What you need to know about Próspera: A new charter city in the making in Honduras
Who hasn’t gazed at the magnificent building of human civilization in all its intricacy and thought to themselves, “Yeah, but I could do it better”? Throughout history, utopian communes, micronations, and sea steads have aspired to reconstruct society from the ground up, free of entrenched interests and the ruins of the past. Maybe if you had all the rules and principles just right, you could keep poverty and corruption from taking root. Make a genuine effort to promote “liberty and justice for all.”
And who among us hasn’t gotten into multi-year discussions with the Honduran government after experiencing the dream? Have they taken use of a provision in the Honduras-Kuwait Treaty on Reciprocal Investment that guarantees them the freedom to pursue their dreams? To make it a reality, you raised millions in venture money and purchased land on a Caribbean Island.
Honduras
A Private Tech City in Honduras
Erick Brimen and Honduras Próspera Inc. are not among them. Bloomberg reported on them: A Private Tech City Opens For Business In Honduras. Or, as NACLA puts it, “A Private Government Moves Forward in Honduras.” Or, in the words of the Financial Times, “An Investor’s Prosperity Vision For Honduras.” After reading it all, we felt like we still didn’t feel like we knew what was going on.
In this article we will summarize all we could find out about Próspera from basically every public source, as well as a few private ones. It’s all about a private tech metropolis, a prosperous vision, and so on. But it’s also about “systemic change” and how private communities could be safe havens in the future for Sovereign Individuals, much like we would like to see the future of the Bitcoin Citadels play out.
What if you had the power to alter the system? Let’s say, “I don’t like the system we have, the one that allows all these people to starve, suffer violence, and die of avoidable diseases. Let’s try something different this time “What are your thoughts on this? Yes, this is about startup governments and investment opportunities and blah blah blah. Still, it’s also about attempting to combat global poverty by drastically altering the rules of the game that allow it.
What exactly is a ZEDE?
Nobel Laureate economist Paul Romer proposed a new governance structure in 2009. Underdeveloped countries seeking economic assistance may gift land to a non-corrupt and capable governance body, such as Switzerland. The recipient entity would effectively rule the territory, resulting in more significant human rights and economic progress.
It may be a win-win-win situation if everything goes smoothly. Citizens in the region would benefit from improved governance, safety, and wealth. The undeveloped donor country would gain a cut of the profits in the form of taxes, as well as the benefits of having a well-developed economic center in their own country. The prosperous recipient country would gain bragging rights, investment opportunities, and access to relatively inexpensive labor.
No alternatives
Honduras was out of alternatives, with 70% of its population living in poverty, the world’s fifth-worst murder rate, and a political system primarily regarded as corrupt and ineffective. They approached Romer and showed their enthusiasm for his concept. Romer and Honduran officials collaborated to create the ZEDE (Spanish acronym for “Zone for Employment and Economic Development”), a generic vision for establishing special economic zones (also known as “charter cities”) in Honduras.
However, the ZEDE law’s initial implementation was a failure.
Honduran President Manuel Zelaya, a Marxist, sponsored a vote to amend the Constitution in 2009, which his opponents saw as a conspiracy to remove term limits and rule permanently. Despite the Supreme Court’s decision, Zelaya authorized the military to assist in the referendum’s holding; instead, the military staged a coup. They named the next in line for president as interim president, then held contentious elections that were partially boycotted by Zelaya supporters and whose legitimacy was questioned. Porfirio Lobo Sosa, a conservative candidate, was elected president. Octavio Sanchez, Lobo’s chief of staff, came across Romer’s TED address about charter cities and invited him to Honduras for talks.
Lobo’s party had a majority in Congress and was able to pass a charter city ordinance. After that, the story becomes a little hazy. According to Paul Romer’s version, they designated him head of a Transparency Committee to ensure that whatever transpired was in Honduras’ best interests, then began negotiating with a business called MKG Group without informing him. He quit in protest, both because of the secrecy and because of the negotiations themselves (he desired that the zones be administered by a foreign country rather than a private firm). According to Honduras’ version, Romer was never appointed to any position, and there was no Transparency Committee.
