Model Cities definitively unconstitutional

The Supreme Court of Honduras ruled today that the Honduras legislation establishing charter or model cities was unconstitutional.  A ruling two weeks ago from the constitutional branch of the court established by a 4-1 vote that the law was unconstitutional. Because that decision was not unanimous, the entire Supreme Court had to consider and vote on the issue.

The full court voted 13-2 that decreto 283-2010 which reformed two constitutional articles to enable the model cities legislation violated the constitution.  

The court will release the reasoning behind its finding tomorrow. 

Grupo MGK reacted to the constitutional branch decision on October 8, stating:

We hope and expect that whether or not the full Supreme Court chooses to invalidate particular articles of the Constitutional Statute, that they will preserve enough of it intact that Grupo MGK along with other organizations will be able to create hundreds of thousands of jobs in Honduras.

While Honduras's model cities initiative was on hold, we learned a little more about Grupo MGK.  It is not a fully formed business entity, but rather is said to be part of a newly formed Nevada limited partnership that is not fully set up under the laws of Nevada.

La Prensa reported that Grupo MGK is part of Grupo de Desarrollos Especiales LLC, a company registered with the state of Nevada on September 4, 2012, by Kevin Lyons, a business partner of Michael Strong..  Like MGK, this is a newly registered company, with no track record.  It has until October 31 to file its list of officers, pay fees, and obtain a Nevada business license

Kevin Lyons was also responsible for setting up Grupo Ciudades Libres, a never-legally-established Nevada company whose goal was to set up a Free City in Honduras, according to The Economist.  Grupo Ciudades Libres LLC's filing as a partnership was revoked by the state of Nevada for not paying any of the associated legal fees that were due as part of establishing the company in 2011.

Now that the full Supreme Court has invalidated the Model Cities law, it will be interesting to see whether Grupo MGK persists in its efforts to create a free business colony in Honduras. Meanwhile, we would be willing to bet that the legal arrangements for Grupo de Desarrollos Especiales LLC won't be completed by October 31.

Model Cities Law Unconstitutional

The law enabling Regiones Especialles de Desarrollo (RED) sometimes referred to as Model or Charter Cities, has been found unconstitutional by the Constitutional Law branch of the Supreme Court in Honduras.  Justices  José Antonio Gutiérrez, José Ruíz, Gustavo Enrique Bustillo, and  Edith María López voted to sustain the legal challenge brought in 2011.  Only justice Oscar Fernando Chinchilla voted to reject the legal challenge.

Justice Chinchilla traveled to southeast Asia to visit Korean economic development zones with President of the Senate Juan Orlando Hernandez and refused to recuse himself from the case.

Because the decision was not unanimous, Chief Justice Jorge Rivera Aviles will have to assemble the full court of 15 justices and get their votes over the next 10 days before there is a final determination.

Model Cities Update

The Honduran press has been full of news about Model Cities over the last couple of weeks.

As our readers will recall, the oversight and transparency commission, headed by Paul Romer resigned en masse because they were shut out of the negotiations with Grupo MGK, and when they asked, denied permission to review the Memorandum of Understanding between Honduras and this group.

This lack of transparency seems not to bother Porfirio Lobo Sosa one bit.  With the removal of Romer and the other "transparency commission" members from the oversight and approval process, this means that the Honduran Congress has all the oversight  and approval power in the Model Cities process.

In a 50 minute interview with Michael Strong on a libertarian internet radio program on September 10, we learned that Strong plans that his model city will be in the valley around San Pedro Sula, and is not interested in the other locations being discussed.  So much for idea that model cities would be in uninhabited areas: the San Pedro Sula area is the business and industrial center of the country, a region already host to many free enterprise zones (maquilas). San Pedro itself is the country's second-largest city.

Michael Strong is not proposing to build Paul Romer's vision of a model city.

