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Hondurans Fight Private Cities Run by US Companies Amid Legal Battle

Such “extreme investor rights” under an international trade agreement directly oppose Honduran sovereignty, says critic.

In Honduras, communities are fighting back against privatization and foreign exploitation after Honduran President Xiomara Castro and Congress repealed a law that established so-called Economic Development and Employment Zones, where private companies have “functional and administrative autonomy” from the national government. Now a Delaware-based company called Próspera has launched a case to challenge the repeal of the law under the Dominican Republic-Central America-United States Free Trade Agreement and is seeking almost $11 billion, which amounts to nearly two-thirds of the country’s entire 2022 budget. This is an example of the “extreme investor rights” of this international trade agreement directly opposing Honduran sovereignty, says Melinda St. Louis, director of Public Citizen’s Global Trade Watch. We also speak with local leader Venessa Cárdenas of Crawfish Rock, the area directly impacted by the Próspera ZEDE on the island of Roatán, about the stress of losing control over their community. “We don’t know when our home will be taken from us,” says Cárdenas. “We, of course, have the rights to be free and previously consulted on any type of project that is being done in our community.”

TRANSCRIPT

This is a rush transcript. Copy may not be in its final form.

AMY GOODMAN: This is Democracy Now!, democracynow.org, The War and Peace Report. I’m Amy Goodman, with Juan González, as we turn to Honduras, where communities are fighting back against privatization and foreign exploitation. The Honduran President Xiomara Castro and Congress repealed a law enacted by the previous right-wing administration that established what are known as Economic Development and Employment Zones, or ZEDEs. The law also allowed the private cities and special economic zones to have functional and administrative autonomy from the national government, which opponents say is a threat to Honduran sovereignty and livelihood of local communities.

Now a Delaware-based corporation called Próspera has launched a case to challenge the repeal of the law under the Dominican Republic-Central America Free Trade Agreement. The company established one of the zones on the island of Roatán and is now seeking almost $11 billion, which amounts to nearly two-thirds of Honduras’s entire 2022 budget.

Last month, Democratic Senator Elizabeth Warren and 32 others in the U.S. Congress released a letter calling on the Biden administration to intervene, writing, quote, “Large corporations have weaponized, and continue to weaponize, this faulty and undemocratic dispute settlement regime to benefit their own interests at the expense of workers, consumers, and small businesses globally.”

For more, we’re going to Brussels, Belgium, to speak with Melinda St. Louis, director of Public Citizen’s Global Trade Watch. And in Honduras, we’re joined by Venessa Cárdenas, the leader of the community council of Crawfish Rock, the area directly impacted by the Próspera ZEDE on the island of Roatán.

We welcome you both to Democracy Now! We’re going to begin in Honduras with Melissa — rather, with Venessa. Can you explain what’s taking place? For people to understand around the world, you’ve got U.S. corporations running cities? Venessa? I think she’s not hearing us, so we’re going to go to Melinda St. Louis. If you can explain what’s happening in Honduras?

MELINDA ST. LOUIS: Well, yes. It’s great to be here. Thank you so much. And I really look forward to hearing from Venessa.

It is absolutely outrageous that in Honduras, after the coup in 2009, there was this radical project to create these ZEDEs, as you mentioned, private cities, that U.S. corporations could come in and control the territory. The territory was removed from municipal jurisdictions, and then, they had then the power, as a corporation, to set their own regulatory standards, tax policy, monetary policy, security forces, have their own separate court system and, basically, run their own government.

And in the case of Roatán, this company, Próspera, came in and established this private zone where the governance structure does not allow for representative democracy from the people of the community. And at first, the people in the community didn’t even know that this was happening. It’s happening in such an opaque format. And once people understood what this meant in terms of taking away Honduran sovereignty and taking away land from communities, there was massive uprising. Indigenous people, community organizations, even the largest business association in Honduras opposed this corrupt law.

And so, through the democratic process, fortunately, they managed to overturn this corrupt law. The Xiomara Castro administration ran on a platform of repealing this law. And they did so. They made good on their promise. The National Assembly overturned or repealed the law. And that really should be the end of the story. It’s a victory for democracy in Honduras, after a very dark period of right-wing rule.

And then, that’s not the end of the story because of the trade agreement, that no one knew about, and, you know, kind of these secretive trade rules that empower corporations to be able to challenge democratic policies outside of the court system. This isn’t in a U.S. court. It’s not in a Honduran court. It’s in a private tribunal of private sector lawyers, three arbitrators, who will decide whether to basically ransack the treasury of the tiny country of Honduras to the tune of $11 billion — with a “B” — which, again, as you mentioned, would bankrupt the country. So, the company is using this as an additional tool to try to bully the government to not implement the democratic will of the people. And so, it’s very complicated, but it’s actually very simple. It’s, once again, kind of this neocolonial project of U.S. companies going to the region, but in this very radical way.

JUAN GONZÁLEZ: Yeah, I think we have Venessa Cárdenas in Honduras now, and I wanted to go to her. Venessa, when I was in Honduras as a reporter back 30 years ago, there were already very large export processing zones, basically to manufacture goods and send them to the United States. But this is a whole other stage here of whole cities. Could you talk about how your community, Crawfish Rock, found out about this, and what the previous government had done to keep the basic information from the people?

VENESSA CÁRDENAS: Yes. Hello.

Well, we have — we didn’t hear it from the government, of course. We heard it through a community leader. And she practically was telling us underneath, because she was so scared. But she had to have — she wanted the community to know. I actually got it from a colleague of mine, and she sent it through WhatsApp messages. And we had to do so much studying. We had to knock on so many doors, because everyone that we asked was like — no one knew about it. The authorities knew nothing about it.

