Source: Al Jazeera
Model cities’ unprecedented privatization scheme will undermine democracy and exacerbate inequality
On May 26, the Honduran Supreme Court upheld a 2013 law that would in effect cede control of sovereign territory to foreign investors under the guise of Zones for Employment and Economic Development (ZEDEs). Known as model cities or charter cities, ZEDEs are investor-friendly enclaves governed by their own judiciaries, laws and security apparatus. By relinquishing control of key state functions to foreign investors, the arrangement allows corporations to circumvent local laws and business practices.
While the notion of special development zones is not new, the political and historical context of the Honduran case raises particular alarm. New York University economist Paul Romer initially suggested the charter cities model to Honduran authorities as a way to promote economic development. Romer argued that entrenched interests and corruption eclipsing a more egalitarian and effective model of development were hampering the country’s economic growth. To correct this, charter cities would be set up on uninhabited land, and the resulting semi-autonomous regions would start with a clean legislative, judicial and political slate to create environments conducive to attracting foreign capital and expertise.
The genesis of the ZEDE law speaks volumes about the integrity of Honduran institutions. In 2011 the country’s legislature created Special Development Regions (REDs) to implement Romer’s proposal. The following year, four out of five Honduran Supreme Court justices found the RED law unconstitutional. In December 2012, in a process rife with procedural irregularities that many called a technical coup, the four judges were removed from the bench and replaced with jurists who were amenable to massive privatization schemes. The only judge who was in favor of the RED law, Oscar Chinchilla, is now the country’s attorney general. The 2013 legislation, which the court upheld in May, is a slightly revised version of the RED law that was initially deemed unconstitutional.
Those unfamiliar with Honduran politics and history may view the ZEDEs as promising and innovative anti-poverty measures for a country with weak democratic institutions and anemic economic growth. Appeals to employment and development also suggested that the poor and jobless are the ZEDEs’ intended beneficiaries. But the model essentially offers large swaths of Honduran territory to the highest bidder, setting the stage for unprecedented corporate plunder.
Critics claim that model cities are yet another iteration of neocolonial ideas. Some observers even likened the project to the “shock doctrine” policies developed by economist Milton Friedman and his colleagues at the University of Chicago’s economics department who advocated for less regulated, libertarian free markets.