Honduran economic zones in 'limbo' after government repeal

TEGUCIGALPA, Honduras (AP) — A plan to create special self-governing zones for foreign investors in Honduras has been thrown into limbo with the new government's repeal of a law many criticized as surrendering sovereignty.

The zones were inspired by libertarian and free-market thinkers as a way to draw foreign investment to the impoverished country. They not only were free from import and export taxes, but could set up their own internal forms of government, as well as courts, security forces, schools and even social security systems. They were authorized by a constitutional amendment and an enabling law passed in 2013.

Critics were worried that the zones could become nearly independent statelets and President Xiomara Castro, who took office in January, campaigned against the law. On Monday, she signed a measure passed by Honduras' Congress to repeal it — though the permission for the zones still remains in the constitution.

The zones — known as ZEDEs in Spanish — had been promoted by her predecessor as president, Juan Orlando Hernández, who was extradited to the United States on April 21 to face drug trafficking and weapons charges.

Castro called the repeal “historic” and said Honduras was “recovering its sovereignty.” Her administration said it did not want to destroy what had already been built, but that changes were coming.

“We are going to work hand-in-hand to do things in a responsible way because we also don’t want to try to destroy what has been built,” said Rodolfo Pastor, a member of Castro’s cabinet. “With those that already (exist) there is going to be dialogue because autonomous zones are not going to be allowed.” He said a committee would be formed to work with the three existing zones.

Perhaps the most ambitious is a planned 58-acre development called...