The focus shifted to the Committee For Best Practices (CAMP in Spanish), a legitimate organization in charge of the day-to-day negotiations. Its members, on the other hand, appeared to have been hand-picked to raise eyebrows. They included Ronald Reagan’s adopted son, Oman’s foreign minister, Grover Norquist, a US low-tax crusader, and a member of the Habsburg family, just in case, any conspiracy theorists weren’t already on high alert. I’d say this raises a lot of questions, but at the time, the only one that everyone had was “what?”
In the midst of it all, the Honduran Supreme Court ruled 4-1 that the charter city statute was unconstitutional because it jeopardized Honduras’ sovereignty.
This became part of a larger political struggle in Honduras, which erupted after the Supreme Court overturned a significant police reform measure. The four anti-government Supreme Court judges were fired by Congress and replaced with pro-government justices; opinions on the move’s constitutionality range from ambiguous to strongly suspicious. For a time, there was a major crisis, with certain factions accusing other factions of organizing coups, but the government was able to survive. They tried again three years later with a ZEDE statute; this time significantly changed to make it apparent that the lands would remain under Honduran sovereignty in the end. The measure passed with 78 percent (!) of Congress’s backing, thanks to the new Supreme Court, which is stacked with government allies. They replaced the former CAMP members with folks who appear to be inoffensive enough that no one has commented on who they are (I think one of them might be this guy).
We arrive at Próspera and the present after a series of failed projects and false starts.
Will it be a success?
It is hard to tell right now. Proponents argue that the concept of a ZEDE or charter city is akin to (and even more potent than) the concept of a special economic zone, which revolutionized the Chinese cities of Shenzhen and Dubai.
Similar stories may be told about Hong Kong and Singapore’s prosperity, two different policies with little to recommend other than a different and more capable rule than the surrounding territories.
The argument behind charter cities is that Shenzhen, Dubai, Hong Kong, Singapore, and the rest of the wealthy globe are not wealthy because their residents are morally superior than their impoverished counterparts. They are wealthy because they have more developed legal systems, lower levels of corruption, a stricter rule of law, and more capable administrators.
And poor countries do not choose to have corruption, crime, or incompetence. They have those things because it is difficult to change things due to vested interests, zero-sum games, and a lack of education. If you could put a portion of a poor country under a rich-country-style government, it could become wealthy in the same manner that the rest of the world did.
Honduras agreed to let ZEDEs test their hypothesis and see whether they could provide a radical answer to poverty.
So, what exactly is Próspera?
Próspera is the first ZEDE in Honduras.
Próspera is a 58-acre plot of undeveloped land on Roatan’s island, sandwiched between a fishing community and a golf course. The adjoining golf course is larger than the 58-acre park.
There are now three structures on the property. They’re known as the Beta Buildings since they’re a test to see if people can actually create things using Próspera’s building code.
For the time being, this is merely a testbed. Próspera intends to acquire up the majority of the land between Palmetto Bay and the golf course in the future (though not the area marked Crawfish Rock, which is already a separate town). It would be around a square mile in size, slightly smaller than Central Park in New York.
But that’s just the start. Próspera is a platform, not a location. It’s a kind of governance that includes a charter, laws, legislators, officials, contracts, and partnerships, among other things. Anywhere in Honduras can join Próspera; if someone owns land in a distant section of the country and wishes to join Próspera, they can. This is the only tract on Roatan that has signed up thus far, but that could change.
The Prósperans utilize the metaphor of a strand of pearls to describe their situation. They hope to control multiple noncontiguous enclaves within Honduras in the same manner as the United States controls the contiguous 48 states, Hawaii, and Alaska, which are separated by an ocean and foreign land but are still part of the same structure.
