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Making the World Safe From Democracy, One Charter City at a Time

If you’re a Libertarian billionaire that was looking forward to creating your own privately managed “Free City” from a seriously distressed country – a city free from things like democracythings may be looking up for you:

AP
Honduras Once Again Passes ‘Model Cities’ Law

TEGUCIGALPA, Honduras January 24, 2013 (AP)

The Honduran congress approved once again a “model cities” project that the country’s Supreme Court had previously declared unconstitutional because it would create special development zones outside the jurisdiction of ordinary Honduran law.

Congressman Rodolfo Irias of the ruling National Party says the law “includes the necessary modifications” to answer concerns about unconstitutionality.

The vote was 110 to 13, with 5 abstentions.

The court’s rejection of the plan led Congress to fire four of the court’s five justices in December.

The plan would create “special development regions” with their own independent tax and justice systems, to spur economic growth in this Central American country struggling with corruption and crime.

The project was opposed by civic groups as well as the indigenous people.

Ooooo…these charter cities sound so nice the Honduran legislature had to pass the plan twice. Although it sounds there are some Hondurans that aren’t entirely on board with the idea. Perhaps they just weren’t sold on the idea behind the charter cities: that the key to reversing decades of poverty and deep, entrenched corruption is to hand over governance to Libertarian billionaires? Why can’t they see the light?

The New York Timne
Who Wants to Buy Honduras?

By ADAM DAVIDSON
Published: May 8, 2012

Shortly after the 2009 coup that overthrew Manuel Zelaya, Honduras’s newly elected president, Porfirio Lobo, asked his aides to think big, really big. How could Honduras, the original banana republic, reform a political and economic system that kept nearly two-thirds of its people in grim poverty?

One young aide, Octavio Rubén Sánchez Barrientos, had no idea how to undo the entrenched power networks. Honduras’s economy is dominated by a handful of wealthy families; two American conglomerates, Dole and Chiquita, have controlled its agricultural exports; and desperately poor farmers barely eke out subsistence wages. Then a friend showed him a video lecture of the economist Paul Romer, which got Sánchez thinking of a ridiculously big idea: What if Honduras just started all over again?

Romer, in a series of papers in the 1980s, fundamentally changed the way economists think about the role of technology in economic growth. Since then, he has studied why some countries stay poor even when they have access to the same technology as wealthier ones. He eventually realized something that seems obvious to any nonacademic, that poor countries are saddled with laws and, crucially, customs that prevent new ideas from taking shape. He concluded that if they want to be rich, poor countries need to somehow undo their invidious systems (corruption, oppression of minorities, bureaucracy) and create an environment more conducive to business. Or they could just start from scratch.

Then he decided to put the theory into practice. In 2009, Romer developed the idea of charter cities — economic zones founded on the land of poor countries but governed with the legal and political system of, often, rich ones. There were a couple of interested parties. (The president of Madagascar was intrigued by a preliminary version of the idea, Romer told me, but he was soon ousted in a coup.) Then, in late 2010, Sánchez met with Romer, and the two hurriedly persuaded President Lobo to make Honduras the site of an economic experiment. The country quickly passed a constitutional amendment that allowed for the creation of a separately ruled Special Development Region.

Romer’s charter city is trying to avoid this dark side of urbanization by adapting older, more successful models. The United Arab Emirates, Hong Kong and Singapore were able to build well-designed cities that housed and employed millions, in part by persuading foreigners to invest heavily. Dubai created a number of micro­cities — one of which, for instance, is governed by a system resembling English common law with judges from Britain, Singapore and New Zealand.

Each has had well-known flaws, but Romer said the core idea can be replicated without them. The new Honduran charter city can work, he said, if its foreign leadership can similarly assure investors that they’ve created a secure place to do business — somewhere that money is safe from corrupt political cronyism or the occasional coup. If a multinational company commits to building new factories, real estate developers will follow and build apartments, which then provide the capital for electricity, sewers, telecom and a police force.

Note that President Lobo – the president that was “elected” in 2009 following the coup – is a big example of the kind of deep corruption that he’s apparently trying to fix with charter cities.

Also note that each of the “older, more successful models” – The United Arab Emirates, Hong Kong and Singapore – are all undemocratc. And keep in mind that Patri Friedman, Milton Friedman’s grandson, stepped down as the head of Peter “I no longer believe democracy is compatible with freedom” Thiel’s Seasteader Institute to lead Future Cities Development, Inc. which is going to have its first project in Honduras.

Continuing…

Romer hasn’t yet been able to persuade any nations to take on the role of custodian (Sweden and Britain both passed), so Honduras has named a board of overseers until there are enough people to form a democracy. Romer, who is expected to be chairman, is hoping to build a city that can accommodate 10 million people, which is 2 million more than the current population of Honduras. His charter city will have extremely open immigration policies to attract foreign workers from all over. It will also tactically dissuade some from coming. Singapore, Romer said, provides a good (if sometimes overzealous) model. Its strict penalties for things like not flushing a public toilet may make for late-night jokes, but they signal to potential immigrants that it is a great place if you want to work hard and play by the rules.

There will be many rules in Romer’s charter city too. Even though he expects most initial opportunities will be fairly low-paying basic industrial jobs, the local government will mandate policies that ensure retirement savings, health care and education. According to Romer’s plan, the immigrants who arrive will not get rich, but their children will eventually be ready to climb the economic-development ladder.

Hmmm…a planned charter city of fairly low-paying basic industrial jobs. On the one hand, that means many of those planned jobs will be filled by robots in a decade or two, but on the other hand at least Paul Romer is envision a guaranteed healthcare and education mandate. It would be interesting to see if that healthcare mandate includes guaranteed healthcare even if the low-paid workers can’t afford it or if it’s one of those other kinds of “mandates”. You also have to wonder if there’s going to be the kind of labor law mandates that ensure workers can still afford to live without having to work so many hours that they don’t have enough free time to spend reading the history of thier countriy. This might include the history of how their oligarch overlords first took over and looted the country and then eventually implemented an “anti-corruption” scheme that involves selling off cities to international Libertarian consortiums that want to build privately run international-oligarch-founded city states with a distinct uber-Libertarian business-first constitutional philosophy. There won’t be an mandates that ensure the workers have enough time to learn about all that because, you know, that would be anti-freedom.

Unfortunately, there isn’t much chance that we’ll find out how Mr. Romer’s envisioned mandates would have played out because while the Charter Cities plan is back on the agenda, Romer is no longer part of the project. He had been leading the “Transparency Panel” for the project to ensure that the whole endeavor would be negotiated in a public, responsible manner that would lay the foundations for long-term trust between the Honduran public and the international investors that would be financially backing the cities. But he decided to quit in protest last October after he found out that the Honduran government had already worked out a deal with the first group of investors in secret:

The New York Times
Plan for Charter City to Fight Honduras Poverty Loses Its Initiator
By ELISABETH MALKIN
Published: September 30, 2012

MEXICO CITY — Paul Romer is a respected economist with an unconventional plan to lift people out of poverty. And in Honduras, he thought he had found a government eager to put his ideas into practice.

What if you simply sweep aside the corruption, the self-interested elites, and the distorted economic rules that stifle growth in many poor countries and set up a brand new city with its own law and governance?

The charter city, as Mr. Romer calls it, would be administered by countries that have developed strong institutions and rule of law. If it sounds crazy, think of Hong Kong.

Once Honduras signed on and its Congress passed a law at the beginning of 2011 to start the process, the concept moved from big idea to a tentative possibility. Stories followed in The Economist, The Wall Street Journal and The New York Times Magazine.

But now, Mr. Romer, an expert on economic growth, is out of his own project, tripped up by the sort of opaque decision making that his plan was supposed to change.

The tipping point came with the announcement a few weeks ago that the Honduran agency set up to oversee the project had signed a memorandum of understanding with its first investor group.

The news came as surprise to Mr. Romer. He believed that a temporary transparency commission he had formed with a group of well-known experts should have been consulted. He withdrew from the project.

The law setting up Honduras’s experiment in a charter city, a special development region, or RED in its Spanish initials, creates flexibility that promotes innovations, but requires strict disclosure along the way, Mr. Romer said. “The one absolute principle is a commitment to transparency,” he said.

The investor group is led by Michael Strong, an activist who has worked in the past with libertarians like John Mackey, the founder of Whole Foods. He promises that his investors include Silicon Valley entrepreneurs and Central American investors, but when pressed for details, named only one Guatemalan businessman.

Opponents on the left have been filing challenges with the Honduran Supreme Court against the charter cities plan. The news of the investment deal brought more.

According to Mr. Strong and others involved in the project, including Mark Klugmann, an American consultant who is working with Mr. Sánchez, the transparency board never legally existed. Mr. Sánchez agreed, although he had never disputed the existence of the board in the past.

Mr. Romer said that President Lobo signed the decree in his presence in December. But he acknowledged that the board was on tenuous legal footing because of the challenges in the Supreme Court. The decree was never published.

Mr. Romer is now looking elsewhere.

“If it were easy to undertake social reform, it would have happened,” he said. “You just have to keep trying.”

The loss of the adademic visionary that was providing the intellectual justifications for the project was certainly a blow to the whole affair. Mr. Romer is still looking elsewhere to create his vision but his leaving wasn’t a deathblow to the project. That came a few weeks later:

The Atlantic Cities
Probable Deathblow of the Day: Charter Cities Struck Down in Honduras

Henry Grabar
Oct 22, 2012

Over the last year, Paul Romer’s ambitious and controversial vision for Charter Cities — foreign-run economic colonies designed to bring wealth and stability to poor countries — has been moving quickly towards reality in the Honduran jungle. But a rapid series of setbacks may have brought the project to a halt.

Last month, the project’s Transparency Commission, an oversight committee featuring Romer and several other prominent economists, was excluded from agreements between the Honduran government and international development companies, prompting fears about corruption. (One of those companies, the Future Cities Development Corporation — slogan: “Creating Humanity’s Future” — was founded by Patri Friedman, grandson of Milton, who wrote in 2009 that “democracy is not the answer.”)

Later that month, a prominent Honduras human rights lawyer who had filed one of dozens of legal challenges to the “model cities” decree, was murdered, inspiring further speculation.

Last Wednesday, the Honduran Supreme Court ruled that last October’s alterations to the Honduran constitution removing national territory from government control were unconstitutional. A branch of the court had come to that conclusion earlier this month, but because the decision (4-1) was not unanimous, the full court convened to vote. It struck down the legislative decree 13 to 2.

President Porfirio Lobo, one the project’s biggest supporters, was upset by the decision, insinuating that the court was influenced by external economic and political interests. He encouraged Hondurans to go to the Supreme Court to look for the jobs that the body’s ruling had denied them. “I’m sure they’re not thinking about the harm they’re doing to the Honduran people,” he said.

Deathblows like supreme court rulings that rule the project unconstitutional are difficut hurdles for any project that requires an aire of legitimacy. Deathblows to prominent opponents of the project are even worse. But as the first article indicated, where there’s a will, and lots of money, and a corrupt government, there’s a way. Yes, things are looking up for Libertarian oligarchs in Honduras.

Discussion

18 comments for “Making the World Safe From Democracy, One Charter City at a Time”

  1. It is a concerted effort in the erosion of national sovereignty.

    The Hon­duras ‘Model Cities’ is reminiscent of Macau & Hong Kong in the 19th century.

    Posted by Vanfield | February 9, 2013, 8:06 pm
  2. Oh, good. Another opportunity to call out Adam Davidson for the contemptible toady that he is. He can put a plausible tint on a window into hell. Well done.

    Posted by GrumpusRex | February 10, 2013, 9:02 pm
  3. Well, it looks like all the folks that have desperately wanted to see public employees lose their gold-plated pension plans – so that the entire society can shift back towards the traditional paradigm of just assuming and accepting mass poverty for people in their “golden years”might get their wish:

    July 27, 2013, 1:14 p.m. EDT
    Today, Detroit. Tomorrow, Hometown, USA
    How Detroit’s bankruptcy filing will have national repercussions
    By Chuck Jaffe, MarketWatch

    Back when I was a rookie reporter at the Detroit Free Press nearly 30 years ago, the big debate the staff had over lunches was which would go bankrupt first: the big automakers or the city. And which experience would be worse.

    You could make arguments for each possibility, but most of the staffers thought there was no way either event would ever actually happen. They insisted that the early signs of trouble were an anomaly or something that could be reversed before it became a calamity.

    Having just earned my degree in economics, I thought back then that both were possible — many years in the future — and that bankruptcies for the Big Three would be bad for the city, but that a bankruptcy for the city would be bad for the entire country.

    Sadly, what was once little more than a theory is now a reality, but what’s worse is that so many people — like my old colleagues — don’t recognize what the city’s financial woes mean on a national level.

    Detroit owes roughly $20 billion to over 100,000 creditors, but the big creditors people will be watching are the city’s public-sector labor unions, which fear that a bankruptcy judge might let the city reduce or cancel pensions and retiree health benefits.

    Sure, the unions have the law on their side — Michigan’s state constitution protects workers’ pensions from being reduced — but they still have reason to be worried. After all, Michigan law also requires public pensions to be fully funded every year, and yet Detroit apparently only managed that using accounting tricks that, by some estimates, have left the city as much as $3.5 billion off the mark.

    That’s why the Detroit bankruptcy filing serves as a warning beacon for everyone expecting a pension and other benefits when they retire, a signal that it’s dangerous to entrust your financial future to others, assuming they are going to keep their promises.

    How much precedent Detroit will set for other communities remains to be seen, but clearly everyone is watching to see what’ll be allowed. Other communities on the brink will see how the Motor City comes through the experience financially and decide if they want to mark a similar course on the map, even if it is as a last resort.

    There is plenty of precedent for corporations using bankruptcy to cut or eliminate pension obligations — Delta Airlines being the most-recent big-name company to go that route — leaving the Pension Benefit Guaranty Corp. to step in with smaller pensions and the workers with a much less secure future.

    The Pew Center for the States estimates that public pension plans nationwide were underfunded by $1.4 trillion in 2010. While the stock market has reached record highs — narrowing the gap somewhat — since then, the undeniable problem is that most state and local government pension funds don’t have enough money to live up to the promises they have made.

    If employers can’t live up to their obligations, you can bet that the Pension Benefit Guaranty Corp. — the nation’s pension backstop — will follow suit and run out of money too.

    Even if the Detroit situation is resolved without setting some benchmark for other troubled municipalities to use and follow, the nation’s pension shortfalls aren’t going away; this story is going to play out again and again, and while it will be corporations, cities and towns in the headlines, it will be the nameless, faceless individuals who are the real story.

    That’s not a story anyone wants playing out in their own home.

    This is one of those stories that reminds us that the critical contract that the far-right oligarchs want destroyed isn’t just the pension contracts with employees. It’s the social contract that must be destroyed before their far-right paradise can be achieved. Until society accepts that we simply must embrace a “you’re on your own” mentality that oligarch-managed paradise can’t truly come to fruition. Not that it could anyways, but you get the idea…

    Posted by Pterrafractyl | July 27, 2013, 6:47 pm
  4. Oh wow, there’s a new RoboCop movie coming out in 2014. Like the original film, the story take in 2028 Detroit after it’s been taken over by a corporate entity. Hopefully this means that the current “Emergency Financial Manager”-led take over and looting of Detroit is actually just part of a really elaborate advertisement for the upcoming film. It’s just really nice to imagine that this is all an attempt to create art as opposed to looting it.

    Posted by Pterrafractyl | September 5, 2013, 10:45 pm
  5. The Detroit von Clausewitz experience: coming to a state near you:

    Forbes
    7/19/2013 @ 2:58PM
    Detroit’s Bankruptcy Is Just Politics By Other Means
    Daniel Fisher, Forbes Staff

    Prussian military theorist Carl von Clausewitz famously declared war is “mere policy by other means.” Detroit’s bankruptcy is similar. Saddled with billions of dollars in bond debt and pension obligations it can never repay, Michigan’s largest city has resorted to settling its deep-rooted fiscal and political problems in court.

    By filing Chapter 9 bankruptcy, Detroit has effectively handed its fate over to a federal bankruptcy judge, along with the difficult questions of how to divide its inadequate resources among more than 100,000 creditors. Among other things, that judge will have to tackle the politically charged question of whether the city’s public employees can jump ahead of bondholders and other creditors to collect pension payments that vastly exceed both financial reserves and the city’s likely ability to repay.

