The Daily - The Sunday Read: ‘The For-Profit City That Might Come Crashing Down’

Episode Date: September 15, 2024

If Próspera were a normal town, Jorge Colindres, a freshly cologned and shaven lawyer, would be considered its mayor. His title here is “technical secretary.” Looking out over a clearing in the trees in February, he pointed to the small office complex where he works collecting taxes and managing public finances for the city’s 2,000 or so physical residents and e-residents, many of whom have paid a fee for the option of living in Próspera, on the Honduran island of Roatán, or remotely incorporating a business there.Nearby is a manufacturing plant that is slated to build modular houses along the coast. About a mile in the other direction are some of the city’s businesses: a Bitcoin cafe and education center, a genetics clinic, a scuba shop. A delivery service for food and medical supplies will deploy its drones from this rooftop.Próspera was built in a semiautonomous jurisdiction known as a ZEDE (a Spanish acronym for Zone for Employment and Economic Development). It is a private, for-profit city, with its own government that courts foreign investors through low taxes and light regulation. Now, the Honduran government wants it gone.

My name is Rachel Corbett, and I'm a contributor to the New York Times Magazine. This story is about a private city. What is a private city, you ask? It's just like a regular city. People live and work there, make decisions about how they want to pursue their dreams, except the city is owned by a corporation. It has all of the features of a government is owned by a corporation. It has all of the features of a government, but for a price.

Almost everything is privatized. Private school, private security, private infrastructure. And they're often built in semi-autonomous zones, with their own laws. That kind of freedom is especially appealing to foreign investors looking to circumvent certain regulations or taxes. Historically, places like this already exist, like Shenzhen, Singapore, or Hong Kong. But private cities are a growing movement. About 30 have sprung up all over the world, sometimes in conflict with the very countries that host them.

My story from the magazine is about one private city being built by a U.S. corporation on an island off the coast of Honduras. And it's backed by a few Silicon Valley billionaires like Peter Thiel, Sam Altman, and Balaji Srinivasan. And the city they've put their money into is called Prospera. Prospera is the most advanced version

of this private city phenomenon, in terms of its infrastructure and the number of businesses that have invested in it. For example, medical companies there don't have to operate by FDA standards when conducting clinical trials. Real estate developers don't have to follow typical environmental laws. But there's something else that makes Prosper notable. It's suing the Honduran government for almost $11 billion. Once I heard about this lawsuit, I realized this wasn't just some kind of fringe libertarian fever dream.

That it was someplace that could actually have real effects on the world. And so I needed to know more. And that meant I had to go to Prospera. Prospera is not open to the public. You have to become a resident, which with a few exceptions is shockingly easy. You just fill out a form and become a resident. Which, with a few exceptions, is shockingly easy. You just fill out a form and pay a fee.

Their whole mission is to simplify governance. Tap a button, you're a resident. Or tap a button, now you have a business. I flew to the island of Roatan, where Prosper is located. The island's absolutely beautiful, and home to the second largest barrieratan, where Prospera is located. The island is absolutely beautiful and home to the second largest barrier reef in the world, so it's already a big destination for tourists. When you approach Prospera, there's a fork in the road. If you go right towards the city, there are armed guards and black combat fatigues manning the gates.

But if you go to the left, you arrive at this poor fishing village called Crawfish Rock. The village's sagging houses are a stark contrast to Prospera, where corporate-looking guys are running around with laptops in their hands. When I reached Prospera's Gates, the first thing that happened was that I was required to sign a contract. It asked me to agree to over 4,000 pages of rules. They let me in, and then I walked up and it was absolutely idyllic. They had these totally manicured grounds. It was this clean, tropical paradise right on the Caribbean Sea. And then I met Jorge, who's essentially the mayor of the town. Very nice, young, clean-cut guy.

We went on a tour of the town and to the top of a tower where you could look out on the construction projects. I immediately noticed that everything's new, built from scratch. An office complex, a residential tower, a high-tech factory. However, there was a big underlying problem to everything I saw. So big that it's put all of Prospera in limbo. Honduras's president, a socialist, ran on a platform in 2021, promising to repeal the constitutional amendment

that allows Prospera to even exist. And Prospera countered with that lawsuit against Honduras for $11 billion, an amount that would almost bankrupt the very nation in which it's built. On the one side of this fight is a private city that wants nothing to do with Honduran government control, and on the other, the government that wants it gone. And so here's my story, read by Frankie Corzo. Our producer is Jack DiSidoro, and our music was written by Aaron Esposito.

