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Próspera

Coordinates: 16°22′21″N 86°27′45″W / 16.37250°N 86.46250°W / 16.37250; -86.46250
From Wikipedia, the free encyclopedia

Próspera ZEDE
Zone for Employment and Economic Development
The Beta Building, situated within Próspera, which serves as the ZEDE operational center.
The Beta Building, situated within Próspera, which serves as the ZEDE operational center.
Flag of Próspera ZEDE
Flag
Official seal of Próspera ZEDE
Seal
Official logo of Próspera ZEDE
Logo of Honduras Próspera, Inc., the developer and "guarantor" behind Próspera ZEDE.
Nickname: 
"The Hong Kong of the Caribbean"[1]
Map
Próspera ZEDE is located in Honduras
Próspera ZEDE
Próspera ZEDE
Coordinates: 16°22′21″N 86°27′45″W / 16.37250°N 86.46250°W / 16.37250; -86.46250
Country Honduras
DepartmentBay Islands
Government
 • Body
Population
 (2024)[2]
 • Total
2,000
Time zoneUTC-6
Website

Próspera, officially known as Próspera ZEDE, is a charter city on the island of Roatán, Honduras.[3] It is one of the three ZEDEs (Zones for Employment and Economic Development) in the country, operating under a distinct fiscal, legal and regulatory framework that grants it autonomy from the national government.[4]

The project is led by Honduras Próspera Inc., which itself is funded by venture capitalists and has a veto vote in Próspera's governing council.[5]

History

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Background

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Main article: Zone for Employment and Economic Development

According to Canadian historian Quinn Slobodian, Próspera is part of a broader trend of projects aimed at implementing libertarian theory in practice.[6]

The first attempts to create jurisdictions similar to Próspera in Honduras emerged with the Special Development Regions (Regiones Especiales de Desarrollo, REDs),[7] which were intended to be administered by a developed guarantor country rather than private entities.[8] However, the REDs were later declared unconstitutional for violating national sovereignty, and the ZEDEs subsequently served as their successors.[9][7]

In 2013, during the presidency of Porfirio Lobo, the Constitution of Honduras was amended to allow the creation of Zones for Employment and Economic Development (Zonas de Empleo y Desarrollo Económico, or ZEDEs). These zones function as subnational territorial units with a high degree of autonomy, operating under a distinct legal and fiscal system. Unlike conventional local governments, ZEDEs possess independent administrative systems and laws, much like in special economic zones.[10]

The past president of Honduras Juan Orlando Hernández championed the special economic zones (ZEDEs) which enabled Próspera to be formed.[11]

Próspera, located on the island of Roatán, is one of the most prominent ZEDEs and has been described as a modern iteration of the charter city model, initially proposed by former World Bank chief economist and Nobel laureate Paul Romer. The idea behind charter cities is to establish new urban areas with governance structures that attract investment by ensuring rule of law, economic freedom, and regulatory efficiency. Próspera's model follows this logic, offering streamlined business regulations, lower taxes, and private arbitration for dispute resolution. It has also been heavily influenced by the Charter Cities Institute (CCI), a Washington, DC-based organization that promotes the development of such special jurisdictions worldwide.[12] The ZEDEs have been touted as "prosperity zones" where the law can be tailored to attract capital, and where the private city does not adhere to governmental powers like taxation or policing; the ZEDEs have been tried in the U.S. but found pushback, which is why organizers have gone to places like Honduras.[11]

Development of Próspera

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Duna Tower under construction in 2023, the tallest building in Roatán.[13]

Wealth fund manager Erick Brimen, a Venezuelan, created the idea of Próspera and is its CEO, along with being the CEO of NeWay Capital; Brimen said in 2024 that he conceived of the city as a "poverty relief initiative" for Honduras.[11][14] Brimen formally applied for a charter city in Honduras in 2017.[11] He has used intermediate companies with names like Brimont Holding and North Shore Development Company to buy land on the island where Próspera resides, as well as mainland Honduras.[11]

Próspera is also backed by multiple investors, including Balaji Srinivasan, Peter Thiel, and Marc Andreessen, through the venture capital firm Pronomos Capital.[15] In January 2025, Coinbase CEO Brian Armstrong said that his company's venture capital division would be an additional investor in Próspera to "grow financial inclusion and innovation."[11]

Construction

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Construction began in 2021, with initial buildings designed by German architect Patrik Schumacher.[16] In 2025 it was reported that robots were turning wooden blocks into construction materials at a location called "The Circular Factory."[11]

Economy

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Other than real estate sales, the city has held conferences such as 2024's biotech startup events which led to $1.5 million in venture capital investments; one of the theme was "Make death optional."[11] Próspera also hosted a "crypto cities summit" in February 2025.[11]

