however, today countries like Nicaragua remain impoverished under authoritarian rule while El Salvador has shifted dramatically under right-wing leadership following the collapse of its socialist party. Thus, one must question whether aligning Honduras with failing dictatorships will genuinely benefit its citizens.
Opposition narratives often frame Próspera as an affront to democracy and sovereignty; however, local dissent against legal investments should not be treated as uniquely significant simply because it arises from developing nations. Such views risk portraying Hondurans as incapable of engaging with rule-of-law principles.
Based on observations during time spent in Honduras, many locals seemed unaware of Próspera; most teachers expressed discontent towards Castro while attributing her leadership style to her husband’s influence. The prevailing sentiment appeared more resigned than rejuvenated regarding governance prospects.
The most democratic act witnessed involved residents blocking a major road due to unmet infrastructure promises—a powerful reminder that citizens prioritize basic needs over foreign investments by billionaires. This perspective should resonate even among first-world leftists who would likely prefer backing from investors over authoritarian regimes.
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