So, first of all, we need to know that this ZEDE, especially ZEDE Próspera, is not like the rest of the autonomous or independent zones. This is a state within a state, which will have its own Indigenous system. It is run by a technical secretary through the ZEDE CAMP. And the CAMP itself is in the shadow. No one knows who the members of the CAMPs are. And, of course, the link that it has to the narco state of Juan Orlando is very concerning to us, and their lack of transparency. They have not been transparent in anything they have done.

This community is a small community. It’s an ethnic community. And we, of course, have the rights to be free and previously consulted on any type of project that is being done in our community, and we have not been. So, you know, we have totally the stress of Próspera ZEDE, and the power that the treaties and the law gives them is of so much concern. We are so very concerned about that.

AMY GOODMAN: You know, I was looking at the ads to attract businesses, and it talked about these ZEDEs. It said, around the world, there are something like 5,000 of these zones, but 500 of them, 10%, are in Latin America. Here, if you can talk about your community, how it’s impacted, and the fact that this was imposed by the previous president, JOH, as he’s called — J-O-H — Juan Orlando Hernández, who was extradited to the United States for drug trafficking, for corruption; even though it was repealed, how it’s being enforced right now in your community, and the particular effects on your community?

VENESSA CÁRDENAS: ZEDE Próspera had a very negative impact on our community. It has had a psychological impact, as well a physical impact. Why I would say psychological, because the mental stress that we are under. We don’t know when we will have — when our home will be taken from us. And we have old people. We have single mothers. We have widows. And, you know, it’s a problem to be stressing and worried all the time when we will have to leave our community.

And then, physically because there was not — the community was stuck in a limbo. No one wanted to do anything with it. There was no development. After the law was abolished in last year, anyone that is from here can see that there have been numerous construction. Many homes have been — people have started to build homes, to fix. First, before that, because of the ZEDE problem that we have, and we still have, you know, people didn’t even want to fix their fences, because it was like, you know, we don’t know when we’ll have to move. And it was a constant stress, as well as the environmental destruction of this thing done in our community. They have torn down a complete hill, a hill that has so many species of animals, species of trees, as well as our main source of water. We already have a well that has been dried up.

So, it’s so many things that have impacted us negative, that there are little — they promised jobs, and there is very little jobs that we can apply to or that people have gotten, that the pros and the cons is more, you know, negative than positive.

JUAN GONZÁLEZ: Yeah, I wanted to ask Melinda St. Louis: Who is this firm, Próspera, this Delaware firm? Who runs it? And also, given the fact that these — many companies previously had the right to manufacture in many of these countries, what’s different in terms of what these private cities offer to foreigners? Is this another haven for a crypto utopia for tech millionaires?

MELINDA ST. LOUIS: Yes. Well, I think it really remains to be seen, because it’s quite a shadowy operation. You know, Próspera, as you mentioned, it is a Delaware-based company. It was created for the ZEDE, to create this ZEDE in Honduras. And as far as we can tell, there is not a goal to do manufacturing, to really have major jobs. It can look like, on the surface, a tourist community, like a residential community. But what it looks like is really more of a political project.

I mean, there was — certainly, there are a number of members of the Próspera community who are very active in the cryptocurrency movement. They have made bitcoin legal tender. They have created an opportunity to become an e-resident. So, you don’t have to live there, but if you pay a fee, you can be an e-resident, and then you can open up a business using the very lax regulatory framework, where you can propose your own regulatory code and basically operate outside of the jurisdiction of the United States or Honduras. And so, you know, I think that is really more what the project is of Próspera.

So, in terms of contributing to development, that seems very unclear. And yet, and in this case that they have launched against the government of Honduras, they are claiming that $11 billion is what their expected future profits might be in the future, and that’s why they are claiming that under these extreme rules, investor rights, that are included in the trade agreement, that they should be able to be compensated, unless Honduras basically lets them do whatever they want, according to the law that they previously invested under, that was put into place under the regime of Juan Orlando Hernández —

AMY GOODMAN: And explain the role of CAFTA.

MELINDA ST. LOUIS: — and that they signed a —

AMY GOODMAN: Can you explain the role of CAFTA in this — we have less than a minute to go — and the letter that Senator Warren and others have signed, what you’re demanding of the Biden administration?

MELINDA ST. LOUIS: Yeah. So, in CAFTA, there are these extreme investor rights that corporations can sue governments outside of the court system to demand billions — or, millions or billions in taxpayer compensation. And this is a very radical element of our past trading system, so much so that it is no longer considered to be a viable thing to include in trade agreements. The Biden administration is no longer seeking to include these extreme corporate rights in agreements. And yet it exists in CAFTA, and so this company is utilizing it.

So, Senator Warren and 30 members of Congress are calling on the Biden administration to weigh in on behalf of Honduras in this case, so that they do not bankrupt this country, and also to seek to remove these extreme investor rights from CAFTA and other free trade agreements, given that now there — now that there is bipartisan opposition to these very extreme rules that are exploited by corporations like Próspera.

AMY GOODMAN: Melinda St. Louis, we want to thank you for being with us, Public Citizen’s Global Trade Watch, and Venessa Cárdenas, leader of the community council of Crawfish Rock, the area directly impacted by the Próspera ZEDE on the island of Roatán in Honduras. Go to democracynow.org to hear this interview in Spanish.

Oh, and a happy belated birthday to Jon Randolph! I’m Amy Goodman, with Juan González.

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