    “This was going to be battled out politically inside or outside of bankruptcy, and that’s not going to change,” said David A. Skeel, a professor at the Univeristy of Pennsylvania Law School who has written extensively about the political and legal questions swirling around government insolvency. “The court is a referee, an umpire, but ultimately the parties have to make the proposals.”

    Congress first passed a provision of the bankruptcy code allowing for municipal bankruptcies back in 1934, which the Supreme Court promptly found unconstitutional for violating both the 10th Amendment (powers not explicitly granted to Congress are reserved to the states) and the clause prohibiting impairment of contracts. Congress slightly amended the law and the Supreme Court — chastened by FDR’s 1937 threat to pack it with more cooperative justices — approved Chapter 9 in 1939.

    Since then there have been relatively few municipal bankruptcies, although the number has ticked up in recent years. Much like airlines, which entered a serial bankruptcy phase after the industry was deregulated in order to rework union contracts, more cities have turned to federal bankruptcy court to solve intractable disputes over debt loads and public pensions. The city of Vallejo, Calif. was prohibited under state law from closing non-essential fire stations or modifying pensions, for example, but achieved both in bankruptcy court.

    When Skeel wrote an influential article proposing the equivalent of Chapter 9 for overleveraged states, critics said “no real city uses Chapter 9,” he said. With Detroit’s filing, that statement is no longer accurate. “I really think it changes your perspective on that, and it forces you to think Chapter 9 is one of the main tools in the tool kit when a municipality is in trouble.”

    Is that a bad thing? Skeel thinks not. Cities like Detroit — and states like Illinois, California and Connecticut — got into fiscal trouble because their political leaders spent too much and promised too much to public-sector employees in the form of future pension benefits. That’s a fundamental problem with elective politics, of course: It’s easier for today’s politicians to make promises they can’t keep than deliver financial reality to their constituents. In that sense, pension underfunding is one of the main tools politicians use to get around state laws requiring balanced budgets.

    Michigan, like other states, has attempted to protect municipal pensions through its constitution. But Skeel thinks a federal judge, compelled under the law to treat creditors equally, might limit that protection to the portion of the pension backed by actual pension assets. The promise of future payments might fall into the category of an unsecured debt, although courts haven’t actually decided this precise issue yet.

    Skeel is criticized by Richard C. Schragger, a professor at the University of Virginia School of Law who says it is incorrect and unfair to blame the problems of cities like Detroit on their elected leaders. Detroit, like a lot of northern industrial cities, is also the victim of state neglect and laws that allowed affluent suburbs to shield themselves from the city’s financial problems. As businesses and rich citizens moved outside the city’s borders, Schragger said, Detroit was left with 700,000 mostly poor residents with the same demand for schools and other government services.

    “People say the decline is attributable to bad management, but that’s just not the reality,” he said. “There are structural impediments to their well-being, and you can ignore those.”

    Schragger has argued bankruptcy unfairly yanks such questions from the political realm, and may give cities cover for pushing the costs of insolvency on city employees and the poor, while protecting creditors.

    But Skeel says the opposite is more likely to occur. Bankruptcy judges are specifically prohibited from ordering cities to raise taxes or change spending, he said, and they must treat creditors in a similar manner. The main effect of filing Chapter 9 is the possibility of restructuring public pensions, he said, which simply can’t be accomplished outside of bankruptcy. By forcing creditors to take haircuts on their bonds as well, he said, a judge might help inject a little fiscal discipline into the financial system by raising interest rates on profligate spenders.

    The examples of governments from Greece to California to Argentina argues otherwise, however.

    “Just increasing the cost of borrowing doesn’t stop people from borrowing,” he acknowledged.

    In Clausewitz’s day, that’s when the armies marched to plunder new territories. Detroit and its many creditors can only slug it out in court.

    Posted by Pterrafractyl | September 12, 2013, 11:26 pm
  6. @Pterrafractyl–
    ical
    MORE than a little interesting to see a mainstream, conservative business publication such as “Forbes” discussing matters fiscal/economic in terms of Von Clausewitz’s theoretical formulations!!

    Other than this website/blog and my programs, where, and when, have you EVER seen or heard contemporary economic/financial/political matters discussed in terms of Von Clausewitz. (“Germany Watch,” whcih feeds along this website on the front page being an obvious exception.)

    Best,

    Dave

    Posted by Dave Emory | September 13, 2013, 1:52 pm
  7. @Dave: Let’s hope the reporting trend continues because, if anything, the growing number of global free-trade agreements is going to make the temptation to engage in economic/financial warfare almost irresistible. That’s partly because money and entire industries can be relocated across the globe like never before but also because global economic integration of some sort is kind of inevitable, but it’s a lot easier to do it wrong than do it right (like most things). And as the eurozone experience is teaching us, doing it wrong is the right way to win the war. So we’ll probably see a lot more von Clausewitz experience on coming years.

    Posted by Pterrafractyl | September 13, 2013, 7:06 pm
  8. So this was happening in the lead up to the November 24 election in Honduras:

    Land to be Usurped and Votes to Be Bought: The Pre-Election Honduran Landscape
    Sunday, 24 November 2013 10:19 By Andalusia Knoll
    Truthout | News Analysis

    “When was the last time I was threatened?” asks Alfredo Lopez, repeating my question. He laughs and then responds, “Today, yesterday, the day before, everyday. They tell me they want to mess me up.”

    Lopez is the vice president of the Honduran Black Fraternal Organization (OFRANEH) and speaks with such a jovial tone that you wouldn’t guess that he’s talking about pre-election violence in Honduras. We’re in the Afro-Indigenous Garífuna town of Triunfo de la Cruz in the northern coast of Honduras. The first true presidential elections, since the 2009 coup that ousted president Mel Zelaya, are just days away.

    Lopez is the host of the Notibimetu show on the Faluma Bimetu (Sweet Coconut) FM radio station. We accompany him to his afternoon program where he plays traditional Garifuna music, coupled with local and international news focused on land struggles of indigenous communities. The station has been a stalwart of “La Resistencía,” the resistance movement birthed in the aftermath of the 2009 coup d’etat.

    His phone rings various times during the program, but he doesn’t answer, citing it as another example of people trying to disrupt his activities. Lopez and OFRANEH have been involved in a long battle to protect their fertile coastal collective land from international investors attempting to turn these pristine coasts into a Honduran Cancun.

    Repression of their movement to defend their land has increased in the pre-election season, but it is hardly something new to their community. Lopez himself served six years in jail for false drug charges. He was later released, vindicated of all charges and granted a retribution payment. In 2009, Faluma Betu was burned down by arsonists assumed to be linked to the coup government. The community’s resilience allowed them to reconstruct the station. A month later, they were back on the air, transmitting at double the station’s prior wattage.

    Current Honduran President Porfirio Lobo Sosa held a conference in 2011 titled “Honduras, Open For Business.” The 46 Garifuna communities dotting the coast have never advertised that they are open for investment, but the fact that they haven’t given their consent has made little difference to the powerful businessmen vying for their chunk of Honduran beachfront property. According to Convention No. 169, all indigenous and tribal peoples have the right to “decide their own priorities,” especially when it “affects their lives, beliefs, institutions and spiritual well-being and the lands they occupy.” The lack of consent has formed the basis for three cases that OFRANEH has before the Inter-American Commission on Human Rights in Washington, DC, and two cases that have passed on to the Inter-American Court of Human Rights in Costa Rica.

    While these pending cases have helped throttle the development, they surely have not been able to stop it. In 2011 the Honduran National Congress approved the Law for Special Development Regions (RED) which allows the development of Charter Cities, which will operate autonomously from state jurisdiction and be allowed to enter into agreements with international agencies.

    Tim Russo, a community media activist with the organization Popular Communicators for Autonomy (COMPPA), has worked in Honduras over the past decade and tells Truthout that the Charter Cities, with “their level of autonomy and all the special regulations that apply to the RED zones, are basically a Honduran version of the Green Zone in Iraq. But supposedly this is not a war zone.”

    Just recently The Los Micos Golf Resort opened up in the nearby Tela Bay, with 750 acres of beach houses and a hotel, despite countless protests by local Garífuna organizations. The project has been financed by Randy Jorgensen, a Canadian businessman who struck it rich in the porn industry and told Kaelyn Forde of the Real News Network that “We want to bring back life to the banana booms,” referencing the Banana Republic that Central America was once considered. Jorgensen denied usurping communal Garífuna land and stated that which borders delineate the community and individual land is “a debate that they need to have amongst themselves.”

    Members of the Garífuna community are not opposed to tourism and in fact are in favor of development it as long as guarantees dignified work with fair wages for local residents, coupled with the protection of the collective land, crops and ocean. One example of community-led tourism is the Panchy Cabanas, where close to a hundred foreigners have stayed in the pre-election season. These visitors hailing from Canada, Germany and the United States have not come to catch the waves, but instead to participate in various international delegations that will monitor the elections.

    The upcoming elections are the first that Honduras has seen since 2005, because the 2009 elections in which Pepe Lobo was elected were boycotted by many in protest of the coup government. According to a recent Gallup poll, Xiomara Zelaya de Castro, wife of ousted president Mel Zelaya, candidate with the new political party Libre, holds a few point margin over the ruling National Party Candidate, Juan Orlando Hernández. Yet journalists and election observers have questioned why the margin is so small, pointing to National Party-ruled congress funding of the poll. Regardless of Xiomara’s supposed lead in the polls, no one in the streets responds with any kind of certainty regarding Honduras’ next president. In a country where corruption and political violence is rampant, people’s faith that their vote will be respected is incredibly low.

    The international delegations are meeting with Lopez and other members of OFRANEH at the town pool hall that also serves as a community center. Outside, three young Rastafari men sit on the curb, kicking back as the sun sets on this beach town. They share with Truthout their nicknames Dibu, Capri and Diablo and their desire for change.

    Unemployment has skyrocketed since the coup, and these three have found themselves without work. Capri and Dibu said they worked in construction in a nearby port town, but when the company got wind that they were part of the resistance, they were laid off. Diablo is a craftsmen and says that his cash flow has been low because the increased violence in post-coup Honduras has severely reduced the number of tourists coming to Triumfo and that while flinging its arms open to foreign investment, Honduras has also opened the floodgates to Chinese imports, making hand-crafted goods, which cost more, less desirable.

    When questioned whether they are afraid to vote, all respond with a confident “no,” but say this sense of security is only because they will be voting in their local Garífuna community. Dibu says that some folks told them “if you go over there to vote, people will kill you.”

    While they say they don’t fear for their lives in the elections, they do say they have seen a climate of intimidation and bribes. Clara Flores of OFRANEH confirmed this in an interview with Truthout, saying that people in the community “fear what will happen if the Libre party wins because they think that there might be another coup d’etat or action take against the president.” She also mentioned that people connected to the National Party offered 10,000 lempiras, the equivalent of 500 dollars to people in Triunfo in exchange for their vote. “This money was supposed to be money from the government for poor people, but since Juan Orlando was the head of congress, he is using these funds to influence the people’s vote.” In a community with high levels of unemployment, some were bought off, but Dibu says the majority of people “know what’s up” and with “a strong desire for change, they are not so easily willing to sell their votes.”

    As the workshop continues, participants speak about the importance of broadcasting, to break the media siege. DJ Antony decides its worth taking the risks to participate in the coordinated broadcasts with the other indigenous and Garífuna stations. In the middle of the workshop, the WiFi stops functioning, as the internet in Honduras is anything but reliable. The community broadcasters say that if their internet gets blocked or just stops working, they will take to their cells, informing the people with phone calls.

    Tomas Gomez Membreño from Radio Guarajambala, says every time that they have broadcasted a large event, most recently an anti-militarization mobilization, their electricity has been cut off.

    Honduran media is abysmal, not just because it is controlled by monopolies known for their sensationalist yellow journalism, but also for rampant censorship stemming from the violence perpetrated against journalists. Helena Roux is accompanying a German observers delegation and works with the press freedom group Reporters Without Borders in Paris. She says that Honduras ranks as the most dangerous country in Latin America to exercise journalism, and constant threats from state forces, narco-traffickers and community members aligned with these elements leads to auto-censorship by journalists who fear for their lives. Roux comments, “With this kind of climate, the journalists do not have the right to carry out their work of informing the population, and in turn, the population does not have the right to be properly informed about what is happening in the elections.”

    Two weeks before the elections, photojournalist Manuel Murillo, who was working for LIBRE congressional candidate Rasel Tomé, was killed with three bullets to the head. More than 30 journalists have been killed since the 2009 coup. A Rights Action Report has documented the assassination of 18 members of the Libre Party in this election cycle, and aligned journalists have not escaped the violence.

    The major media outlets have launched an all-out campaign against presidential candidate Xiomara, labeling her a communist and criminalizing members of indigenous and campesino organizations such as the Civil Council of Popular and Indigenous Organizations of Honduras (COPINH.)

    And then this happened:

    CSMonitor
    Honduras recount: Can a free and fair election also be fraudulent?

    International observers say Honduras presidential election results are ‘transparent,’ but protesters are alleging fraud. A recount may settle the dispute.

    By Seth Robbins, Correspondent / December 9, 2013

    TEGUCIGALPA, Honduras

    With clouds of tear gas hanging in the air, hundreds of students sheltered themselves behind the National University’s gates two days after the hotly contested presidential election here

    The student groups didn’t come out looking for trouble, they say, but to register their disgust with the country’s election system – which had just proclaimed ruling party Congressman Juan Orlando Hernández Honduras’ next president.

    Many of these youth were among thousands of university students who sacrificed their chance to vote in order to serve as election custodians, running polling centers in far-flung parts of the country. Though none would give his or her full name, citing fears of reprisal, several recalled witnessing signs of fraud, like the buying of votes and polling credentials; voters presenting false IDs; and people handing out gifts on the eve of the Nov. 24 election.

    “We thought [this election] was going to be different, and it was the same as always,” says a 23-year-old IT student who served as an election volunteer. “What happened is a mockery for us.”

    Perhaps unsurprisingly, the losing presidential candidates say the same. Two are demanding recounts, alleging fraud, and, in the case of left-wing hopeful Xiomara Castro de Zelaya, calling supporters into the streets for rowdy, defiant marches.

    These allegations run contrary to the findings of some 700 international observers who served in Honduras last month. In their official reports, the missions described the elections as largely trouble-free. Experts say such disagreement is typical, as monitoring missions – which are often composed of professors, lawyers, human rights activists, and college students – are inclined to look more at the general quality of the election process than ferret out every tiny irregularity.

    “Almost all elections have some problems,” says Susan Hyde, an expert on international election observation missions at Yale University. “It’s a difficult judgment to make.”

    But the disputes between the election authority and detractors could exacerbate existing polarization here, building on polemic issues of poor security and economic opportunity. The election authority agreed to hold a recount, but has yet to do so.

    Fraud … or sore losers?

    Candidates can be loath to accept observers’ findings, especially in countries where politics are polarized and democratic institutions are weak, experts say. Elections in war-torn Afghanistan have repeatedly thrust election observers into the spotlight. Venezuela’s opposition candidate still contests last April’s presidential election results, despite observers having characterized them as fair. And after Mexico’s 2006 elections, also deemed fair, losing candidate Andrés Manuel López Obrador went so far as to set up a parallel government.

    The European Union mission’s report on the Honduran elections, issued within days of the official results, praised both the “the transparency of voting” and “respect of the will of the voters during the counting process,” despite some irregularities. The Organization of American States’ report similarly congratulated Honduras for an organized election and high voter turnout.

    Honduran presidential candidate and television personality Salvador Nasralla says he has no faith in the international election monitors.“There are complaints from a ton of people signifying that the process was not transparent,” he says.

    Mr. Nasralla, whose Anti-Corruption Party, or PAC, finished with 14 percent of the vote, has formally demanded a full recount, claiming that “unofficial modems” were used to transmit election results. He also says he has evidence of inconsistencies between tally sheets and votes recorded, and of masked men marking paper ballots to accord with official tallies. The real results, he contends, would show him winning.

    Meanwhile, Ms. Castro, of the newly formed left-wing Libre party, has refused to concede the presidency to Mr. Hernández. The electoral authority’s official results give Hernández 37 percent of the votes, and Castro 29 percent.

    In her first appearance since the elections, Castro – whose husband is deposed former President Manuel Zelaya – held a press conference to declare the elections a “disgusting monstrosity.” Within days thousands of Libre supporters poured into the streets, with Castro and Mr. Zelaya marching alongside the coffin of a Libre activist who they alleged was killed for political reasons just after the election. Police could not confirm that the killing was political.

