A new city on the Mosquito Coast

Honduras is open for business. Can its underdevelopment be tackled by creating charter cities which set their own laws?
John Perry
10 August 2011

In Paul Theroux’s The Mosquito Coast, the protagonist Allie Fox takes a boat from Baltimore to Central America.  He lands in Honduras, where he buys a place called Jeronimo, at an indeterminate location in the rainforest.  Expecting virgin territory, his plans go awry when it turns out there are people there already, and the obstacles to his grand design eventually become insuperable.

Allie Fox is a loner, disdaining the support of governments and investors.  The latest grand design for what is still alleged to be an unpopulated area is being promoted by Paul Romer, a Stanford economist.  He believes that underdevelopment in countries like Honduras can be tackled by creating charter cities which set their own laws and attract the international business that is otherwise reluctant to invest.

His plan focuses on the region of Trujillo, not far from where Theroux’s fictional character meets his nemesis.  While the country’s eight million people are concentrated around its two biggest cities, Trujillo and its rural hinterland are far from empty.  Nevertheless, Romer’s charter city could require up to 1,000 square kilometres and have up to ten million inhabitants.

Honduras, attempting to recover its international image after a damaging coup in 2009, followed by questionable elections and a long series of human rights abuses, has declared itself 'Open for Business'.  In May, its national congress amended the constitution to allow an enormous special development zone to be created that can indeed set its own laws and would have virtually total autonomy.  In an English-language propaganda film, the government sets out its stall for international investors to help establish this zone in Trujillo.  

Among other planned attractions, the film shows a high speed train, a foretaste of a hoped-for inter-oceanic railway to rival the Panama Canal.  It has signed an agreement with a British company, K Group inc (a company on whose other activities Google is silent) to do a feasibility study of the route.  However, the precedents aren’t encouraging. An earlier, 1854 study of such a railway led to the British government giving Honduras a multi-million dollar loan to build it, but nothing happened.

Business interest in the city itself is led by two Canadian companies, Canadian Shield Asset Management and Life Vision Properties.  Of the former, little is known, but Life Vision’s Randy Jorgensen is also head of the firm Adult Only Video (AOV), which has earned him the title of Canada's King of Porn.  He also has a track record in Trujillo, where he is building houses for wealthy North Americans and plans a cruise terminal.  The Trujillo region is home to many communities of Garifuna people, an indigenous group descended from shipwrecked slaves who began to colonise this coast, from Belize to Nicaragua, when relocated there by the British in 1797.  Many of these have already found that their land is being taken for tourism developments.  According to Garifuna leaders, Jorgensen started to buy their communal land illegally in 2008

In fact, this whole region has a history of incendiary land disputes.  Soon after taking office, President Lobo sent in thousands of troops to occupy the area in response to violent incidents resulting from corrupt land deals.  The nearby Aguan valley has become a cause celebre since dozens of peasant farmers were shot defending their land rights.  Even as I write this piece, news arrives of two more supporters of land reform being shot dead in the Trujillo area.

Nevertheless, Jorgensen has been assured of support by President Porfirio Lobo, who has urged the local authorities not to hinder his developments.  Congress had, in fact, rushed through its approval for the cruise terminal only days before Lobo took office last year.  In an odd twist to the story, when the approval appeared in the official Gazette on 22 January, two copies were printed of that day’s edition – one with and one without the controversial cruise terminal approval.

The film promoting the charter city shows contented workers in the factories that Honduran businessmen presumably hope to build.  Business leaders support a project which would free them from tiresome labour laws such as the minimum wage.  Yet Honduras already attracts plenty of foreign investment into its ‘maquilas’ – the clothing factories in tax-free zones that blight practically everywhere from the Mexico-Texas border down to the Panama Canal.  The charter city would allow businesses to jettison even the modest regulations which still exist in those zones – and would put Honduras at an ‘advantage’ compared to its neighbours.

Of course, the chances of the skyscrapers in the government video actually being built are still remote.  The real danger of the charter city lies in the legitimacy it offers to those who intend to trample over the interests of the mainly poor people who live in the region. Since the arrival of the banana companies at the end of the nineteenth century, to that of Canada’s porn king in the early twenty-first, there has been no shortage of businesses who want to take their land or force them to work for tiny wages.

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