Monday, February 21, 2011

Songdo, Korea A Model City For Honduras?

Juan Orlando Hernandez has a facebook page in which he chronicles the 63 person Honduran delegation's trip through Asia to visit model cities. First up is Songdo, Korea, or more properly, SongdoIDB.

Songdo is an international business district of 1500 acres (or 6 square kilometers) built on reclaimed land along Incheon's waterfront. It is part of the Incheon Free Economic Zone. It is a planned city developed by Gate International and POSCO E&C. The master plan developed by the design firm Kohn Pederson Fox includes 100 million square feet of commercial office space, retail shops, hotels, residences, schools and cultural facilities. There are currently $10 billion invested in its development. Its first phase opened in August 2009.

So why Songdo in Korea. The key here is the location. It lacks its own airport, but is only 15 minutes away from Incheon's international airport. From there, all the major business centers of Asia are close by. As their website says,
3.5 hours to a third of the world's population,

for which they call it an "Aerotropolis".

It is scheduled, when fully built, to have 22,500 luxury condominiums giving it a population density as great as, or greater than Tokyo (5600 people per square kilometer). Public and private schools will serve the populace, and it will have its own state of the art hospital system.
Residents can shop in an opulent retail mall or stroll through picturesque local markets.

But how exactly is this a model city in Paul Romer's sense and how will it help develop Honduras?

It is office space, not manufacturing. Its goal is to attract businesses to locate offices in it. It will provide only luxury housing, golf courses, charter schools and hospitals, and by its own description, "opulent malls". This is meant to cater to the rich.

The jobs created by such a city located in Honduras would be service jobs, store clerks, office cleaning staff and support staff, groundskeepers, caddy's for the golf course, and none of the people filling these jobs would benefit from the schools or the hospital, which are for residents. These kinds of jobs would be filled by non-residents.

And that brings up another factor in Songdo's success, its locate in a major metropolitan area, to provide the labor, connectivity, and service infrastructure that such a development requires to be successful. Such a development in Honduras would need to be located within commute distance of a major urban center like Tegucigalpa or San Pedro Sula, not the locations currently being discussed.

In some ways, Songdo is reminiscent of the Bahia de Tela resort project being implemented near Triunfo de la Cruz, Atlantida. The plan there is for up to five luxury resorts, housing, and a golf course. The Bahia de Tela resort project will not succeed without a place for its labor force to live nearby. It will need more semi-skilled and skilled labor than Tela and Triunfo residents can provide.

Songdo's success is predicated on its location as a central hub for businesses wanting to do business in all of north Asia, which houses a large segment of the world population. Honduras could be a hub for business, but likely only for Central America and perhaps northern South America, and it would have to develop better air service to do that. TACA airlines serves Central America well, but not frequently enough, from Honduras.

And then there's the infrastructure questions. Korea has sufficient reliable electricity, water, sewer, and so forth. Honduras does not, so all those infrastructure necessities would have to be added to any Honduran similar development.

Songdo is not a model city in Paul Romer's sense. It neither has, nor requires, its own rules, laws, or constitutional exceptions. It is an international business district located within a developed metropolitan area, leveraging that development, to provide luxury services to businesses.

Songdo functions within the laws of Korea, not outside them. Korea chose to modify their local laws to fit international business standards, not come up with new laws that only function within the Incheon Free Economic Zone.

Songdo seems like an interesting place to live, if you can afford it, but we don't see it as a viable model for development in Honduras precisely because of the way it leverages its location and the surrounding metropolitan area. Next?

Wednesday, February 16, 2011

Blustering Bravado

Roberto Micheletti does not believe in free speech, even though it is protected under the Honduran Constitution. He actively suppressed free speech in Honduras by forcibly closing dissenting media outlets during his regime.

But he also doesn't understand free speech as protected in the US Constitution and law. He told El Heraldo he intends to sue Ambassador Hugo Llorens in US court over what he wrote about Micheletti in the leaked State Department cables on Wikileaks once Llorens is no longer an Ambassador.
"I will file a case against him so that he proves to me all the things he says I've committed,"

said Micheletti. The cable in question is the one that states that according to embassy sources, Micheletti is a partner in the firm granted the concession to the Nacaome dam as part of "gazetazao". What the cable says about Micheletti is
While the de facto regime leader Roberto Micheletti and his colleagues portrayed themselves as practitioners of efficient and honest government, they appear to have cut a significant number of back room deals, which were egregious even by local standards. The dam concession is the prime example.