    Castro also demanded a recount, and election officials consented to review results from more than 16,000 voting stations with Libre party representatives present. The recount has stalled over disagreements between Libre and elections officials, and on Friday Castro and Zelaya filed a formal complaint demanding the outright annulment of the election results.

    Honduras’s electoral authority is “doing the right thing” by helping the parties settle discrepancies in the vote, says Jennifer McCoy, director of the Americas Program at the Carter Center, which sent a small delegation last month in support of the larger EU and OAS missions.

    “The important part that often gets short shrift is the dispute process,” Ms. McCoy says.

    ‘More voices’

    The election monitoring agencies did cite irregularities in their assessments. The EU’s report spoke not only of the trade in credentials, but criticized Honduras’ election system for its lack of transparency in campaign financing, its unreliable voter registry, and for making it difficult for voters to submit complaints on election day.

    Still, the report’s mention of irregularities didn’t go far enough for one EU observer, Leo Gabriel of Austria, who broke protocol and in an interview with a Brazilian website Opera Mundi denounced the mission’s generally positive report. Mr. Gabriel said there was heated debate between observers and EU mission leaders before the report was issued.

    The United States and its ambassador may not have helped the situation, says Rosemary Joyce, a Honduras expert at University of California, Berkeley. The US State Department congratulated Honduras on “generally transparent” elections when votes were still being tallied.

    “We had more pressure to put [on Honduras] than anybody else,” Ms. Joyce says. “We didn’t use it.”

    Yet Joyce says that, provided a transparent recount is done, Honduras will likely come out of this election stronger. The congressional gains made by upstart parties like LIBRE and PAC signify a historic shift in political power, as the two traditionally powerful parties, National and Liberal, won’t control congress anymore. “You will have more voices,” she says.

    Note that this also happened:

    Panampost.com
    Anonymous Hacks Honduras’s Elections Website
    Hacktivist Group Protests Alleged Wrongdoing in Latest Presidential Race
    By Sofía Ramírez Fionda on Monday, December 2, 2013

    As of the evening of December 2, the international network of hacktivists, Anonymous, has successfully hacked the website of Honduras’s Supreme Electoral Tribunal (TSE). This came just a few hours after the tribunal announced its willingness to recount the votes and review the official electoral records of the recent presidential elections, held on November 24.

    In the website, Anonymous Honduras declares “we commit the sin of giving you the benefit of the doubt, even when we are certain that your institutions are useless, and don’t serve anyone but the one that has the money and the power in this country. We can no longer tolerate this and the help of your bribed media, who want the people to stay quiet and consume the process no matter what.”

    In their message, they inform of a portal where they have allegedly collected evidence of electoral fraud. They also call for peaceful protests as a way to demand freedom. They ask people to “remember they have the weapons and money, we only have our voice, indignation and our desire for freedom. If you’re abroad, protest in front of embassies. If we don’t wake up now that we can, there won’t be another possible moment.”

    So the right-wing forces in favor of selling off Honduras to billionaires just had a big win.

    Also, this just happened:

    Honduras TV journalist found shot to death, international press groups demand investigation

    By The Associated Press December 9, 2013

    MEXICO CITY – Two international press groups are calling for a full investigation into the death of Honduran journalist Juan Carlos Argenal Medina, who was found shot to death at his home in the southeastern city of Danli.

    The Committee to Protect Journalists and Journalists Without Borders say Argenal was a correspondent for Radio y TV Globo, which has come under attack for its opposition to the 2009 coup that deposed President Manuel Zelaya.

    Zelaya’s wife, Xiomara Castro, lost the Nov. 24 presidential election and is contesting the results.

    The groups say Argenal’s body was found Saturday.

    Argenal was also owner of Vida Television. He was the third TV journalist killed this year in Honduras.

    Posted by Pterrafractyl | December 10, 2013, 11:17 am
  9. Sad, scary questions of the day: The Dark Enlightenment: Is it scarily sad or sadly scary?

    The Telegraph
    The ‘neo-fascist’ Dark Enlightenment is more sad than scary
    By Tim Stanley US politics Last updated: January 22nd, 2014

    If you’re going to take time out of your busy day to think, think big. And so it’s quite exciting to discover that some online conservatives say the best way to deal with the world’s problems is to abolish the democratic state and replace it with a Jacobite monarchy. Let’s not waste time on reforming the NHS. Let’s just ban public healthcare and go back to the leeches.

    I joke, but according to the Telegraph’s Jamie Bartlett, a group of internet philosophers classifying themselves as “the Dark Enlightenment” reckon that everything’s been downhill since the Enlightenment and that we need to start all over again. The project is:

    …a loose collection of neo-reactionary ideas, meaning a rejection of most modern thinking: democracy, liberty, and equality. Particular contempt is reserved for democracy, which [writer Nick Land] believes “systematically consolidate[s] and exacerbate[es] private vices, resentments, and deficiencies until they reach the level of collective criminality and comprehensive social corruption.”

    Jamie reports that there is a “neo-fascist” element to this because they “obsess over IQ testing and pseudoscience that they claim proves racial differences”. Presumably, this is because they are anti-egalitarian and would argue that nature makes us unequal, which is one more reason why democracy is a sham. The weak and idiotic ally together to form a majority and rip off the intelligent minority. Now, can anyone remember who John Galt is…?

    That these “neo-reactionaries” admire monarchies is what makes they seem way-out and new. But, actually, their philosophy is the logical extension of where an element of the Right has been heading for some time. The Tea Party has been saying since 2009 that America was intended to be a republic, not a democracy. In a republic, the power of the majority is limited by its constitution; in a democracy, the majority can use the state to impose their will on everyone else. So for the Right, the re-election of Obama, the massive increase in food stamps, Obamacare and even the NSA overreach are all evidence of the US evolving from a constitutional framework that protects individual liberty to one that enables collectivism. Technically, they are not wrong – and as the Supreme Court continues to try to reflect popular opinion rather than the law as strictly defined by the Constitution, some conservatives are retreating into states rights, or even secession, to escape the Leviathan.

    And some libertarians are taking refuge in the past. The imagined benefit of pre-modern monarchies was that they didn’t tamper too much with civil society for fear of provoking rebellion (consider how many British medieval revolts were to do with tax). Matt Lewis thinks there is a “logic (if tortured)” to the latter-day conservative dreaming of a restoration of the crown:

    “Under monarchy,” Hans-Hermann Hoppe, author of Democracy: The God That Failed, explained, “the distinction between rulers and ruled is clear. I know, for instance, that I will never become king, and because of that I will tend to resist the king’s attempts to raise taxes. Under democracy, the distinction between rulers and ruled becomes blurred. The illusion can arise ‘that we all rule ourselves,’ and the resistance against increased taxation is accordingly diminished. I might end up on the receiving end: as a tax recipient rather than a taxpayer, and thus view taxation more favorably.”

    Now, I’m not saying that the neo-reactionaries are either right or wrong, simply that these views are not plucked from the ether or are an over-elaborate experiment in trolling. On the contrary, the idea of “shopping” for an ideal government is quite attractive. Think Britain is taxing you too much? Switch your citizenship to http://www.Austro-Hungarian-Empire.com. You won’t get healthcare or a police force – but you also won’t be conscripted or asked to put out your cigarette.

    Jamie interprets the rise of the Dark Enlightenment in terms of a resurgence of historical fascism. He maybe right. But I also think it’s an insight into how desperate elements of the Right have become. They believe they’ve lost the battle for control of the West and would now like to withdraw from democracy altogether. Some are driven into the arms of Putin, some into the Far, Far Right and some up trees with guns. As such, the Dark Enlightenment is probably more tragic than it is scary. Or, at least, let’s hope it stays that way.

    Note that the idea of “shopping” for your ideal government – where you can just “switch your citizenship to http://www.Austro-Hungarian-Empire.com” (but can’t vote) – has been gaining in popularity from another recent trend that sounds awfully similar to some old, bad ideas:

    Paul Romer is a brilliant economist – but his idea for charter cities is bad
    His wheeze that poor countries swap sovereignty for prosperity smacks of colonialism

    Aditya Chakrabortty
    The Guardian, Monday 26 July 2010

    Some professors hold on to their careers for dear tenure, eking out threadbare research material and desperately placing articles in whichever journal will take them. When retirement comes, the waters of academia swallow them up so that they become barely a footnote on a conference paper. And then there are men like Paul Romer.

    Romer is bulge-bracket academia, a departure-lounge economist: the kind of intellectual as likely to be found turning left on a plane as in seminar rooms. Forever mentioned as a future Nobel prizewinner, this Californian is a world expert on how and why economies grow. When Gordon Brown made that infamous speech about post-neoclassical endogenous growth theory, it wasn’t Balls – as Heseltine jibed – but Romer he was quoting.

    He’s one of Time’s “25 most influential Americans” (true, Time was the magazine that ran a joint profile of Cyndi Lauper and Madonna in 1985, and firmly declared that Cyndi was the bigger star, but that neither came “within a mile of Tina Turner’s splendid album of racked soul, Private Dancer”, but accolades such as these are still to be taken with due gravity of expression) . And then there are the adoring journalistic profiles, one of which began with the reporter turning up cap in hand to meet the academic lounging “poolside at his house, which overlooks a huge expanse of rolling ranchland”. That, it perhaps won’t surprise you to learn, was the hardest-hitting moment.

    So Romer is a brilliant economist, and he has a new and big idea. And because he is The Great Romer, he gets to present this wheeze to national leaders, high-profile conferences and invitation-only gatherings of policy-makers. And because he has some spare cash (views over rolling ranchland don’t come cheap, you know), Romer can afford to jack in his formal position at Stanford and start up his own think tank to make his case.

    Trouble is, the idea stinks. With little track record in dealing with poor countries, Romer has come up a grand scheme for lifting Africa and Asia out of poverty. What they need to do, he argues, is give up a big chunk of their land to a rich country. Policy experts from Washington can take over a patch of Rwanda, and invite along GM and Microsoft and Gap to come and set up factories. Poor countries give up their sovereignty in return for the promise of greater prosperity.

    His big example is Hong Kong. At the end of the first opium war in 1842, the Chinese were marched on board a British warship anchored off Nanjing and forced to sign Hong Kong away to Queen Victoria. Over the next 150 years, the little island turned into Asia’s number one capitalist success story. It was an example that Deng Xiaoping ended up copying on the mainland, in coastal provinces such as Guangdong – to explosive economic effect.

    China’s loss of Hong Kong should not be seen as a national humiliation or great international injustice, Romer has written, but “an intervention” which has “done more to reduce world poverty than all the world’s official aid programmes of the 20th century combined — and at a fraction of the cost”. What the world needs, the economist argues, is not one but 100 Hong Kongs.

    You think this is colonialism? For Romer, that “kind of emotion . . . can get in the way” (see what he did there? You have emotions; the elite economist has evidence). Sure, the poor people living and working in these new charter cities wouldn’t necessarily have any democratic privileges such as the right to vote, but they could vote with their feet. And in the meantime, the Africans or the Asians would get the undoubted benefit of all this huge western expertise.

    One result of the great economic crisis is that academic practitioners are finally acknowledging that economic policy is not just a series of equations applied to the real world, but questions that ultimately have a political answer. Yet the old pseudo- scientific blank slate-ism still survives, as Paul Romer’s latest project demonstrates.

    Posted by Pterrafractyl | January 31, 2014, 8:11 am
  10. If art imitates life, what kind of art is going to be inspired by Detroit’s new “kick ’em when their down and take the art”-social contract getting established in Detroit’s looming bankruptcy:

    Detroit emergency manager pleads for state funds
    Kathleen Gray, Nathan Bomey and Mark Stryker, Detroit Free Press 10:35 p.m. EDT May 13, 2014

    DETROIT — Detroit’s emergency manager on Tuesday pleaded with state lawmakers to kick in $195 million in upfront cash as part of a grand bargain to help resolve the city’s historic Chapter 9 bankruptcy — while some of city’s largest creditors devised strategies to block the fund meant to shore up pensions and protect the city’s art museum from having to sell its treasures to pay off debt.

    “We have what we think is a reasonable plan, but to put it bluntly, we need your money,” emergency manager Kevyn Orr testified before the newly created state House Committee on Detroit’s Recovery and Michigan’s Future. “If we don’t get the state settlement, our creditors likely would not approve the plan.”

    Orr wants the state to contribute the lump sum as part of an $816 million grand bargain fund that is the centerpiece of his restructuring plan because it limits cuts to pensioners and protects art by injecting new money into the situation.

    A group of local and national foundations would contribute more than $366 million to the fund, but only if a sweeping settlement is reached and pensioners and others agree not to sue. The Detroit Institute of Arts, for its part, has agreed to raise $100 million.

    The fund has drawn support from the city’s major retiree groups. But financial creditors, including bond insurers and banks owed hundreds of millions of dollars are trying to kill the deal, arguing in court filings that the city should consider selling the art masterpieces. They say the current plan unfairly favors pensioners over city debt holders and investors.

    The legal fight has emerged as one of the most important hurdles to a quick resolution of Detroit’s bankruptcy. The conflict will culminate in a massive trial starting in July when U.S. Bankruptcy Judge Steven Rhodes will decide the fate of the largest municipal bankruptcy in U.S. history.

    Pensions at risk

    The House committee’s first hearing Tuesday began the process of considering an 11-bill package that will govern the state’s potential contribution to the settlement.

    The bills would attach some controversial conditions to the funding, including the creation of an oversight commission that would retain authority over the city’s spending, borrowing and contracts for 20 years and the requirement that new Detroit employees receive 401(k)-style retirement plans instead of traditional defined-benefit pensions.

    As part of the grand bargain funding from lawmakers and pledges from foundations, Detroit retirees would have to relinquish their right to sue the state over pension cuts in exchange for better treatment in the city’s restructuring plan.

    Civilian retirees would get 4.5% pension cuts and no more annual cost-of-living adjustment increases if they vote “yes” on the city’s restructuring plan and Lansing lawmakers also approve the state’s contribution. Police and fire retirees would get no monthly pension cuts and would accept a decrease in COLA from 2.25% to about 1%.

    If the state fails to contribute $195 million upfront — the statistical equivalent of $350 million spread out over 20 years — Detroit would lose the $366 million pledged by charitable foundations and the $100 million in donations the DIA is working to raise.

    Without the grand bargain cash, some civilian pensioners could endure cuts of up to 40% when including the impact of the city’s plan to claw back excessive annuity payments over the last 10 years.

    “Without this settlement, we’re going to have to go back to the drawing board,” Orr testified. “And for some people, it would be catastrophic.”

    A typical retiree with a $20,000 a year pension would drop to $12,000 a year without the state’s participation. Retired police and firefighters, who don’t get Social Security to supplement their retirement, would drop from $35,000 to about $20,000 a year, Orr said.

    Let’s see…so the proposed Grand Bargain includes:
    – Cutting existing pension by 4.5% and eliminating cost of living increases which is going to guarantee poverty for these retirees as the years tick by (and it’s potentially closer to a 20% cut when claw backs are factored in).
    – Transition all new employees to the bad joke that is 401k system.
    – Detroit gets an “oversight commission” that would retain authority over the city’s spending, borrowing and contracts for 20 years.
    – Local and national foundations would contribute more than $366 million to the fund, but only if a sweeping settlement is reached and pensioners and others agree not to sue.
    – The Detroit Institute of Arts would raise $100 million.

    And this is the deal the creditors are saying is too generous to the pensioners. Instead, the creditors want the art. Bad. And they’re even arguing that they should be allowed to remove the art in order to have their own appraisers inspect the pieces. While it’s quite understandable that there would be a strong desire to put people’s pensions over art works, keep in mind that this is largely a false choice because the groups opposing this plan and advocating a selloff of the art don’t want the additional proceeds to go towards pensioners. The proceeds are intended to for the creditors:

    Detroit bankruptcy judge nixes art access request
    May 15th 2014 6:36PM

    By Ed White

    DETROIT (AP) – A judge in Detroit’s bankruptcy refused to grant hands-on access to a valuable trove of art Thursday, telling creditors who face steep losses in the case that they can visit a city museum and browse the walls like any other patron.

    Bond insurers have pointed to the art as a possible billion-dollar source of cash in the bankruptcy. But the city is firmly opposed to any sale and instead is banking on a separate, unique deal that would protect the art forever and soften pension cuts for thousands of retirees.

