Of the seven countries in Central America (CA), only two, Costa Rica and Panama, have been doing well economically. Data from Statista, at the website statista.com, shows that the per capita income of persons in those two countries is easily twice that of persons living in the other five countries in CA. Economists say Costa Rica’s success is based on its openness to foreign investment and trade liberalization, and much of Panama’s success comes from revenues derived from the Panama Canal and its vibrant services sector.
Unlike Belize, Guatemala, El Salvador, and Honduras, the other four free market economies in CA, Panama and Costa Rica have not made it onto the least desired list — most murderous countries in the world. Nicaragua, whose economy is not considered open, and whose leaders are not in the good books with the Americans, has the lowest per capita income in CA, but, contradicting the belief that low income breeds violence, it is the safest place to live in our region.
Belize, Guatemala, El Salvador, and Honduras, for whatever reasons, have not done well with the Costa Rica and Panama model, and faced with increasing poverty, stratospheric murder rates, and social chaos, Honduras, in 2021, elected a president who is not a disciple of the free market economy promoted by the US, the hemisphere’s, the world’s, most powerful nation.
Honduras’s journey has been a rough one. Around the turn of the 20th century, its economy came to be dominated by rich businessmen from the US, and for many decades in the 1900s the country was led by strongman-type leaders who were favored by the Americans. In the more recent past, in 2006, Manuel Zelaya was elected president of Honduras. He has been described by some as a left-leaning leader, mostly because in the face of strong resentment from the wealthy, he moved to address the land needs of the poor. In 2009, Zelaya was removed from office by the Honduran military, in a coup which was reportedly backed by the US.
Presidents who supported the US’s economic policies for CA followed Zelaya into office. Human rights groups say that during the term of Porfirio Lobo Sosa, who became president after Zelaya was ousted from office, over a dozen journalists and political opponents of his regime died. Another lowlight of Sosa’s regime was a special economic zone law called ZEDE (Zones for Employment and Economic Development).
“The Honduran ZEDE Law, from Ideation to Action”, a research paper written by Jeffrey Mason and Carl Peterson and published by the Charter Cities Institute, said the 2012 law was passed to address the country’s struggle to attract foreign investment. The paper, which discusses the principal objections to the law and analyses the first two ZEDEs, said the law was “among the most innovative special jurisdictions in the world.”
The president of Honduras between 2014 and 2021 was another US favorite, Juan Orlando Hernández. During his reign, the widely celebrated indigenous leader, Berta Cáceres, was murdered, in 2016, and in 2020 five Garifuna leaders disappeared from Triunfo de la Cruz, their village on the Caribbean coast. When Hernández took office he declared to the world that Honduras was “open for business.” Shockingly, Hernández, a US favorite and heavy promoter of the ZEDE law, is now a resident of a US jail, accused of conspiring to import cocaine into the US.
Hondurans hated what was happening to their country under the right-wing regimes, how the ZEDE in particular was allowing foreign investors to trample the rights of indigenous Hondurans, and in November 2021 they elected the left-leaning Xiomara Castro as president. On May 13, 2022, less than six months after the Castro government took office, the Honduran Congress put away the ZEDE law.
Al Jazeera journalist, Jared Olson, described the ZEDE as “one of the most widely loathed economic projects in this Central American nation.” In his story, “Honduras ‘retakes sovereignty’ by nixing corporate enclaves”, Olson said: “the law allowed for the creation of special economic development zones…semi-autonomous corporate enclaves where investors could govern as though they were independent entities, taking advantage of separate tax schemes, security forces and labor regulations.”
Following the revocation of the law, Honduras Prospera announced possible court action. Olson said that the company, a US-based investor, said that under the rights it acquired from the ZEDE law it would proceed “with plans to invest hundreds of millions of dollars and to create tens of thousands of good-paying jobs in Honduras.” Olson said Castro’s government stated that businesses operating under the ZEDE could “continue operating, under the condition that they submit themselves to new economic regimes.”
It’s interesting that our Briceño government chose the slogan, “Belize is Open for Business”, when in 2021 it held the Belize Investment Summit, a meeting of ministers of government, local business folk, and business folk from abroad. It could have been mere coincidence, but it is known that the right wing element of the PUP didn’t go far away when the party was chased from office back in 2008. It is because the Belizean people didn’t trust this wing of the PUP, that the UDP, despite wasting and plundering much of the Petro Caribe soft loans and taxes from BNE oil, was able to win three consecutive elections.
It’s not possible for a government in a democracy to serve one master only, and if the present and future are anything like the past, the unfettered capitalists among us will be after theirs, and the masses could be left to collect the crumbs that trickle down from their tables. We haven’t heard much since the Summit, but Belizeans have to be wary. Costa Rica and Panama have ridden the free market model to some success, but there are factors that make each country different. Panama, for example, has the Panama Canal, and that waterway gushes between 2 and 2.5 billion US dollars into their economy each year.
The proponents of unrestrained capitalism can have their say, but our government must not allow them free rein. Governments for the people aren’t afraid to make the tough decisions to ensure that all win. The present government deserves some props for moving to address the untenable boledo contract. The previous government deserves its props for taking back BTL, though local lovers of the unrestricted free market model howled that it would hurt investor confidence. The handling of the deal remains questionable, but would we have preferred for a 100% profit-motivated private entity to still be controlling VOIP? Neither government has protected the people from select lawyers who have had a feeding frenzy off public contracts and businesses.
Belize is open for business. We must ensure that the model we follow works for all of us.