By Karen Spring
Zones of Economic Development and Employment (ZEDEs) in Honduras are an extreme form of neoliberalism. Recently ZEDE Próspera announced it will seek consultations under CAFTA for lost investments after the Honduran Congress overturned the ZEDE law earlier this year. This interview with Fernando García, the Honduran Presidential Commissioner Against ZEDEs gives some context and refers to ZEDE Próspera’s recent announcements.
On June 3, 2022, Honduras Próspera (Delaware, USA) together with its affiliate U.S.-based corporations, announced that it requested consultations and negotiations with Honduras under the Dominican Republic- Central America Free Trade Agreement (DR-CAFTA). Próspera notified the Honduran government of their intentions in a letter, the third written communication to the new administration of Xiomara Castro (1).
Próspera is the organizer and promoter of the ZEDE Próspera, an enclave-type project that the company seeks to construct in Roatán and Atlántida, located in northern Honduras. Zones for Economic Development and Employment (ZEDEs) are special economic zones known by international investors as “start-up cities”, or “free private cities.” ZEDEs are one expression of extreme neoliberal policies created under the post-2009 coup administrations. ZEDEs have been widely rejected in Honduras by entire municipalities and community-based organizations since created and modified through legislation under the previous administration of Juan Orlando Hernández.
Próspera’s announcement comes almost two months after the Honduran National Congress overturned the legislation that gave birth to the ZEDEs. Widespread rejection of ZEDEs are based on concerns that the projects violate national sovereignty and were imposed through corrupt means by a handful of national and international investors close to representatives of the National Party. Shortly after Próspera made its announcement to seek consultations under CAFTA, the Special Prosecutor Against Corruption Networks (UFERCO) made public that a line of investigation related to corruption and constitutional violations of the ZEDEs is underway.
In response to the Próspera’s announcement, Fernando García, the Presidential Commissioner tasked with opposing ZEDEs, gave an interview to Honduran media outlet La Plaza on Radio Globo. García refers to the challenges that the new administration of Xiomara Castro faces in obtaining all the information and documents related to the previous administration’s management of the ZEDEs. The following is García’s translated statement:
Interview with Mr. Fernando Garcia, Presidential Commissioner against the Zones of Economic Development and Employment (ZEDEs)
Given on the In the Plaza program, Radio Globo on June 13, 2022
Fernando Garcia: “During these ten years of struggle for national sovereignty and against the ZEDEs, we have obtained more than 10,000 pages of documentation related to the ZEDEs. Nevertheless, we consider that, as a result of the Law of Classification of Public Documents [Decree number 418-2013 and also known as the Secrecy Law] and other provisions that classify documents such as 27 reformed articles in the General Law of Public Administration and Resolution 0-69 [also known as CNDS 069/2014] of the National Council of Security and Defense, we do not have all the documentation (2). And in the first, expanded session of the Council of Ministers [under President Xiomara Castro], we asked more than 80 ministers and heads of state institutions to begin to identify the information that was classified [under the previous administration]. This was so when the repeal of the Law of Classification of Public Documents and other provisions created with the same intention is approved [overturned by Congress in March 2022], they would already be ready to proceed to declassify, as indicated in the second article of that repeal decree.
However, the loss of information is such that so far practically no more information has been identified than what we have been identifying day by day (3). So, what happens? In the National Congress, whose report is presented today on the first months of government, two complementary and independent regulations, that were repealed regarding the ZEDEs were discussed:
- One related to the reform of four articles of the Constitution, that were [originally] reformed unconstitutionally, illegitimately and illegally, breaking with all the legal tradition of the State of Honduras. This decree still must be ratified as a constitutional reform [by the Honduran National Congress] in January of next year .
- But another independent decree [Decree 33-2022] also proceeded to repeal the Organic Law of the ZEDEs, the promotion program of the ZEDEs, the ratification of the Appointment Agreement, the 21 members of the Committee for the Adoption of Best Practices and two decrees from last year related to the Sales Tax Law.
As a result, the Executive and Legislative powers, in a coordinated manner, carried out the first actions to repeal all the laws related to the ZEDE.
But what happens now? For example, the ZEDE Próspera in December 2017, in the midst of the heat of the electoral process and the entire electoral conflict, when the results in favor of the Alliance were stolen, at that moment, they [the Honduran government under Juan Orlando Hernández] were giving the ZEDE Próspera a document whose text we have not yet identified. The Attorney General’s Office (Fiscalía General de la República), the Solicitor General of the Republic (Procuraduría General de la República), and the Prosecutor’s Office against Corruption are trying to obtain this information.
We, on our end, have identified this document as being a legal stability agreement that guarantees 50 years of privileges, standards, and forms of administration to the Zones of Economic Development and Employment. However, we consider that this is totally illegitimate, illegal, and unconstitutional because the ZEDEs began from a false assumption and that is that the reforms to the Constitution were invalid because they infringed on intangible articles that are irreformable, known to us as pétreos in Honduras. In other words, they can only be modified by a National Constituent Assembly, by the sovereign power or by a plebiscite. And this means, logically, all the secondary framework [that created and supported the ZEDEs] falls under its own weight, because if the constitutional reform is not valid, then the Organic Law is not valid either. And therefore, that December 2017 document and the Legal Stability Agreement completely fall apart and any call for consultations made within the framework of the Free Trade Agreement is not going to be favorable for them at Próspera either.
Why? Because the Vienna Convention on the Law of Treaties establishes the principles that support an international convention, such as the Free Trade Agreement with the United States [CAFTA-DR], and the United States Free Trade Agreement [CAFTA-DR] itself also establishes the circumstances that can sustain – from the point of view of the principles – an arbitration or a summons and in this case – in our personal judgment and that of other government colleagues and prominent lawyers – also do not qualify. Therefore, what they are doing is buying time solely and exclusively so that if a consultation in the framework of the free trade agreement or an arbitration were eventually brought forward in their favor, they can argue that they have made more investments.
However, when they signed this document on March 9 of last year, 2021, this document refers to an investment of $10 million (4). In the case of Próspera, they now claim to have an investment of $100 million. It is unheard of to think that in a year they would invested ten times more [than what was stated previously]. On the other hand, Próspera have been asked publicly and privately to take advantage of the special regimes (5). On March 9 of this year and by the end of the month, Próspera was asked to present a request or an approach regarding special regimes; temporary import regimes, tourist free zones, industrial processing zones, agricultural processing zones and any another that they would need to register their companies. But not as a ZEDE anymore, because the ZEDEs no longer have a legal existence in the country, but rather their companies can and they never presented anything.
Now some of the investors say that they are going to accept a new legal status but that the agreement should be beneficial for both parties, as if they are contracting parties to an international treaty and the State of Honduras is their counterpart. This conception is not possible in international law. International treaties are between states, not between a particular party, a businessman and a state.”
- See all three written letters from ZEDE Próspera to the Honduran government here: First letter on April 27, 2022; second letter on May 11, 2022, and third letter on June 3, 2022.
- For an analysis and overview of access to public information and the respective laws to limit such right, see: https://eric-sj.org/envio/las-restricciones-al-ejercicio-del-derecho-de-...
- According to criterio.hn, in approximately 80% of public institutions, documents were destroyed by the previous Juan Orlando Hernandez administration in an effort to hide corruption and mismanagement of public funds: https://criterio.hn/en-el-80-de-las-instituciones-del-estado-se-habria-d...
- This document is a Judicial Stability Agreement that was written by the Technical Ministry of Próspera and was named by the Committee for the Adoption of Best Practices (CAMP).
- Special legal statuses offered by Honduras that provide special tax benefits and economic incentives for private investment.