Envío Digital
Central American University - UCA  
  Number 357 | Abril 2011



A Model City for a Society in Tatters

Neoliberal economist Paul Romer wants Honduras to be the guinea pig for his extremist ideas. He’s recommending the creation of economic, political, juridical and social arenas totally open to transnational capital investment on our territory for a century or more, little autonomous states within the State untouchable by national laws and authorities. “Model Cities” are the new disguise of enclaves, as Honduras, the “banana republic,” knows well. We’re all too familiar with such exploitation of our land, resources and people.

Ismael Moreno, SJ

A committee led by President Porfirio Lobo Sosa, made up of some 50 members of his administration visited Southeast Asia between February 18 and March 1 this year. It was the biggest official group since nearly a hundred people using state funds represented Honduras in the South African World Cup. The point of this new committee was to learn in situ about successful experiences of US economist Paul Romer’s initiative known as “Model Cities” in South Korea, Singapore, Hong Kong and Kuwait and to set up partnerships for implementing them in Honduras. A month earlier, the National Congress had already passed a law to make that possible.

The legislators approved

Model City: the words sound nice and nice is how the Honduran government is presenting the project. It was necessary to bring the legislation up to date in order to implement it, since the idea is to set up a bona fide enclave in the country, using laws from other countries and the multinationals’ commercial laws because they need a free hand to function at full capacity.

Model cities are miniscule states within the State. Every Honduran legislator, from the coup-implementing extreme Right to the so-called anti-coup Left, voted in favor of reforming the national legislation to make these “liberated” territories legal. Our legislation was thus adjusted to benefit foreign corporations and countries that want to invest in these areas.

The background:
Sweatshops and fast food

For Honduran legislators, politicians, officials and businesspeople, model cities don’t look like an outlandish reality. It’s the next step up from what has been their immediate forerunner since the nineties: the maquila industry, free trade parks of sweatshops that assemble imported raw materials and re-export the result, all without paying import or export duties in either direction. Maquilas are true tax havens where slavery is practiced. Their policies and business decisions tend to ignore the Labor Law, arbitrarily firing workers and often falling well short of the most minimal health and safety regulations, all with impunity. Hondurans are treated like beasts of burden in their own country.

The approval of the proposal for model cities—areas in which the law of the market is king, open to investors who make their own rules and in the hands of authorities dedicated to promoting these investments at any cost, as long as it’s to others—isn’t at all strange in a country where with the stroke of a pen legislators have approved tax-free operation for foreign fast food franchises.

All these maquila businesses, with their pretty names, are very much like the model cities, which also enjoy tax-free status and treat their Honduran employees like slaves. They’re indeed like liberated territories. Even the tomatoes and bread they use come from outside and all the money they make goes back out.

We were a “banana republic”

It’s also not strange for Honduran officials, legislators, politicians and entrepreneurs to be organizing cities under foreign control because even the maquilas have their historical forerunner in the enclaves set up by the banana companies. That model dominated and defined Honduran society over the entire 20th century. They, too, were a state within the State and they ended up defining the politics, economy, legislation and even customs of the larger occupied State that provided its services to the occupier.

One can’t help noticing the interesting coincidence that approval of the legal reform for implementing model cities occurred exactly one century after the extremely generous concessionary regime approved by General Manuel Bonilla, Honduras’ President at that time, in favor of the US banana companies. He ceded them lands and tax privileges on the North Coast, thus initiating the enclave model that would lead Honduras to be known internationally as the “banana republic.”

This is how Honduran historian Marvin Barahona explains it in his book Honduras en el siglo XX, una síntesis histórica (Honduras in the 20th century, a historical synthesis): “The construction of the ‘banana republic’ was the most significant achievement of the State’s concessionary policies towards foreign capital, putting liberal ideology and its quest for progress and civilization as a praxis. The period was marked by the consolidation of US capital in the banana industry on the North Coast, the growing intervention of the banana companies in national political life and a recurring crisis in the political regime’s stability.”

“It would all be different
if Tela were here...”

Without doubt Honduras was the most likely Central American country in which legislators and public officials could, without blinking an eye, approve a multinational model based on tax privileges and the use of national territory and labor to drive commercial projects for the benefit of others.

In the end, it all came quite naturally, not only to legislators and public officials but also to much of the North Coast population, traditionally influenced by transnationals. In the banana plantations scattering the Northern Sula Valley it’s common to hear someone say: “Everything would be different if Tela [Railroad Co. a subsidiary of the transnational United Fruit banana company], were here. With them we had work, schools, electricity, railways and they even kept the yards of the living quarters swept. Now we don’t even keep our own houses in order.” Tela, as the subsidiary was known, enforced its economic regime from 1912 right up to 1998 when Hurricane Mitch became the main excuse for abandoning its investment in bananas. In that near century it imposed an enclave culture and the population there depended on its decisions, which in turn influenced the election of municipal, departmental and national authorities.

