A Lawsuit From Backers of a ‘Startup City’ Could Bankrupt Honduras

The flurry of private contracts became part of a “kleptocratic” regime, according to one 2017 report by the Carnegie Endowment for International Peace. Nearly all of the ISDS claims have their roots in contracts, laws or other agreements made during this period.

For the farmers and villagers being pushed off their land, or having their water resources privatized, the development rush converged with spiraling violence.

“Nowhere are you more likely to be killed for standing up to companies that grab land and trash the environment,” the international watchdog group Global Witness wrote in 2017, “than in Honduras.”

An opponent of a project that became the subject of two ISDS claims was murdered the following year.

At the center of these new laws and contracts was Juan Orlando Hernández, who was president of the congress when the ZEDE law was passed and was elected president of Honduras later in 2013. Hernández would serve two terms as president—a step prohibited by the Constitution. The US Department of Justice would later charge that Hernández used millions of dollars in payments from drug cartels to help buy off local officials to secure his electoral victories.

Eventually, Hernández, his brother and his chief of the national police would be extradited to the United States and convicted of drug trafficking and weapons charges. Hernández, US Attorney General Merrick B. Garland said, used his time in power to run “one of the largest and most violent drug-trafficking conspiracies in the world.”

Hernández was convicted in March of this year and sentenced to 45 years in prison, while the former national police chief was sentenced to 19 years. His brother is serving a life sentence. Hernández did not reply to a request for an interview from prison.

Brimen, Honduras Próspera’s CEO, who immigrated to the United States from Venezuela, has said his goal is to provide a model that would foster prosperity, helping alleviate poverty by streamlining unnecessary bureaucracies that hobble governments, especially in parts of Latin America.

Honduras Próspera said it “has no connection to any corruption in Honduras whatsoever.” The company has not been publicly accused of being involved in corruption or in passing the ZEDE law. But some residents, activists and members of the current government criticize the company for taking advantage of the law, given how it was passed, and for working with Hernández’s administration.

“They came and did business with the darkest side of our country,” said Rosa Danelia Hendrix, speaking in Spanish. Hendrix serves as president of the federation of patronatos for Roatán and the other Bay Islands, and helped lead the fight against the ZEDEs.

Up Against an Economic Superpower

The Castro administration’s fight against the ZEDEs is being waged from Tegucigalpa’s Government Civic Center, a set of gleaming buildings erected by Hernández’s government. The neat, modern plaza sits next to the presidential palace and houses many government offices, but its pedestrian entrance opens onto a busy street without a turn-off, resulting in a chaotic scene of double-parked taxis and honking, as if its architects failed to imagine that citizens would visit.

There, Fernando Garcia and a team of half-a-dozen young staffers compile documents and compose fervent social media posts denouncing the ZEDEs—there are two others apart from Próspera, focused on agricultural exports and mixed-use development, neither of which has filed an ISDS claim.