Honduras is a country lurching towards communism, yet it is a nation that contains a small oasis of freedom on the small island of Roatán. They have something set up called a Zone for Employment and Economic Development (ZEDE) that is modelled on the free trade zones of pre-China takeover of Hong Kong, Singapore and Dubai. The fight to protect ZEDEs in Honduras are the center of the worldwide ideological battle between economic freedom and socialism.
It also should be a model for us here in the United States.
ZEDEs were set up before the election of leftist Honduran President Xiomara Castro who ran on a hard left campaign to make Honduras look more like Venezuela. If Castro does not sabotage the experiment in economic liberty, it is possible that more nations in Central and South America may embrace free market economics, individual liberty, and private property rights. Furthermore, this example of economic freedom in Central America could be a model for a reimagination and improvement on Enterprise Zones attempted here in the U.S. years ago.
Surrounded by socialism, and a crackdown on economic freedom, is a small property called Honduras Prospera, Inc. It is a ZEDE that negotiated a 50-year stability agreement with the government of Honduras memorialized in the Honduran Constitution and protected by investor protections in the DR-CAFTA trade agreement. Several American investors excited about establishing a Central American laboratory for economic freedom and wealth creation worry that the leftist Castro government will expropriate their property and ruin the experiment.
There is recent evidence that the Honduran government is working hard to eliminate economic freedom in their country, because they fear the success of the Próspera ZEDE would embarrass their experiment in communism. Look no further than a recent anti-ZEDE government sponsored meeting in Honduras attended by ambassadors from Cuba, China and Venezuela for evidence of the government rallying opposition. Senator Bill Hagerty (R-TN) pointed out the attendance of the communist nations at a meeting to find ways “to expropriate US investments in Honduras’s special economic zones.” Erik A. Brimen, founder and CEO of Honduras Próspera, argued, “if the USG remains quiet and inactive, axis regimes will continue to push out legitimate US investments out of the region to achieve supremacy in our backyard!” The possibility of the U.S. being pushed out to be replaced by China, Venezuela and Cuba should send shivers down the spine of those who have lived under the failure of communism.
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The policy objectives for the ZEDE is much like free trade zones embraced by liberty-minded American politicians who would like to make our country resemble the regulatory, tax and investment framework of the Honduran ZEDE. Investment in Honduras that creates Honduran jobs reduces the flow of Hondurans to the United States. Today, we see a flood of Venezuelans fleeing the political and economic oppression of that communist nation and Honduras is experiencing similar numbers.
While the Biden administration dithers and coddles President Castro, Russia and China are offering to build infrastructure in Honduras so they can invade the economic and political space traditionally controlled by the U.S. Privately funded ZEDEs are a counterbalance to those countries. The American investors in ZEDEs should have the full support of both Republican and Democratic politicians on national security grounds.
There are actions Congress can take. While the Honduran government attempts to reorient towards China, American taxpayers continue to dump foreign aid into the anti-U.S. Honduras government through the USAID and other U.S. taxpayer -unded entities. This is at a time when Honduras has started the process of making capitalism illegal in this poor nation.
Furthermore, Congress should condition any aid on respecting Honduras’ ZEDEs and not facilitate Honduran government officials’ enjoyment to the US with unrestricted visa access by suspending them. Visas are a courtesy, not a right that we extend to other nations, therefore we should not allow government officials pushing communism to enjoy the rewards of capitalism. No Disney World and Miami Beach, in addition to a superior health care system, for those government officials exterminating the same opportunity for the citizens of Honduras.
States can play a role too in importing economic freedom. Our Founders intended on having competing states that encourage better governance. It is time for our nation to encourage something called Prosperity States or Prosperity Zones within states that have the potential to encourage laboratories of competition. States should roll out policies that work gradually in geographic terms but deeply in policy terms so citizens and businesses enjoy the synergy and resiliency of pro-liberty transformations.
As William F. Buckley argued, America is creeping slowly towards socialism in a way that most Americans do not recognize. Creeping, or jogging, towards free markets is a better direction than creeping towards the failed socialist experiments of Cuba, Venezuela, and now, Honduras.
Brian Darling is former Counsel to Sen. Rand Paul (R-KY).
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