Privatizing Cities in Honduras

While Latin America has seen the rise of more progressive leaders at the national level in recent years, neoliberalism has certainly not faded away as residents of three Honduras cities are about to find out:

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”.

The turning over of Honduran infrastructure to foreign private enterprise should raise major warning sirens for anybody even vaguely familiar with the history of the region. However, MKG CEO Mark Strong is apparently not one of those familiar with said history. In the grossest displays of condescension and historical ignorance, Strong arrogantly declared that “the future will remember this day as the day that Honduras began developing.” Suffice to say, the belief that Honduran development can only begin via a neoliberal approach that puts Honduras’s fate in the hands of foreign private companies is, to put it charitably, historically myopic and grossly ignorant. Going back to the colonial period, Honduras (a relative “backwater” in the Spanish empire) existed primarily to ship its limited silver back to Spain, relying first upon indigenous labor and then African slaves and creating a context in which the crown and a handful of its representatives and elites became wealthy at the expense of the majority of Honduras’s small population.

However, those inequalities in the international arena only worsened in the nineteenth century, when foreign capitalism replaced the mercantilism of the colonial period. By the 1870s, the politico-economic elites of the country had embraced liberalism; by the 1880s, transportation companies based in the US had built railroads and improved harbors in Honduras and other Central American companies. However, these lines were not made to help improve the lives of Hondurans; rather, they existed for the companies to enter into the banana industry and to profit only them. As a result, these transportation companies eventually became companies like the Boston Fruit Company and, later, the notorious United Fruit Company. Throughout the late-1800s and early-1900s, these companies bought up incredible amounts of land, while political elites in favor of liberalism looked the other way or even facilitated such land grabs (often profiting themselves). The result of this was an increasing flow of cash out of Honduras and other Central American countries, even while an increasing percentage of the population was landless and impoverished, further accelerating socioeconomic inequalities and underdevelopment in the parts of the country not directly tied to the banana companies. These conditions led to a virtual monopoly on power in which the Banana companies effectively ran national politics, infrastructure, and economics in Honduras and elsewhere either directly or indirectly, leading to the term “banana republics” – countries where a small plutocracy aided private multinational companies in exporting goods and money out of the country at the cost of political and economic stability, even while an overwhelming majority of the citizens of a country remained impoverished and often landless.

While the powers of the banana companies diminished somewhat in the latter half of the twentieth century, the long-term effects are still visible – even today, over 60% of Honduras’s population lives in poverty [as the article also points out], and the average annual income is only $1,970 per year. As loaded as the term “developed” is, it’s not a stretch to say that, in many regards, Honduras suffers from a lack of development. However, contrary to what Mr. Strong would like to believe, Honduran “development” hasn’t occurred because of private enterprise and multinational investment in the country, not in spite of it.

And it’s not like privatization is the only solution. In a country that presently and historically has had tax rates that favor the oligarchs and foreign corporations, they could try to resolve the issue by perhaps redistributing the revenue of the state to tax those who actually have money in order to provide the infrastructural and public institutions designed to protect all citizens, including the elites. But hey – that would require the elites to actually sacrifice something, and as we know, the elites are not exactly open to a more democratic society in Honduras. As a result, they prefer selling off the country to private interests rather than assuming the responsibilities and duties a state owes its citizens, sacrificing autonomy to private enterprises in a system that historically has played no small role in perpetuating the very inequalities and underdevelopment that continue to plague Honduras to this day. And it will be the majority of Honduran citizens who are going to pay the price for this, learning once again the hard lessons of international capital in their country.

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About Colin M. Snider

I have a Ph.D. in history, specializing in Latin American History and Comparative Indigenous History. My dissertation focused on Brazil. Beyond Latin America generally, I'm particularly interested in class identities, military politics, human rights, labor, education, music, and nation. I can be found on Twitter at @ColinMSnider.
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