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Discussion community for Prospera Honduras, a startup city that's expected to be the freest jurisdiction in the world. It's on Roatán, an English-speaking Caribbean island that's a former British colony. Construction began in 2020. Próspera was set up under the special economic zone law of Honduras.
submitted 1 month ago by opa_bom_dia
Listening to Massimo Mazzone's interview on the ZEDEs, he mentioned the possibility that a new government legislature could overturn and extinguish the ZEDEs if the political scenario changed in a future election. How likely is this to occur in the short term and also how strong are the protections against this kind of political hostility?
The OP is talking about this interview with the founder of another ZEDE.
I'll take a stab at this.
It's too early to tell how the next election (in November) will turn out. Wikipedia shows the current governing party's Presidential candidate leading in one poll, but with 51% undecided.
The standard answer about protections, from that recent Journal article:
Given the reputation of Honduras for corruption and impunity, the authors of the ZEDE regime knew they would need to insulate the legal stability of the ZEDE system from the day-to-day affairs of the legislature as much as possible. As such, the ZEDE organic law has three strong elements of legal stability, despite the provision of the Honduran constitution stating that ZEDEs are "subject" to national legislation "in all topics related to sovereignty, application of justice, national defense, foreign relations, electoral matters, and issuance of identification documents and passports" (Constitute, 2020, p.74). First, a two-thirds vote of Congress is required under the ZEDE amendments for any future legislation that would invoke this constitutional provision to amend or otherwise repeal the ZEDE organic law to expand the national laws that currently apply within ZEDEs (Constitute, 2020). Second, Honduras’ treaty obligations to investors in Kuwait, (La Gaceta, 2014),11 the United States (United Nations, 1995), and CAFTA member nations (USTR, 2004) guarantee that Honduras will not abrogate the ZEDE program as an obligation of the treaties. Third, CAMP, the Committee for the Adoption of Best Practices, has expressly and by non-objection agreed to comply with such treaty obligations and to resolve disputes concerning Próspera’s legal authority by private arbitration, which agreement is enforceable by the promoter and organizer of any given approved ZEDE under CAFTA-DR (Próspera 2019d).
Put differently, substantially amending the ZEDE Organic Law and constitutional amendments in such a way that materially changes the legal autonomy of the jurisdiction requires a 2/3rds majority vote of Congress in a highly partisan legislature, which would then put Honduras in violation of treaties with Kuwait, the United States, and CAFTA member nations, while simultaneously opening the Honduran government up to international litigation on the world stage for rescinding investor protections. The reputational and pecuniary damages this could cause to the Honduran government serve as powerful bulwarks protecting the legal stability of the ZEDE program.
11 This treaty was duly signed by public officials from both countries on January 15, 2014, as well as ratified by the Honduran National Congress; the Honduran Committee for Adoption of Best Practices has represented that the treaty is in effect and we are awaiting confirmation of effectiveness from the Foreign Ministry of Kuwait.
And to add the obvious: Honduras doesn't have a good record of adhering to its constitution.
Also, I think Massimo was right: the only real security will come with scale. When enough Hondurans are benefiting from multiple ZEDEs, there will be too much opposition politically to killing the goose that lays the golden eggs (good jobs, safe environments, prosperous businesses, etc.).
Greg is right. I would merely add the National Congress literally passed a law last week increasing the autonomy and strength of the ZEDE regime, so it's not exactly in political threat right now. You can read more about it here.
Here in Ukraine, the goose is the IT industry. Good jobs, safe environments, prosperous businesses, one of very few sources of middle class salaries. What’s the government doing? Trying to tax it out of existence.
Also here in Ukraine, the entire coop was threatened by a rabid dog, and in a once-in-a-lifetime stroke of luck, halfway competent leadership was elected that staved off the danger. What was the political result? Getting booed out of office to be replaced with a literal clown as president.
It does seem to me Próspera needs to defend itself politically in order to succeed. Also I can’t see how can there be staunch defenders of it outside of it—whoever likes it so much as to invest their political capital into it would surely move there or integrate with it in some other way, it being head and shoulders above the rest of Honduras?
Honduran citizens that move to the ZEDE can still vote in national elections AFAIK. And their congress uses proportional representation, so having them all voting in the same spot doesn't matter. So at least "all ZEDE supporters will move into the ZEDEs" won't make the political situation worse.
Well, Próspera will be a minority for a long time. And especially if everyone who likes the ideas will move into one place, that will alienate everyone else and make them easy fodder for politicians with "those people think they’re better than us! They move away from us! They are guilty of the ultimate crime of being slightly better well-off than we are!"
To survive such an attack, and it’s exceedingly likely one will be coming at some point as politicians love any kind of divide, Próspera will likely need to campaign, stage picketing or whatever in Honduran political center(s).
You don't have to "move" anywhere to become a part of Prospera. If I am not mistaken, so long as they accept you, you can be under their jurisdiction even if you are on the other side of Honduras.
I think you're mistaken about that. You can become an e-Resident and create an entity in Prospera without moving, but you'll always be under the jurisdiction of wherever you reside.
I got the impression that you could do that from Próspera's accepting of the incorporation of a port in northern Honduras as well as Brimen's comments on multiple future hubs that voluntarily annexed to the Próspera jurisdiction. But I guess that just means that there will be many little hubs and not that your business could suddenly become part of Próspera's jurisdiction.
There was also this bit from that article where Trey offered an extensive interview.
What’s to stop this from getting really weird? Can I have my house be in Próspera while my neighbor’s house is in regular Honduras? My kitchen in Próspera but my dining room in regular Honduras? I asked Trey, who said HPI has to guarantee provision of services to everywhere within Próspera; they wouldn’t expect providing services to somebody’s dining room to be worth it, and so they would turn down those kinds of frivolous applicants. Their plan is for a network of hubs, each city-sized and relatively convenient to provide for. They’ve already selected an area near the city of La Ceiba as their first satellite, and eventually want to expand across Honduras’ north coast.
Anyone can apply to move their land to Prospera's jurisdiction, but I doubt they would approve anything that wasn't contiguous with one of their existing projects. They need to be able to extend services to any land that joins Prospera. Their existing projects are the ones on Roatan and La Ceiba. In both cases, Honduras Prospera Inc. bought the initial land, and so far still owns it all.
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