the debrief: issue seven

Special economic zones meet an early demise in Honduras

by Harry Padoan

image credit: Frodar (Wikimedia Commons)

Celebrations have swept through the nation of Honduras after one of its most controversial laws succumbed to an early death. The widely unpopular law, centred around the creation of Zones for Employment and Economic Development (ZEDE) came to a miserable end in May when it was repealed unanimously by the Honduran Congress. This law was conceived and promoted in 2013 by former President Juan Orlando Hernández, allegedly in the hope of stimulating employment in previously uninhabited and underdeveloped areas through attracting foreign investment. However, with Hernández being extradited to the United States on 21 April on drug trafficking charges, his failed ZEDE law seems to have taken a similar path, being swiftly thrown onto the ash heap of history.

Public outcry surrounding the creation of special economic zones was predominantly concerned with the creation of asymmetric levels of power and autonomy. The policy would have seen ‘model cities’ obtain independent judicial bodies, along with control over taxation and budgeting. The opposition led by Xiomora Castro’s left-wing Libre Party branded these clauses as a danger to national sovereignty. After the monumental decision to axe the ZEDEs, Castro claimed they were indicative of a ‘legal system that was invalid from the start,’ doubling down on her aim to revive constitutional value. Xiomara Castro, the current President of Honduras, ran her presidential campaign in 2021 on the platform of democratic socialism, championing values such as income equality, legal justice and political transparency. It is relatively unsurprising then, that ZEDEs were not a personal favourite of Honduras’ first female President.

Honduras is a nation suffering from profound poverty, with the World Bank suggesting that around 14.8 percent of the population live on under $1.90 per day, classified as being in ‘extreme poverty’. What is perhaps surprising, is the continued increase in poverty across Honduras despite it registering the second highest economic growth rates, behind Panama. It is clear to see that the denunciation of ZEDEs is part of a wider trend in Latin American politics – the collective breakaway from the neo-liberal economics that have dominated and desolated the region for decades.

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