88% of revenue brought in by Próspera goes to the city, with the rest in a trust that is supposed to be spent on Honduran development.[11]

Governance and regulation

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Administrative structure

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Próspera is governed by a council composed of nine members, five of whom are elected and four appointed by Honduras Próspera Inc. Decisions require a two-thirds majority, effectively granting Honduras Próspera Inc. veto power.[17] Above this, there is a Committee of Best Practices, an unelected body whose members are appointed by the Honduran government and tasked with approving internal regulations and providing policy guidance.[18]

Security

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Visitors wishing to enter Próspera must pass through gates with armed guards at a booth. These guards have clipboards and pens for visitors to sign a "temporary touristic access permit" that adheres to the community's legal code.[11]

Regulatory environment

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While subject to Honduran criminal law, Próspera maintains its own civil and commercial codes, allowing businesses to select regulations from approved foreign jurisdictions, propose custom regulations subject to Próspera's ZEDE (Zone for Employment and Economic Development) approval, or operate under common law.[19] Its charter disallows land expropriation.

Taxation and residency

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Tax rates within Próspera are set at 1% on business revenue, 5% on wages, and a 2.5% sales tax.[20] 2025 data says there is also a 5% personal income tax.[11] Bitcoin is recognized as legal tender within the city.[21]

Controversy

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Repeal efforts

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During her 2021 presidential campaign, Xiomara Castro made the repeal of the ZEDE law a key issue. In April 2022, Honduran President Xiomara Castro signed legislation to repeal the ZEDEs, citing sovereignty concerns.[22] She referred to Próspera as a creation of a "narco-regime" and declaring self-governing ZEDE zones like Próspera unconstitutional.[23][11] Despite this, Próspera continues to operate, arguing that existing ZEDE agreements grant it legal stability for 50 years. In response to the repeal, Honduras Próspera Inc. sued Honduras for up to $10.7 billion in damages, equivalent to one-third of the country's GDP.[24] In July 2022, the U.S. State Department expressed concerns that repealing the ZEDE law might violate international trade agreements, including the DR-CAFTA free trade agreement.[25]

The founder of Próspera, Erick Brimen, also has spent hundreds of thousands of dollars to lobby U.S. legislators to put sanctions on Honduras and end U.S. aid to the country if the Honduran government does not allow Próspera to continue operations.[11] In 2024, U.S. Representative Steven Horsford pressured Honduras by advocating for denying visas to their government officials if Honduras did not do as Próspera wanted (Brimen donated $5,000 to Horsford's campaign in 2023).[11] In the 2024 U.S. House budget, members also tried to pressure Honduras to allow ZEDEs to continue how they wish.[26] And U.S. Representative María Elvira Salazar has claimed that the current Honduran leadership are socialists who don't care about their country when they don't allow ZEDEs to do as they like.[11] As of 2025, ZEDEs—including Próspera—remain operational despite ongoing legal disputes.[27]

ICSID ruling on Próspera et al. vs. Honduras

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In 2024, the International Centre for Settlement of Investment Disputes (ICSID) rejected Honduras' argument that Honduras Próspera Inc. and its affiliates should have exhausted domestic legal remedies before initiating arbitration, ruling that such a requirement was a matter of admissibility, not jurisdiction. The tribunal found that Honduras had unconventionally inserted this requirement into domestic law in 1988, yet it was never recognized in ICSID treaties, including CAFTA-DR. It also highlighted the contradiction in Honduras' position, which both required investors to exhaust local remedies and simultaneously forced them to waive their right to pursue local proceedings before arbitration. The ruling allows Próspera's $10.7 billion claim against Honduras to proceed, following the 2022 ban on ZEDEs by President Xiomara Castro and the 2024 Supreme Court decision declaring the ZEDEs unconstitutional with retroactive effect. The dispute was a major factor in Honduras' decision to withdraw from ICSID in August 2024, raising concerns about the country's commitment to international investment agreements.[28]

Land expropriation

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Neighbors of the project in the nearby village of Crawfish Rock (which directly abuts Próspera) expressed a fear that their land might be expropriated after a drawing of later stages of Próspera appeared on the project website including parts of Crawfish Rock.[29][11] Honduras Próspera's CEO has publicly supported legal reform to make the practice of expropriation illegal nationwide.[30]

Isolationist

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Paul Romer, a Nobel-winning economist and World Bank leader, proposed the idea of charter cities as early as 2012,[31] but rejects Próspera as "living in this libertarian fantasy that ... they can be free of the government. That's not gonna turn out well."[11]

Lack of supposed Próspera earmarked development funds for Honduras have not made their way to the nextdoor Crawfish Rock where roads are still unpaved; and there are ongoing issues about ground water rights and sewage problems, as well as Próspera utilizing Roatan's garbage dump, electricity, and airports with inequities.[11]