Credible Embassy sources have directly implicated Micheletti and some of his closest business partners in this deal.
According to Embassy sources, Micheletti was one of the Honduran partners in the consortium granted the concession. The chief actors included Saavedra, Micheletti, Minister of Public Works Saro Bonano, and Micheletti intimates Johnny Kafati and Roberto Turcios. It is inconceivable that this deal could have been put together without Micheletti's knowledge.

But this was not public speech and hence is not liable as defamation or slander. Llorens didn't publish this publicly, he informed his employer as part of private business communications which later, through no fault of Llorens, became public. It's private, protected speech as a matter of US law.

Micheletti told HRN radio that he would file the case in US court once Llorens loses his diplomatic immunity.
"I'm not afraid of him nor am I afraid of the gringos, nor do I fear anyone."

This should be interesting. Micheletti can get a case filed long distance with money to hire lawyers; lawyers will be happy to take his money; but perhaps Micheletti forgot he lost his US visa and therefore cannot enter the US to testify in the case. In any event, there is no case here.

This is a lot of bluster and bravado with no legal basis under US law.

Tuesday, February 15, 2011

Twenty-First Century Socialism

The Unión Civica Democratica (UCD), a far right organization in Honduras funded by the US government, is holding a conference in Tegucigalpa today called "Antidote to Twenty-First Century Socialism" with Roberto Micheletti Bain as the keynote speaker. We have not yet explored what it is they want to cure us of.

Twenty-first century socialism is the brainchild of Heinz Dietrich Steffan, a German professor, in his book "El Socialismo del Siglo XXI" published in 2000. It was popularized outside of scholarly circles by Hugo Chavez starting in 2005. It is currently said to be the basis of reforms in Venezuela, Ecuador, and Bolivia.

So what is twenty-first century socialism? According to Dietrich, neither capitalism nor real socialism have managed to solve the urgent world problems. To resolve this, Dietrich proposes a new kind of socialism with four basic institutions.

The first institution is the equivalence economy, based on Marx's theory of labor and value. Under this system, value is determined by those who create it, instead of the market. Dietrich proposes creating an economy of values based on the idea that something derives its value from the work put into it, not the law of supply and demand. Value replaces price.

The second institution is participative democracy, which uses the plebiscite to decide important questions that concern its citizens. Dietrich calls for a high quality democracy that slowly moves from representative to participative democracy. Key is self-determination via everyone participating in the decision making process.

The third institution is basic organizations, that is, the political or social organizations closest to the community that they serve. These in turn are assisted by larger organizations, such as political parties or NGOs.

The fourth institution is development or structuralism, an economic theory that holds that the core industrial center with an agricultural periphery produces underdevelopment and increases the gap between developed and underdeveloped nations. The industrial development of raw materials (such as wheat, soy, wood) adds value to these exportable materials, and their use internally instead of imports leads to less of a development gap between the industrialized and developing nations. This economic theory has its roots in dependency theory, which holds that the current world economy is rigged in favor of the developed nations.

Dietrich refined twenty-first century socialism down to a single phrase in a 2007 interview, saying
"it's when the majority have the greatest historically possible degree of control of the decision making in the economic, political and cultural and the military institutions that govern their lives."
We've seen Micheletti's antidote: stage a coup and trample civil rights. Which one would you prefer?

Wednesday, February 9, 2011

Security or Scarcity

There's something ironic about Porfirio Lobo Sosa announcing today that 2011 is the year of food security when food prices are skyrocketing and the government is doing nothing to assure food supplies.

Case in point, beans. Beans are a staple of the Honduran diet, eaten twice a day. Beans began their price climb last august, surging from $0.45 to a high of $1.20 a pound in November. The government installed price controls in December and set a price of $0.73 a pound, but failed to enforce it, so the farmers market price remained around $0.85 to $0.95 a pound. Since the harvest in January, the price has backed off to $0.94 cents in farmers markets in Tegucigalpa, but the supply remains weak. Banasupro stopped coming to farmer's markets and selling beans at $0.63 a pound. To get that price now, residents must queue up at one of the 12 Banasupro stores in the country.

Case in point, corn. Corn is another staple in the Honduran diet, consumed as tortillas, tamales, pupusas, and as the beverage atole. Nearly 40 percent of this year's crop is destroyed due to the use of "improved" seed from Nicaragua that brought with it a blight that reduces yields from 40-70 percent. Tortillas have gone from $0.02 each to $0.10 each in the market, or $1.32 a pound. IHMA, the Instituto Hondureño de Mercadeo Agricola, assures the country there is adequate supply, but so far has failed to release any grain to try and bring prices down.