Everything used to
be decided in Lima

With Tegucigalpa the country’s capital city and Lima, in the center of the Sula Valley, department of Cortés, the headquarters of Tela’s general management, it used to be said that the country’s political and economic decisions, from the important to the secondary, were made in Lima. Everyone used to wait for the heads of Tela to express an opinion to know which way the government would go. Everything revolved around the banana company.

The company imposed its way of seeing and acting, its way of commanding and its way of life, all of which were a reproduction of life in the US, shipped to the swamps and tropical heat of our North Coast. Many of that region’s people still long for Tela’s return, they continue to live caught in the nostalgia of a past that has been distorted with the passing of time, making harsh exploitation seem like goodwill and the bosses’ abuse like a decent life. That distortion is the consequence of a dependent society and a totally alien national economy and commerce. Today, all that is reborn as an “angel of light” among a defenseless population.

Given this alienated consciousness, nobody was the least bit disturbed when on the night of January 18, 126 of the 128 legislators raised their hands to vote for a constitutional reform authorizing the operation of model cities under the name “Special Development Regions.” They say that on this night, when the legislators lowered their hands, you could hear one of the loudest rounds of applause heard in the recent history of our country. Immediately afterwards all the representatives, men and women, enthusiastically sang the national anthem.

Salvavida beer

Honduran history over the past century leaves an impression full of contradictions. The more sovereignty the country lost, the more politicians and businesspeople experienced it as an expression of sovereign patriotism. The years between 1912 and 1930 saw the banana enclave’s consolidation. Between 1920 and 1930 Honduras occupied first place in the world of banana exporting countries.

It was during that period of alienation from national sovereignty that the “patriotic symbols” appeared. For example, when the US banana business Vaccaro Fruit Company began diversifying production in the early twenties, it set up a brewery in La Ceiba on the Atlantic Coast, calling the first beer brewed there by the first syllables of the names and surnames of two prominent businessmen, one from the US and the other an Italian, Salvador Vaccaro and Vicente D’Antoni. The beer was called Salvavida, which means lifesaver in English, and they didn’t hesitate in putting the crossed national flag recently approved by the National Congress on the label. To this day the beer is a Honduran national symbol.

They want a bit of the
country for a hundred years

Paul Romer, a US academic and economist, promoter of “growth theory,” is the creator of the model cities project known as “Charter Cities.” The examples promoted by Romer are Hong Kong and Singapore, both of them Asian giants of growth.

For a country like Honduras, Romer recommends handing over a piece of its territory of approximately a thousand square kilometers for one or more developed countries—or else several transnationals—to jointly administer autonomously. It would be like creating autonomous cities with their own legislation: oriented of course towards commerce, finance and business administered by a coalition of nations and corporations under a concession that would last for up to a hundred years or even more.

Romer, a graduate of the University of Chicago School of Economy, and other academics from the same mold supported by the Central American Bank of Economic Integration (BCIE) envision the model cities in Honduras attracting investment, creating jobs and setting up their own specific health and education systems, as well as promoting cutting-edge technological development.

We learned from international sources that Romer was in Tegucigalpa earlier this year and met in private with various groups. Afterwards he presented his project in a public meeting. For a backdrop he had a huge screen with a photo of a soccer game and he said: “You can’t change the rules of the game halfway through, what you have to do is create a new playing field and see if anyone wants to play.”

Turned into a guinea pig

Within Honduras the project’s most fervent promoter is President Lobo’s anointed National Congress president Juan Orlando Hernández. Parroting Romer’s words, Hernández explains that model cities are based on “autonomous zones in territories regulated by a Constitutive Act or General Law under which they would be administered and based on free trade, defense of individual rights and protection of private property.”

As with the enclave model, Honduras is once again being turned into a guinea pig. Romer’s optimism about the results of the experiment isn’t wasted. He believes it’s about “constructing the first city in the history of humankind that will enjoy true economic freedom to create jobs, independence from government in generating wealth and freedom for citizens to create riches.”

The “Pearl of the West”

Those pushing this proposal believe the Honduran model city will turn the country into one of the richest territories in the world, that it will become the “Pearl of the West”. Its champions say that true wealth will be attained when the model functions independent of central government power and that this already happened with the Panama Canal, administered independently of the Panamanian government since 1914. The same occurred, they say, with the banana enclave, which generated significant economic growth precisely because it was a model clearly independent of the central Honduran government.