What’s to keep things from getting out of hand? Is it possible for me to live in Próspera while my neighbor lives in ordinary Honduras? In Próspera, I have a kitchen, but in ordinary Honduras, I have a dining room. When I asked Trey about it, he explained that HPI has to ensure that services are provided to everyone in Próspera; they wouldn’t consider delivering services to someone’s dining room to be worthwhile; therefore, they would turn down such kind of frivolous applicants. Their objective is to create a network of hubs, each of which is roughly the size of a city and relatively easy to maintain. They’ve already chosen a region near La Ceiba as their first satellite and plan to extend across Honduras’ north coast in the future.
Isn’t that quite a distance between them? Isn’t it difficult to govern a single polity across so many disjointed islands and enclaves? The following is taken from the white paper:
Próspera is well-versed in the plethora of environmental, climate, and humanitarian issues that accompany motor traffic. As a result, Próspera hopes to deploy VTOL drones to create the world’s first entirely economic and safe air taxi system between its numerous Prosperity Hubs.
But, before we get ahead of ourselves, keep in mind that it’s currently a plot of land the size of a golf field with around three buildings on it in the actual world.
Who will be working on this?
Originally, charter cities were to be ruled by a respected and capable foreign power, such as Switzerland. That fell through for a variety of reasons (concerns about national sovereignty and colonialism, no indication that Switzerland genuinely wanted to help), and they’ll now be administered by a corporation made up of visionaries, professionals, and other hopefully non-corrupt individuals. The corporation will only make money if the ZEDE becomes economically productive; corporations like to make money; therefore, this should provide an incentive for them to rule correctly.
Honduras Próspera Inc (henceforth: HPI) is the company involved in Próspera, and Erick Brimen is the company’s founder and CEO.
Brimen hails from Venezuela, whereas as a youth, he dabbled in socialism and Chavismo before “reality…opened my eyes to exactly how wrong I was.” He immigrated to the United States, worked in banking, ascended through the ranks, launched an insurance company in Colombia, and eventually founded NEWay Capital, a “social impact investing” organization aimed at promoting Latin American growth. Próspera began as an initiative of NEWay and swiftly evolved into a new and more ambitious firm.
NEWay is only five years old, employs single-digit to low-double-digit numbers of people, and appears to deal in single-digit million-dollar quantities. They don’t appear to be the type of folks you’d expect to create their own city. Is there anyone else in the picture?
HPI is receiving investment from Pronomos Capital, a group of people who are precisely the type of people you’d expect to build their city. Pronomos, a group of Silicon Valley libertarians interested in competitive governance, forecasts “crowd choice in governance providers, new startup societies sanctioned by existing nations, and altogether new developments in unclaimed areas such as the high seas or celestial bodies” on their website. Some are former Seasteading Institute members who planned to build charter towns on floating platforms in international waterways. Pronomos is led by Patri Friedman (grandson of Milton Friedman, son of David Friedman), and their advisors include cryptocurrency mogul / VC / outspoken libertarian Balaji Srinivasan, legendary venture capitalist Naval Ravikant, and a slew of other, apparently wealthy and well-known individuals about whom I know little. I think we’d all be disappointed in Peter Thiel if he wasn’t somehow involved in this, and it appears that he is a significant Pronomos backer.
However, as far as I can tell, the big-name billionaires are merely supplying the cash. Próspera is primarily an initiative of a small company founded by a Venezuelan man who is deeply committed to assisting Latin America.
Do they have a track record of successfully developing cities?
Some of them, in fact, do. They’ve enlisted the help of consultants from some of the most prominent private city initiatives of the last few decades.
Jeff Singer is the former CEO of the Dubai International Financial Center Authority. It is a charter-city-like legal zone in the heart of Dubai. On the other hand, Chirag Shah is a member of Dubai’s executive team. Their accomplishments are astonishing. Dubai gained many titles during their leadership, including the world’s tallest building, the world’s largest shopping mall, the world’s largest theme park, the world’s busiest international travel hub, etc.
