Bad Model Cities

Under the rubric of "Model Cities" the Lobo Sosa administration presented a law to Congress which will give the government the right to expropriate any contiguous region of land for the use of "Special Administrative Regions" which will be owned in full by the government, but have their own fully autonomous court system, not answerable to the Supreme Court. This is based on Stanford economist Paul Romer's ideas about "Charter Cities".

Romer's idea of Charter Cities, documented here and here, was advanced by him as a development initiative for poor countries. His specific analog is Hong Kong, which he says brought so much good to China. Romer seems to ignore the fact that it brought no good to China for 156 years, from 1839 until 1997 when it was removed from its status as a British colony and merged, fully formed and developed, as a part of China. It was only when integrated into modern China that it brought any good to the country.

According to La Tribuna's description, these Special Administrative Regions pretty closely model what Romer is suggesting. A large region of land (Romer recommends 1000 square km.) would be allocated by the Honduran government, with a charter set by the National Congress. Mind you, Romer sets the target developed population at 10 million, more than the entire population of Honduras. The Charter outlines the basic set of rules under which the city will begin to operate. It is, however, not answerable to Honduran law or the Honduran constitution and may establish, within the guidelines of its charter, any set of laws it wishes using the form of government specified in the charter (eg, it need not be representative of the population in any way).

As Romer sees it, investors will fund these charter cities by setting up services and collecting fees for them (water, sewer, electricity, etc.). Land title either remains with the national government, which then benefits from the rents on the lands, or is transferred to the development authority, which then finances itself by leasing (not selling) land to developers.

Romer says these are not gated communities for the rich. He sees this as the natural evolution of the maquila, with the first residents being maquila workers assembling garments and making toys, people with little formal education. He holds the mistaken belief that such workers today already can afford city services (electricity, water, sewer) and rents on their existing salaries. Everyone would have to rent, in Special Administrative Regions. No one would own their own residence.

These regions are sort of like today's Export Processing Zones that house the maquilas, except that they will have residents who are no longer full Honduran citizens, governed instead by the laws and rules set up by the local administration to administer these areas. There is no requirement for worker participation in the local government, for example. It harkens back to the banana company towns, with the potential for all the benefits and worker abuses, except that these would be industrial rather than agricultural workers.

Why is this idea attractive to the Honduran government? It might be the claimed potential for development of the host country, although Romer basically glosses over that part in his descriptions; but I think it specifically is attractive to the Honduran government because such zones are claimed to attract the people who currently leave the country to pursue social and economic opportunities in other countries. It is said to bring home all the migrants who currently enter the US illegally after traversing Guatemala and Mexico and being victimized by criminals in those countries.

Romer came to Honduras on January 3 and presented the idea of constructing a charter city in Trujillo to the BCIE, Juan Orlando Hernández, and Porfirio Lobo Sosa. Romer is interested in setting up and financing a demonstration project in Honduras if the government will only turn over the land to him for a few years. Juan Orlando Hernandez said of the pilot

"There are many countries that are fighting to be the site of this project. Honduras has all the possibilities to do it and the government, we are interested in doing it to benefit all the population."

It's clear that this law was fast-tracked after Romer's visit. Perhaps the government should, as Mario Argueta noted in an editorial in El Heraldo, remember previous development attempts that gave concessions to foreigners. They all failed, and were bad for Honduras.

Are Special Administrative Regions Lobo Sosa's solution to the Bajo Aguan problem?