Description

Ciudad Morazán is a special economic zone free city in Honduras.

Discussion

Overview

Ciudad Morazán is a particular type of special economic zone called, in Honduras, a “zone for economic development and employment” (ZEDE).

This model is not completely private in as much as it is a feature within the Honduran constitutional framework. That feature establishes what is similar to a public entity to administer the territory and operations of the ZEDE with oversight from a governmental body.

Morazán shares the the rights, privileges, and duties of any other ZEDE in the Honduras, including having its own legal jurisdiction with special regime zone status.

Morazán and Live and Let Live

Morazán has so far been an overwhelming success in terms of showcasing the Legal Principle and the Moral Principle.

The ZEDE has delivered a safe environment attracting residents from neighboring zones due to the reduced risks to safety, including risks from street violence.

The framework is also stable thus far, making it an attractive option for receiving foreign investment.

Per its Charter and Bylaws, as2.03):

The purpose of Morazán is to provide a safe and prosperous place to live and work for many people by fostering a community based on individual freedom, personal security, rule of law and harmonious relationships between people. Morazán exists to create clarity, efficiency, confidence and mutual respect in the relationship between people and their governors and to attract investors with a highly business-friendly and legally stable jurisdiction. Morazán’s goal is to promote and further the development of the nation of Honduras through thoughtful governance and the promotion of dynamic entrepreneurship.

Live and Let Live is active in the Morazán Model forum.

Critiques

One common objection to Ciudad Morazán is a concern that it represents a foreign investor takeover Honduran territory.

This critique, however, conflates financial investment with political sovereignty. Firstly, the investors and developers of Morazán have an incentive to create a safe and productive environment to generate a financial return. That is, to make profit. Moreover, Morazán’s existence is subject to the Honduran state, which retains ultimate sovereignty over the territory. This has proven a challenge already to Morazán with changing national governments.

Another concern from opponents to Morazán is a supposed potential for corruption within its administration. While a valid consideration, it overlooks that Morazán is structure as an alternative to the corruption prevalent in the existing system.

The Morazán model is predicated on offering a transparent, predictable, and stable legal framework to attract residents and capital that would otherwise avoid the region.

Ciudad Morazán is not a facilitator of corruption but a market-based challenge to existing political corruption.

Implementation

The authority to establish ZEDEs in Honduras is provided under article 329 of the state’s constitution, whereby:

The state may establish zones of the country subject to special regimes which shall have juridical personality, and are subject to a special fiscal regime and may incur obligations which do not require the guarantee or collateral of the state in solidarity, and may create contracts until the fulfillment of their timely objectives and during various governments. They shall enjoy functional and administrative autonomy that shall include the functions, abilities, and obligations that the Constitution and the laws confer on the municipalities. … In order to solve conflicts within the zones of the country subject to special regimes, the judicial branch through the Council of the Judiciary must create tribunals with exclusive and autonomous competency over them. The judges of the zones subject to special jurisdiction shall be proposed by the special zones before the Council of the Judiciary, who shall appoint judges given prior competition of a proposed list from a special commission formed in the manner described in the Organic Law of those regimes…

The Chater and Bylaws of ZEDE Morazán reads, at 2.04:

Morazán has exclusively the following powers, to be exercised pursuant to this Charter, applicable Rule, and the terms of any Agreement of Coexistence or legal stability agreement to which it is a party: (1) to use a corporate seal;

(2) to sue and be sued;

(3) to form agreements in the form of contracts or other instruments with public or private parties;

(4) to acquire, develop, maintain, operate, or sell property in the same way as a corporation operating under Applicable Laws within the boundaries of Morazán;

(5) to create special districts by Rule with governance structures, authorities and Rules that differ from the rest of Morazán within its own jurisdiction;

(6) to give, receive, and manage funds in any form, including loans, grants, gifts, sale proceeds, equity investments, service charges, fees, fines and taxes;

(7) to issue bonds, promissory notes, marketable tax credits and other instruments within the limits established by Article 23 of the ZEDE Organic Law;

(8) to promulgate Rules for application in Morazán;

(9) to conduct its internal affairs as a fiduciary for its Residents;

(10) to provide public services and charge for their use, including police, courts, law enforcement, and public infrastructure;

(11) to regulate activities for purposes of public health, safety, and welfare both within and outside its boundaries;

(12) to prescribe by Regulation or Resolution a code of ethics and Rules for resolving conflicts of interest;

(13) to enforce arbitration awards through administrative or executive action;

(14) to enforce Applicable Law; and

(15) to do all things necessary and proper for carrying out the powers in this Article, including delegation to a General Service Provider, provided that such incidental power is construed as no greater than the scope of a reasonably implied power to implement the preceding express powers.

Further resources

• Constitution of the Republic of Honduras (1982), Title VI
• Chater and Bylaws of ZEDE Morazán (2020)
• Titus Gebel, Free and Private Cities (3rd ed, Free Cities Foundation, 2023).