Honduras ‘retakes sovereignty’ by nixing corporate enclaves | Business and Economy News

La Ceiba, Honduras – In a rare find of unanimity, last month the National Assembly of Honduras voted to repeal a controversial law that had facilitated one of the most widely hated economic projects in the Central American country.

The law allows for the creation of special economic development zones, known by the Spanish acronym ZEDEs – semi-autonomous business areas where investors can manage as if they were real estates. can be independent, taking advantage of separate tax regimes, security forces, and labor regulations.

While foreign investors and well-known Silicon Valley companies have not stopped supporting ZEDE as a driving force of economic developmentmany Hondurans have spent years protesting against them, saying the areas would offend rural residents while selling off national sovereignty.

Congressional repeal of the ZEDE law, passed in 2013 and closely supported in subsequent years by the administration of the currently jailed President Juan Orlando Hernandezwhich means that such projects no longer stand within the framework of the Honduran legal system.

ZEDE is the “final coup d’etat” [the previous government] Maria Carrasco, a Honduran doctoral student living in Tegucigalpa, told Al Jazeera, did what it took for the country: to sell its territory to pieces. She welcomed the revocation of the law, saying the controversial project was a “piece of rice paper” after years of government corruption and mismanagement.

Xiomara Castro, the leftist president who took office in January, thanked Congress for “crushing the criminal ZEDEs and defeating those trying to steal our sovereignty”. The first female head of state in Honduras, Castro revoked the one-signature ZEDE law campaign promise.

‘Do it with confidence’

Exactly how the repeal will affect companies that have bought into the ZEDE program over the past decade remains unclear.

In a press release following the vote, Honduras Prospera, a US-based investor, said it had “every intention to proceed with confidence with its plans to invest hundreds of millions of dollars and creating tens of thousands of high-paying jobs in Honduras in the light of its rights acquired under the ZEDE framework”. The state’s denial of such rights “clearly violates its obligations under international and domestic law,” the company added.

Fernando Garcia, the presidential commissioner tasked with combating the ZEDEs, told Honduran media that the Castro administration is preparing an executive order to allow businesses in the existing ZEDEs to continue operating, with condition that they submit to the new economic regime.

There are several ZEDEs operating in Honduras, including Ciudad Morazan, in the city of Choloma; Prospera, along the north coast; and Orquidea, in the southern division of Choluteca.

“Despite the fact that they [ZEDEs] disrespecting democracy in Honduras, we will not act in the same way,” Garcia told news website Contracorriente. “We are superior as a state, as a sovereign and as a government, so we will give them the opportunity to establish themselves in accordance with existing legal regimes. domestic practice”.

Xiomara Castro says
Xiomara Castro thanks Congress for ‘erasing the criminal ZEDEs and defeating those who try to steal our sovereignty’ [File: Jose Cabezas/Reuters]

While ZEDE supporters argue that they will create an environment free of government corruption and bureaucratic red tape, ultimately bringing jobs and money to impoverished regions of Honduras, opponents Opponents and activists argue that such claims are exaggerated.

Leonel George, a human rights defender in Tocoa, told Al Jazeera: “The decision to revoke ZEDE sends an important message and is a brave decision by the National Congress of Honduras to regain the sovereignty of our country. us and all its territory.

He added: “The relocation of the African indigenous Garifuna community, located in unspoiled coastal territory where some ZEDEs have been kicked off, could be accelerated through the establishment of lands,” he added. : “A lot of the rights of Honduran citizens have been violated by these projects over the past few years… People here notice this. [reversal] as a really positive thing. ”

The predecessors of the ZEDE system were unable to pass the Honduran legal system. A similar 2011 proposal for “model cities” was rejected by the Supreme Court as unconstitutional, which ruled that the plan would violate Honduras’ territorial sovereignty. But Congress, then led by Hernandez, later removed four of the Supreme Court’s five justices, ostensibly part of an anti-corruption campaign. The ZEDE law was introduced in 2013.

Lack of popular support

Hernandez, one of the most staunch political advocates of the lands, recently arrested and extradited to the US on drug trafficking; he has denied any wrongdoing. Hernandez’s brother, a former Honduran congressman, was sentenced to life in prison last year after being found guilty of drug trafficking.

For some members of Congress, it was not the concept of ZEDE but the sheer unpopularity of Hondurans that prompted them to vote to repeal the law.

Conservative Party member Marco Midence, of the Honduras National Party, said his party believes in the stated purpose of the ZEDEs of creating jobs and bringing foreign investment to the country. But members of the party ultimately chose to give up after admitting that the project lacked significant support among the population.

“We always ask in the legislative chamber that we respect the existing ZEDEs,” Midence told Al Jazeera.

“But at the end of the day, the topic is one that polarizes the Honduran population. So now, we will look for innovative mechanisms and other fiscal regimes to continue to bring investment to Honduras and create more jobs for its people.”

    A man walks past protesters rallying against ZEDE in Honduras
Protesters hold banners during a demonstration against the special economic zones and the government of former President Juan Orlando Hernandez in 2021 [File: Fredy Rodriguez/Reuters]

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