Jorge Colindres, a freshly coloned and shaven lawyer, handed me a hard hat to take the elevator to the 14th floor of what is now the tallest building on the Andorran island of Roatan, nearly twice what the local building code allows. When construction is complete, Duna residences will house 82 units overlooking a jungle of palm trees, the Caribbean Sea, and several other new buildings that the enduring government considers illegal. If Prospera were a normal town, Colindres would be considered its mayor. His title here is technical secretary. As we looked out over a clearing in the trees in February, he pointed to the small office

complex where he works collecting taxes and managing public finances for the city's 2,000 or so physical residents and e-residents, many of whom have paid a fee for the option of living in Prospera or remotely incorporating a business there. Nearby is a manufacturing plant that is slated to build modular houses along the coast designed by Zaha Hadid architects. About a mile in the other direction are some of the city's businesses, a Bitcoin cafe and education center, a genetics clinic, a scuba shop. A delivery service for food and medical supplies will deploy its drones from this rooftop.

There's not much else to see yet, but the Delaware-based company that founded this experimental town in 2017 has raised $120 million in investments, including from venture capital funds backed by the Silicon Valley billionaires Peter Thiel, Sam Altman, and Mark Andreessen, to transform the territory, about twice the size of Monaco, into the most developed start-up city in the world. Built in a semi-autonomous jurisdiction known as ACEDE, a Spanish acronym for Zone for Employment and Economic Development, Prospera is a private, for-profit city

with its own government that courts foreign investors through low taxes and light regulation. Businesses can choose a regulatory framework from a menu of 36 countries or customize their own. A California company offers a Montessori education for approximately 60 students. Security is provided by a private firm of armed guards. An arbitration center staffed by three retired Arizona judges handles dispute resolution.

In order to enter the jurisdiction, I was told I needed to sign an agreement of coexistence, binding myself to 4,202 pages of rules, violations of which would be subject to the jurisdictional authority of the arbitration center. Prospera has become particularly well known for the zone's experimental medical facilities, which run clinical trials unburdened by FDA standards. The week of my visit, Patrick Friedman, grandson of the economist Milton Friedman,

and the founder of a startup cities fund that invested in Prospera, had a chip with his Tesla key implanted into his hand. On a previous trip, he brushed his teeth with genetically modified bacteria purported to prevent cavities. Another time he was injected with a protein booster intended to make him stronger and faster, as he put it at a conference in Rwatan that weekend. I can tell you when Prospera became most real for me, Friedman told the audience. When I sat down to fill out my informed consent forms that said like,

this agreement is adjudicated under the laws of the Prospera Sede. Any disputes are arbitrated by the Prospera Arbitration Center. Like, you are under a different set of laws. There are more than 5,400 of these special economic zones in the world, ranging on a spectrum from free ports for duty-free trading all the way to the special administrative region of Hong Kong. About 1,000 zones have cropped up in just the past decade, including dozens of startup cities, sometimes called charter cities, most of them in developing nations like Zambia

and the Philippines. Some have actually grown into major urban centers, like Shenzhen, which went from a fishing village to one of China's largest cities, with a GDP of $482 billion, after it was designated a special economic zone in 1980. Each zone offers a degree of escape from government oversight and taxation, a prospect that has excited libertarian and anarcho-capitalist thinkers,

at least since Ayn Rand imagined a free-market utopia called Galt's Gulch in Atlas Shrugged. Today, escalating clashes between the government and big tech, like the SEC's regulatory war on crypto or the Federal Aviation Administration's repeated investigations into SpaceX, have spurred some Silicon Valley entrepreneurs to seek increasingly splintered off hubs of sovereignty. And with government dysfunction preventing reforms even in wealthy cities like San Francisco, locked in a decades-long affordable housing crisis, and New York City, which just lost

out on as much as $1 billion when Albany scrapped a 17 years in the making congestion pricing plan that would have funded public transit. It's not hard to see the appeal of starting from scratch. In promotional materials, Frosbena markets itself to 21st century pioneers, craving not just laissez-faire policies, but also good times and Caribbean vibes. Direct flights from Miami and Houston can transport these digital nomads to Roatan in less than three hours. Then from a chaise longue on the beach, they can register a business with the tap of a

button. Although only one residential building has been built so far. A forthcoming eco-condo was, during my visit, courting buyers seeking more personal freedom and less political drama. Prospera's original investment plan projected that by 2030, the city would be home to 38,000 residents, and that foreign direct investment in the country