References

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  1. ^ Ernst, Jeff (December 2, 2020). "Foreign Investors Are Building a 'Hong Kong of the Caribbean' on a Remote Honduran Island". VICE. Retrieved November 9, 2024.
  2. ^ "Próspera: A Network State Colony in Honduras". Venture Capital Status. 2024.
  3. ^ Aust & Rodiles 2023, p. 208.
  4. ^ "A Private Tech City Opens for Business in Honduras". Bloomberg.com. March 27, 2021. Retrieved April 18, 2021.
  5. ^ "A Private Government in Honduras Moves Forward". NACLA. Retrieved November 9, 2024.
  6. ^ McAteer, Dan (April 17, 2023). "A conversation with Quinn Slobodian | Crack-Up Capitalism (Penguin, 2023)". intellectualhistory.web.ox.ac.uk. Centre for Intellectual History. Retrieved March 15, 2025.
  7. ^ a b Slobodian 2023, p. 195.
  8. ^ Hadfield 2017, p. 341.
  9. ^ Hadfield 2017, pp. 341–342.
  10. ^ Aust & Rodiles 2023, p. 207.
  11. ^ a b c d e f g h i j k l m n o p q r s Farooq, Umar; McDonald, Michael D (February 14, 2025). "A Libertarian Island Dream in Honduras Is Now an $11 Billion Nightmare". Bloomberg. Archived from the original on February 17, 2025. Retrieved April 20, 2025.
  12. ^ Aust & Rodiles 2023, pp. 207–208.
  13. ^ Montoya, Angeline (August 16, 2024) [August 16, 2024]. "Prospera, the eccentric private libertarian enclave in Honduras". Le Monde. Retrieved March 15, 2025.
  14. ^ "Erick Brimen | Entrepreneur". Erick Brimen. Archived from the original on March 21, 2025. Retrieved April 20, 2025.
  15. ^ "A crypto-libertarian paradise just lost an existential battle with Honduras". May 11, 2022.
  16. ^ Corbett, Rachel (August 28, 2024). "The For-Profit City That Might Come Crashing Down". The New York Times. ISSN 0362-4331. Retrieved March 15, 2025.
  17. ^ "Code of law" (PDF).
  18. ^ art 11 zede laws https://pzgps.hn/wp-content/uploads/2019/05/ZEDE-Organic-Law.pdf
  19. ^ "A Private Government in Honduras Moves Forward". NACLA. Retrieved April 18, 2021.
  20. ^ Farooq, Umar; McDonald, Michael D. (February 14, 2025). "Libertarian City Dream in Honduras Becomes $11 Billion Nightmare". Bloomberg Law.
  21. ^ Palencia, Gustavo. "Honduran special economic zone adopts bitcoin as legal tender". Reuters. Archived from the original on February 27, 2025. Retrieved April 4, 2024.
  22. ^ Gonzalez, Marlon (April 30, 2022). "Honduran economic zones in 'limbo' after government repeal". Los Angeles Times. Retrieved May 2, 2022.
  23. ^ Palencia, Gustavo (September 20, 2024). "Honduras top court declares self-governing ZEDE zones unconstitutional". Reuters. Retrieved April 20, 2025.
  24. ^ Long, Guillaume; Main, Alexander (September 5, 2024). "How a Start-Up Utopia Became a Nightmare for Honduras". Foreign Policy. Retrieved September 4, 2024.
  25. ^ Lazare, Sarah (October 28, 2022). "U.S. Pressuring New Left-Wing Honduras Government". Workday Magazine. Retrieved September 4, 2024.
  26. ^ "H. Rept. 118-554 - STATE, FOREIGN OPERATIONS, AND RELATED PROGRAMS APPROPRIATIONS BILL, 2025". www.congress.gov. June 14, 2024. Retrieved April 20, 2025.
  27. ^ Gomez, Christopher (January 19, 2025). "Prospera: Honduras' Bitcoin City Project". Colombia One. Despite the legal and political challenges, ZEDES like Prospera remain operational, though the city has had to start paying taxes on goods that enter its territory
  28. ^ "Gobierno hondureño pierde intento de desestimar demanda de Zedes en el CIADI | Diario El Mundo | Noticias de Honduras y el Mundo" (in Spanish). March 1, 2025. Retrieved March 15, 2025.
  29. ^ Ernst, Jeff (July 5, 2022). "'Go home': Honduran islanders fight against crypto colonialists". The Guardian.
  30. ^ "A Private Libertarian City in Honduras". Reason.com. July 6, 2023.
  31. ^ Watts, Jonathan (September 6, 2012). "Honduras to build new city with its own laws and tax system to attract investors". The Guardian. Retrieved April 20, 2025.

Bibliography

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Further reading

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