Architect of Honduran privatised cities drops out over lack of transparency

Paul Romer attacks Honduran government over its failure to ensure accountability of the new privately-run cities.

Honduras' plans for "model cities" – entire settlements managed by private corporations – already seem to be settling in to a pattern of secrecy and corruption worthy of the best dystopian futures.

The idea to create the cities – known as Regions Especial de Dessarrollo (Special Development Regions), or REDs – was suggested a year ago, but this month the first deals were signed, with US-based investment group MGK, to build one.

The Financial Times' Ron Buchanan reported (£):

The model cities are to be states within a state, with their own legal and law enforcement agencies, tax and monetary systems – “Hello US dollar”, “Adiós Honduran lempira”, presumably – and every conceivable facility to attract investment.

The concept sounds like a steroid-enhanced vision of a free-market enthusiast. Which it is. The US economist Paul Romer has dreamed up the idea of creating cities, along the lines of Hong Kong and Singapore, which have created poles of dynamic investment that have spilled over into their once impoverished hinterlands.

Even before the real problems began, there was already opposition to the plan. The Independent's Suzy Dean wrote, back in January, that:

What sets the REDs apart from other charter cities is the belief that in order for the cities to thrive they must suspend democracy. The unelected [Transparency] Commission will govern the new city, until they decide the population is ‘ready’ for democracy; only then will new local councils be set up. . .

The establishment of the Transparency Commission reflects the belief of the Honduran government that the public might ‘get it wrong’. The Transparency Committee will not engage with or respond to public demands.

The economist Paul Romer has been the guiding voice behind the plans, and was one of the five people originally slated to be on the Transparency Commission. But yesterday, he sent Marginal Revolution's Tyler Cowen a statement detailing his growing problems with the project. In short, the Transparency Commission has been shuttered, and Romer only even heard about the MGK deal from the press:

From recent newspaper reports, I learned that the Honduran agency responsible for public-private partnerships had signed an agreement about a RED with a private company. When I asked for information, I was told that I could not see this agreement.

This was a departure from the standards of transparency that the administration had led me to expect. It was also a departure from the role for the Transparency Commission outlined in the Constitutional Statute passed by the Honduran Congress.

So the model cities, which were going to have a transparency commission in the place of democratic governance, now have… nothing. Except the corporation that runs them.

Meanwhile, Antonio Trejo Cabrera, a lawyer who had helped to prepare motions declaring the the model cities unconstitutional, was murdered on Sunday, according to the Associated Press:

Antonio Trejo Cabrera, 41, who died early Sunday after being ambushed by gunmen, was a lawyer for three peasant cooperatives in the Bajo Aguan, a fertile farming area plagued by violent conflicts between agrarian organizations and land owners. The most prominent is Dinant Corporation owned by Miguel Facusse, one of Honduras' richest men. Thousands of once-landless workers hold about 12,000 acres (5,000 hectares) of plantations they seized from Dinant.

Trejo, who was shot six times after attending a wedding, reported threats in June 2011, according to documents obtained by The Associated Press, including photocopies of a BlackBerry message he received saying: "Trejo, you dog, you have 48 hours to get out or you're dead." . . .

MGK director Michael Strong said the company is "horrified" by Trejo's killing.

"We believe that Antonio Trejo, had he lived long enough to get to know us, would have concluded that our approach is 100 percent beneficial to Honduras and Hondurans. We are saddened for his family and understand what a tragedy this is for trust and goodwill in Honduras," Strong said in a statement to The Associated Press.

The plans to construct the first RED remain in effect.

A still from the dystopian future of the upcoming film Dredd 3D. Photograph: Lionsgate/Reliance Entertainment

Alex Hern is a technology reporter for the Guardian. He was formerly staff writer at the New Statesman. You should follow Alex on Twitter.

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4 ways to end freedom of movement (and try to dodge a hard Brexit)

A lot depends on the details. 

There are few subjects as explosive in Britain today as immigration. Labour is split between those who see anti-immigrant feeling as racism by stealth, and those who consider it a legitimate response to a changing labour market. The Tories, too, are divided between social conservatives worried about culture and communities, and economic liberals who believe everything must be done to preserve the single market.

If David Cameron hadn’t decided to hold an EU referendum, perhaps this debate would have rumbled on before either rolling towards an overwhelming question or being outstripped by events. But he did, and Brexit happened. 

Now, most political realists agree, there will have to be some kind of policy change on immigration. But apart from turning the lights out at border control and bracing ourselves for a hard Brexit, what are the options? Here are some of the ideas on the table:

1. A points-based system

This idea has been bandied around for years, with “points-based system” usually coming straight after “Australian”. The principle is simple enough – aspiring immigrants gain points depending on their education, age, fluency in English and work experience. Of course, the Australian immigration system also involves refusing to let desperate people on boats land, and instead leaving them to rot on islands like Nauru. However, the points-based system is also used in Canada, and *news klaxon* the UK already uses elements of a points-based system for immigration from outside the EU. 

If you’re Theresa May, the main argument against a points-based system is, apparently, that it lets in too many talented immigrants. If you’re the NHS, it can be an obstacle to hiring staff who are desperately needed. And if you’re a Brexit negotiator, since a points-based system effectively eliminates working-class EU immigrants, it is going to make your job very hard indeed.

2. Regional recruitment

In Canada, each province can set their own immigration policy, within certain boundaries, by nominating individuals for permanent residence. So British Columbia is willing to nominate healthcare professionals and post-graduate students who attend a provincial university. The Yukon, a remote province with just one city, nominates entrepreneurs.

But there’s the thing. Canada is the second biggest country in the world, and the population is half that of the UK. Breaking the rules takes effort. Chris Murray, a research fellow at the IPPR, said: “Everyone’s afraid it is a backdoor to London. You say you’re working in Cumbria, and you move straight down to London.”

3. An emergency brake

Back in 2014, the then-Prime Minister David Cameron floated the idea of an “emergency brake” on EU immigration. Under this system, which is based on existing EU law, free movement could continue but the Government would reserve the right to halt it in certain circumstances. As the FT noted: “The rules are supposed to deal with situations such as acts of war or volcanic eruptions, not the movement of fruit pickers from eastern Europe.”

After the volcanic eruption of Brexit, though, the IPPR now thinks an emergency brake could be Britain’s best bet. Murray told The Staggers: “It is quite targeted, and also it is much more likely to get support from European partners.” But remember, Cameron tried to negotiate an emergency brake before. And failed. 

4. Work permits

If you subscribe to the idea Brexit was about wages, and not xenophobia, you might be inclined to support a system of work permits. Under this system, freedom of movement could continue for students, families and retirees, but workers would have to obtain work permits. Home secretary Amber Rudd has said of the idea that it “has value”. 

The problem is, both Britain’s Brexiteers and the EU’s negotiators can count. Hand out work permits to everyone, and immigration levels remain high. Tighten the rules, and that’s the end of freedom of movement. It’s hard to see either side giving the Government such an easy way out.