Strong's vision differs, he says, in four key ways.  First, it is based on the entrepeneurial model he says rules in Silicon Valley:  start small and when that works, scale it up.  In Strong's Free City, residents have access to the best laws without having to be governed by foreigners.  Strong sees this as more respectful of local autonomy and sovereignty than Romer's model. Third, the governor, a Honduran, chooses what legal systems are available to the residents. Thus residents can have contracts based on Honduran law, or, as Strong advocated in the interview, on Texas business law, because that is the closest to the 19th century ideal he favors.  Strong says, finally, that his model does not rely on a land grant from the Honduran government, but rather purchases the land to increase its size as needed.

There are signs that this normally rubber-stamp Honduran Congress is restless about the Model Cities project, however.

Juan Orlando Hernandez, the head of the Congress, and  a presidential candidate for the National Party, announced this week that any vote establishing the bounds of the land for Grupo MGK would be delayed until after the primary elections in November.  Ostensibly, the reason was that there were then 24 legal challenges to the law filed with the Supreme Court-- a number now much, much higher.

Practically, model cities are a political hot potato with the electorate.  Moving the vote after the primary elections may also be intended to prevent voter backlash.

Meanwhile, Hernandéz main legislation writing proxy in the Congress is hard at work, trying to fix the flaws in the law, presumably so that after the primaries, Hernandéz and company can proceed with their ever-evolving introduction of new colonialism in Honduras.

Where is Lempira when you need him?

Behind the Model Cities Memorandum of Understanding

There's a lot of misinformation floating around about who is behind the Honduras Model Cities memorandum of opportunity (MOU).  This is the agreement, announced by Juan Orlando Hernandez of the Honduran Congress, that would authorize a specific group of investors to build the first such enclave in Honduras.

So here's what we can find out:

Grupo MGK  (note, not NKG, NGK, or MKG as the careless or perhaps terminally dyslexic Honduran papers keep reporting) is the consortium behind the memorandum of understanding signed last week with Honduras to develop a model city.

The group, whose bare bones generic website grupomgk.com (in English and Spanish) was hastily erected in the last week, claims to have developed plans for a model city-like project in Estonia, but shelved it upon hearing of the Honduran opportunity.

Their new website has already been updated since it was first made public. Michael Strong registered the domain name with GoDaddy on September 8. The website was last updated on September 21.

There are currently four public faces for Grupo MGK:  Michael Strong, Gabriel Delgado, Robert Haywood, and Nadine Spencer.

Michael Strong reportedly studied economics at the University of Chicago, but dropped out of the graduate program when he was offered a job teaching his socratic training seminar to teachers in Homer, Alaska. This in turn, led to a 15 year career in education consulting.

Strong met John Mackey, the founder of Whole Foods, during this period, and together they founded Freedom Lights Our World (FLOW), dedicated to the proposition that entrepeneurs and markets were the most effective way of creating a better world.  They have since moved on to more targeted projects: Conscious Capitalism, Radical Social Entrepeneurs, and Peace Through Commerce.

Strong is also a founder of the Free Cities Institute, whose website, described as "gorgeous" in this announcement of its founding, has since disappeared.  Free Cities were the focus of a conference held in Guatemala in April 2011, sponsored by the Universidad Francisco Marroquin, in Guatemala.

All of these movements share the idea that bad legal systems create poverty by keeping poor people from founding businesses and therefore keeping them off the road to wealth and success.

Robert Haywood is Director of the World Economic Processing Zones Association (WEPZA), a collective for Free Trade Zones world wide.  WEPZA was founded by Richard Bolin, who performed the economic studies that led to the development of Mexico's maquila industry.  WEPZA is a dependency of Bolin's Flagstaff Institute.  Haywood is said to have participated in the design and development of Honduras's maquilas as well.

Nadine Spencer is an entrepeneur, born in Jamaica, who is founder and CEO of Nadine Spencer, Inc. a gourmet food and lifestyles conglomerate.  Her expertise is in marketing.  She particularly supports work to develop women entrepeneurs.

Gabriel Delgado is described as a telecommunications entrepeneur and fellow in the Aspen Institute, an education and policy studies nonprofit that is generally described as "centrist".  He reportedly founded and developed IT companies in Chile, Guatemala, and Mexico.

