Can private cities save a nation with world's worst murder rate?

Fears of new 'banana republic' as US firm signs Honduras deal

Honduras has unveiled a radical free-market plan to establish three "charter cities" in the violence-racked Central American nation.

The government this week signed an agreement with US developers MKG group to begin building the cities – complete with their own governments, laws, courts, police forces and tax systems – from scratch early next year.

The plan's backers say it is the only way to kick start development in Honduras, which has the world's worst murder rate – 68 times higher than the UK's – and where 65 per cent of the 8 million-strong population lives below the poverty line.

However, critics warn that it could mark a return to the dark days in Honduras when US companies controlled the government, owned vast tracts of territory and ordered police to massacre striking workers – an era which prompted political scientists to coin the term "banana republic".

MKG will initially invest $14m for construction of the first phase of the first city, near Puerto Castilla on the Caribbean coast, which it says will immediately create 5,000 jobs. In total, the company predicts the three cities will lead to 200,000 new jobs.

"The future will remember this day as the day that Honduras began developing," said MKG Group CEO Mark Strong at the signing ceremony.

Carlos Piñeda, who chairs the Commission to Promote Public-Private Partnerships, added that the deal was a "development instrument typical of first world countries", and marked the largest foreign direct investment in Honduras in 50 years. The signing follows a constitutional reform last year to permit "Special Administrative Regions" that will attempt to emulate the economic success of Asian city states such as Hong Kong and Singapore.

In recent years, Honduras has attempted to diversify its economy away from bananas and coffee, to include exports of clothing and car parts. But a massive wave of violent crime, triggered by drug cartels and savage street gangs known as "maras", has stunted economic growth, and even prompted analysts to talk of the country as a failing state.

Opponents claim outsourcing the government's responsibilities to the private sector will only further undermine the rule of law and weaken Honduras' democracy, which remains fragile following a 2009 coup. Edmundo Orellana, a former attorney general and member of congress, has warned that the charter cities would allow "multinational corporations" to establish "protectorates" by stealing sovereignty from citizens.

"We are going to see long, eternal queues like we see in Palestine [for people] to go to work in Israel, or queues just to move around," he told Honduran newspaper La Prensa.

That allegation is likely to strike a nerve in Honduras which, along with neighbouring Guatemala, was dominated by the Standard Fruit Company and United Fruit Company for much of the 20th Century. The two corporate rivals built much of Honduras' modest infrastructure, including railways to transport banana harvests to Caribbean ports. Yet they have been lambasted for interfering in national politics – including pushing the Eisenhower administration to orchestrate the infamous 1954 coup against Guatemala's social democratic government, which led to decades of brutal civil war.

MKG has yet to line up its first tenants but expects most will be medium-sized service and manufacturing companies, including textile firms, call centres, data-processing companies and product assembly lines. There are already numerous free trade zones in Mexico and Central America, where assembly lines known as "maquiladoras" piece together cars, computers and other exports, mainly for the US market.

The charter cities' internal laws would have to comply with international human rights and other legislation. But according to the government, they would have full autonomy in all areas other than foreign and defence policy, national elections and issuing identity documents.

Bright lights: Small city states


Monte Carlo casino and Monaco Grand Prix are major tourist draws, but it is the glamorous principality's advantageous tax regime that cements its reputation as a playground for the wealthy. It operates under a constitutional monarchy.

Republic of Singapore

Since gaining independence from Malaysia in 1965, Singapore has become one of the world's most prosperous places. Its population is subject to strict social laws but enjoys a high standard of living.

Vatican City

The seat of the Roman Catholic Church's leadership is the world's smallest independent state. With a population of about 800, mostly priests and nuns, it has its own system of governance.

Have you tried new the Independent Digital Edition apps?
ebooksAn unforgettable anthology of contemporary reportage
Arts and Entertainment
musicBand's first new record for 20 years has some tough acts to follow
peopleAt least it's for a worthwhile cause
A new app has been launched that enables people to have a cuddle from a stranger
voicesMaybe the new app will make it more normal to reach out to strangers
Liam Payne has attacked the media for reporting his tweet of support to Willie Robertson and the subsequent backlash from fans
peopleBut One Direction star insists he is not homophobic
Life and Style
healthFor Pure-O OCD sufferers this is a reality they live in
Life and Style
Sexual health charities have campaigned for the kits to be regulated
healthAmerican woman who did tells parents there is 'nothing to be afraid of'
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs General

Pharmaceutical Computer System Validation Specialist

£300 - £350 Per Day: Clearwater People Solutions Ltd: Pharmaceutical Computer ...

High Level Teaching Assistant (HTLA)

£70 - £90 per day: Randstad Education Birmingham: Higher Level Teaching Assist...

Teaching Assistant

£50 - £80 per day: Randstad Education Birmingham: Randstad Education is the UK...

Senior Java Developer - API's / Webservices - XML, XSLT

£400 - £450 Per Day: Clearwater People Solutions Ltd: Our client is currently ...

Day In a Page

A roller-coaster tale from the 'voice of a generation'

Not That Kind of Girl:

A roller-coaster tale from 'voice of a generation' Lena Dunham
London is not bedlam or a cradle of vice. In fact it, as much as anywhere, deserves independence

London is not bedlam or a cradle of vice

In fact it, as much as anywhere, deserves independence
Vivienne Westwood 'didn’t want' relationship with Malcolm McLaren

Vivienne Westwood 'didn’t want' relationship with McLaren

Designer 'felt pressured' into going out with Sex Pistols manager
Jourdan Dunn: Model mother

Model mother

Jordan Dunn became one of the best-paid models in the world
Apple still coolest brand – despite U2 PR disaster

Apple still the coolest brand

Despite PR disaster of free U2 album
Scottish referendum: The Yes vote was the love that dared speak its name, but it was not to be

Despite the result, this is the end of the status quo

Boyd Tonkin on the fall-out from the Scottish referendum
Manolo Blahnik: The high priest of heels talks flats, Englishness, and why he loves Mary Beard

Manolo Blahnik: Flats, Englishness, and Mary Beard

The shoe designer who has been dubbed 'the patron saint of the stiletto'
The Beatles biographer reveals exclusive original manuscripts of some of the best pop songs ever written

Scrambled eggs and LSD

Behind The Beatles' lyrics - thanks to Hunter Davis's original manuscript copies
'Normcore' fashion: Blending in is the new standing out in latest catwalk non-trend

'Normcore': Blending in is the new standing out

Just when fashion was in grave danger of running out of trends, it only went and invented the non-trend. Rebecca Gonsalves investigates
Dance’s new leading ladies fight back: How female vocalists are now writing their own hits

New leading ladies of dance fight back

How female vocalists are now writing their own hits
Mystery of the Ground Zero wedding photo

A shot in the dark

Mystery of the wedding photo from Ground Zero
His life, the universe and everything

His life, the universe and everything

New biography sheds light on comic genius of Douglas Adams
Save us from small screen superheroes

Save us from small screen superheroes

Shows like Agents of S.H.I.E.L.D are little more than marketing tools
Reach for the skies

Reach for the skies

From pools to football pitches, rooftop living is looking up
These are the 12 best hotel spas in the UK

12 best hotel spas in the UK

Some hotels go all out on facilities; others stand out for the sheer quality of treatments