The Sandy Springs model was created by Oliver Porter and is called after the city of Sandy Springs, Georgia. Sandy Springs organized in a hurry, didn’t have time to develop its city services, hired private firms to handle everything, and then presented itself as a libertarian paradise and a model for everyone else to follow.
Tom Murcott worked as an investment officer for Songdo, a South Korean charter city with 50,000 residents, a 1,000-foot-tall skyscraper, the UN’s Green Climate Fund headquarters, and a pneumatic waste disposal system. Instead of throwing trash out for the garbage truck, you throw it directly into pressurized tubes that suck it to the recycling center or incinerator.
There are also lawyers, consultants, diplomats, architects, and entrepreneurs on the HPI team. There are so many entrepreneurs.
Who will be the residents of Próspera?
Officials suggest that by 2025, Próspera is expected to have 10,000 residents.
They concentrate their efforts on Honduran professionals and remote workers; the more isolated they are, the easier it will be for them to relocate to a new metropolis on an island. Poorer Hondurans looking for construction and service work, as well as ex-pats looking for a piece of paradise on a tropical beach, are both targets.
Interested? All you have to do now is sign the social contract, pay the membership fee, and apply for Honduran residency (they claim it’ll be simple, and they have attorneys on hand to assist you).
Agreement of Coexistence
Are you sure you want to sign the social contract? Yes. There is a literal social contract that you sign (officially: “Agreement Of Coexistence…which indicates that the resident is explicitly, freely, and voluntarily consenting to the governing structures, rulemaking mechanisms, and authority of Próspera”), contrary to your Political Science professor.
And, wait, there’s a membership fee? Yes. Hondurans pay $260 per year, foreigners $1300, and companies may pay much more. This is in addition to regular taxes, and it is paid to HPI as part of their pay for running the ZEDE.
Is this something that people are willing to do? Thousands of Hondurans have already applied, according to HPI. Because Próspera now only has one building complex, it’s safe to assume that supply will continue to outnumber demand for a long time.
In the event that demand outstrips supply, HPI is already in contact with NGOs that assist Honduran refugees attempting to enter the United States illegally. They want to see if they can persuade these people to come to Próspera legitimately instead.
Those who do not wish to relocate to Roatan can apply for “virtual residency” Or “e-residency,” a concept pioneered by Estonia in 2014. This primarily enables virtual residents to establish corporations in Próspera that are subject to Prósperan legislation. HPI has already employed Ott Vatter, the Estonian project’s head, to develop their system, as is their customary practice.
Is Próspera going to be a libertarian/anarcho-capitalist utopia?
Sort of, but not quite. Próspera’s founders are largely libertarians; however, they aim to avoid using the term “libertarian” too often while discussing their enterprise. Partly due to public fear of the libertarian brand. But it’s also because their worldview entails more than simply tiny government.
In libertarian ideology, charter cities fall into an unpleasant chasm. Almost every libertarian thinks that you can create rules (even arbitrary regulations) regarding what people can and cannot do on your land and that everyone who wants to stay on your property must respect your rules. But what’s the difference between that and a government “owning” its territory and enforcing its laws on its people? In actuality, the distinction is that entering someone’s home – or even their golf course – is a choice you make, and they have indisputable rights to the property. However, being in a country is unavoidable, and the president does not “own” America in the same sense that a regular individual may own a home.
However, if someone owned an entire city and you decided to live there, they should theoretically be able to enact whatever rules they want, and not even the most ardent libertarian would be able to object. This was the first time the topic had come up. However, here we are.
Próspera is erring on the side of limited government because they believe it will be the most effective. However, their primary goal is to make their city a pleasant place to live and work, and when little government gets in the way, the city usually wins.