Case in point, flour. Flour is used in Honduras to bake bread, and more importantly, make flour tortillas for baleadas. Another case in point is fruits and vegetables like tomatoes, cauliflower, yuca, cabbage, potatoes, and eggplants. Eggs are $0.20 each. Pork is over $3 a pound, beef likewise. There is no staple food in Honduras that has not gone up sharply this year.

The Agriculture Minister, Jacobo Regalado, says there's no shortages of basic grains like corn or beans, but shortages are used to explain the high prices for these products in the market today. Is it all speculation removing grain from the market to artificially drive up prices? That would explain the apparent inconsistency between what the Agriculture Minister claims about supply versus what the market is experiencing.

If that's the case, it is incumbent on the self described christian humanist government of Porfirio Lobo Sosa to do something about the speculation. Yet it does nothing.

In any case, the irony of declaring this the year of food security and nutrition in light of the apparent shortages of basic grains was not lost on some sectors of the Honduran population who questioned the launch of this new program.

Tuesday, February 8, 2011

Airport Misinformation

La Tribuna reported this morning that the Lobo Sosa government promises to build two airports in the Department of Copan, one at Rio Amarillo and one at La Concepción. Really? Is that even financial feasible? Who will fund it? We have our doubts about this story.

Tiempo, on the other hand, reported yesterday that the government will call a representative assembly of the municipalities of the Departments of Copan, Lempira, Ocotepeque, and Intibuca to decide where to build the airport. La Tribuna published an article yesterday that agreed in detail with what the Tiempo article reported.

Confused? Either La Tribuna is, or we are.

The story yesterday was prompted by a meeting between two of the presidential designates, Maria Antonieta Guillén and Victor Hugo Barníca, the Minister of Tourism, Nelly Jerez, and the Secretary of Public Works, Transport, and Housing, Miguel Pastor, and a delegation from Santa Rosa de Copan and La Concepción headed by Monseignor Luis Alfonso Santos, the Bishop of Santa Rosa de Copan. The Alcalde of La Concepción, José Tulio Sánchez told reporters that the land owners there were willing to donate 40 manzanas of land for the airport, saving the government about $5 million, the asking price for the land in Rio Amarillo, if it chooses to build the airport at La Concepción.

Yesterday Guillén was quoted as saying
"There are two options, one alternative is Rio Amarillo and the other is La Concepción; the smart decision of the President is not to exclude one or the other but to consider both possibilities in terms of analyzing the convenience of building either airport."

Yesterday the story was that the central government would not make the decision, the communities would make it.

Today the message La Tribuna reports is that Guillén told them that the government would build both airports to avoid a confrontation between the municipalities of the region. Except that it's not at all clear she said exactly that, since the rest of the article is full of phrases about weighing the benefits of each, and that those benefits would be discussed in a regional assembly by the 25 of March.

Guillén is cited as the source of another dubious piece of information in the La Tribuna article. She is reported to have stated it would cost over 400 million lempiras to construct the road from La Concepcion to Santa Rita to connect that airport with Copan Ruinas. Yet a year ago, an article from Hondudiario reposted in an Internet forum cited the cost of 24 kilometers of road as 116 million lempiras. Where did this inflated estimate of 400 million come from? Proceso Digital has an answer: they attribute that bit of information to Miguel Pastor and SOPTRAVI. Using the cost to produce a lane mile of roadway in individual states in the US, this estimate is roughly the same as it would be to construct a similar length road in Louisiana, using US prevailing wages and material prices. For Honduras it seems rather high.

We think today's La Tribuna article is wrong; its simply internally inconsistent and we think Miguel Pastor would do well to question that 400-500 million lempira estimate for the cost of constructing the road in light of the previous estimates around 25 percent of that cost.

New CESPAD Study

The Centro de Estudios para la Democracia (CESPAD), a group founded in 2009 to study Honduran democracy, has issued a paper that examines three possible scenarios for an end to the unresolved political crisis in Honduras. Gustavo Irias, director of CESPAD held a press conference yesterday. The report is the result of the work of Eugenio Sosa and Francisco Saravia and appears to be based in part on the results of the September 2010 public opinion survey that CESPAD carried out. We wrote about this poll in late November contrasting its results with the much earlier LAPOP poll from January which hit the press about the same time.

Since we've been critical of Proceso Digital, I want to give them credit for providing the only Honduran press coverage. This post is based on their summary of the report, which has not yet been posted anywhere.

The September poll found that only two to six percent of the population had confidence in any one of the organized political parties in Honduras. Only 14 percent of the survey respondents reported being satisfied with the state of Honduran democracy; a large majority, 86 percent, were unsatisfied. Finally, in September 2010 only 15 percent of those polled thought the political crisis of 2009 had been resolved.