On the website, Strong and Delgado are described as the "Leadership" while Haywood and Spencer are described as "advisors".  Delgado was added to the Leadership section in a round of revisions to the website.  His name has not previously appeared associated with Grupo MGK.

Grupo MGK lists a single investor, Calidad Immobiliria, a real estate development company located in Guatemala and El Salvador, a branch of Grupo Entero. The real estate company specializes in urban development projects.

Grupo Entero is a Guatemalan company founded using the principles of Stephen Covey's The Seven Habits of Highly Effective People to develop its own staff.  They focus on commercial and residential real estate, construction, and health in large parts of Latin America.

Legal Challenges to Model Cities Law Proliferate

The law in Honduras that enables the Regiones Especiales de Desarrollo (RED), better known in English as model cities, is facing increasing opposition from Honduran citizens. 

The constitutionality of the law was first challenged in October, 2011 by the Asociación de Juristas para la Defensa del Estado de Derecho (Association of Jurists for the Defense of the Rule of Law).

Fourteen challenges against the model cities enabling law were filed on September 18, 2012. These fourteen challenges were filed on behalf of 14 separate individuals, including Miriam Miranda Chamorro, head of Organización Fraternal Negra Hondureña  (OFRANEH), a Garifuna organization.

On September 18, the Public Defender of the Constitution, a prosecutor with the Public Prosecutor's office, filed a brief with the Supreme Court on an October 2011 case challenging the constitutionality of the law. The Honduran Supreme Court solicits the opinion of the Defender of the Constitution whenever there is a constitutional challenge present in a case before the Supreme Court.  A legal countdown clock has now started, that by law gives the Supreme Court's Constitutional group of five judges just 20 days to render an opinion in that first legal challenge from October, 2011.

Nine more challenges to the constitutionality of the law were filed with the Honduran Supreme Court on September 21, 2012.  Eight of these were filed by the Consejo Cívico de Organizaciones Populares e Indígenas de Honduras (COPINH, the Civic Council of Popular and Indigenous Organizations) and the nineth by Father Fausto Milla, a Catholic priest in the Lenca region of Honduras.

On September 25, the LGBT community filed 30 more challenges to the constitutionality of the Regiones Especiales de Desarrollo law.

On September 26, a further 22 challenges against the law were filed.  One of these was by the Colectivo de Mujeres Hondureñas (Collective of Honduran Women), and the rest by individuals challenging the legislation.

For those of you keeping score, that's 76 separate challenges to the constitutionality of the RED legislation.

And that's not the only bad news. The Honduran Congress apparently agrees that the law, as written, is unconstitutional.

Oswaldo Ramos Soto, who drafted the existing RED law and is  Juan Orlando Hernandez's go-to guy for writing legislation, is preparing to introduce an amendment which will "fix" the unconstitutional parts of the law.

Ramos Soto wants to change Article 1 of the RED law to make it clear that the judicial system in the RED is still answerable to the Supreme Court, which is the court of last resort in Honduras.

Ramos Soto also wants to strip away the treaty-making power granted the model city in the existing law.  He proposes changing Article 18 to remove any mention of treaties, and to give to Congress the power to appoint judges in the model city. 

Ramos Soto also proposes changing Article 19 to make the legal system in a RED part of the Honduran judicial system, under the authority of the Supreme Court.

The net effect of Ramos Soto's proposed changes would be to gut one of the key features of Paul Romer's model cities: their judicial independence from the host country.

Both Romer and Michael Strong have argued that it is the legal systems in the host countries that are in part responsible for the poverty in them and the lack of economic development.

The experiment seems to be on the way to being over before it even began.

Honduran Police Failing Evaluation

Forty seven percent of the 70 police officers processed fully by the Dirección de Investigación y Evaluación de la Carrera Policial (DIECP) over the last three months failed their confidence test.

That's 33 police officers that the DIECP will seek to have fired.

