Honduras Sets Stage for 3 Privately Run Cities

September 6th, 2012

Update: It’s Over for Now: Honduran Supreme Court Rejects ‘Model Cities’ Idea

This was sent in by almaverdad2.

Via: AP:

Honduras’ Supreme Court has struck down a plan to build a series of model cities with their own independent tax and justice systems, a proposal that was meant to spur economic growth in this Central American country struggling with corruption and crime.

Court spokesman Daniel Aguirre said the justices voted 13-2 Wednesday evening that legislation permitting the creation of special development zones outside the jurisdiction of ordinary Honduran law was unconstitutional, partly because it placed Honduran territory out of government control.

Proponents of the model cities project said Thursday that the court decision was a blow to Honduran efforts to attract more international investment. Opponents said they were happy with the decision, which was expected to put an end to the model cities idea.

—End Update—

Update: Court: Private Cities ‘Unconstitutional’

This was sent in by almaverdad2.

Via: AP:

The constitutional chamber of Honduras’ Supreme Court ruled Wednesday that privately run cities in the Central American country would be unconstitutional, threatening a project to build “model cities” with their own police, laws, government and tax systems.

The five-judge panel voted 4-to-1 in a ruling that goes against the Honduran government and the country’s elite.

Because the decision was not unanimous, the case now goes to the full 15-member Supreme Court, which is expected to take it up within 10 days.

The constitutional judges argued that “the foreign investment expected to be received by the state of Honduras implies transferring national territory, which is expressly prohibited in the constitution,” according to a copy of the ruling obtained by The Associated Press.

—End Update—

Update: Plan for Charter City to Fight Honduras Poverty Loses Its Initiator

This was sent in by latitude38.

Via: New York Times:

“I do feel disappointed on behalf of the people I have gotten to know,” said Mr. Romer, an economist at New York University’s Stern School of Business and the director of its Urbanization Project. “The Hondurans who hoped this would be a way to escape from business as usual.”

The tipping point came with the announcement a few weeks ago that the Honduran agency set up to oversee the project had signed a memorandum of understanding with its first investor group.

The news came as surprise to Mr. Romer. He believed that a temporary transparency commission he had formed with a group of well-known experts should have been consulted. He withdrew from the project.

—End Update—

Update: Human Rights Lawyer Murdered, Had Helped Prepare Motions Declaring Proposed Private Cities Unconstitutional

Via: AP:

A prominent Honduran human rights lawyer gunned down after a weekend wedding had long complained about death threats, including in documents filed last year seeking protection from a powerful billionaire landowner.

Antonio Trejo Cabrera, 41, who died early Sunday after being ambushed by gunmen, was a lawyer for three peasant cooperatives in the Bajo Aguan, a fertile farming area plagued by violent conflicts between agrarian organizations and land owners. The most prominent is Dinant Corporation owned by Miguel Facusse, one of Honduras’ richest men. Thousands of once-landless workers hold about 12,000 acres (5,000 hectares) of plantations they seized from Dinant.

Before his death, Trejo had publicly said that if he were killed, Facusse would be responsible.

In a statement received by The Associated Press late Monday, Facusse denied any role, direct or indirect, in Trejo’s murder.

Trejo had also helped prepare motions declaring unconstitutional a proposal by the Honduran government and a U.S. company, MGK Group, to build three privately run cities with their own police, laws and tax systems.

Just hours before his murder, Trejo had participated in a televised debate in which he accused congressional leaders of using the private city projects to raise campaign funds.

MGK director Michael Strong said the company is “horrified” by Trejo’s killing.

“We believe that Antonio Trejo, had he lived long enough to get to know us, would have concluded that our approach is 100 percent beneficial to Honduras and Hondurans. We are saddened for his family and understand what a tragedy this is for trust and goodwill in Honduras,” Strong said in a statement to The Associated Press.

Update: MGK Website

Cryptogon.net user keti found the website for Grupo MGK: grupomgk.com.

From the About page, this was all I could find about who is providing the money:

Most of our U.S. investors are based in Silicon Valley…

And still, nobody has collected my US$10 bounty for the answer to the simple question:

Who is paying for this?

Also, GrupoMGK doesn’t list a physical address.

Update: More on Michael Strong

Via: Conscious Capitalism:

Michael Strong is an Author and Thought Leader. He is lead author of Be the Solution: How Entrepreneurs and Conscious Capitalists Can Solve All the World’s Problems, co-authored with John Mackey, Muhammad Yunus, 2006 Nobel Peace Prize Laureate, Hernando de Soto, Co-Chair of the U.N. Commission on the Legal Empowerment of the Poor, and others. Michael’s work is featured in academic journals (The Journal of Business Ethics, Economic Affairs, Critical Review, etc.), specialty publications (Microfinance Insights, Policy Innovations, Carnegie Ethics, etc.) and in media reaching popular audiences (The New York Times, Bloomberg, The Huffington Post, RealClearPolitics, Barron’s, etc.). He serves on the board of Conscious Capitalism, Inc., The Free Cities Institute, The Seasteading Institute, and the Advisory Boards of The Lifeboat Foundation, Trilinc Global, The Moorfield Storey Institute, and is a mentor for developing world entrepreneurs for the MIT Legatum Center for Entrepreneurship and Development.