When you acquire land in Próspera, for example, you’ll be required to sign a Covenant Restricting Vice Industry Uses, which means you won’t be able to turn your house into a brothel+casino and conduct unethical medical research in the basement. Even the most adamant libertarian must acknowledge that this is reasonable; if you sign a contract, you must abide by it. But it’s clear that HPI wants the town to be in tip-top shape, well-organized, and family-friendly, rather than the wild west vibe that some people associate with libertarianism.
Furthermore, Próspera is subject to a number of Honduran regulations that Honduras has refused to exempt them from, including laws prohibiting abortion, euthanasia, and most gun ownership.
Extremely low taxes, right?
It’s the cheapest in the world. The Próspera Charter states that income taxes cannot exceed 10%; anyone wanting to raise taxes over that must pass a thorough constitutional amendment in a system that is purposefully meant to be challenging to modify. There are a few more minor levies, but the Charter states that overall taxes must never exceed 7.5 percent of GDP, and total debt must never exceed 20 percent of GDP (provided specific requirements are met) (with various specifications and caveats). According to HPI documentation:
This is a significant improvement over the American system, as unrestricted debt can lead to unsustainable fiscal scenarios that jeopardize the jurisdiction’s economic health, stability, and shared prosperity.
What happens to the taxes?
- 12% goes to Honduras as a reward for allowing ZEDEs in the first place.
- 44% goes to the General Service Provider, a commercial company that deals with things like sanitation and electricity. This will most likely be an HPI subsidiary that subcontracts to Jacobs Engineering, the same firm that worked on a lot of the Sandy Springs projects.
- 44% goes to the Próspera local government, which will handle any services that cannot be subcontracted out.
How does HPI generate revenue? They get a portion of the membership fees and the money from the General Service Providers, but land development is probably their real cash cow. They buy undeveloped land, turn it into a thriving city, and then sell it a considerable profit to individuals who want to live in booming cities. The greater the land value and the more money HPI makes, the more thriving the city is, which they believe puts the incentives in the correct position.
What will Próspera be like?
As a result, some entrepreneurs have been given a once-in-a-lifetime opportunity to develop a utopian metropolis of the future from the ground up. The government of Honduras will allow them to do amazing things. They’re motivated to come up with excellent new ideas. They have enough money and talent to do big things in the field of innovation. What kinds of fantastically innovative things do they intend to undertake?
What will Próspera's houses look like?
Modular, adaptable, community-focused, and appealing.
Patrick Schumacher is the Principal Architect of Zaha Hadid, a world-renowned architectural firm that constructed, among other things, Beijing International Airport and the Aquatics Center for the London Olympics. He’s received some of architecture’s most prestigious awards, but his beliefs, which his Wikipedia page defines as “associated with anarcho-capitalism in favor of complete decentralization and extreme privatization of all aspects of design, planning, and development,” have sparked controversy. He recently lost a court dispute over his architecture firm’s ownership, and… wait, haven’t I read this Ayn Rand book before?
Próspera also promises a level of personalization hitherto unseen in the industry. The dwellings are modular enough that you can customize them to your liking.
How much will these set you back? Trey estimates a starting price of $70,000 for a home or $450 to $600 per month for a lesser rental property. Erick Brimen, on a podcast, offered some slightly different estimates for more expensive homes: $3750 per m2, with sizes ranging from 40 m2 (small apartment) to 250 m2 (large four-bedroom house), implying prices ranging from $150,000 to $950,000.
I’m guessing the photographs are Prósperan apartment buildings; I’m unsure how their single-family homes look. Próspera is also interested in serving non-traditional living arrangements, such as group houses, co-living spaces, and entire communities uprooting and relocating to a location in Próspera that is tailored to their specific needs.
It’s easy to make big promises and show off glossy images, but Trey says that “[these] renders should reflect the reality of the 58 acres by the end of 2022.”