    Attorneys for Syncora Guarantee and Financial Guaranty Insurance said potential buyers should be allowed to look at certain pieces at the Detroit Institute of Arts, even remove them from the walls and examine the backs.

    “The record fails to justify this extraordinary relief,” Judge Steven Rhodes said after hearing arguments for more than an hour.

    He said creditors don’t deserve special treatment and instead can go to the museum and look at the art “like everyone else.”

    Art has been a hot issue in the bankruptcy because many creditors believe pieces could be sold to pay debts. City-owned art has been valued at $450 million to $870 million, but some Wall Street creditors say that’s way too low.

    A so-called grand bargain favored by Detroit, wrapping in illustrious art and city retiree pensions, involves $816 million from foundations, philanthropists, the museum and the state of Michigan. The state’s part, a $194.8 million lump sum, remains unsettled in the Capitol.

    The money would be exclusively earmarked for pensions.

    “To us, the grand bargain is not grand. It’s more grandiose than grand,” said Marc Kieselstein, an attorney for New York-based Syncora, which could lose hundreds of millions of dollars in the bankruptcy.

    He acknowledged the art is a “glittering link to the glory days of Detroit.”

    “But in bankruptcy, some of those rarified things, those edifying things, have to yield to things more base. Perhaps people would say more grubby” – such as creditor losses, Kieselstein said.

    The creditors said they’ve found buyers willing to pay more than $1 billion for parts or all of the collection; one wants all Chinese art.

    But under Detroit’s bankruptcy exit plan, the museum would take control of thousands of pieces of city-owned art already there. The DIA, as it is known, has promised to raise $100 million of the $816 million pledged to ease cuts for retirees whose pensions are being reduced.

    Rhodes, who will approve or reject the city’s entire bankruptcy strategy later this year, has repeatedly signaled that one-time asset sales probably are not a good idea. He said the art would not have been available to creditors if Detroit had chosen to skip bills and fix its finances outside of bankruptcy.

    In a statement, Financial Guaranty suggested the fight over art isn’t over.

    “We maintain that the drastically undervalued DIA settlement under the ‘grand bargain’ places politics over the financial and legal realities of the situation and will almost certainly result in drawn-out litigation that no one wants,” the company said.

    Also note that it isn’t just bond insurers like Syncora Guarantee and Financial Guaranty Insurance that have been holding out for more. European banks that were amongst the largest recipients of the backdoor Fed bailout, Dexia and Depfa, have also been big investors in Detroit’s bonds. Yes, Dexia and Depfa. Where they stand on the recent ‘grand bargain’ proposal isn’t clear from reports, but as of last October these banks weren’t exactly interested in settling soon either:

    The Wall Street Journal
    European Banks Hold Out on Detroit
    Lenders Hire Lawyers to Protect Stake Rather Than Sell

    By Matt Wirz and Emily Glazer
    Oct. 2, 2013 6:55 p.m. ET

    Banks in Germany, Belgium and Luxembourg that own about $1 billion of bankrupt Detroit’s bonds are taking a page out of the hedge-fund playbook to carve out their share of the city’s meager cash pile.

    Depfa Bank PLC, Dexia SA and a unit of Commerzbank AG have hired lawyers to protect their stake rather than immediately selling the debt—primarily bonds issued to help fund the city’s pensions. The move is unusual for banks, which typically don’t want to be mired in long bankruptcy-court fights, and it has frustrated a number of hedge funds that want to buy some of Detroit’s most battered bonds from the banks at deeply discounted prices.

    By holding out and fighting in Michigan bankruptcy court, the banks could boost their payouts from the record-setting bankruptcy compared with what they might get from selling quickly to distressed investors. Even if the banks ultimately decide to sell before the process is completed, as some are contemplating, their public arguments before mediators could help drive up the prices of their bonds, said people familiar with the situation.

    The banks and the investment firms interested in the debt—including Brigade Capital Management, Claren Road Asset Management LLC, Fundamental Advisors LP and Monarch Alternative Capital LP—thus far remain apart on their values for the Detroit debt. Small amounts of the bonds recently traded at 44 cents on the dollar, according to the Municipal Securities Rulemaking Board, but distressed buyers want to pay prices around 40 cents on the dollar, or less for larger trades, said people familiar with the matter.

    The appetite for Detroit’s bonds shows how the municipal-bond market is evolving into a playground for distressed investing. Hedge funds, which typically focus on buying the debt of troubled corporations, have been homing in on the debt of cities, states and other municipalities as the number of those bankruptcies has risen while defaults by corporations are declining. Most of the funds interested in Detroit also are owners of debt sold by Jefferson County, Ala., home of the country’s second-largest municipal bankruptcy.

    Hedge-fund managers thought the banks—including Franco-Belgian lender Dexia and a German state agency that took over bad assets from Depfa Bank—would write down the Detroit pension bonds they hold and sell them. Instead, the European lenders are marking down the bonds, but most aren’t selling yet. Dexia has provisioned for a roughly 50% loss, and hired the lawyer representing hedge funds in Jefferson County’s bankruptcy, to advise it. They also are talking to restructuring bankers for advice, people familiar with the matter said.

    The European bank creditors are playing an unusually activist role, in part because many of them were nationalized during the European financial crisis and now are seeking to make a profit for taxpayers by unloading assets at the highest prices they can get. They have been selling some loans and bonds and in other cases, including Detroit, they are negotiating with borrowers to recover the maximum amount possible.

    So we’ll have to wait and see if the European banks holding these bonds joined the bond insurers in holding our for more art sales to cover their losses. As the above article indicates, that these banks were holding back in the first place was somewhat surprising but there’s another group opposing the plan that’s perhaps even more surprising considering that it strips Detroit of self rule for the next two decades: The far right Mackinac Center, the architects of Michigan’s “emergency financial manager” scheme, is also opposed to the deal.

    All this opposition to a deal that basically sends Detroit to democracy prison for two decades, ends public pensions, and guarantees old age poverty for the current employees that won’t receive cost of living increases and the future employees are basically handing their retirement savings to Wall Street. Why the opposition when this seems like a far right dream come true? Because there’s so much more that could be done to undo the social contract. So much more:

    The American Spectator
    Don’t Save Detroit — Sell It

    Belle Isle alone could fetch $1 billion.

    By John H. Fund – From the September 2013 issue

    IN THE 1983 movie Dr. Detroit, the flamboyant lead character goes on a rampage warning of trouble to come. “I am talking about scorched earth, no survival, wholesale destruction…body-bags and fire!” he yells. That’s pretty much what has happened to Detroit over the last three decades.

    Its population has shrunk by half to below 700,000. The wait for police response is five times the national average, and only 8 percent of crimes are solved. Roughly a third of the city’s 140 square miles is either unoccupied or dilapidated. About 40 percent of its tax revenue is directed to retirement or debt, and the city hasn’t been in the black since 2004. Bankruptcy should have been declared years ago. The best experts say there is no way the city can ever crawl out of its predicament using conventional means.

    In the short term, Detroit could sell assets. Kevyn Orr, the city’s emergency manager, says all assets must be potentially on the table. Experts consulted by the Detroit Free Press say the collections of the Detroit Institute of Arts—works by everyone from Van Gogh to Matisse to the original Howdy Doody children’s TV doll—would fetch some $2.5 billion. But that’s only one-eighth of the city’s projected long-term debt of $20 billion. Art experts say any sales from the museum would have to be spaced out over a long period.

    “There are only so many billionaires that could absorb all of that material,” art appraiser Betty Krulik told reporters.

    With a federal or state bailout effectively off the table because of the bad precedent it would set for other near-bankrupt cities, it’s time for truly creative thinking.

    One of the most intriguing parts of Detroit is Belle Isle, a 1.5 square-mile park with real market value that sits in the Detroit River between the two cities. Designed by Frederick Law Olmsted, one of the creators of New York’s Central Park, it was once an urban jewel but has been left decrepit by years of neglect. One proposal is to revitalize Belle Isle by having the city sell it for $1 billion to investors interested in setting up a self-governing “free enterprise zone.” While it would function as a mini-Hong Kong, some strings could be attached (no factories, for example). The idea has been endorsed by no less than former Chrysler president Hal Sperlich, who says the island could bring economic dynamism back to the area and create a “Midwest tiger.”

    Other commentators point to other properties that could be sold to Canada or private investors. The city’s water department begs for new management. There are prime waterfront sites owned by the city such as the Joe Louis Arena and Hart Plaza. The Detroit Zoo sits on 125 acres of prime land. Its animals are much in demand, too; the Free Press reported that a breeding female giraffe can fetch $80,000.

    The Canadian media outlet Global News went further with a poll asking “Should Canada buy Detroit?” It pointed out that Canada’s sports cred would instantly be enhanced by adding the Detroit Red Wings, Detroit Pistons, and Detroit Lions. Its music status would rise, too, as it could lay claim to local artists Stevie Wonder, Eminem, and Iggy Pop. As of press time, the winning answer was “yes”: 36 percent of respondents agreed with buying Detroit. Close behind, with 29 percent, were those who agreed it was a good idea, but “only if we’re able to get rid of the guns.”

    AT THIS POINT, selling assets to Canada or even private investors is politically untenable. But wait a few months, until the crushing burden of Detroit’s debt makes it clear that radical solutions are in order. Bold ideas are often ridiculed or scorned in the beginning. In 1985, former British Prime Minister Harold Macmillan upbraided Margaret Thatcher for her program to privatize state-owned enterprises. He shouted that his successor was “selling off the family silver.” Thatcher ignored such criticism and stuck to her guns.

    Detroit needs a Margaret Thatcher figure, someone who can ignore the screams of outrage that inevitably accompany the implementation of any bold program. All over the world, once-devastated cities have revitalized themselves after their industrial bases decayed: Belfast, Northern Ireland, after shipbuilding went elsewhere; Turin, Italy, after Fiat drastically downsized; Pittsburgh, Pennsylvania, after steel factories folded. Detroit can ultimately do the same if it sets no limit on who it will do business with—whether they be private investors or even Canadians.

    “AT THIS POINT, selling assets to Canada or even private investors is politically untenable. But wait a few months, until the crushing burden of Detroit’s debt makes it clear that radical solutions are in order”. That was John Fund’s prediction back in September, and here we are, 8 months later with a “grand bargain” on the table that should make the far right giddy, and there’s still opposition to the plan from not just the creditors, but also ideological champions of shredding the social contract like the Mackinac Center.

    On top of that, the House Speaker Jase Bolger, of the GOP, is demanding that Detroit’s unions also throw some money into the bailout fund (presumably the pension cuts weren’t enough). And until that happens he won’t back the ‘bargain’. And keep in mind that the proposal to sell off Belle Island and turn it into self-governed Hong Kong was proposed by the Mackinac Center specifically to address Detroit’s pension crisis. So we could be looking at not only an extended period of court battles but also extended political opposition to any deal that doesn’t utterly crush Detroit’s public sector and sell parts of it off. If folks like John Fund get their way, Canada might need to start looking into the value of that art too since it’ll presumably come with the package deal.

    Posted by Pterrafractyl | May 17, 2014, 6:46 pm
  11. Will Michigan’s Republicans kiss the ring? A certain pair of oligarchs can’t wait to find out:

    Koch Brothers Group Fighting Detroit Bankruptcy Deal
    DAVID EGGERT – May 20, 2014, 6:17 AM EDT

    LANSING, Mich. (AP) — Americans for Prosperity, the conservative advocacy group supported by the Koch brothers, has launched an effort to torpedo a proposed settlement in the Detroit bankruptcy case, potentially complicating chances for completing the deal just as its prospects seemed to be improving.

    The organization, formed to fight big government and spending, is contacting 90,000 conservatives in Michigan and encouraging them to rally against a plan to provide $195 million in state money to help settle Detroit pension holders’ claims in the case, a key element of the deal.

    The group has threatened to run ads against members of the Republican-controlled Legislature who vote in favor of the appropriation before the state’s August primary. An initial legislative vote may come this week.

    Using public money for Detroit’s case “is very toxic, especially to out-state and Republican, conservative-leaning individuals,” said Scott Hagerstrom, director of the Americans for Prosperity’s chapter in the state. “Even out-state Democrats, why send any more money to Detroit? Certainly other areas of the state have needs.

    The group’s move is a blow to Republican Gov. Rick Snyder, who proposed the state cash as a final ingredient to bring the 10-month-long bankruptcy case to a conclusion. Some creditors are fighting the “grand bargain,” but it recently drew support from major retiree groups and unions. The bankruptcy court trial on the city’s case will be held this summer.

    “This is a settlement. This not a bailout,” Snyder said. “And I want to be very, very clear about that.”

    Ten-year-old Americans for Prosperity, which plans to spend at least $125 million nationally helping conservatives in the midterm elections, is becoming more active in state politics. Its willingness to spend millions for advertising has made it a powerful player in political contests.

    Dave Doyle, a political strategist and former chairman of the Michigan Republican Party, said the organization’s opposition could make a difference even though polling shows considerable public support for a settlement.

    “What does have an impact is if they start spending a lot of money on TV and radio and doing mailings into people’s districts. The threat of that would get some people to pay attention,” he said.

    Snyder, who took the lead in resolving Detroit’s fiscal crisis by appointing an emergency manager for the city’s operations, proposed the $195 million to match commitments from private foundations. The money would limit pension cuts for the approximately 30,000 retirees and city workers to no more than 4.5 percent and avert the need to liquidate the Detroit Institute of Art’s collection to raise money. Snyder and city leaders say the museum is important to rebuilding Detroit as a world-class city.

    Keep in mind that in addition to the 4.5% pension cut there’s also the loss of any cost of living adjustments and a “clawback” of the last decade of pension contributions that substantially raises the cuts.

    Skipping down…

    Republican House Speaker Jase Bolger has warned that the bills may not advance unless the city workers’ unions agree to kick in some cash toward the settlement. Snyder must also persuade Democrats despite their unhappiness with his use of his executive powers to take over control of Detroit’s finances.

    Americans for Prosperity intends to turn up the heat on the Republicans, who hold 26 of the 38 seats in the Senate and 59 of 110 House districts.

    “Tell Lansing politicians that Detroit has gotten enough of our tax dollars,” the group says on a website created to oppose the aid. “More money can’t fixDetroit.”

    Notice how there’s no actual plan from the Kochs beyond letting Detroit die and dancing on its grave (and then reanimating the body as part of horrible experiment). Consider this a preview.

    Posted by Pterrafractyl | May 20, 2014, 7:44 am
  12. Here’s another preview of what life will be like once the oligarchs are finished privatizing the commons: Don’t have enough money for water? Oh well. You can dig a well or go to hell. Your oligarchs don’t really care either way. They only care if you can pay:

    The Guardian
    True North
    Detroit’s Water War: a tap shut-off that could impact 300,000 people

    A right-wing state and corporate push to cut off water is economic shock therapy at its most ruthless and racist, but resistance is growing
    by Martin Lukacs
    June 25, 2014

    It was six in the morning when city contractors showed up unannounced at Charity Hicks’ house.

    Since spring, up to 3000 Detroit households per week have been getting their water shut-off – for owing as little as $150 or two months in bills. Now it was the turn of Charity’s block – and the contractor wouldn’t stand to wait an hour for her pregnant neighbour to fill up some jugs.

    “Where’s your water termination notice?” Charity demanded, after staggering to the contractor’s truck. A widely-respected African-American community leader, she has been at the forefront of campaigns to ensure Detroiters’ right to public, accessible water.

    The contractor’s answer was to drive away, knocking Charity over and injuring her leg. Two white policemen soon arrived – not to take her report, but to arrest her. Mocking Charity for questioning the water shut-offs, they brought her to jail, where she spent two days before being released without charge.

    Welcome to Detroit’s water war – in which upward of 150,000 customers, late on bills that have increased 119 percent in the last decade, are now threatened with shut-offs. Local activists estimate this could impact nearly half of Detroit’s mostly poor and black population – between 200,000 and 300,000 people.

    “There are people who can’t cook, can’t clean, people coming off surgery who can’t wash. This is an affront to human dignity,” Charity said in an interview with Kate Levy. To make matters worse, children risk being taken by welfare authorities from any home without running water.

    Denying water to thousands, as a sweltering summer approaches, might be bad enough in itself. But these shut-offs are no mere exercise in cost-recovery.