According to the approved decree, these Special Development Regions are being created for “the purpose of speeding up the adoption of technologies that permit production and service provision with high value added. They will do this in a stable environment with transparent rules that can attract the national and foreign investment required for rapid growth, create the jobs needed to reduce social inequality, and provide the population the education and health services, public security and infrastructure that permit truly improved living conditions in the region.”

Now that the Constitutional Statute has been drafted and approved, “it may only be modified, reformed, interpreted or withdrawn by a two-thirds majority vote of the legislators, after a referendum of the citizens living in the Special Development Region in question.”

The Special Development Regions “enjoy legal status establishing a special system of public administration that can issue its own legal procedures, which must be approved or rejected by the National Congress by simple majority of all its members; they must be endowed with their own jurisdiction; they can sign treaties and agreements on issues related to trade and cooperation in matters pertaining to them which must be ratified by the National Congress. Likewise, in matters of budgets, taxation, revenue collection, administration of rates and duties, as well as the drafting of any kind of contract, they will be regulated in accord with the terms of their Constitutional Statute.”

Breaking with “bad laws”

According to Romer, the backwardness of countries like ours is mainly the result of “bad laws” that prevent or interfere with investment and hamper initiatives. Because of this, a country that wants to get ahead must get rid of these bad laws. This means getting rid of any legislation that protects workers’ labor rights or natural resources and coastal and marine property from the greed of foreigners, that guards the land and resources of ethnic populations and, in general, all legislation particular to a country.

For Romer, boldness on the road to development consists of breaking with this legislation and opening the door to new laws aimed at encouraging investment by other countries and corporations. This economist’s idea of radical neoliberalism is that legislation should cease being country specific allowing laws that transcend national States to predominate. It’s an extreme and extremist example of the enclave concept. Honduran legislators have totally bought into this formula, opening the way for Honduras to become an experimental laboratory for an economic, political, legal and social enclave favoring fully globalized 21st-century capitalism.

Inequality and violence will increase

Analysts who criticize this model insist that separating off chunks of our country to put them at the service of transnationals and the world’s rich countries means that the inequality and exclusion characterizing our society will become more deep-seated and the differential between those who live in the model cities and those who live in the rest of the country will widen. This will be so marked that rather than lessen current social conflict, it will intensify political polarization, public violence and crime.

Independent analysts all agree that a model city within the territory of an economically, socially and politically failed society will not help reduce inequity and the inequality gap, but will instead deepen the imbalance to unsustainable extremes. Just as the logic of successful professionals in failed societies is problematic, model cities can’t be sustained in failed societies without paying a high human and social price. They are an elitist option born of a capitalist logic that has already provoked polarization and social exclusion in Honduras, a climate that generates rebellion, convulsions, violence and social confrontation.

It’ll be in the Sico Valley

According to Paul Romer’s dreams, the ideal is to start a model city from scratch on uninhabited land with new regulations motivating investment and creativity, without government imposition and with freedom for each individual to offer and develop his or her creativity in an atmosphere of total freedom for capital in line with transnationalized laws.

In Honduras, this would mean unpopulated areas such as the Sico Valley in Honduras’ northeastern Mosquito Coast, precisely at the foot of the only virgin forest reserve now left to Honduras, a region designated as a World Heritage Site.

This model city would end up eliminating the last agricultural frontier left to us. They’re also thinking about constructing a sort of floating model city in the port of Trujillo and the Bay of Castilla, where Columbus dropped anchor for the first time in 1502. Romer’s fantasies have been embraced in the Caribbean region.

After bananas, African palm

At the start of the 20th century, thousands of Honduran subsistence farmers from the south and west, as well as from El Salvador, set about cutting down the forests of the Sula, Aguán and Sico valleys on the North Coast to plant bananas. In the forties and fifties the banana companies abandoned the Sico Valley and most of the Aguán Valley because of the Sigatoka plague that badly affected the bananas. Hundreds of farm families left as well, and in a very few years rainforest returned to those fertile valleys.

Around the mid-sixties, after a World Bank study, the companies turned their eyes back toward the Aguán Valley, not so much for growing bananas but rather to experiment with African palm plantations, which produce the low-cholesterol oil the populations of rich countries were starting to demand.

At the start of the seventies thousands of families arrived in the valley, lured by aggressive state planning in full connivance with transnational capital, in what was being called an Agrarian Reform Project. The facts and later their results showed that the project was no more than an agricultural colonization plan driven by foreign interests requiring massive cheap labor. Once again the subsistence farmers cut down the lush rainforest regenerated after its devastation for banana cultivation, this time to plant African palm. The State contributed major resources for organizing cooperatives and for the agricultural supplies the organized farmers needed.

