The biggest public-private partnership I've ever heard of has been proposed in Honduras, a struggling Central American country trying desperately to find ways to expand its economy.
Word came last week that the country plans to have three privately run cities built. They will have their own police, laws, government and tax systems, making them, in effect, city-states located in Honduras, but hardly a part of it.
An interested group of investors and government representatives have signed a memorandum of agreement allowing the private-sector investors and planners to proceed.
The project’s aim is to strengthen Honduras’ weak government, which is overwhelmed by corruption and drug-related crime. In addition, there is lingering political instability after a 2009 coup d’état, making it almost impossible to cope with a crumbling infrastructure.
According to the memorandum of agreement, the cities will have their own judiciary, laws, governments and police forces. They will also have the power to sign international agreements on trade and investment and set their own immigration policy.
Work is to start within weeks on the basic infrastructure for the first city, to be built on the country’s Caribbean coast. The work will be funded with an initial $15 million investment from the MGK Group.
That initial work is expected to create 5,000 jobs over the next six months, and up to 200,000 jobs in the future.
The second city will also be built in the northern part of the country, and the third city in the south.
No details were released about plans for them.
There are opponents, of course, including those who feel that it is inviting trouble to create states within a state, commercial entities with state powers but outside the jurisdiction of the government. Apparently, the Honduran president will appoint “globally respected international figures” without financial interests in the project to nine-member independent boards to oversee the running of the cities.
Daily operations will be administered by a governor appointed by the board.
All that, of course, opens the door for more of the corruption. But, one can’t help but watch and cheer for the effort. If honestly run government can emerge in these cities, the people will have earned it.
Korky Koroluk is a regular freelance contributor to the Journal of Commerce. Send comments or questions to email@example.com.
EDITOR'S NOTE: Since this column was written, the Honduran Supreme Court has ruled that these "Charter Cities" are unconstitutional and the projects have been cancelled.