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The “private city” in Honduras: a small and very controversial ‘country’

The plan is to create a model city in an uninhabited territory where international investors will generate business opportunities and create an economy . It will have its own laws and government and will be able to devise its own budgets, among other things.

Nuria Riutord Lleonart

At the start of september this year, the government of Honduras ratified a process through which some ‘special’ places could be formed within the boundaries of the country.

The Order in Council 283-2010 has permitted the Honduran parliament to legalize these model cities.

But, what does ‘private city’ mean?, especially when private is not an adjective normally associated with the noun city, at least inside a democracy.

They have, of course, been given other names: “charter cities” or, more euphemistically, “Special regions for Development (RED)”. In any case, how do they work? and, what will happen in Honduras?

The idea is for the country to give up a portion of uninhabited land in order to establish a small city with its own laws, government and ability to devise its own budgets. It will have its own monetary policy and will also be able to acquire its own sovereign debt even when there is no external guarantee for it.

According to the promoters of the project, global investors will be attracted by the business opportunities that this “new city” will generate. It will become a laboratory of sorts with the aim of generating economic activity, in a time when apparently every other place in the world has a stagnated economy and have failed to overcome the crisis years.

It will be an opportunity to start anew, with the possibility of creating jobs and progress… a new promised land to “conquer”, of which the beneficiaries and those who will control the markets are unknown.


This experiment, which will take place in Central America, is not a new idea. Indeed, Hong Kong or Macau in China are paradigms of this type of economically independent city states.

Hong Kong is surely the most well known example of a ‘private’ city. The former British colony is both politically and judicially autonomous of China with whom there is a relationship based on the same principle applied to Macau: one country, two methods. The city which was also occupied by Japan, is today one of the financial capitals of the world. Its currency, the Hong Kong dollar, is amongst the ten strongest on the international market.

In the case of Macau, which administratively belonged to Portugal until 1999, has despite returning its sovereignty to China, remained autonomous through declarations officially recognized by the People’s Republic.

Thus there is a legislative structure that stipulates that Macau has its own legal and economic system, police, migration policy, etc until at least 2049.

The project in Honduras is backed by North American and famously neoliberal economist Paul Romer, linked to the University of Chicago. The fact remains that it is in these ‘weak’ democracies where these plans and experiments nestle.

Madagascar and California, two places in the world which appear so far apart in every sense, both have experienced a charter city. The african island saw itself overcome with violence and corruption. The protests of the opponents of the president, who defended the idea of creating a private city in an uninhabited area in the east of the country were answered with violence.

Approximately thirty islanders died forcing the expulsion of power and indefinite paralysis of the project.

In the case of powerful North American state California, named cities of ‘general law’ exist. These are usually governed by a city council whose cabinet is formed by 5 elected members voted for by the public. California, however, was made particularly famous by a corruption scandal: in 2012 in the small city of Bell, the mayor managed to defraud one and a half million dollars taken as part of his salary.

Why say no to these cities?

Those who oppose this process in Honduras argue that such a venture goes against an essential principle of every state: sovereignty

They consider it illegal stating that, according to article 320 of the Honduran Penal Code, any action that puts in danger the integrity of the state or lets it be submitted to a foreign force, whether wholly or partially constitutes a crime.

Recently, according to the Honduran press, it appears that the one most responsible for the conception of charter cities, Paul Romer, no longer wishes to associate himself with the project. The three other experts appointed to the Commission of Transparency, for the creation of the ‘private city’ have also now renounced it.

Professor Romer said that official Honduran organisations have not allowed them to reach an agreement with the private company intended to carry out the creation of a RED. It is due to this lack of integrity and transparency that he and colleagues decided to disassociate themselves from the process started in Honduras.

This is only one part of what is without doubt a controversial idea which can also be questioned from different perspectives whether legal, social or political.

The idea is no longer just on paper, it has become a reality since the Honduran parliament passed it by statute law. The wheels are in motion and the question going round is whether it is possible for the Honduran people to slow down the project from this point onwards, now that its original creator wants nothing to do with it.

(Transslated by Harriet Payne)

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