An agrarian reform fraud

This “reformed” farming sector, as it was called, was organized into cooperatives and made the formal owner of the land and plantations. The transnationals would buy the oil they would start to produce five years after planting. During this time the cooperatives acquired huge debts with the State to ensure their survival, thus finding themselves tied to the decisions and will of public officials, especially the military, which insisted that the farmers even carry out even their own dirty work, spying or taking control of cooperative leadership classified as subversive in order to break up groups that questioned official policies.

In the nineties, two decades after the initiation of this agricultural colonization in the Aguán area, once the production of palm oil was at its height, the government passed new legislation—the Agricultural Sector Modernization Law—that gave the cooperatives the right to sell properties that hitherto had been destined solely for agricultural reform.

The Aguán tragedy

A few private businessmen led by Miguel Facussé Barjum then began to buy up and accumulate most of the cooperative land planted with African palm, employing for this task bribery, coercion, threats, the farmers’ debt burden, and especially the weak or nonexistent sense of struggle and ethics of not a few of the remaining coop leaders.

The macabre logic of the transnationals, national businessmen and the State became completely clear: colonizing the Aguán region caused thousands of farming families to migrate in and do the tough job of making the land productive again, making them feel confident about investing their labor and even going into debt, by making them the land’s owners under the cooperative regimen and agrarian reform plan.

But once the African palm production began to bear fruit, the State apparatus turned to its real mission of demoting the farmers to their habitual place in the production mechanism: as cheap labor, subordinated to the interests of national and international big capital, transferring ownership of the land to private hands.

Today, 40 years after the euphoric settlers’ trek, the Aguán farmers live in deplorable conditions. The organizations that struggle to regain their land are under threat and their youth are emigrating overseas.

That first experience, a forerunner to what today is called a model city, didn’t lessen exclusion and social inequality; it wasn’t a step towards a democratic society. On the contrary, inequality, exploitation of the farming population, violence and agricultural confrontation all increased, particularly in the Aguán Valley, which these days has become the eye of the storm in the country’s agrarian and political conflict. Will Paul Romer get to know this historical, territorial, economic, political and legal model: a mirror in which to glimpse the future heralded by his charter cities?

Why not benefit
from the opportunity?

What do other voices in the country say and think about this imported project? envío met with the National Party representative for the department of Cortés to learn why she voted for the constitutional reform to create the law that will allow model cities in Honduras. Without hesitation the legislator told us she was satisfied: “Firstly because we’re providing the country with a window onto the world. Honduras needs jobs and the model cities are coming to create specific areas for implementing projects to provide the jobs and opportunities our young people need. For Honduras to get ahead I think we must open our doors to big businesses to invest and for this to happen we have to give them the legal protection they need.”

“We can’t be saying we’ll lose sovereignty over a specific place because that’s already been the case since 1984 when the sweatshops arrived here in Honduras; they were given legal protection. So why not give the same to a whole lot of people from other countries who want to invest here? A series of businesses will come and invest in Honduras. We believe we must give this country the chance to excel, so we Hondurans can get ahead and Honduras can be a window to create jobs.”

“It’s the new mask”

Constitutional lawyer Carlos Augusto Hernández doesn’t see it like that: “Model cities are the cynical expression of an oligarchy that, feeling triumphant, persists in acting behind the back of the rule of law, very often using constitutional phraseology when they betray the principles of sovereignty with their deeds. They are a form of domination, the new mask of the enclave model through which the multinationals associated with the national oligarchy aim to develop their penetration and dominion of national territory.”

In a society in tatters?

“A model city in a society in tatters is a contradiction,” adds Bertha Cáceres, “as is talking about development when one’s referring to profits for only a few.” Cáceres is a nationally recognized leader as head of the Lenca people who belong to the Civic Committee of Popular and Indigenous Organizations in Honduras (COPINH).

She energetically rejects this decision, which jeopardizes indigenous peoples’ lives, sovereignty and culture. “For us as indigenous peoples, development is sharing all wealth in common and putting people’s wellbeing at the center of everything. Model cities are one more extermination project for areas that are a source of biodiversity. They imply the destruction of rainforests, land, water resources and also people’s culture, particularly that of indigenous peoples. It’s a model imported from countries that have turned into big markets and big businesses. There’s a rush to get them going here because they need a big screen for money laundering. They’re forbidden models for the poor, and are exclusively for the rich with the capacity to consume, squander and launder dirty money.”

Ismael Moreno, sj, is the envío correspondent in Honduras.

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