    The official rationale for the water shut-downs – the Detroit Water Department’s need to recoup millions – collapses on inspection. Detroit’s high-end golf club, the Red Wing’s hockey arena, the Ford football stadium, and more than half of the city’s commercial and industrial users are also owing – a sum totalling $30 million. But no contractors have showed up on their doorstep.

    The targetting of Detroit families is about something else. It is a ruthless case of the shock doctrine – the exploitation of natural or unnatural shocks of crisis to push through pro-corporate policies that couldn’t happen in any other circumstance.

    The first shock was the slow disaster that struck Detroit over the last four decades: the flight of corporations toward cheaper, overseas labour; the movement of white, wealthier Detroiters to the suburbs, draining the city’s tax base; a Wall Street-driven financial crisis that left many homeless or jobless; and the deliberate starving of the city of funds owed them by the Republican state legislature.

    On its heels has come a round of economic shock therapy: taking advantage of the severe decline in revenue from Detroit’s first shock, the media, corporations and right-wing politicians drummed up a crisis of fear about financial debt. This has become the pretext for a rapid-fire assault on Detroit’s public resources: an attempt to dismantle its schools, to slash its pensions, and to transfer its parks and art and land into the hands of private corporations.

    The public water system, a prized resource worth billions and sitting on the Great Lakes, is now the latest target – and the water shut-offs are a way to make the balance-sheet more attractive in the lead up to its privatization.

    As Detroiters like Charity Hicks have taken a stand, they have been met by a third shock: literal blows of police force and violence, intended to dampen any resistance.

    Taking full advantage of Detroit’s plight required the removal of another obstacle: democracy. No Detroit politician, subject to the pressures of an electorate, could imagine going after the city’s water. But in 2013, using Detroit’s debt as his excuse, Michigan’s Republican governor Rick Synder imposed an “emergency manger” – a trustee to govern Detroit unilaterally. When Detroiters overwhelmingly voted in a referendum against the “emergency manager” law, Synder passed a new one overnight – with a provision rendering referendums meaningless.

    Having made his reign democracy-proof, Detroit’s emergency manager has proceeded to drive the city toward bankruptcy. With the bankruptcy dominating media headlines across the country, the real nature of Detroit’s crisis has been obscured and ignored. It has left the banks and corporations free to pursue a liquidation of the city’s assets. And nothing is off the table.

    The US banks and corporations who now have Detroit on the hook want these ugly truths to stay submerged. They haven’t flinched while the water has been shut-off. Nor did they flinch when Detroiters’ heat was cut – in 2013, before the worst winter on record, 169,407 households were disconnected. But they loudly protested when organizations proposed a tour of the city for the US judge who will rule on Detroit’s bankruptcy – that, they insisted, would be too “dangerous.”

    The view the judge would see is in radical contrast to Detroit’s prevailing image: a city with a flowering network of community gardens, more than any in the United States, feeding residents and nurturing solidarity; a rich artistic and musical culture; and neighbourhoods organizing for meaningful education and to restore local democracy. No one denies Detroit is racked by crime, poverty and unemployment – but it is also hard to miss its vibrant renewal.

    It is from this incredible web that a challenge to the water shut-offs is emerging. Community organizations have filed a human rights complaint to the United Nations, demanding Michigan state impose a moratorium on the shut-offs. UN experts have already responded critically. There are daily acts of civil disobedience: cars being parked over water valves to prevent shut-offs; neighbours teaching each other to turn the water back on. A new initiative called the Detroit Water Brigade – an Occupy Sandy-style response to disaster zones created by the deprivation of water instead of its excess – is accepting supplies from around the country, opening local service hubs, and coordinating calls to action.

    And the Detroit People’s Water Board, a broad coalition co-founded by Charity Hicks, continues its work of raising consciousness about water justice and conservation, setting out a vision for water as a public trust, not a commodity – a source of life, not of private enrichment.

    “This is a test being looked at by cities across the US – even the world,” Charity says. “We will not let water be used as a weapon to remake the city in a corporate image. We will re-establish what it is to live in a democracy, with a water system that is part of the commons, that affirms human dignity and that ensures everyone’s access.”

    “This is a test being looked at by cities across the US – even the world.” Yes indeed.

    Posted by Pterrafractyl | June 26, 2014, 8:29 pm
  13. “An investor, either international or local, builds infrastructure…The territory in which they invest becomes an autonomous zone from Honduras…The investing company must write the laws that govern the territory, establish the local government, hire a private police force, and even has the right to set the educational system and collect taxes.” Sounds pretty nice, doesn’t it? At least nice if you’re the owner. But Honduras’s charter city oligarchs are about to get another gift: Militarized police for their brand new city-states:

    Alternet
    Thursday, Jan 29, 2015 10:45 AM CST
    Nightmare libertarian project turns country into the murder capital of the world
    Even Ayn Rand would be taken aback
    Mike LaSusa

    Since the 2009 coup against President José Manuel Zelaya and subsequent election of Porfirio “Pepe Lobo” Sosa and his favored successor Juan Orlando Hernandez, Honduras has embarked on a devastating neoliberal economic program that has contributed to its status as one of the poorest and most unequal countries in the region. The privatization of Honduran society has been accompanied by a militarization of public security efforts in the country, both of which have been fueled by a network of U.S.-supported policies and programs.

    Despite the country’s crackdown on crime, violence in Honduras has skyrocketed in recent years. Honduras now has the world’s second-highest national murder rate and is home to two of the world’s five most violent cities. Unchecked gang activity has contributed to widespread corruption and impunity within police and government institutions.

    This weekend, a coalition of leftist opposition parties came together temporarily to defeat a proposed amendment to the Honduran constitution that would have given permanent status to the country’s militarized police force, known as the Policía Militar de Orden Público, or PMOP.

    This “elite” police unit, which serves under the direct command of the presidency, is intended to support President Hernandez’s heavy-handed crime reduction efforts. President Hernandez created the PMOP shortly after coming to office in 2014, with support from a legislature dominated by his conservative National Party. The Hernandez administration’s police militarization efforts also had the backing of the country’s business sector.

    According to one study, in 2013, only 27 percent of Hondurans expressed confidence in the civilian police while 73 percent thought the military should be involved in policing efforts. Nevertheless, both the military and the police have a long history of corruption and criminality as well as abuses committed against civilians in Honduras.

    The PMOP plan isn’t the only initiative with dubious implications for human rights put forth by Hernandez’s government. Honduras is also experimenting with Zonas de Empleo y Desarrollo Económico (special employment and economic development zones), also known as ZEDEs or “charter cities.”

    According to reporting by Danielle Marie Mackey for the as last month, here is how the project works: “An investor, either international or local, builds infrastructure….The territory in which they invest becomes an autonomous zone from Honduras…The investing company must write the laws that govern the territory, establish the local government, hire a private police force, and even has the right to set the educational system and collect taxes.”

    An earlier article by Erika Piquero at Latin Correspondent described the law as “allowing the corporations and individuals funding the ZEDEs to dictate the entire structural organization of the zone, including laws, tax structure, healthcare system, education and security forces. This kind of flexibility is unprecedented even in similar models around the world.”

    George Rodríguez reported for the Tico Times that the plan was previously challenged and ruled unconstitutional in Honduras’ supreme court, but Hernandez “twisted arms, had the [dissenting] judges removed, and brought in obedient replacements.” Hernandez then re-tooled the bill and pushed it through the congress.

    As Mackey reported, “The ZEDE’s central government is stacked with libertarian foreigners,” including a former speechwriter for presidents Ronald Reagan and George Bush Sr., conservative political operative Grover Norquist, a senior member of the Cato Institute think tank, and Ronald Reagan’s son Michael, as well as “a Danish banker, a Peruvian economist, and an Austrian general secretary of the Friedrich Hayek Institute.”

    According to the official ZEDE website, the zones place a heavy emphasis on security, offering “a 21st century, business-efficient, non-politicized, transparent, stable, system of administration, plus a special police and institutional security to overcome regional issues and meet world standards.” A new bill introduced by Hernandez minutes after losing the vote this weekend would allow municipalities and ZEDEs to request that the PMOP or other branches of the Armed Forces provide them with security services.

    Honduras’ continuing militarization of security efforts appears to have the backing of the United States, which has provided more than $65 million in security aid to Honduras since 2008. President Hernandez has also met frequently with high-level U.S. officials for talks on security and migration issues. As the U.S. amassador’s Twitter account wrote on Friday, “U.S. cooperation with Honduras’ fight against narcotrafficking and crime is strong and continuing.”

    However, contrary to commonly held perceptions, most of the violence in Honduras is not caused by large, transnational drug trafficking organizations, but rather by smaller gangs fighting over territory (including street corners, neighborhoods and even prisons) in which to conduct extortion rackets, small-scale smuggling efforts and prostitution operations among other illegal activities.

    Privatization and paramilitarization are also concerns in Honduras, with one recent report estimating that there are three times as many private security guards as police in Honduras, up to a third of whom work for unregistered companies, some of whom reportedly employ off-duty police officers looking to supplement often-meager salaries.

    While international investors may be seeking to capitalize on Honduras’ voluntary surrender of its national sovereignty to make a “legal” profit, even more nefarious actors are already operating in a completely unregulated, free-market criminal underworld in Honduras—one that has helped turn the country into the world’s “murder capital” in recent years.

    Even Honduran schools have become scenes of rampant gang activity. In a recent chilling article for the Associated Press, journalist Alberto Arce wrote that gang members “rely on kids to do much of their illegal grunt work, knowing that even if they get caught, they won’t face long jail sentences…School administrators say that teachers generally are more afraid of the gangs than the remaining students are, because so many children admire gangsters.” Arce also writes that “a 14-year-old can earn $500 a month in prostitution — more than a police officer’s salary.”

    U.S.-backed policies in Honduras have fed a cycle of crime, violence, exploitation and abuse of vulnerable populations by state and non-state actors alike. According to the research organization Security Assistance Monitoror, gang-driven “violence has been one of the primary drivers behind the surge in migration to the United States from Honduras,” but ironically, “[t]he U.S. government practice of deporting thousands of Hondurans with criminal records, which began in the 1990s, has only fueled the growth of these gangs.”

    When these migrants, many of them women and children—along with those from El Salvador, Guatemala, Mexico and elsewhere—flee to the United States, they are routinely apprehended and “fast-tracked” for deportation. In the case of Honduras, migrants are sometimes sent back to some of the most violent cities in the world. Many women and children fleeing violence in Central America also experience abuses and violations of their legal rights at the hands of U.S. authorities if they are detained after crossing the border.

    As Maya Kroth wrote in September for Foreign Policy, “[c]ritics worry that evidence to date — the government’s opaque approach, the ZEDEs’ undemocratic features, the cast of characters backing the scheme, and the vulnerabilities of people likely to be affected by development — indicate that charter cities would be little more than predatory, privatized utopias, with far-reaching, negative implications for Honduran sovereignty and the well-being of poor communities.”

    The U.S. has coupled its neoliberal economic prescriptions with its drug war security framework in other countries in the Americas, including at home, with disastrous results. While the vote against the PMOP this weekend was an important victory for human rights advocates, from the perspective of many, much work remains to be done. It appears that the precarious situation of Honduras’ most vulnerable citizens could get worse before it gets better.

    Once again:

    According to reporting by Danielle Marie Mackey for the as last month, here is how the project works: “An investor, either international or local, builds infrastructure…The territory in which they invest becomes an autonomous zone from Honduras…The investing company must write the laws that govern the territory, establish the local government, hire a private police force, and even has the right to set the educational system and collect taxes.”

    That does indeed sound nightmarish. But in case that didn’t send a strong enough chill down your spine, here’s a bit more on how the rules of how that nightmare is supposed to operate. Yes, nightmares have rules. The scariest kinds of nightmares. The nightmares you can’t wake up from:

    Foreign Policy

    Under New Management

    The coast of Honduras could be the site of a radical experiment: one in which foreign investors bankroll a quasi-sovereign city. Backers say it will lift the region out of poverty — but residents are anything but convinced.

    By Maya Kroth
    September 1, 2014

    Amapala, Honduras – In a cinder-block building at the end of a narrow, washed-out dirt road, Alberto Cruz, the mayor of Amapala, wipes the sweat from under his white baseball cap. The July heat is oppressive, and beads of moisture form as Cruz faces the insistent stares of hundreds of his constituents, gathered for a town-hall meeting. People fill the small room before him and spill out into an adjacent, dusty lot, peering in through metal window screens. They are eager to pepper him with questions about a provocative new law that could change their lives permanently.

    “I’m not here to defend or condemn a law that I didn’t make or a project that I don’t know about,” Cruz tells the crowd. “But we need to be open to investment.” In a cinder-block building at the end of a narrow, washed-out dirt road, Alberto Cruz, the mayor of Amapala, wipes the sweat from under his white baseball cap. The July heat is oppressive, and beads of moisture form as Cruz faces the insistent stares of hundreds of his constituents, gathered for a town-hall meeting. People fill the small room before him and spill out into an adjacent, dusty lot, peering in through metal window screens. They are eager to pepper him with questions about a provocative new law that could change their lives permanently.

    “I’m not here to defend or condemn a law that I didn’t make or a project that I don’t know about,” Cruz tells the crowd. “But we need to be open to investment.”

    “This law was passed without consulting anyone here,” protests one man in the crowd.

    “We’re only fishermen and farmers,” says another, rising from his chair and stabbing the air with an angry finger. “We won’t stand for the invasion of these model cities created for the benefit of the rich!”

    The room erupts in applause.

    Here, in a poor corner of one of the poorest countries in the Americas, a radical economic and political experiment may soon be underway. In May, the Supreme Court of Honduras ruled in support of a constitutional amendment and attendant statute that allow for the creation of “zones for economic development and employment” (ZEDEs). Sometimes called “charter cities” or “model cities,” these zones would be quasi-sovereign entities built on Honduran soil with backing from foreign investors. Unlike the world’s thousands of “special economic zones,” such as Shenzhen in China, which attract foreign direct investment through tax breaks and other flexible economic policy measures, ZEDEs would operate with “functional and administrative autonomy that includes the functions, powers, and duties” of ordinary cities, according to the constitutional amendment. They could enact their own laws, set up their own courts, even establish their own police forces.

    The first zone may be built on southern Honduras’s picturesque Gulf of Fonseca, specifically in the small province of Valle (home to some 176,000 people, according to a recent estimate). The Honduran government has mentioned Amapala, which comprises several islands, as a potential charter-city site, and it is among the Valle municipalities that the Korea International Cooperation Agency (KOICA), South Korea’s bilateral aid bureau, is analyzing in a $4 million feasibility study.

    ZEDE supporters — both in Honduras and around the world, including famous free market champions in the United States — cheer what they see as a way to bring investment, jobs, and the rule of law to parts of Honduras, a notoriously unstable country. And admittedly, with the world’s highest murder rate, rampant legal impunity and poverty, and tens of thousands of people fleeing across its borders, it’s hard not to look at Honduras and think that something drastic needs to be done.

    But are charter cities too drastic? Countless questions about how they would operate remain unanswered because the government enacted the ZEDEs legislation with minimal transparency and has offered little information since. Critics worry that evidence to date — the government’s opaque approach, the ZEDEs’ undemocratic features, the cast of characters backing the scheme, and the vulnerabilities of people likely to be affected by development — indicate that charter cities would be little more than predatory, privatized utopias, with far-reaching, negative implications for Honduran sovereignty and the well-being of poor communities. Diminishing confidence further, the recent Supreme Court decision is mired in controversy and allegations of corruption.

    In the town-hall meeting, people’s anxiety is palpable. Some want more honest talk from the government about what ZEDEs would mean for them. Others, however, insist they will never allow charter cities in their backyards.

    “This is the most dangerous thing I’ve read in my life,” says one woman, holding up a well-worn photocopy of the ZEDEs legislation. “The whole law is a deception.”

    Every morning in Tegucigalpa, economist Fernando García buys at least three of the capital’s four daily newspapers, clipping stories and filing them in binders organized by subject. His ZEDEs binder is fat with more than 100 pages of stories and legal documents, including a copy of La Gaceta, the official state paper, from Feb. 11, 2014 — the day the names of the 21 members of the Committee for the Adoption of Best Practices (CAMP) were published. Under the new charter-city law, the CAMP is the successor to the Transparency Commission; its functions include approving regulations and recommending judges in a ZEDE, and setting aside areas for a zone’s future expansion, in accordance with an undefined set of “international best practices.”

    “I had an expectation that they would be people with great international renown and importance, but when you investigate,” García says, that isn’t the case.

