(MintPress) — A team of international investors will reportedly begin development on three completely privatized cities in Honduras as early as 2013. The initial $15 million investment from U.S. sources has been heralded as an important initiative, helping to expand infrastructure development in the small Central American country still recovering from a debilitating 2009 military coup and widespread poverty.
However, many locals caution that this investment could undermine Honduran national sovereignty, as the cities, once completed, will have private police, laws, government and tax systems outside the purview of government regulation. With no accountability to a political constituency, citizens are concerned the mass privatization will create a leadership unresponsive to the needs of local communities.
While employment and the state of the economy are top concerns for locals, foreign investors have made no formal commitments to help combat rampant violence in a country suffering from the highest murder rate in the world, according to U.N. estimates.
Privatizing cities
The first $15 million, from the international investment firm MGK Group, will be allocated for the construction of the first of three “model cities” on the Caribbean coast. Currently, authorities are using $4 million donated by South Korea to conduct a feasibility study in the area of projected development. Construction could begin in early-2013 barring any unforeseen problems.
Honduran Congress President Juan Hernandez praised the project saying that the investment will immediately create 5,000 jobs and could create up to 200,000 jobs once the other two model cities are developed. The “model” Hernandez refers to is the “Hong Kong model” for city development in which a majority of infrastructure is financed and maintained by private investment.
Carlos Pineda, the president of the Commission for the Promotion of Public-Private partnerships, also praised the plan saying the project “has the potential to turn Honduras into an engine of wealth. It can be a development instrument typical of first world countries.”
Conversely, the development has been widely criticized by local residents, mostly indigenous Hondurans, who see the the project as a threat to their way of life. Many of the long-standing Garifuna communities are threatened with displacement should the project continue on its current course.
The Garifuna are descended from the Amazon’s Arawak Indians, the Caribbean’s Caribes and escaped West African slaves. Many Afro-Honduran groups have opposed the project as well. Miriam Miranda, president of the Fraternal Black Organization of Honduras commented on the project saying:
“These territories are the Garifuna people’s and can’t be handed over to foreign capital in an action that is pure colonialism like that lived in Honduras during the time that our land became a banana enclave.”
Other groups have launched legal challenges, petitioning the Honduran Supreme Court to nullify to project. The Supreme Court has yet to respond to these inquiries.
Privatizing local infrastructure and natural resources has proven problematic for other communities in South America. Earlier this summer, Brazilian tribes ended a three week long occupation of the $10.6 billion Belo Monte dam on the Xingu river. Tribal representatives claim the project cut off local populations from their land and disrupted their way of life.
Unlike the Belo Monte project which was largely financed through public funds, the Honduran project is expected to be 100 percent owned by private investment. Nine independent boards, “without financial interest in the project,” will be appointed by the president of Honduras to govern and oversee the new cities.
Honduran law will not apply to the cities, but the new developments will reportedly have to abide by international conventions on human rights. Although the architects of the project tout these commitments, others are concerned that corporations and foreign investors, with no allegiance to a constituency, will be unaccountable to the needs of the people.
The “charter city” model seen in Hong Kong, Singapore and Dubai generally attracts a bevy of wealthy foreign investors who move to the area or set up corporations because of low taxes and few government market regulations.
The most pressing needs nationally continue to be comprehensive economic overhaul necessary to cut poverty and eliminate illicit drug trafficking through the country — two goals Michael Strong, the CEO of MKG believes are possible with the new project.
“We believe this will be one of the most important transformations in the world, through which Honduras will end poverty by creating thousands of jobs,” Strong said in a recent statement.
Development challenges
Despite the optimistic economic predictions, Honduras continues to struggle with soaring poverty and high unemployment. According to the Human Development Index, Honduras is the sixth poorest nation in Latin America and one of the poorest in the Western Hemisphere with more than 50 percent of the population living in poverty.
Additionally, government sources indicate that the official unemployment rate stands at nearly 28 percent, although many Hondurans believe that the number is higher.
Investors involved in the project believe that the private cities project can go a long way in helping Honduras break from a history of poverty and underdevelopment. However, historically, economic growth in Honduras has been concentrated among the upper classes of society.
Honduras reported impressive 7 percent annual economic growth over the past few years. However, rates of poverty and unemployment remain constant as the gap between the poor and the rich continues to widen.
The underlying problem, some economists contend, is lack of citizen control in the economy, which is already subservient in many private sector industries to North American corporate control. A more immediate problem hampering economic growth and national stability is the escalating violence associated with drug trafficking.
Rural populations have already complained that the joint drug interdiction operations by DEA and Honduran authorities are ineffective and have resulted in the deaths of innocent villagers in recent months.
DEA operations in rural Honduras
The bulk of the DEA operations have been concentrated in “La Moskitia,” or the Mosquito coast. The mostly rural region is thought to be an area where 80 percent of South American drug traffickers stop to refuel their planes before continuing to North America, the biggest cocaine market in the world.
It is estimated that 80 percent of cocaine shipments from South America headed toward to the U.S. first land in Honduras to refuel. An Al Jazeera Fault Lines report describes a May attack in which DEA helicopters fired mistakenly on a village in a drug interdiction operation, killing four innocent civilians.
According to the report, “In May, a mission in the Moskitia region, which was led by the Drug Enforcement Administration (DEA), left four innocent civilians killed and four others wounded. It was followed by two more incidents where a U.S. DEA agent shot and killed an alleged drug trafficker. Local communities have demanded a thorough investigation but so far nothing has been done.”
The U.S. has built several bases in the area, spending hundreds of millions of dollars in drug enforcement operations. Despite the influx of U.S. government security investments, locals have seen no economic or security benefit.
“What we are calling for is a reorientation of these resources that are being poorly used. This money ought to be used to strengthen education, health, and other things that we need. There is no work here for anyone. So in my personal opinion, it is completely illegal that they are here, the American presence. Also the military bases are totally illegal because we haven’t asked for it,” said a local resident in an interview last month.
Honduras suffered the highest murder rate in the world in 2010 and 2011, according to the United Nations Office on Drug and Crime. The small country with a population of just over 8 million had 86 murders for every 100,000 residents in 2011. This translates to one violent death every 74 minutes, most as a result of the drug trade.