What about Honduran laborers who can’t afford $450 a month? Trey explains:
LAVA Architects, in collaboration with a Honduran architect, have created the Beta Residencies (for now), which can be built for less than $40k and in less than 60 days for blue-collar laborers in even more difficult economic circumstances. These are specifically designed to allow very low-income Hondurans to live in Próspera alongside wealthy ex-pats, as research shows that having a diverse cross-section of class and culture is essential for community cohesion, especially early on when the community is just forming. Some of them have already been constructed.
What are the characteristics of property rights?
They will be 3D, with the possibility of blockchain implementation.
Prósperan real estate is sold in three-dimensional voxels, such as 1m x 1m x 1m cubes, to permanently resolve “air rights” disputes. Consider this scenario: I own a property with a beautiful view of the beach, but my next-door neighbor wants to build a tower that will obscure my view. Is he capable of completing the task? “It depends what occurs after ten years of lawsuits and city council meetings,” says the answer in the United States. “It depends who owns the voxels the tower is passing through,” Próspera says.
So, if I wish to keep my neighbor from building a tower that will block my view, I can buy the air above his house that the tower will have to pass through; if he builds there, he will be trespassing on my land. But if my neighbor wants to buy a house and make sure he can turn it into a tower in five years, he may buy the air above it as well as the ground, and no one can tell him what to do with his property.
In actuality, Próspera will sell everyone ground-level voxels before agreeing to sell or not sell higher-level voxels depending on whether they want to “zone” land for higher-density construction.
What happens if the owner of the ground floor of a skyscraper wants to demolish it, but the owner of the fifth story does not? I’m not sure, but other jurisdictions do something similar, so it’s likely that someone has already considered it.
Despite the fact that it’s only a passing reference in one of their more theoretical texts, they also mention:
Land-backed tokens: Using a land-backed crypto token is one option to capitalize and fund the purchase and development of land. Anyone in the world could, in essence, purchase one of the tokens produced for a specific plot of land. This money would be used to buy and develop the land, with a secondary market allowing early adopters to profit as the development progresses, and with [HPI] or another financial partner potentially buying back all the tokens if the lot is developed successfully. This would effectively democratize land development by removing it from the hands of the wealthy and making it available to everyone else.
How will Próspera be governed?
Garrett Jones notably advocated for a 10% reduction in democracy. Próspera takes it a step further: 44% less democracy. The city will be controlled by a nine-member council, five of whom will be elected and four of whom will be selected by HPI.
(Right now, everyone is appointed by HPI because no one lives there; but, as more people come in, different provisions will progressively give locals more of a voice, and eventually, five Council members will be elected.)
But, in a way, that’s still democratic, right? Is there a democratic majority? Yes, but everything the Council does requires a 66 percent majority. Without the support of at least one HPI member, the five democratically elected members are powerless.
But isn’t it true that HPI can’t do anything without the cooperation of certain democratic members? Yes, but HPI has already written all of the laws in their preferred format. They won’t be able to change anything without at least some democratic backing, but they expect to be content even if everything stays the same.
Other branches of government operate on the same principle: appear to be democratic on the surface but unlikely to upset the status quo in practice. If the general public disagrees with a law enacted by the Council, they can have it overturned in a referendum with a simple majority of 50%. However, the offer is only valid for the first seven days after the bill is approved (Trey claims that Próspera’s e-governance platform will make it simple to keep track of what’s going on, start a referendum, and finish voting in that time). Any law can be repealed by the public even after the seven-day period has passed. However, a 66 percent majority is now required, and this process can only overturn laws, not establish new ones.
The most severe check on the government is that once Próspera reaches 100,000 residents (which will be a long time if the experiment is a success), they can hold a referendum in which a 51 percent majority can change anything about the Charter, including kicking HPI out entirely and becoming a direct democracy, or rejoining the rest of Honduras, or anything else. Trey says he hopes it never gets this far, that he can’t image them failing so severely that the inhabitants want them out, and that this was added in case Próspera is bought out by a business that does a lot worse job than HPI intends to do. However, the referendum requires the approval of 51 percent of eligible voters, not just 51 percent of those who vote. In the most lopsided presidential election in modern US history, FDR won his second term with 523 electoral votes to his opponent’s 8, despite the fact that only 35% of eligible voters voted for him.