    The CAMP is stacked with free-marketeers, mostly non-Honduran: Barbara Kolm, the libertarian president of Austria’s Hayek Institute; Cato Institute senior fellow Richard Rahn; Ronald Reagan’s son Michael; Mark Skousen, producer of the libertarian FreedomFest conference; U.S. anti-tax crusader Grover Norquist; and even a member of the Habsburg family. A subset of this committee, a five-member permanent commission, will handle the finer details of zone oversight. A technical secretary, approved by the CAMP, will run each zone day to day. Critically, unlike with REDs, there is no legal provision outlining how a local population would ultimately gain control of a ZEDE.

    García and other critics worry that the backing of free-marketeers and the lack of democratic safeguards indicate that charter cities will cater to their corporate benefactors. “They may establish any rules and regulations that its governing panel determines are right, without submitting them to the entire population for approval,” Russell Sheptak and Rosemary Joyce of the University of California, Berkeley, and co-authors of the Honduras Culture and Politics blog, wrote in an email. Even some vocal supporters of charter cities as a general concept are worried about what might take shape. Romer, for one, says he is “concerned that the far-reaching delegation of what really are powers of government to private entities and foreign, private individuals is taking place without sufficient debate” between the government and critics of ZEDEs.

    Klugmann, who is one of the permanent commission’s co-chairs and lives in Tegucigalpa, argues that dissenters who don’t propose better ideas are just defenders of the status quo. “What if we say, ‘OK, done’? Everybody on this committee resigns; the government repeals the law,” he says. “Then where are we?”

    A plebiscite is technically required for a charter city to be created. There are exemptions, however, for areas with low population density, including some along Honduras’s coasts — places that are “too empty to fight over,” Klugmann says.

    Currently, there is strong momentum for a charter city in Valle province, which includes exempted areas. In no small part this is because South Korea’s KOICA is conducting the feasibility study, due out in September, and creating a master plan for a potential ZEDE there. In June, a delegation of Honduran officials, including Mayor Cruz and other local leaders, traveled to Seoul, where, among other things, they heard a presentation on how to work with investors. “They also talked about the complex issue of financing and the efforts that the Honduran government must make” to find investment partners, says José Alfredo Saavedra, a Valle congressman. “They were clear that they have an interest in Valle because Honduras is the center of Central America and Valle is the path from the Pacific to the Atlantic.”

    Yes, even Paul Romer, the guy behind this whole charter city idea, is “concerned that the far-reaching delegation of what really are powers of government to private entities and foreign, private individuals is taking place without sufficient debate” between the government and critics of ZEDEs. Hopefully he’ll have some luck taking his concerns to the Committee for the Adoption of Best Practices (CAMP) that regulates best practices for the ZEDEs, although it didn’t sound like CAMP was stacked with people prone to being concerned about things like ‘sufficient debate between the government and critics of ZEDEs’:

    The CAMP is stacked with free-marketeers, mostly non-Honduran: Barbara Kolm, the libertarian president of Austria’s Hayek Institute; Cato Institute senior fellow Richard Rahn; Ronald Reagan’s son Michael; Mark Skousen, producer of the libertarian FreedomFest conference; U.S. anti-tax crusader Grover Norquist; and even a member of the Habsburg family. A subset of this committee, a five-member permanent commission, will handle the finer details of zone oversight. A technical secretary, approved by the CAMP, will run each zone day to day. Critically, unlike with REDs, there is no legal provision outlining how a local population would ultimately gain control of a ZEDE.

    Wow, given that list of CAMP members, the Habsburg on the board, Gabriela von Habsburg, just might be the best bet at lending a sympathetic ear to Romer’s concerns and that’s mostly due to the fact that she appears to be focused on revitalizing her family’s power and influence and maintaining the appearance of decency as opposed to just trying to make a lot of money or create a more horrible world on principle like all the Libertarians involved. And when the aristocrats are your best bet, you already lost.

    So, all in all, it’s quite a nightmare.

    Posted by Pterrafractyl | February 2, 2015, 1:44 pm
  14. A number of eyebrows were raised when Rudy Giuliani recently asserted that President Obama didn’t love America, which was a little eyebrow-raising since Giuliani has been saying stuff like that for years and most Republicans agree with him anyways and want to see more.

    No, the real eyebrow-raiser in Rudy’s latest contribution the GOP’s Neverending Evergrowing Histrionics Parade is that he included the suggestion that President Obama was driven by a sense of anti-colonial sentiments. Not that we shouldn’t expect Republicans to accuse Obama of desiring to destroy the United States out of a desire for anti-colonial revenge. We should expect that. But if anyone has a reason to avoid ‘going there’ with the anti-colonial stuff, it’s Rudy Giuliani:

    The Nation
    Giuliani’s Love for His Country Is Equal to the Money He Makes
    Tim Shorrock on February 25, 2015 – 12:55 PM ET

    Over the last few days we’ve seen a slew of arrows directed at Rudy Giuliani for the hateful, derisive comments he made about Barack Obama’s alleged lack of “love for his country.” There’s even been a few grunts of dissatisfaction from fellow Republicans worried about the impact of Giuliani’s outlandish comments on the 2016 elections.

    Few commentators, however, have seen his differences with the president in economic terms.

    That’s a mistake: Giuliani’s disgust with our first African-American president is deeply rooted in his own security-business interests, which depend on magnifying the potential danger from terrorism and gang violence to the highest extent possible.

    Seen in this context, the Giuliani flap is a simple case of a reactionary businessman angry that his market is threatened by a rival. Kind of like the Mafia.

    Specifically, Giuliani seems deeply concerned about Obama’s more conciliatory approach to terrorism and crime, particularly his view (albeit somewhat naïve) that some Islamists may have economic grievances with their Middle East or European governments. That runs counter to the aggressive, warlike tactics Giuliani sells to private clients, oligarchies and governments, especially overseas.

    Last Thursday, Obama explained his views in a speech to a White House summit on “Countering Violent Extremism” this way:

    “Terrorist groups are all too happy to step into a void. They offer salaries to their foot soldiers so they can support their families. Sometimes they offer social services—schools, health clinics—to do what local governments cannot or will not do,” Obama added. “So if we’re going to prevent people from being susceptible to the false promises of extremism, then the international community has to offer something better.”

    To Giuliani, this smacks of treason—or, as he calls it, “ socialism and anti-colonialism.” His approach is always to use the big stick.

    “The best answer to terrorist groups and gangs is to confront them,” Giuliani likes to say in his many speeches, according to a recent profile in The Economist. In an address last year to a conservative business association in Guatemala about crime, for example, he warned that “you are not going to solve it with schools, libraries, nice neighborhoods and sports teams. You have to emphasize law enforcement.”

    It’s all part of the Giuliani method: cultivating fear and loathing to market himself as the savior of good, old-fashioned imperialist values. For Rudy, that means one thing: the greater the threat or the instability, the more he makes.

    Since almost the minute he left office, Giuliani has been using the global fame he acquired on 9/11 and its aftermath to rake in millions of dollars from consulting with “corporations, individuals, and governments” (as his website describes his client base) on security matters, financial audits and crisis management.

    Corporations that have sought his help over the years include Aon, the global risk-management firm that lost 175 people in the World Trade Center attack; Entergy, the nation’s largest operator of nuclear power plants (and, ironically, the number one corporate donor to President Obama’s 2008 presidential campaign; and Delta Airlines and US Airways.

    Other prominent clients include TransCanada, the developer of the controversial Keystone XL Pipeline Project (which Obama opposes, further damaging Rudy’s economic interests); Purdue Pharma, which manufacturers Oxycontin, once Rush Limbaugh’s drug of choice: Nextel, the wireless services company now owned by Sprint; Shell Oil; and the Government of Mexico.

    His latest big-name client is Uber, the Internet ride company that’s drawn fire from police departments around the country for hiring drivers who’ve assaulted passengers.

    But ironically, as his recent stop in Guatemala illustrates, much of his money is now being made overseas, in places like El Salvador, where a right-wing business association has brought him to advise on curbing crime. Apparently Giuliani himself loves the Latin American oligarchies far more than he loves the American elite.

    Wayne Barrett, the New York Daily News reporter who wrote a devastating biography of Giuliani, laid out the full spectrum of the hypocricy in a rip-roaring commentary last week:

    Rudy said Obama is “more of a critic than he is a supporter of America,” an odd admonition coming from a security salesman who told a Tijuana audience of consulting clients in October: “America needs to stop lecturing other countries and start working on how to stop drug use in its citizens,” shifting the onus for the Mexican drug trade onto us. He’s a consultant in Mexico, El Salvador, Honduras and Guatemala, the very countries where right-wing governments, traffickers and/or gangs are driving children and teenagers across the U.S. border.

    He was a consultant for the government of Qatar, the country his friend and FBI director Louis Freeh accused of hiding 9/11 mastermind Khalid Sheik Mohammed before the attack. That’s the ultimate triumph of money over memory, since he’s still talking, as recently as a week ago, about the 10 friends and 343 firefighters he lost on 9/11.

    But here’s the irony: foreign governments and business groups make up his primary market after a series of failed business deals and partnerships in New York and Washington since he left the mayor’s office in 2001. The overwhelmingly foreign nature of his business is revealed in an statistic embedded in the official biography of CEO John P. Huvane , a twenty-one-year veteran of the NYPD. Huvane’s work for Giuliani Security & Safety, it states, “has taken him on over 280 international trips, in 56 different countries.” The company’s news feed offers more details).

    Rudy loves the oligarchies

    Another new Giuliani-Schwartz subsidiary, NSM Surveillance, develops “surveillance and sensor” systems to federal agencies and the military to “provide situational awareness to the war fights, the investigator, the commander and/or senior leadership to enable effective tactics and decision-making.”

    Which brings us to Giuliani’s work with El Salvador’s largest business association, the National Association of Private Enterprise, or ANEP.

    For anybody who lived through the 1980s, the very thought of a Salvadoran business association brings to mind the horrific repression of that era. From the late 1970s to the early 1990s, tens of thousands of labor and social activists were murdered by death squads funded by El Salvador’s business elite. The United States was directly involved, sending Special Forces and the CIA to help the Salvadoran government crush the leftist resistance.

    Last March, Salvador Sánchez Cerén, a former guerrilla commander with the Farabundo Martí National Liberation Front, was narrowly elected president. A key part of his platform was to defuse crime by negotiating with the country’s powerful gangs. But his conciliatory approach has not gone down well with Salvador’s business community. So in December, ANEP hired Giuliani as a security consultant. He and CEO John Huvane made their first trip in January, where the “drew up a plan” for El Salvador’s crime problem. They are doing similar work in Honduras, now ruled by a right-winger who seized power in a 2009 coup.

    On Monday, Hizzoner tried to back down from his incendiary comments about Obama in an op-ed in The Wall Street Journal. But there’s not much he can do to repair the damage to his image—except, perhaps, in the far-right netherworld of Fox News and the 1 percent of Central America.

    That’s right, in addition to sharing his wisdoms with El Salvador, Rudy Giuliani has been hired by the government of Honduras to presumably tell them things like, “you are not going to solve it with schools, libraries, nice neighborhoods and sports teams. You have to emphasize law enforcement,” while they set up their new privately-owned charter cities. There’s nothing colonial about that!

    And he’s already started issuing a number or similar recommendations to some of Honduras’s neighbors. For instance, let’s take a peek at Rudy wielding his social healing magic in Guatemala:

    Bloomberg Business
    Giuliani Lends Crime-Fighting Advice to Guatemala

    by Michael D McDonald
    4:08 PM CDT
    October 8, 2014

    Oct. 8 (Bloomberg) — Former New York City Mayor Rudy Giuliani landed in one of the world’s most violent cities with advice on how the government could fight crime that has helped fuel a surge in child migrants to the U.S.

    Speaking in Guatemala City, Giuliani said stronger law enforcement should trump social programs when trying to get spiraling crime rates under control. With a population of 14 million, Guatemala had about 17 homicides per day last year, compared with less than one per day for New York, population 8.4 million, over the same period.

    “My top recommendation is to set up a system to measure the effectiveness of your police, your prosecutors and your prisons,” Giuliani, 70, said today at a forum sponsored by the not-for-profit Guatemalan Development Foundation. “That helps give you the right answers to questions like how many more police do you need. At what level should they be compensated so you can reduce the level of corruption.”

    Along with El Salvador and Honduras, Guatemala forms part of Central America’s “northern triangle,” where street gangs with ties to Mexican drug cartels extort businesses and kidnap people for ransom, fueling the highest homicide rates in the world, according to the United Nations. That has prompted thousands of unaccompanied children from the region to trek toward the U.S., often led by smugglers, in the hopes of finding refuge.

    ‘Emphasize Enforcement’

    Giuliani said he spent four months reviewing Guatemalan crime data and practices before visiting the country today. The country needs to strengthen prosecutors and boost its conviction rate for murders, which he said stood at 10 percent.

    “When you have a tremendous amount of crime in your society, you are not going to solve it with schools, libraries, nice neighborhoods and sports teams,” Giuliani said. “You have to emphasize law enforcement. As soon you get the crime down, the next thing you do is build up the social programs. That’s when you create more jobs, better neighborhoods, better schools.”

    As mayor from 1994-2001, Giuliani cut crime 63 percent and led the city through the Sept. 11 terrorist attacks. Current New York Mayor Bill de Blasio tapped Giuliani’s first police commissioner, William Bratton, to lead the force after taking office in January.

    “When you have a tremendous amount of crime in your society, you are not going to solve it with schools, libraries, nice neighborhoods and sports teams,” Giuliani said. “You have to emphasize law enforcement. As soon you get the crime down, the next thing you do is build up the social programs. That’s when you create more jobs, better neighborhoods, better schools.”

    Given New York City’s historic drop in crime during Giuliani’s administration (which also took place everywhere else in the world for reasons we have yet to identify), we should probably expect Giuliani’s advice to Honduras to involve a heavy emphasis on cracking down on crime. But Hondurs should wait until after it’s solved its endemic problems with rampant crime before it makes investments in things like better schools or more jobs according to Rudy.

    You can see why the Honduran government would love to pay for his views on these kinds of topics. Especially since he’s calling for the same failed strategy that has worked out so well for Honduras thus far…

    Alternet
    Nightmare libertarian project turns country into the murder capital of the world
    Even Ayn Rand would be taken aback

    Mike LaSusa
    Thursday, Jan 29, 2015 10:45 AM CST

    Since the 2009 coup against President José Manuel Zelaya and subsequent election of Porfirio “Pepe Lobo” Sosa and his favored successor Juan Orlando Hernandez, Honduras has embarked on a devastating neoliberal economic program that has contributed to its status as one of the poorest and most unequal countries in the region. The privatization of Honduran society has been accompanied by a militarization of public security efforts in the country, both of which have been fueled by a network of U.S.-supported policies and programs.

    Despite the country’s crackdown on crime, violence in Honduras has skyrocketed in recent years. Honduras now has the world’s second-highest national murder rate and is home to two of the world’s five most violent cities. Unchecked gang activity has contributed to widespread corruption and impunity within police and government institutions.

    This weekend, a coalition of leftist opposition parties came together temporarily to defeat a proposed amendment to the Honduran constitution that would have given permanent status to the country’s militarized police force, known as the Policía Militar de Orden Público, or PMOP.

    This “elite” police unit, which serves under the direct command of the presidency, is intended to support President Hernandez’s heavy-handed crime reduction efforts. President Hernandez created the PMOP shortly after coming to office in 2014, with support from a legislature dominated by his conservative National Party. The Hernandez administration’s police militarization efforts also had the backing of the country’s business sector.

    According to one study, in 2013, only 27 percent of Hondurans expressed confidence in the civilian police while 73 percent thought the military should be involved in policing efforts. Nevertheless, both the military and the police have a long history of corruption and criminality as well as abuses committed against civilians in Honduras.

    The PMOP plan isn’t the only initiative with dubious implications for human rights put forth by Hernandez’s government. Honduras is also experimenting with Zonas de Empleo y Desarrollo Económico (special employment and economic development zones), also known as ZEDEs or “charter cities.”

    According to reporting by Danielle Marie Mackey for the New Republic last month, here is how the project works: “An investor, either international or local, builds infrastructure….The territory in which they invest becomes an autonomous zone from Honduras…The investing company must write the laws that govern the territory, establish the local government, hire a private police force, and even has the right to set the educational system and collect taxes.”