Update: Honduras Approves Private Cities Project

The link on this update mentions Decree #123-2011, which is just 15 pages long, but will have you wondering, “Is this real?”

I’m asking everyone out there: Is this real?

Let’s assume it is, for a few minutes anyway.

I took one semester of International Law, so I’m far from being an expert on these matters, but this thing is far and away the most breathtaking voluntary forfeiture of sovereignty by a state that I’ve ever encountered.

Look at Articles 15 and 69:

Article 15.- Other domestic and foreign authorities cannot interfere in matters within the exclusive jurisdiction of the RED’s.

Article 69.- The government of the RED?s may apply immigration controls on the entry, stay and departure of people from other States to the RED’s.

These REDs will have governments that are independent of the Honduran Government, borders that they control and their own police forces (Article 8). They are able to lease out and otherwise encumber the land, but they don’t own it. Because they don’t own the land, I suppose they wouldn’t pass the sovereignty test, but this is getting pretty damn close. The REDs, for example, are free to enter into foreign relations with other states independently of the Honduran Government.

The political structure is a mix of oligarchical and democratic. A, “Transparency Commission” appoints governors. The initial members of the Transparency Commission, arbitrarily appointed by the President of Honduras are:

George Akerlof – Professor of Economics at the University of California at Berkeley, Senior Resident Scholar at the International Monetary Fund, and Nobel Prize Winner

Harry Strachan – Former President of INCAE Business School, Director Emeritus at Bain & Co., and Managing Partner at Mesoamerica Partners and Foundation in Cost Rica

Ong Boon Hwee – Former Chief Operating Officer of Singapore Power and Former Brigadier General in the Singapore Armed Forces

Nancy Birdsall – President and Co-Founder of the Center for Global Development , former Senior Associate at the Carnegie Endowment for International Peace, and former Executive Vice President at the Inter-American Development Bank

Paul Romer (Commission Chair) – Professor of Economics at the New York University Stern School of Business

Really, Bain & Co.? Really.

Ok, so the core of the unelected regime that will pick the governors of the REDs is made up of a couple of economics professors, a Bain & Co. executive, a bank executive and a former Singaporean general. This thing is like a board of directors and the governors are like division heads in a corporation.

The Normative Councils have legislative and advisory roles. Members of the Normative Councils will be elected.

I’ll definitely be following developments with this story, but I have to move on right now. I’ll pay a US$10 bounty to anyone who can tell me the names of the people who are putting up the initial $15 million. I have not been able to find that information after 30 minutes of searching, which I find interesting.

Via: Honduras News:

Honduras signed a deal for an initial investment of 15 million dollars to create the first “Private City” in the country. (Also referred to as “Free Cities”, “Charter Cities”, “Model Cities”, or in Spanish, “RED – Regiones Especiales de Desarollo”, and “Ciudades Modelo”.) The city will be built in Trujillo, in the Department of Colón, where it does not have the full support of the Garifuna people, as they fear that the loss of their land may be on the agenda.

Carlos Pineda, the president of Coalinza, stated that this was not just an agreement, but the most important project for the development of the country in 50 years.

Michael Strong, an executive with the MKG Group that was granted this project, stated that the objective is to create a secure and prosperous community for Hondurans.

The development of the physical infrastructure laid out in phase one of the project will result in 5,000 new jobs, as well as 15,000 indirect new jobs.

Juan Hernández, the President of the Honduran National Congress, stated that this is a giant step forward for the country. Last July, the Honduras Congress passed Decree #123-2011, which in a nutshell, takes care of all constitutional issues related to the creation of these RED zones, or model cities, as we refer to them in Honduras.

I have found that Michael Strong has a site: The Purpose of Education.

He is a libertarian. This is from his About page:

In order to create an educational system capable of improving the happiness and well-being of humanity, we need to reduce, and ultimately eliminate, government involvement in education at all levels, as well as government restrictions on the free pursuit of whatever occupation one desires. Government financing and regulation of education at all levels prevents the emergence of the more authentic, humane, and effective forms of education that we need. Thus around the world we need to move towards a principled separation of school and state, occupation and state, and research and state.

Sometimes, “libertarian,” means, libertarian, and other times, it means, corporate fascist. It’s a spectrum that seems to be determined by the scale of one’s endeavors.

Which is the case here?

I’m not sure yet. I have to go out and collect eggs, feed the chickens and help Becky get the kids fed, bathed and into bed. I’ll return to this later tonight.

In any event, this is clearly the most interesting story that isn’t getting much play in the regular media at the moment.

Via: ABC News / AP:

Investors can begin construction in six months on three privately run cities in Honduras that will have their own police, laws, government and tax systems now that the government has signed a memorandum of agreement approving the project.