What about the legal system?
Próspera must use the Honduran criminal court system, but they are allowed to create their civil law. The civil law of Próspera is based on arbitration. You can choose who will arbitrate your contract if there are any issues when you sign it. If you don’t make a choice, the Próspera Arbitration Center will be used.
I am not jealous of the PAC having to resolve conflicts involving, for instance, a doctor who has elected to be controlled by the Norwegian medical code suing her office building, which is governed by the laws of Houston, Texas. But they’re trying to rise to the challenge: among their judges is a former Arizona Supreme Court judge, the director of the Cato Institute’s Center for Constitutional Studies, and “the first Chilean lawyer to obtain permission from the Berlin Bar Association to act as a legal advisor in Chilean law in Germany,” which I guess sounds like the level of complication you’d need to be familiar with in a case like this.
What if you don’t like it?
According to Trey:
We wanted to give ourselves the ability to create internal competitive forces. As a result, any municipality can establish a community interest declaration and displace the GSP wholly within their town’s boundaries under the Charter. Within the [more extensive] Próspera jurisdiction, it’s a minor competing jurisdiction. It must still follow Próspera laws, but it is free to set its regulations precisely like an HOA, and to hire its security, as many private developments do across the world.
It also displaces the rest of the authorities’ supply of services in that area, unlike anywhere else in the globe. So, if an enterprising individual wants to build a better community with better rules and management than we offer, we welcome them to do so! Próspera is the perfect place to put your Marxist commune to the test! Maybe this time it will work. If it works, people will be able to relocate from the rest of Próspera to your small settlement, and the ZEDE will have to adjust its meta institutions to accommodate them.
Who will stop Honduras from turning their backs once they've achieved their goals?
Given the recent news regarding Hong Kong, this is an appropriate question. Its unique position outside of the Chinese system aided it in becoming wealthy and powerful; China vowed to maintain that position, but when it became inconvenient for them, they broke their promise and reinstituted Chinese law. Why can’t the same thing happen in this case?
The statute allowing ZEDEs was enacted as an amendment to the Honduran Constitution, and overturning it would take a 66 percent majority (it was passed with a 78 percent majority, so that would require an overwhelming turn against it). Even if the law is repealed, the statute states that it will take 10 years for the repeal to take effect (I’m not sure if this is legal or enforceable). Because ten years is longer than a Honduran election cycle, repealing it would require the agreement of two successive governments.
They are “guaranteed by international treaty,” according to Próspera. The Honduras-Kuwait Treaty For Reciprocal Investment is the treaty in question, and I believe Honduras is telling Kuwait that they can invest in ZEDEs because Honduras has promised not to get rid of them for the next 50 years. I don’t have the knowledge of international law that I’d need to know if this is genuinely enforceable. Could a future Honduran Congress unfriendly to the ZEDE repeal the treaty? Would this have a negative impact on their international reputation? Do you think the Great Honduras-Kuwait War of 2036 will happen?
Finally, what would be Honduras’ motivation? They entered into this with the expectation that ZEDEs would be economically productive, benefiting the rest of Honduras while allowing them to take a little cut. If the ZEDEs do become economically productive, it appears that letting the rest of Honduras benefit and skimming a bit off the top is still their best hope. Sure, if necessary, they could use military force to take over the ZEDE. That, however, would be murdering the goose that lays the golden eggs. China did not take over Hong Kong because of its wealth. They’d already taken as much of the money as they wanted. They took Hong Kong because having a thriving democracy within their borders was too embarrassing, and they wished to maintain dictatorial authority.
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