    An earlier article by Erika Piquero at Latin Correspondent described the law as “allowing the corporations and individuals funding the ZEDEs to dictate the entire structural organization of the zone, including laws, tax structure, healthcare system, education and security forces. This kind of flexibility is unprecedented even in similar models around the world.”

    George Rodríguez reported for the Tico Times that the plan was previously challenged and ruled unconstitutional in Honduras’ supreme court, but Hernandez “twisted arms, had the [dissenting] judges removed, and brought in obedient replacements.” Hernandez then re-tooled the bill and pushed it through the congress.

    As Mackey reported, “The ZEDE’s central government is stacked with libertarian foreigners,” including a former speechwriter for presidents Ronald Reagan and George Bush Sr., conservative political operative Grover Norquist, a senior member of the Cato Institute think tank, and Ronald Reagan’s son Michael, as well as “a Danish banker, a Peruvian economist, and an Austrian general secretary of the Friedrich Hayek Institute.”

    According to the official ZEDE website, the zones place a heavy emphasis on security, offering “a 21st century, business-efficient, non-politicized, transparent, stable, system of administration, plus a special police and institutional security to overcome regional issues and meet world standards.” A new bill introduced by Hernandez minutes after losing the vote this weekend would allow municipalities and ZEDEs to request that the PMOP or other branches of the Armed Forces provide them with security services.

    Honduras’ continuing militarization of security efforts appears to have the backing of the United States, which has provided more than $65 million in security aid to Honduras since 2008. President Hernandez has also frequently with high-level U.S. officials for talks on security and migration issues. As the U.S. amassador’s Twitter account wrote on Friday, “U.S. cooperation with Honduras’ fight against narcotrafficking and crime is strong and continuing.”

    However, contrary to commonly held perceptions, most of the violence in Honduras is not caused by large, transnational drug trafficking organizations, but rather by smaller gangs fighting over territory (including street corners, neighborhoods and even prisons) in which to conduct extortion rackets, small-scale smuggling efforts and prostitution operations among other illegal activities.

    Privatization and paramilitarization are also concerns in Honduras, with one recent report estimating that there are three times as many private security guards as police in Honduras, up to a third of whom work for unregistered companies, some of whom reportedly employ off-duty police officers looking to supplement often-meager salaries.

    While international investors may be seeking to capitalize on Honduras’ voluntary surrender of its national sovereignty to make a “legal” profit, even more nefarious actors are already operating in a completely unregulated, free-market criminal underworld in Honduras—one that has helped turn the country into the world’s “murder capital” in recent years.

    Even Honduran schools have become scenes of rampant gang activity. In a recent chilling article for the Associated Press, journalist Alberto Arce wrote that gang members “rely on kids to do much of their illegal grunt work, knowing that even if they get caught, they won’t face long jail sentences…School administrators say that teachers generally are more afraid of the gangs than the remaining students are, because so many children admire gangsters.” Arce also writes that “a 14-year-old can earn $500 a month in prostitution — more than a police officer’s salary.”

    Yes, even before hiring Rudy Giuliani for criminal advise, Honduras was already years into an effort to privatize security forces, militarize the police, and cut social spending. It’s almost as if Honduras’s ruling National Party has been listening to Rudy all along.

    Posted by Pterrafractyl | February 25, 2015, 11:37 pm
  15. Check out Rand’s Grand Plan for the US: turn the 10 most impoverished states into “Economic Freedom Zones”:

    Salon
    Rand Paul’s terrifying vision for America: The truth about his plan for “Economic Freedom Zones”
    The senator’s detailed economic policy agenda is like something out of an Ayn Rand fever dream
    Matthew Pulver

    Tuesday, Apr 7, 2015 04:39 PM CST

    Presidential campaigns are usually long on sloganeering and short on substance. The first Republican candidate out of the gate for 2016, Texas Sen. Ted Cruz, gave an announcement speech asking listeners to “imagine” Cruz’s America — the word appears nearly 40 times in the address — which is actually great advice, because he sure as hell wasn’t describing his plans in any detail.

    Unlike Cruz, and many of his eventual contenders for the nomination, Sen. Rand Paul, who announced his candidacy on Tuesday, has offered up a detailed vision for how to change America: his “Economic Freedom Zones” plan, an exhaustive 50-page blueprint for giving the country a radical free-market face lift. The plan, which was originally introduced as legislation in 2013, was championed by Paul’s wife Kelley during his campaign announcement today, while the senator himself alluded to the bill as a centerpiece of his economic vision.

    Paul also roused the crowd with mention of his “Read the Bill” resolution, which would mandate that members of Congress be permitted sufficient time to read each piece of legislation. Paul is a details guy, after all. His campaign is already distinct in his willingness — or eagerness, even — to discuss the details of his vision. And, heck, the “Read the Bill” idea is not a bad one. So, why not take a closer look at those “Economic Freedom Zones” Paul is so high on.

    Paul’s big idea is to take the country’s most economically distressed places and use them as a laboratory for experiments in removing government and allowing hyper-capitalism to govern. Detroit is the candidate that leaps to mind, especially since Paul chose the old Motor City as the backdrop for his public introduction of the bill.

    But while Detroit is the standout candidate for the “bankrupt or economically distressed areas” Paul’s bill aims to radically change, the criteria are written loosely enough to make vast amounts of the country eligible for so-called “economic freedom.” In the end, selection can be at the discretion of the Treasury Secretary, a presidential appointment. Cities, counties and municipalities don’t have to be in bankruptcy like Detroit but simply be “at risk of insolvency.” But who isn’t at risk of insolvency these days? Then the bill’s criteria widen even further: “An eligible entity shall be designated as a low economic or high poverty zone if…the entity is located within one of the 10 most impoverished States.”

    This is not a carefully targeted experiment. Vast sections of the country could be targeted and made into these zones. I guess if you’re in the business of bestowing freedom, why not try to give to as many people as possible, right?

    So what happens in these zones?

    Well, for one, taxes for the rich are slashed to an insane rate of 5 percent. That goes for corporations, too: 5 percent. It’s 5 percent for everybody, basically, far lower than the already ambitious 17% flat tax he proposes for everyone else. Capital gains taxes are essentially nonexistent in the zones, and even payroll taxes are reduced substantially to 4.2% for both employer and employee. You might ask, “But isn’t that how Social Security is funded, through payroll taxes?” Yes, but the revenue lost by slashing social security inputs in the zones is made up by the rest of us, according to the bill. Because freedom.

    Of course, if taxes just aren’t your thing at all, zone inhabitants of means can have their charitable contributions counted as tax credits, not deductions. Give a few thousand to American Legislative Exchange Council (ALEC) this year? Consider that amount taxes paid!

    You’ve never really been free until you cool off from a sweltering day under a smog-choked sky by hopping in the nearest polluted waterway. The Clean Air and Clean Water Acts are effectively made toothless and null in “Freedom Zones,” with crucial regulatory linchpins expertly eliminated in the bill. The Wild and Scenic Rivers Act looks to be toast as well. Also, any National Heritage Area, which includes our many Native American sites, lose any protection in a zone designated for “freedom”; they are now simply real estate.

    Paul’s bill embarks on an ambitious school privatization plan in the zones, because freedom for children is exposing them to the cold and indifferent winds of the capitalist market in their schooling. Nothing says freedom like showing up to your school bright and early to find it shuttered because the hedge fund that owns it made some bad bets. But Paul goes all in, priming the privatization pump by mandating that local school money–tax dollars–be funneled to for-profit schools if students choose to exit the public system. And predictably, up to $5,000 of tuition paid to a for-profit school is a tax credit, not a deduction, in the zone.

    So what if all this “freedom” doesn’t work? What if taking insolvent governments and the nation’s most desperate populations and using them as insane laboratories ends up blowing up? Paul’s bill takes care of that in its very first substantive section: No bailouts, guaranteed or discount loans, or any sort of financial assistance from the federal government are permitted once a place is made into a freedom zone.

    The neoliberal experiment in hyper-capitalism and the erosion of the state, which used to be run in places like Chile, after Washington helped install a dictator, has now come home. The vision outlined in Paul’s bill is nothing less than an upending of the American ideal–a republic of citizens–and the creation of a republic of property, with the state receding into inconsequentiality.

    To summarize:

    So what happens in these zones?

    Well, for one, taxes for the rich are slashed to an insane rate of 5 percent. That goes for corporations, too: 5 percent. It’s 5 percent for everybody, basically, far lower than the already ambitious 17% flat tax he proposes for everyone else. Capital gains taxes are essentially nonexistent in the zones, and even payroll taxes are reduced substantially to 4.2% for both employer and employee. You might ask, “But isn’t that how Social Security is funded, through payroll taxes?” Yes, but the revenue lost by slashing social security inputs in the zones is made up by the rest of us, according to the bill. Because freedom.

    Of course, if taxes just aren’t your thing at all, zone inhabitants of means can have their charitable contributions counted as tax credits, not deductions. Give a few thousand to American Legislative Exchange Council (ALEC) this year? Consider that amount taxes paid!

    Wow, that idea sounds…uh…awesome!

    Part of the fun of this plan is when you factor in all the other massive tax and spending cuts he’s proposing in addition to the “Economic Freedom Zones” scheme, plus his calls for balancing the budget with vastly reduced revenues, we can’t really just look at today’s top ten poorest states. We won’t really know which states end up being the 10 poorest until after President Paul nukes the economy, although since the top 10 poorest states are also heavy recipients of Federal spending odds most of today’s poor 10 states would still be on the list post-Paulpocalypse.

    Still, there is kind of a fun lottery element to this for all the people living in, say, the 20 poorest states. Will they get knocked down into the poorest 10 and “Freedom Zoned” after Rand guts the Federal budget or not? We’ll just have to wait and let the chips fall where they may. It’s like a special lottery for the states!

    Posted by Pterrafractyl | April 9, 2015, 12:06 pm
  16. Paul Krugman had a recent post about a twitter exchange between Brad DeLong (a sane economost) and James Pethokoukis (an American Enterprise Institute economist, so…) over why Republicans won’t acknowledge that Ben Bernanke overall helped the economy during his tenure as the head of the Federal Reserve. Pethokoukis’ reply?

    The New York Times
    The Conscience of a Liberal
    John Galt Hates Ben Bernanke

    Paul Krugman
    April 3, 2015 5:53 pm

    h: I see that there was a Twitter exchange among Brad DeLong, James Pethokoukis, and others over why Republicans don’t acknowledge that Ben Bernanke helped the economy, and claim credit. Pethokoukis — who presumably gets to talk to quite a few Republicans from his perch at AEI — offers a fairly amazing explanation:

    B/c many view BB as enabling Obama’s spending and artificially propping up debt-heavy economy in need of Mellon-esque liquidation

    Yep: that dastardly Bernanke was preventing us from having a financial crisis, curse him.

    Actually, there’s a lot of evidence that this was an important part of the story. As I pointed out a couple of months ago, Paul Ryan and John Taylor went all-out conspiracy theory on the Bernanke Fed, claiming that its efforts were not about trying to fulfill its mandate, but rather that

    This looks an awful lot like an attempt to bail out fiscal policy, and such attempts call the Fed’s independence into question.

    Basically, leading Republicans didn’t just expect a disaster, they wanted one — and they were furious at Bernanke for, as they saw it, heading off the crisis they hoped to see. It’s a pretty awesome position to take. But it makes a lot of sense when you consider where these people were coming from.

    Yes, as has been obvious for ever since the financial crisis started in 2008, the GOP has been fuming that the US hasn’t been forced to go though a “Mellon-esque” national fire sale. And why would they be fuming about it? There’s so much more to liquidate now than in the early 1930’s! Like the New Deal and social safety nets! Those can be liquidated.

    But keep in mind that folks like Pethokoukis don’t just want to see a Mellon-esque liquidation that dismantles the social safety net. That’s just a start. Why not sell of the poor cities to the wealthier ones?

    The National Review
    Remake Detroit, or Empty It

    We should restructure its entire government into a free-enterprise zone, or encourage people to leave.
    by James Pethokoukis July 22, 2013 12:00 AM

    If Detroit were its own city-state — a bizarro version of prosperous Singapore — it would be a place the U.S. State Department would regularly issue travel warnings about, where “long-term, protracted conditions make a country dangerous or unstable.” Detroit’s murder rate, for instance, would be higher than that of all but a handful of other countries. The Democratic Republic of Detroit would also be relatively poor, with annual per capita income of around $15,000, making it a middle-income country like Mexico.

    Except Detroit would be a nation in decline rather than on the rise. Detroit would be a nation literally dying off, its shrinking population abandoning territory the central government could no longer afford to supply with basic services. Oh, yeah, its disastrous public finances. Well, maybe those would be a minor bright spot in this alternate reality: Detroit could always pay creditors, at least for a while, with devalued Fords, the local currency named after one of its founding fathers.

    Eventually, however, this shrunken, crime-ridden, impoverished city-state — with no one willing to bail it out — might be forced to make a choice: capitalism or collapse. Out of options, it might just make the China choice. A key part of Deng Xiaoping’s pro-market economic reforms in 1979 was the creation of four Hong Kong–inspired “special economic zones” of liberalized labor laws and tax incentives to attract foreign investment. One of these little pockets of economic freedom, Shenzhen, located just north of Hong Kong itself, is now a center for technology manufacturing and one of China’s richest cities.

    The stunning success of China’s economic experiment showed economist Paul Romer how better rules and institutions could work wonders for economic growth. Romer has proposed that developing nations allow the creation of “charter cities,” where the host nation would provide a large, uninhabited piece of land to be governed by market-friendly rules and perhaps run by a foreign government. Workers, businesses, and investors from anywhere could move in and out freely. Basically, Hong Kong in a box, ready for delivery. For example, instead of giving foreign aid to some poor African nation such as Mauritania, New Zealand and Norway might partner together to run a charter city there. With good governance in place and cheap land and labor available, the theory goes, private investment would pour in.

    Although Romer’s concept remains just a fascinating thought experiment — a deal with Honduras fell through in 2012 — and was intended for what used to be called “Third World nations,” why not turn abandoned Detroit into New Detroit, a business-friendly charter city where taxes are low and regulation light? Governance could be guaranteed by some outside entity. Although neighboring, well-run Canada is an obvious choice, maybe an American city could play the role in exchange for a cut of future tax revenue. Reason Foundation analyst Shikha Dalmia suggests Houston as a candidate.

    If Detroit can’t fix itself, maybe Washington could help, with an idea proposed by economist Enrico Moretti, author of The New Geography of Jobs: People living in areas of high unemployment, such as the Motor City, could receive part of their unemployment check in the form of a relocation voucher. The idea might even inspire a film, Escape from Detroit.

    Yes, you read that right:

    Although Romer’s concept remains just a fascinating thought experiment — a deal with Honduras fell through in 2012 — and was intended for what used to be called “Third World nations,” why not turn abandoned Detroit into New Detroit, a business-friendly charter city where taxes are low and regulation light? Governance could be guaranteed by some outside entity. Although neighboring, well-run Canada is an obvious choice, maybe an American city could play the role in exchange for a cut of future tax revenue. Reason Foundation analyst Shikha Dalmia suggests Houston as a candidate.

    Hey, yeah, why don’t we hand over Detroit to Houston (which would presumable have “Emergency Financial Manager” status or something), then have Houston turn it into a low-tax/no regulation business haven, and Detroit can pay Houston back for the favor with a cut of Detroit’s future tax revenue.

    Also, the government should ‘encourage’ Detroit’s unemployed residents to just leave by converting some of their unemployment checks into a relocation voucher. Although, aren’t jobs supposed to be created for them under this scheme? Isn’t that the whole point of this scheme? No?

    Posted by Pterrafractyl | April 10, 2015, 5:22 pm
  17. With an election just around the corner, Turkey’s main opposition party, the CHP, has a plan. A megaplan:

    The Gaurdian
    Turkey’s main opposition party plans new megacity in centre of country

    Matching president Recep Tayyip Erdogan’s ‘crazy projects’, the Republican People’s party said the city would create 2.2 million new jobs over two decades

    Friday 22 May 2015 00.39 EDT

    Trying to outflank the ruling party’s ambitious infrastructure election promises, Turkey’s main opposition party on Thursday unveiled a plan to build a new megacity in the centre of the country.

    Upping the ante on president Recep Tayyip Erdogan’s self-proclaimed “crazy projects”, the Republican People’s party (CHP) said the new city would create 2.2 million new jobs over the next two decades.