As described by Proceso Digital, the report soundly condemns the Honduran political parties for their jingoistic focus on elections and a lack of any real plan for dealing with the economic and political crises facing the country. Politicians in power, both Liberal and Nationalist, live off international funding. This, of course, makes them extremely vulnerable to outside pressure.

Irias noted in the press conference that the country is experiencing a growing dissatisfaction with democracy and its institutions. Irias said,
"This is a kind of public challenge of electoral democracy, as well as holders of political power, so we dared to ask what the prospective scenarios might be going forward, without being wizards, how could the country go in 2011"

The first scenario assumes that Honduras fails to overcome the political crisis, fails to meet the conditions for OAS readmission, and fails to find conditions to allow Manuel Zelaya Rosales to return to the country. Under these conditions the international community will maintain pressure on the Honduran government, especially on the issue of human rights, which in turn, may tarnish or discredit the international image of the country.

CESPAD suggests that under these conditions, the Honduran political system will fail to stabilize or regain credibility with the public. The Nationalist party will not increase its electoral power. The Liberal party will remain divided, and the Frente will fail to reach a political consensus.

If the political forces disintegrate, this can lead to a governance crisis in which the next election would be marked by an atmosphere of dissatisfaction and probably result in a weak minority government reaching power.

CESPAD researchers concluded that the probability of something like this actually happening is high, that with the political recognition of the Lobo Sosa government and the recovery of international funds, the perception is that the hardest part of the solution to the crisis is over, when it is not. The underlying structural problems will persist in the scenario, and may worsen, leading to a new governance crisis.

CESPAD posited a second scenario that involves some minimal level of agreements towards a democratic transition from the current political and structural crisis. In this scenario agreement is reached for Zelaya's return and he becomes a force for either reuniting the Liberal party or focusing the political ambitions of the Frente possibly forming a larger front with the UD (Unificación Democatica) party. In this scenario the UCD would have to raise its profile to neutralize Zelaya's influence. The real question in this scenario is to what extent Zelaya and the Frente are able to move forward beyond discourse to political action which restores the political parties.

CESPAD believes that there's an even chance of arriving at this point, and they point to the short term international pressures around Zelaya's return and human rights as drivers towards arriving here.

In a third scenario, the crisis deepens and there is a further deterioration of democracy making the country even less governable. In this scenario, Zelaya becomes a point of contention both for supporters and detractors, and increases pressure on the government by mobilization for a constituent assembly. CESPAD says this puts the 2012 internal elections and the 2013 general election at risk and may bring Honduras back to be the center of OAS debate. CESPAD says it would test Lobo Sosa's management skills, and likely lead to increased human rights violations, which in turn might lead to a suspension of international aid. CESPAD sees this scenario as less likely, but still possible.

However, Director Irias concluded
"In practice, the actual dynamics of Honduran politics will yield results combined from all three scenarios, arising from factors that change the context and the political will to make changes. The scenarios we provide can serve as a basis for policy making by both civic organizations and those who wield power."

Friday, February 4, 2011

Where Have All The Beans Gone?

Harvest has come and gone. There are still few beans in the farmer's markets in Honduras and they continue to be expensive. Why? Speculators are controlling the supply and keeping the price artificially high. Isn't the free market wonderful?

Honduras planted some 12 million manzanas of beans in the last 3 month crop harvested in January. That should have been more than enough to accommodate Honduran demand for the next 9 months according to IMAH, the Instituto de Mercadeo Agricola de Honduras. But Honduras isn't a closed market. Its basic grains middlemen have ready access to the basic grains markets in El Salvador, Nicaragua, and to a lesser extent, Guatemala. So some of the beans are simply leaving Honduras, gone to markets in El Salvador and Nicaragua where prices were higher prior to the recent harvest, which brought prices back down (to around the equivalent of 52 lempiras for 5 pounds today).

The biggest problem continues to be the "coyote", a speculator who simply buys the beans at harvest and stores them, knowing that by creating a shortage in the country, it will raise prices.

Speculation requires investment; you have to already have money to buy the beans and store them for any period of time. Generally, such speculation involves more than one speculator, although single extremely wealthy individuals have tried to corner commodity markets in things like silver (google "Hunt brothers scandal").
"The speculator is the most evil in business, the one who makes all the profit and squeezes the producer and consumer. This is a person who is not associated with any organization in Honduras, but the problem is that they have so much money that they buy the production and store it and then begin speculating in the market, bringing it out sack by sack (little by little) until it squeezes the consumer with the price of the product,...the [Ministry of] Industry and Commerce is incapable of attacking the coyote,"

said Congressman Francisco Rivera. Congress voted a further 50 million lempiras be given to BANASUPRO, but that does not good if they can't find somewhere to buy them.