An international group of investors and government representatives signed the memorandum Tuesday for the project that some say will bring badly needed economic growth to this small Central American country and that at least one detractor describes as “a catastrophe.”

The project’s aim is to strengthen Honduras’ weak government and failing infrastructure, overwhelmed by corruption, drug-related crime and lingering political instability after a 2009 coup.

The project “has the potential to turn Honduras into an engine of wealth,” said Carlos Pineda, president of the Commission for the Promotion of Public-Private Partnerships. It can be “a development instrument typical of first world countries.”

The “model cities” will have their own judiciary, laws, governments and police forces. They also will be empowered to sign international agreements on trade and investment and set their own immigration policy.

Congress president Juan Hernandez said the investment group MGK will invest $15 million to begin building basic infrastructure for the first model city near Puerto Castilla on the Caribbean coast. That first city would create 5,000 jobs over the next six months and up to 200,000 jobs in the future, Hernandez said. South Korea has given Honduras $4 million to conduct a feasibility study, he said.

“The future will remember this day as that day that Honduras began developing,” said Michael Strong, CEO of the MKG Group. “We believe this will be one of the most important transformations in the world, through which Honduras will end poverty by creating thousands of jobs.”

4 Responses to “Honduras Sets Stage for 3 Privately Run Cities”

  1. Zuma Says:

    The project is opposed by civic groups as well as the indigenous Garifuna people, who say they don’t want their land near Puerto Castilla on the Caribbean coast to be used for the project. Living along Central America’s Caribbean coast, the Garifuna are descendants of the Amazon’s Arawak Indians, the Caribbean’s Caribes and escaped West African slaves.

    “These territories are the Garifuna people’s and can’t be handed over to foreign capital in an action that is pure colonialism like that lived in Honduras during the time that our land became a banana enclave,” said Miriam Miranda, president of the Fraternal Black Organization of Honduras.

    Oscar Cruz, a former constitutional prosecutor, filed a motion with the Supreme Court last year characterizing the project as unconstitutional and “a catastrophe for Honduras.”

    “The cities involve the creation of a state within the state, a commercial entity with state powers outside the jurisdiction of the government,” Cruz said.

    This sets a world legal precedent for ‘Corporate Sovereignty’ as far as I can see. The idea of Rule of Law is what’s most damaged when Power can so manipulate it. For all the legitimacy ostensibly bestowed, it’s still conquest. Is this really *something* new or the same old story simply more honestly described? It does ring a bell.

    Mark Karlin: You begin “Days of Destruction Days of Revolt” with a visit to and reflection upon the Pine Ridge Indian Reservation, the poorest and perhaps most hopeless Native American settlement in the United States. Indian reservations were a tragically ironic result of the American revolt to throw off the shackles of being a colony, only to become a colonial power over the indigenous residents that lay in its way to achieving “Manifest Destiny.” Is this irony the reason why you begin your journey across the “sacrifice zones” of the United States at Pine Ridge?

    Chris Hedges: This is where the dark ethic of endless expansion and limitless exploitation, of ruthless imperial conquest, subjugation and extermination of native communities, began in the name of profit. Commercial interests set out to obliterate native peoples who stood in the way of their acquisition of the buffalo herds, timber, coal, gold and later minerals such as uranium, commodities they saw as sources of power and enrichment. Land was sliced up into parcels – usually by the railroad companies – and sold. Sitting Bull acidly suggested they get out scales and sell dirt by the pound. The most basic elements that sustain life were reduced to a vulgar cash product. Nothing in the eyes of the white settlers had an intrinsic value. And this dichotomy of belief was so vast that those who held on to animism and mysticism, to ambiguity and mystery, to the centrality of the human imagination, to communal living and a concept of the sacred, had to be extinguished. The belief system encountered on the plains and in the earlier indigenous communities in New England obliterated by the Puritans was antithetical and hostile to capitalism, the concept of technological progress, empire and the ethos of the industrial society.

    As it is, the U.S. is already de facto privately owned, how much further is it to go to consequence-free admission? Merely fine points of ‘law’?
    When ‘Might Makes Right’ is legally rule #1, one’s right to swing their fist does not end at my nose…

  2. Belle Says:

    There is a pronounced lack of searchable information on these guys. Strong cross-pollinates with Peter Thiel, who could be the main funder.

    The Economist had a short who’s who of the movement and history of libertarian free city-states.


    Came across a blogger who has followed it and summarized the main problem very succinctly:

    But one might also be aware of the simple political economy behind these ideas. Political democracy, with one-person/one-vote, is the only real constraint on the total one-dollar/one-vote rule of wealth over society today. Hence the dream of many ultra-wealthy individuals and their foundations is to de-legitimize the whole idea of an inalienable right to democratic self-government in favor of applying the marketplace logic of free choice to political governance as well.


  3. dano5050 Says:


    Peter Thiel is a possible source of funding.



  4. Kevin Says:


    Yeah, I know about the possibles, probables, maybes, etc.

    It’s amazing that days after this news broke we’re still having to guess about who is picking up the tab.

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