    “The project would give a great push to the Turkish economy and would make our country an economic actor in the region that cannot be ignored,” CHP leader Kemal Kilicdaroglu said in Istanbul.

    He said the new city would eventually have three million inhabitants and could start working as soon as 2020.

    At a crossroads between Europe and Asia, the city would be the “project of the century”, Kilicdaroglu said.

    In order to realise the project, $160 billion in foreign and Turkish investments would be needed over the next 20 years, he added.

    Kilicdaroglu did not give the precise location of the new city but said it would be at the geographical heart of Turkey which would put it in Anatolia east of Ankara.

    CHP, the party of modern Turkey’s founder Mustafa Kemal Ataturk, has consistently failed to make inroads at elections since the ruling Islamic-rooted Justice and Development party (AKP) swept to power in 2002.

    The project received a mixed reaction on social networks with some applauding its ambition but others saying CHP would have to do more to beat.

    “At last a smart project that does not consist of bridges, roads and tunnels only,” tweeted Zafer Gursoy.

    But user @doctorhan said: “This is what happens when you feel obliged to promise something. Try harder.”

    Polls show AKP is almost certain to again win the most seats in the 7 June election but CHP is hoping to erode its majority and prevent it from achieving the constitutional majority it wants to create a new presidential system in Turkey.

    Erdogan, who co-founded the AKP and served over a decade as premier before becoming president in 2014, has put ambitious infrastructure projects at the heart of his drive for a “new Turkey”.

    The authorities have already built a metro line underneath the Bosphorus between Europe and Asia in Istanbul, and are now promising a third airport in the city and an ultra-fast train line that will reduce travel time to Ankara to just 90 minutes.

    “The 7 June elections are very important. Either old Turkey will prevail or the new Turkey,” Erdogan said.

    A whole new megacity where nothing currently exists is quite a plan! But will is be a politically popular plan? That’s going to depend on a lot, like how popular that megacity is going to be if it’s a Charter City too:

    Today’s Zaman
    CHP’s ‘mega project’

    ABDÜLKADIR CIVAN
    May 26, 2015, Tuesday

    Two weeks to the national election, and the main opposition Republican People’s Party (CHP) keeps announcing new policy proposals on the economic front.

    Its latest plan is to construct a new city in Central Anatolia. The specific location has not yet been disclosed, but party officials indicate the population of the proposed city would be about several million.

    In my opinion, there are three important aspects of the “mega project.” It is going to be a new city. It will be a “logistics center” of Turkey and also of the wider region. It is going to have a different and separate governance structure from other parts of the country.

    However, the “why do we need a logistics center city” question still needs an answer. To be frank, I am not satisfied with the given answers. The CHP officials indicate that Turkey has a very advantageous geographical position. It is close to the European, Asian and African markets and so is at the center of world trade. Thus it would be desirable for multinational companies to have manufacturing and logistics support centers in Turkey. The CHP claims that once the physical infrastructure and regulatory framework are established, private investors will flood to the new city. They emphasize that Turkey currently does not utilize that geographical advantage, and not enough trade volume passes through Turkey. The CHP suggests that those kinds of gigantic logistics centers are the new norm in this globalized world. Similar plans in China and Saudi Arabia are highlighted as proof of the economic feasibility of this mega-project.

    Finally, the CHP suggests the new city would have a different governance structure than the rest of Turkey. It would have a much reduced level of bureaucratic oversight, and the governor of the city would have much greater control than mayors and governors in other parts of the country. From that perspective, it sounds like the so-called charter cities of Paul Romer, a prominent economics professor at New York University. Dr. Romer has contributed significantly to the literature of economic growth. However, he was also interested in putting his ideas into practice. He considers the failure of governance mechanisms as the main reason for underdevelopment. According to him, most underdeveloped countries are underdeveloped not because of their geography, their climate, their natural resources or their culture, but because of erroneous structures of governance.

    He claims that autarkic cities can provide an attractive environment for economic and social development even in underdeveloped countries. However, it is normally not possible to provide “good governance islands” in these bad governance countries. Dr. Romer suggests that developed countries like England and Canada can be a guarantor country to the governance of certain cities in underdeveloped countries. He claims that if these cities become successful, it will be easy to expand the new system to other regions of the country. So far charter cities were seriously considered in two countries: Madagascar and Honduras.

    The Madagascar episode ended after the president of the country, who believed firmly in charter cities, was overthrown by a military coup. Recently, Dr. Romer distanced himself from the charter cities project in Honduras as well. He says the current developments worry him because he believes the founding fathers of the charter city in Honduras are creating a new unaccountable ruling class. Both attempts show that good governance is a very difficult result to achieve. To impose it from outside even with the best intentions is not very effective.

    I doubt that the CHP plans to have a foreign guarantor country for the new city. However, I think it would be equally difficult to establish this good governance island by utilizing the internal dynamics of the country. If our local dynamics were enough to establish and maintain good governance structure, we would already have it at the national level. The best we can achieve is to provide financial concessions to foreign and local investors. Unfortunately, I seriously doubt these concessions have benefits in the long run for Turkey.

    Having said that, I believe the CHP’s mega project is less crazy than the Justice and Development Party’s (AKP) crazy projects such as Canal Istanbul.

    “Having said that, I believe the CHP’s mega project is less crazy than the Justice and Development Party’s (AKP) crazy projects such as Canal Istanbul.”

    That must be one crazy canal.

    Posted by Pterrafractyl | May 27, 2015, 5:17 pm
  18. Egyptian billionaire Naguib Sawiris has an idea for how to deal for the growing humanitarian refugee crisis facing now just Europe but the world: Have Greece or Italy sell him an island that he can turn into a private nation, and then send all the refugees there were they would be employed in building their new nation:

    The Daily Beast
    Billionaire Wants to Build Refugee Island
    Just the latest amazing and insane idea for housing Syria’s refugees.

    Nina Strochlic
    09.05.15 12:03 AM ET

    Earlier this week, Egyptian billionaire Naguib Sawiris tweeted out an idea he called “crazy.”

    He would buy an island, fill it with refugees, and then provide jobs and housing until they could return to their homeland—if they so chose.

    Greece or Italy sell me an island, ill call its independence and host the migrants and provide jobs for them building their new country,” he wrote on Twitter. Then, added: “Crazy idea .. Maybe but at least temporary until they can return to their countries ?? !!”

    When the skepticism began, he remained steadfast. “There is nothing to joke about !” he wrote. “I don’t joke on the misery of people.”

    As live feeds of Syrian refugees walking out of Hungary have flooded the airwaves and pictures of drowned refugee children plaster social media, the response has been dramatic. In Iceland, 10,000 people offered to house Syrian families. Singer Bob Geldof announced he would let four families live in his homes. U.S. Senators called on Congress to take in at least five times more refugees than the country currently allows.

    Sawiris isn’t the first to propose such a seemingly outlandish idea, but his is the most singularly generous and bold so far. The telecommunications mogul is worth around $3 billion. In an interview with AFP, Sawiris estimated the cost of purchasing the island—$10 million to $100 million, he said—wouldn’t be a deterrent. The issue also isn’t supply, as there are numerous uninhabited islands in the Mediterranean. The main problem would be persuading the current owners to sell off a plot of land. Then he would target the bulk of needed investment into infrastructure, like “temporary shelters to house the people, then you start employing the people to build housing, schools, universities, hospitals,” he said..

    Meanwhile, in June, a California real estate millionaire named Jason Buzi launched a plan for a “Refugee Nation.” He outlined (PDF) four options for resettlement: one involved purchasing an island and another involved building a new island. “The solution is simple: for the millions of stateless people around the world—a state of their own!” it said.

    His idea received mixed reactions. In The Guardian, Alexander Betts, with Oxford’s Refugee Studies Center, warned not to dismiss the innovation, but worried it could isolate refugees like a leprosy colony.

    “You end up with refugees trapped forever in what is effectively large-scale prison camps,” James Hathaway, the director of University of Michigan’s Program in Refugee and Asylum, told The Washington Post, referring to Australia’s practice of holding refugees on the Pacific Islands.

    “This proposal may be ridiculed or attacked by some, but hopefully is not ignored,” Buzi wrote. “It should be vigorously debated, because the world needs a solution to this staggering humanitarian crisis… But we can no longer sit idly by as millions of our fellow human beings suffer due to human-created conflicts.”

    Greece is struggling to assist the influx of needy refugees streaming across its borders by the thousands, exacerbated by its current financial crisis.

    “[T]he situation has become unmanageable,” he told reporters.

    In his interview with AFP, Naguib Sawiris, the Egyptian magnate who has the funds, imagined a place where the refugees would be treated once more as human beings.

    “The way they are being treated now, they are being treated like cattle,” he said.

    Are refugee island nations going to become a tool in the global community crisis response toolbox? As a solution, it does have the advantage of allowing the wealthy nations of world to pretend like they’re actually helping people without actually having to help them very much and outsourcing the solution to billionaires, so there might be some significant appeal to the idea for many nations.

    And as the article also pointed out, Sawiris isn’t the only billionaire to propose such an idea:


    Meanwhile, in June, a California real estate millionaire named Jason Buzi launched a plan for a “Refugee Nation.” He outlined (PDF) four options for resettlement: one involved purchasing an island and another involved building a new island. “The solution is simple: for the millions of stateless people around the world—a state of their own!” it said.

    So who knows, maybe refugee island nations are going to become the next new hot magic-bullet idea that policy-makers can get all excited about. Like a Charter City for refugees, although it sounded like Jason Buzi’s “Refugee Nation” idea wouldn’t exactly be a Charter City if his “Refugee Nation” really was self-governed by the refugees themselves.

    And that brings us to a rather critical aspect of this whole “refugee island” proposal: Are the new refugee nations actually going to be democratic nations, or will they operate under one of the many non-democratic models of governance that we find across the globe? Or might they use a non-democratic model? Perhaps a non-democratic model that has lots of powerful backers but few actual real world examples. Models like, of course, Charter Cities:

    The Guardian
    Is creating a new nation for the world’s refugees a good idea?

    A property billionaire is proposing to buy land to house the world’s refugees. Migration academic Alexander Betts says it’s not as outlandish as it sounds

    Alexander Betts

    Tuesday 4 August 2015 07.33 EDT

    Two weeks ago real estate millionaire Jason Buzi launched his idea for a “Refuge Nation” in the global media. The basic premise is not new: to buy an under-populated area of land somewhere in the world and turn it into a territory for the world’s refugees to begin a new life. It combines the historic precedent of the origins of Buzi’s native Israel coupled with the visionary idealism of his Silicon Valley heritage. He argues that in a time of increasing need for refugee protection but declining political tolerance of refugees, radical solutions are needed.

    What’s right with the idea?

    First, Buzi’s identification of the problem is spot on. We currently face a global displacement crisis. More people are displaced than at any time since the second world war. Of the 60 million displaced, nearly 20 million are refugees who have crossed an international border. Well over half of those are in so-called protracted refugee situations, having been in exile and often dependent on international assistance for more than five years. Long-term refugee encampment represents a tragic and unacceptable waste of humanity. Furthermore, with new crises like the Syria conflict, from which four million people have left the country as refugees, host countries like Turkey, Lebanon, and Jordan lack the capacity to continue to host so many indefinitely. Meanwhile, the political willingness to continue to support growing numbers is declining from Australia to the Mediterranean to the Middle East.

    Second, we need innovative and creative solutions. At the heart of this must be a rethinking of the political geography of asylum. As Buzi implies, we have enough land and underdeveloped regions of the world. We need to be creative about how we think about territory; in a world of over seven billion, 20 million refugees is not that many.

    Third, a key element of solutions to the crisis should be self-governance. Implicit in Buzi’s Refugee Nation idea is the notion that refugees could govern their own affairs. This recognition of the autonomy of refugee communities and their capacity to be economically and politically self-sufficient is long overdue. Too often, it has been assumed that refugees are dependent upon humanitarian assistance beyond the emergency phase of a crisis, when in practice they can exercise political and economic agency. Around the world, research has shown that under the right conditions, refugees are capable of building representative political structures as well as meaningfully engaging with markets.

    What’s wrong with the idea?

    There are a host of issues relating to identifying an appropriate territory and building a new multinational political community from scratch. The international community’s track record of artificial nation-building is not strong. However, setting aside the practical challenges, there are three major conceptual issues.

    First, the proposal risks conflating refugees and stateless persons. Refugees are not stateless; they still have citizenship of their country of origin. The preferred solution for most is to return home when the situation changes. Of course, repatriation is a remote hope for many refugees but for some asylum is definitely temporary.

    Second, the idea is premised upon exclusion rather than inclusion. It implies that refugees should not be integrated within existing political communities but confined to separate communities. In discussion on social media this has been likened to a leper colony. One of them most important challenges we face is to encourage states to temporarily integrate refugees, so sending a message of exclusion is potentially dangerous. Refugees have much to contribute economically, socially and culturally to host states, and the logic of exclusion risks reinforcing the idea of refugees as a burden. In our own research we have been able to highlight how given the right policies, refugees can make a positive economic contribution to host societies if the right policies are adopted.

    Third, there is an important question about whether the Refugee Nation would be formed on the basis of coercion or consent. In a globalised world, given freedom of choice, people ultimately want to choose where they live, and are likely to seek to move to where their friends, family and greatest opportunities lie. It seems likely that in order to group people onto an artificially created territory one would either have to make it utopian to be attractive or risk encouraging other states to coerce refugees to go there. Examples of islands used to host refugees – Australia’s use of Nauru or the US’s previous use of Guantanamo for Haitian asylum seekers – are not auspicious, having led to significant human rights violations. To be workable, a Refugee Nation idea would need to be based on freedom of choice and the lure of opportunity. In contrast to past precedents such as the creation of Israel or Liberia, it is not obvious that “refugee” would be a sufficiently strong unifying identity to encourage disparate populations to live together.

    What’s next?

    The proposal for a Refugee Nation should not be totally dismissed. The idea is most usefully deployed as a metaphor for creative thinking about the political geography of asylum. Rather than actually seeking one single territory in the world to house the world’s refugees, Refugee Nation should offer a source of inspiration for ways in which we can collectively reimagine and reinvigorate asylum. These should work to offer autonomy and opportunity for refugees, based on innovative and non-traditional conceptions of territory. A range of models could support this.

    First, trusteeship offers a historical precedent. As Robin Cohen has highlighted, during the inter-war period the League of Nations managed territories in the collective interest, and such an idea might be used today to host and protect refugees. Cohen is right to suggest that internationally managed territories might offer creative ways to liberate refugee governance from restrictive host states.

    Second, zonal development provides a neglected and potentially interesting solution. There are historical precedents of refugees being located to underdeveloped border regions, often making a significant difference to long-term development. Such ideas could be revived. In Jordan, for instance, the King Hussein bin Talal Development Zone is a special economic zone just 15 minutes drive from the Za’atari refugee camp. It currently lacks two things: labour and investment. Yet, reconceived, it might offer an opportunity for refugees to have greater autonomy while contributing to the host economy’s national development strategy.

    Third, Paul Romer’s idea of charter cities offers a way of creating designed urban areas in which a particular community’s needs could be met. If refugee camps could be rethought with the opportunities of, say, a university campus or a functioning city, they might offer opportunities for human flourishing, built upon representation and self-governance, even on a temporary basis. Urban planning offers many insights into how to build vibrant, cosmopolitan cities, and yet too rarely are these lessons and insights applied to refugees settlements.

    As we saw, Jason Buzi has been explicit about self-governance being a key element to his ‘Refugee Nation’ idea. But as we also saw, setting up these Refugee Nations as special economic zones (a key selling point for the Charter City model) is also something being talked about. And the more rapidly these sudden ‘refugee nations’ are expected to become economically self-sufficient, the greater the pressure will be to turn themselves into de facto pro-corporate Charter Cities. So while it’s sort of nice to see grand gestures from billionaires for addressing urgent humanitarian needs (needs that they world could easily address if the world really cared), it’s probably going to be rather critical to ensure that any sort of billionaire-created ‘refugee nation’ scheme doesn’t end up turning into a privately-owned and operated ‘special economic zone’ instead.

    It’s also worth keeping in mind that, should the world go down the ‘refugee nation’ path towards helping those that can’t realistically return home any time soon or ever, we’re probably going to need a lot more ‘refugee nations’ in the future than you might suspect. A whole lot more.

    Posted by Pterrafractyl | September 6, 2015, 12:12 am

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