One would think it impossible for any semblance of bipartisanship this close to a critical midterm election, yet there is at least one issue that draws both parties together. The issue of encouraging Central American nations to promote economic policies that result in less illegal immigration to the United States is one. More members of Congress should jump on board to support the fight against far-left wing governments in Central and South America threatening freedom and prosperity.
The numbers of people coming to the United States from Venezuela is increasing while the numbers from Cuba have always been high. Economic oppression is a driver of illegal immigration and one way to combat that driver of the problem is to encourage more economic freedom in Central and South America. In addition to reducing pressure on the southern border, these policies will raise the quality of life of people in the areas respecting property rights and freedom to contract.
A problem emerged in January of this year in Honduras when the nation swore in President Xiomara Castro of the far-left LIBRE Party. She campaigned on redistributing wealth and showed the type of governance she wanted to emulate when diplomatic relations with Venezuelan strongman Nicolas Maduro were restored. During the campaign for president, Castro scapegoated something called Zones for Employment and Economic Development (ZEDEs) and blamed them for the economic devastation wrought in Honduras by the COVID-19 pandemic. Now, President Castro is trying to illegally wipe out these zones, including nationalizing American investments in these zones, to stop any semblance of economic freedom in the region.
There are a number of these zones in Honduras, but the signature Prospera ZEDE is on the tiny island of Roatan off the northern coast of the nation. This highly successful zone has become a prime target of President Castro. This area established innovation in healthcare, high-tech, tourism, and real estate development resulting in economic growth to this sparsely inhabited region. The prior government established a long-term agreement to allow these areas to be self-governing. As a result, tens of millions in foreign investment has flooded into these areas creating a booming economy, new jobs, higher standards of living and economic optimism reducing the pressure on the Honduran people to head to the United States for jobs.
These zones were set up with rational property rights, regulatory and tax systems through a change in law that allowed these zones to be flourish. The hard left government sees nationalizing these zones as an opportunity to forward the socialist goal of a wholly government-controlled economy. The LIBRE Party government wants to impose an economic system that resembles Cuba, North Korea, and Venezuela more so than the booming economies of Hong Kong (pre-China takeover), Taiwan, Singapore, and South Korea. This will be devastating to the people in the region.
A growing bipartisan support for these zones is emerging. Sens. Bill Hagerty (R-TN) and Ben Cardin (D-MD) sent a joint letter to Secretary of State Anthony Blinken on October 13, 2022, that said in part, “as the growing risks posed by global conflict and instability are driving strategic industries to relocate closer to the United States and neighboring nations, nearshoring opportunities increasingly abound for Honduras and other countries in Central America,” and they concluded with grave concern “that the Honduran government is advancing policies and actions that are inconsistent with this promising future.” They are concerned that the Honduran government will toss aside a 50-year legal stability guarantee that protects foreign investment in these zones.
Sen. Hagerty and Cardin announced that they will study legislative solutions to empower the State Department to halt aid to Honduras if the Honduran government seizes U.S. investments in violation of trade agreements and Honduras’ own Constitution. They worry that any direct or indirect expropriation of U.S. investment would violate the CAFTA-DR trade agreement. If Honduras is allowed to seize the ZEDEs, private sector investment in the region would halt. A lack of confidence in trade agreements protecting investment in Honduras, and the region at large, would stifle economies.
Another tool to pressure Honduras to do the right thing is for the State Department to pressure the International Monetary Fund (IMF) to halt aid to Honduras if the Castro regime engages in nationalizing U.S. investments. It is worrisome that Honduras might work to ally with China. They have already started the process of using class warfare to establish a family dynasty in the mold of Fidel Castro’s Cuba and Daniel Ortega’s Nicaragua. One way to pressure the IMF to pressure Honduras is to threaten all money to the IMF if they fail to act on the Honduras situation.
There are some rational politicians in Washington who are willing to put aside political differences to address a real problem for the United States government and to promote good policy. Hopefully the government in Honduras will leave these zones alone and allow the ZEDEs to raise the quality of life of people working and living in the regions.
Brian Darling is former Counsel for Sen. Rand Paul (R-KY).
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