Price controls imposed on basic grains, including beans, during December and early January failed because there was no effective enforcement. While the frozen price of beans was 70 lempiras for 5 pounds, the price in farmer's markets in Tegucigalpa never dipped below 85 lempiras for 5 pounds.

Rivera suggests that rather than keep giving money to BANASUPRO to buy beans at market rate and sell them for a lower price (eg, food subsidies), that the money be given to bean producers to plant more beans (producer subsidies). He suggests planting 25 million manzanas, which would produce a new crop in three months. Rivera suggests that this will bring the market price down. Producers will still gain because they've been subsidized to produce these beans, and Rivera hopes that the coyotes won't be able to absorb this crop too, benefiting consumers with lower prices.

Rivera's idea might work, but it may also be true that the coyotes have sufficient capital and the will to continue to absorb the increased Honduran production. Such are the gambles of the free market.

Andres Carias, Director of AGRIBOLSA, has another idea, establish a marketplace for contracts to buy and sell beans where both buyers and sellers can establish the real price of beans by agreeing on a price. Carias agrees with Rivera that historically, the middle men have been setting the price, provoking artificial shortages and high prices for their benefit. However, there's nothing to keep the middle men out of Carias's marketplace and thereby still potentially controlling the market.

The free market offers no solution other than supply and demand setting the price. Speculators are controlling the supply in Honduras, keeping the price artificially high. This can be demonstrated by comparing the price of red beans in the El Salvador market with Honduran markets. El Salvador reports a price today of $0.55/pound; Compare that to Honduras's market price of $0.90/pound. That $0.35 a pound price difference shows the extent to which the Honduran market has been distorted by speculators.

In the meantime, Honduran families continue to pay artificially high prices for food while the government does nothing.

Wednesday, February 2, 2011

Bye Bye Community Radio

CONATEL would like to stop issuing licenses for these low power stations and so proposes a rule to suspend the issuance of licenses for such stations. The indication that they intend this to pass without meaningful input is that they've allowed less than a week for public comments on the resolution, and have not publicized the rule at all.

The radio spectrum, especially FM is mostly saturated in the urban cities of Honduras, but those signals don't reach very far because Honduras is a mostly mountainous country. The large media conglomerates that own the urban stations have not invested in repeater stations across the country, so that their signals often are not available far outside the urban centers. That's where low power community radio stations come in to play.

There are currently 28 low power community radio stations licensed in Honduras. They broadcast on frequencies that duplicate those of stations in the larger, urban market, but because they use low power transmitters, their signal doesn't interfere with the urban station, even if they are relatively close by.

Community radio serves to broaden public access to the airwaves. They are, in general, not owned by media conglomerates; they serve the community they're located in, not some management team in a different town.

Frank La Rue, the UN Special Rapporteur for Freedom of Opinion, recently expressed concern over the climate of violence and criminalization towards community radio in Honduras. He singled out the Lobo Sosa government for its attacks on community radio.

The garifuna station, Faluma Bimetu had to close down for several weeks because of threats to burn the station and its occupants. Someone burned the station down once already in 2010. The community station in Zacate Grande security forces forcibly took over the station and damaged it.

La Rue said that the attacks on community radio in Honduras had increased since the coup, and continued under the Lobo Sosa administration. He reminded the government of the International Civil and Human Rights Pact.

Now the Comisión Nacional de Telecomunicaciones (CONATEL) wants to issue a rule suspending the issuance of licenses and frequencies for low power FM community radio stations. The claim in the proposed resolution, is that these FM frequencies are saturated such that in populated parts of the country, they can't issue any more licenses to normal FM stations. Second, they allege that these low power FM transmitters are an obstacle to the introduction of new broadcast regions and services for these "normal" stations.

Reading the resolution, what's happening is that the oligarchy controlled media companies want to install repeater stations (see paragraph two of the "Resolves" part) using their frequency and cannot because at least in some cases, the frequency is in use by these community radio stations. In other words, community radio stands in the way of the large media companies increasing their monopolies.

Only in the departments of Olancho and El Paraiso will CONATEL consider issuing new community radio licenses under this resolution.

So by all means, please comment on this extension of the rights of media empires to get larger at the cost of more public access to media. Comments will be received by CONATEL either by mail at:
Edificio CONATEL, Colonia Modelo, sexta Avenida Sur Oeste contiguo a HONDUTEL. Comayagüela M. D. C., Francisco Morazán, Honduras.
Aportado Postal: 15012 Tegucigalpa
or by email at: and do so before February 4 at 5 pm.

Just don't be surprised when they ignore you.