Seventy is an admittedly small sample, but if this rate of failure held up for the entire police force, we would be looking at the dismissal of more than 3700 police over the next two years.

The DIECP is moving slowly, though.  In the last 3 months they have conducted their confidence tests on 145 police officers, and only made evaluations of these 70. In addition they collected urine and blood samples from the 90 officers that form the COBRA Special Operations team.

The slowness of their evaluations prompted Julieta Castellanos to ask the Cabinet for an investigation of the DIECP to find out why it is proceeding so slowly.

Corrales: Blame the Civilian Aircraft

According to Arturo Corrales, Foreign Minister of Honduras, the civil aviation planes that were shot down by Honduran Air Force pilots in August were to blame for their own deaths. 

At least that's the conclusion to be drawn from his statements that no one in Honduras is responsible.

Corrales makes some extraordinary claims in an article in El Heraldo, claims that should give the United States pause in negotiating a new four year agreement with Honduras about cooperation in drug interdiction.

The article is primarily about the obligation of Honduras' Public Prosecutor to investigate who gave the order to shoot down at least two civilian aircraft, in contravention of a 1942 treaty on civil aviation.

But it also includes a statement by Corrales, whose position in the Honduran government is equivalent to that of Hilary Clinton in the US administration.

Corrales said no civilian or military official ordered the shooting down of the civilian aircraft:

"I understand that there was no order; I understand that no one gave the order."

At first, this seems like throwing the pilots to the wolves, since they would then presumably be responsible for their own actions.  

But Corrales absolves them:

The responsibility for the downing cannot be attributed to the pilots of the military planes who shot at the illegal planes, since they risk their lives to go in search of irregular flights and an accident can happen in a fraction of a second.

This is, at best, a non sequitur: because they risk their lives and an accident can happen in a matter of moments, they are not responsible for shooting down two civil aircraft in one month?

The last time Honduras shot down a civilian aircraft was in 2004. Corrales' conclusion strains credibility.

There is a simpler explanation: the Honduran Armed Forces has been advocating for exactly this policy, while presumably knowing it violated Honduran treaty obligations, ever since the spring of this year. These pilots were enacting that desired approach, whether there was an official policy or not.

Paraphrasing an anonymous person identifying himself as a former Honduran Air Force pilot, who wrote a comment on the article in El Heraldo: that's how we've been trained at least since General Osorio Canales was a cadet.

The comment is no longer available; but it is consistent with statements in April of this year by Osorio Canales, still the commander of the Honduran Armed Forces, saying

"The National Congress should reform the law [implementing the 1942 treaty] and consider leaving the treaty because we cannot take down civilian planes that illegally enter our airspace".

At the time he said that there was discussion in the Honduran Congress about the proposal.

We might want to remember why the international presumption is against shooting down civilian aircraft that wander into national airspace without responding to requests for identity. It is simply this: you may think they are engaged in illegal activity: but you cannot know that.

Both Peru and Columbia, at US urging, have adopted a policy of shooting down civilian aircraft suspected of drug trafficking. In both countries that policy has resulted in the shooting down of civilian flights carrying missionaries, not drugs.

Corrales made it clear how poorly justified these incidents actually are, in his comments implying the pilots of these planes were to blame:

The downing was the product of a extreme situations:  such as the flight of the planes was in the early morning hours and the planes were flying at low speed; therefore they were shot at.

A neutral party reading these comments would presumably continue to be troubled that the Honduran government is neither taking responsibility, nor (apparently) is clear on what constitutes a suspicious way of acting (early morning flights at low speed are surely not automatically drug traffickers, even if some drug traffickers fly at those times).

So it is more than troubling that an article early this morning in La Prensa quotes US Ambassador Lisa Kubiske suggesting US radar assistance will be returned to Honduras "soon", specifically because

President Porfirio Lobo and minister Arturo Corrales spoken clearly about the topic of the civilian aircraft and the treaties that Honduras has signed with the international community.

We agree that Corrales has spoken clearly. But we wonder what Ambassador Kubiske finds reassuring in what he has said.