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Can international accountability protect indigenous rights in a charter city?

A Canadian real estate development near the site of Honduras’s proposed charter city has provoked opposition from the local Garífuna community.

The story reads like a convoluted Hollywood pitch for the sequel to Johnny Depp's Rum Diary:

An idealistic American academic devises a plan to create jobs and reduce poverty by building a new city on a tract of unoccupied land in Honduras.  On the heels of his popular TED talk, and a military coup in Honduras, he convinces President Pepe Lobo and the National Congress to enact legislation clearing the way for the world's first modern "Charter City" – where Korean investors and Central American workers can do business under Canadian-style governance.

Shocking plot twist: the land is not entirely unoccupied.  A Garífuna political group known as the Fraternal Organization of Black Hondurans (OFRANEH), launches an online petition calling on the Honduran Supreme Court to strike down the law creating the charter city.  The roots of the dispute go back at least to the 1990s when the Garífuna, descended from West African former-slaves and indigenous Central Americans, won official recognition for their collective land rights, which led to the harassment and alleged murder of Garífuna community leaders by the henchmen of real estate developers, in turn provoking an Amnesty International campaign.

The most famous of the developers, Randy Jorgensen, has not been personally linked to any violence, but made his fortune as “Canada’s Porn King”, and is now pushing a deal to rebrand Trujillo, which [little known fact] originally inspired the term “banana republic”, as the “Banana Coast”, making it a stopping point for Panamex cruise ships.  He’s busily selling beach homes to bronzed Canadian retirees, despite, of course, the ongoing kinetic war between DEA agents and Central American drug cartels in the area. And it appears the new Charter City, with hints of Canadian backing, will land right on top of all this [see maps below], in what surely must be good news for the Porn King’s land values.

[Miramax: Call me.]

An OFRANEH protest against the Honduran ciudad model, or charter city (left);

Randy Jorgensen and President Pepe Lobo, November 2010 (right)

It's unclear how much of this is fiction.  Parts of the story bear the hallmarks of a conspiracy theory -- juxtaposing seemingly unrelated events to create a suggestive, sinister impression.  But it's also easy to see why many Garífuna are skeptical that this story has a happy ending for them – especially given the Honduran government’s track record in protecting their communal land rights..

"They didn't land on the charter city.  The charter city landed on them."

While the Garifuna appear to have a legitimate grievance, the solution need not be to permanently forego any public ventures than intrude on private lands – a surefire recipe to stifle economic development.

Democratic governments that respect the rule of law routinely do public infrastructure projects on occupied land.

Suppose a government wants to build a new road -- or in this case a whole city -- that would cross existing farmland.  Is it justified in taking the land?  The textbook response for an economist would invoke something called the Kaldor-Hicks criterion: the public benefits of the road must be big enough to generate "potential compensation" for the private costs imposed on the farmers.

There are at least two complications that arise in applying the Kaldor-Hicks logic and imminent domain to the Garífuna case.  The first is the collective nature of the land rights.

A 2004 academic study of Garifuna land rights by Eva Thorne noted:

"Honduran constitutional recognition of Garifuna land rights puts valuable lands under a communal titling regime that is, at least theoretically, immune to market logic. ... These titles

grant the community rights to a given area in perpetuity. They may not sell the land or transfer its ownership outside the community."

Second, without disparaging Honduras's legal institutions, it is also worth stressing the need to focus on how and whether potential compensation will materialize as actual compensation for Garífuna communities. The Thorne study also notes:

"Some patronatos have also engaged in illegal land sales to outsiders. Because of such sales, and because Honduran political and legal institutions are often ineffective and corrupt, nearly all Garífuna territories suffer from multiple ownership claims. This has made foreign investment in coastal tourism contentious and difficult to manage."

Finding a credible legal process that can adjudicate these competing claims is going to be a prerequisite for the Charter City’s legitimacy.  Requiring the Charter City’s planners – who have tried hard to focus exclusively on blue-sky thinking and greenfield projects – to participate in fixing the land tenure system from within existing institutions.

Can the West save the Garifuna from the Porn King and the Charter City?

As charter cities seek to escape the sovereign control of their host nations, and struggle to establish internal mechanisms for voice and accountability, where will accountability come from? A couple of ideas are already in the works.

1. One of the charter city's most promising -- albeit peculiar -- milestones to date has been Mauritius's commitment to guarantee the legal framework of the new zone.  Because Mauritius still uses the Judicial Committee of the Privy Council in Westminster as a final court of appeal, cases from the Honduran RED may ultimately be subject to the independent scrutiny of a UK court.

2. President Lobo appointed five international figures -- including Paul Romer and CGD's own Nancy Birdsall -- to a Transparency Commission that will oversee the workings of the RED.  So far the Commission lacks legal powers to do much beyond speak out, but if and when it is legally constituted my guess is it would be deeply concerned with the issue of land rights for the Garifuna community.

Beyond these charter-city-specific mechanisms, our CGD colleague Kim Elliott, who specializes in U.S. trade with developing countries, pointed to a couple of legal and regulatory instruments that might be brought to bear on any American firm doing business in the RED.

If a company doing business in the U.S. colludes with the Honduran government to violate anyone's rights, they  might be subject to a suit under Alien Torts Statute, similar to the case brought by the Ongoni people of Nigeria against Shell and Royal Dutch Petroleum.  (Of course, signs in that link suggest the Supreme Court may overturn that case and limit corporate liability in human rights cases.)

Given Canada's high profile in the charter city venture, it's also worth noting that Canadian MP Peter Julian has introduced a bill entitled the "international promotion and protection of human rights act" modeled closely on the U.S. Alien Torts Statute.

Finally, the US-Central American Free Trade Agreement (CAFTA) may provide some leverage in other rights disputes, though it's probably more relevant to labor disputes than the Garífuna's land case.  For instance, since the law establishing the charter city waives Honduras's minimum wage, Kim forecasts a high likelihood that U.S. labor unions will file a complaint under CAFTA.

The moral of the story

So, will world's first modern charter city violate the hard-won land rights of Honduras's Garífuna people?   Whose responsibility is it to protect those rights?  And what does this have to do with Canada's Porn King , his growing real-estate kingdom on the Honduran coast, or the murder of Mirna Isabel Santos Thomas six years ago?

In theory, Honduran law and international best-practice provide pathways to reconcile responsible land-use development with indigenous communities' rights.  Actual historical practice in Honduras is worrying.

Honduran courts should be the first port of call for these disputes, but the international character of charter cities suggests a role for international accountability mechanisms as well.  The Transparency Committee needs to step up.  The TC should also clarify whether it is helping to implement the charter city project, or providing independent oversight and accountability.

Randy Jorgensen's porn-financed real estate developments and the historical injustices inflicted on coastal Garífuna communities are, at best, tangentially related to the new charter city.  But these very real grievances help explain why the Garífuna are understandably nervous that their rights will not be protected going forward.  These legitimate concerns can't be dismissed lightly.

Update (September 10, 2012): Honduras has signed a memorandum of understanding with potential investors for its charter-city project without the knowledge of the project's transparency commission, prompting Paul Romer to distance himself from the project. On September 7, 2012, the five members of the nascent transparency commission who were appointed, but never officially confirmed, to oversee Honduras’s charter-city project sent an open letter to President Porfirio Lobo Sosa asking him to not proceed with the official appointment of the commission. The signees, including CGD president Nancy Birdsall, noted that “conditions have not existed to permit the Transparency Commission to play the role envisioned for this ambitious and important project.”