The economist Paul Romer has been in Canada promoting his idea for a so-called ‘charter city’ in Honduras. Interviewed for TV Ontario, he said that a charter city would attract investment by offering a completely fresh administrative, legal and financial system, separate from the country in which the city is built. The proposal has started to attract widespread attention, for example in the New York Times and the Economist.
Romer’s ideas are modelled partly on the success of cities like Hong Kong and Singapore, and he believes that he can recreate this success in poor countries like Honduras. He also believes that, because people in Honduras have such little trust in government, he can enlist the support of Canada (which has trusted bodies likes its courts and its police) to help replicate its governance systems in one region of Honduras. He wants businesses from Canada and elsewhere to invest in the new city. The Honduran Congress has now passed a constitutional amendment allowing charter cities (which it calls ‘REDs’ – Regiones Especiales de Desarrollo) to be set up. This fits with its aim of declaring Honduras ‘open for business’.
For an idea which Romer has been promoting for several years, it seems remarkably lacking in detail about how it would be carried out. The Congress in Honduras also seems to have adopted the plan with very little questioning of its implications or of how it would be implemented. As a qualified town planner and housing professional, who happens to live in Central America, I decided to set out ten questions to which Hondurans (and Canadians) might demand answers before the charter city concept goes any further.
1. Who supports the charter city in Honduras?
Romer claims that the plan has support across the political spectrum in Honduras because it gained almost unanimous approval in the Congress. He seems unaware that the Congress largely represents the interests of big business and of a small elite, in a country which is deeply divided and in which there are major political and social groups outside Congress who contest the proposal. No one has taken steps to engage with these groups, including those representing rural and indigenous communities that would be affected if the charter city is based (as planned) in the north-east of the country, a region which is the focus of considerable political and social conflict. Why hasn’t anyone done this?
2. Who decides if the charter city goes ahead?
The constitutional amendment makes no provision for a plebiscite or any other sort of consultation with the population affected. The charter city concept is based on having ‘a vacant piece of land, large enough for an entire city’. There is no area of ‘vacant’ land of this size in Honduras, so how will the views of the current inhabitants of the zone which forms the city be taken into account? What happens if they don’t want the charter city?
3. Who will own the land?
The concept seems to be based on the idea of land being gifted to the city authorities, who would then lease it to entrepreneurs. But in Honduras the government does not own large enough tracts of land which it could make available, so the city will have to be composed mainly of land in private ownership. Who will compensate the current owners for their land, especially owners of small farms or of the many holdings in Honduras where title to the land is disputed? Where will the funds come from to buy land? What happens if owners do not want to sell, will they be dispossessed?
4. Who writes and administers the laws?
The constitutional amendment leaves most criminal and administrative law to be decided by the charter city itself. But writing such laws is a huge task, which in other places is almost invariably carried out incrementally over a period of years, if not centuries. But a growing city cannot operate without a legal system, which will have to be created very quickly (just think about the importance of laws about land sales or governing road traffic, for example). If a legal system is to be imported from elsewhere, even translating it and making it locally applicable will require significant resources, to be followed by recruiting and training judges and everyone else involved in enforcing unfamiliar laws. How will this be done?
Rather bizarrely, one of the few points of detail in the charter city proposal for Honduras is that its court of final appeal will be provided by Mauritius, a country 10,000 miles away with a different language and legal system. How can this work for ordinary Hondurans?
5. Who plans the city?
New cities are usually planned cities, and there are many examples such as Brasilia, Canberra and Chandigarh. But planning is time-consuming and costly. Who will pay for this? If planning is to be minimal or non-existent, then how will minimum standards be established and guaranteed? Who will take decisions about what is built where, and according to what regulations (in a region prone to natural disasters)?
6. Who pays for the infrastructure?
Cities need roads, sewers, water supplies and many other kinds of infrastructure. Romer promises that charter cities will have good infrastructure, for example a good quality water supply. Yet who will make the up-front investment needed to create this, and where will the engineers come from to implement it? Roads require public funding. While in theory water and sewerage systems might be built privately, in practice it is very unlikely that this would happen without extensive guarantees about future revenues. The city will require income to finance its infrastructure, but who will create and enforce the tax systems needed to secure the income?
7. What kind of jobs?
Romer says that the first generation of people moving to live and work in a charter city will still be poor, but that later generations will start to benefit from the greater economic opportunities which the city will produce. Businesses that might be attracted to Honduras will almost certainly look for conditions which are at least as favourable as those they can get elsewhere in Central America, where factories called ‘maquilas’ operate in tax-free zones with limited enforcement of minimum wage laws and of health and safety requirements, and often it is difficult or impossible for trade unions to protect workers’ rights. Workers earn only enough to provide a very basic standard of living for their families. Why then, would going to a charter city be any more attractive than working in a maquila? Won’t the charter city simply be a massive tax free-zone, recreating conditions like (for example) those along the notorious Texas-Mexico border? Who does this benefit, other than the factory owners?
8. Where will workers live?
Large businesses in Central America typically pay no attention at all to their workers’ living conditions, and wages are often too low to enable workers to buy a house, so they share with relatives or create slums of informal dwellings built of waste materials. The world’s largest slum is just outside the region, in Mexico City. Will the charter city also be a large slum? If this is to be avoided, how will houses be built and who will plan for and provide them? Private developers do not meet the needs of low-wage families in Central America, because they don’t earn enough to be able to afford mortgages. There are no social housing systems (as exist, for example, in Hong Kong and Singapore). So where will the workers live?
9. Who protects the environment?
Much undeveloped land in Honduras, especially in the north-east, is rain forest or coastal wetland or otherwise consists of areas of immense environmental importance. How will a new city avoid destroying these areas? What is the justification for developing unspoilt areas when there is plenty of less environmentally important land around Honduras’s two major cities? Honduras has a history of permitting environmental degradation in the interests of ‘development’, for example recently passing laws which allow mining (often by Canadian firms) with few environmental safeguards. Won’t a charter city simply make this situation far worse?
10. How does a charter city help tackle the real problems faced by Honduras?
Honduras faces enormous problems. It has the highest murder rate in the world, and assassinations of leaders of political and social groups who question the established political structure are common. It is the most dangerous country in the world for journalists. Leaders of groups supporting minority rights (e.g. of the lesbian-gay community and of indigenous groups) are also persecuted and murdered. There are high levels of casual violence in cities, related to chronic poverty and drug use. There is enormous inequality, and those fighting it are marginalised by a political system which rejects change (exemplified most powerfully by the coup three years ago). The power of the establishment is most apparent in the impunity of the army and the police when they murder political activists or violently suppress marches and demonstrations.
The biggest question about the charter city idea is – why does it appear to be oblivious to the reality of Honduran society? Why do its proponents not feel obliged to show how it would recognize and begin to tackle these issues? Why do they not see that, in the absence of such recognition or of any desire to engage with the majority of Honduran society outside the ruling elite, the charter city is simply going to eforce and prolong the crisis which Honduras suffers?
Paul Romer is free to peddle his ideas for charter cities but they should be challenged by anyone who is thinking of engaging with them. This is particularly true of Canada, which is rightly proud of its own cities and the institutions which govern them. The Canadian government and Canadian businesses should not take Romer’s ideas at face value but should ask hard questions about how valid they are in the context of Honduras. Quoting examples of successful cities like Hong Kong and Singapore does not begin to address the issues. Unless the Canadians involved in this initiative ask questions like those posed here, they will simply be guilty of helping create and exploit a new colony in Honduras. It might help them make money, but it will do nothing to improve the conditions in which most Hondurans live.