would top $500 million by next year. But plenty of other people find Prospera's goal, building the future of human governance, privately run and for profit, unsettling. Critics have described it as a neo-colonial state within a state, or an example of corporate monarchy, where yacht-owning CEOs exploit land and labor in a poor country. Keller Easterling, the urbanist and architectural theorist, considers Prospera a city in name

only, akin to, say, mattress city. Really, she says, the zones are low tax deregulated marketplaces. As we peered over the edge of the tower's rooftop, I considered the story of a subcontractor who was working at the apartment tower at night two months earlier. The power had gone out, and he walked to the edge of the floor to yell down to his crew to turn on a generator, but took a step too far and fell to his death. on a generator, but took a step too far and fell to his death. If companies choose their own regulatory frameworks, as they do in Prospera, who holds them accountable if they endanger or harm one of their employees? Prospera Sede has its own set of labor systems,

Colindres said when I asked him about it later. He told me the worker's family was compensated appropriately, receiving at least as much as was required under Honduran law. But he declined to disclose details. If an independent investigation took place, its findings have not been released to the public. After all, the point of a place like Prospera is that there isn't really a public to speak of. This lack of transparency is one common criticism

of Prospera, and today it's unclear whether this experiment can continue. In recent years, vehement opposition from the enduring government and neighboring communities has imperiled Prospera's future. Now, its fate, and that of the private cities movement writ large, hangs in the balance of a high-stakes case before an international tribunal. There are about three dozen charter cities currently operating in the world, according to an estimate from the Adrianople Group, an advisory firm that concentrates on special

economic zones. Several others are under development, including the East Solano Plan, run by a real estate corporation that has spent the last seven years buying up $900 million of ranch land in the Bay Area to build a privatized alternative to San Francisco. Praxis, a forthcoming crypto-state on the Mediterranean, and the Free Republic of Liberland, a three-square-mile stretch of unclaimed floodplain between Serbia and Croatia. Many of the same ideologically aligned names—Balaji Srinivasan, Peter Thiel, Mark Andreessen, Friedman—recur as financial backers. Patrick Schumacher, principal of

Saha Hadid Architects and a critic of public housing, is behind several of their urban—or metaversal designs. Srini Vasan, the former Coinbase Chief Technology Officer, and now an advisor to Pronomos Capital, Friedman's fund to build startup cities, argued in his 2022 book, The Network State, that these new business-friendly hubs would soon compete with nation states

and one day replace them. The Network State was inspired, he said, by the state of Israel. That country was started by a book, he tweeted in 2022, referring to Theodore Herzl's 1896 manifesto, The Jewish State. You can found a tribe, Srini Vasan said on a podcast. What I'm really calling for is something like tech-Zionism, when a community forms online and then gathers in physical space to form a reverse diaspora. The concept might have stayed on the fringes of libertarian and neo-reactionary forums. Had Paul Romer, who would go on to be the chief economist of the World Bank and win the Nobel Prize, not made charter cities the subject of an influential 2009 TED Talk.

He projected a photo of students in an African country doing their homework under streetlights, explaining that their government required the electric company to provide power at such low prices that the company decided not to service the homes in their area at all. When the president tried to reform the system, he went on. Consumers and business leaders pushed back, and ultimately, nothing changed. Romer argued that charter cities would give developing countries a chance to prosper by ceding uninhabited territory to wealthier nations to develop.

This ruling country would act as a guarantor to the host country and write its own laws and regulations, which would attract private companies to invest and build the cities. In turn, jobs, technology, and educational opportunities would pour into the host country, which would share in the revenue too. Locals would stop leaving for richer countries.

Migrants would come to the zone. A virtuous cycle would take hold and students wouldn't need to do their homework in the streets. The city can be built, Romer said in his talk. And we can scale this model. We can go do it over and over again. Around the same time that Romer was delivering his Ted Talk, Honduran soldiers stormed the home of the country's left-wing president, Manuel Zelaya.

They led him outside at gunpoint, still in his pajamas, and put him on a plane to Costa Rica. Zelaya had been planning to hold a public referendum on reforming the constitution, which his critics saw as an attempt to illegally extend term limits. Shortly after the coup, the military held another election. It put into office the conservative candidate Porfirio Lobo, who lost the previous contest to Zelaya. Several nations, including the United States, questioned the legitimacy of an election staged by leaders of the coup.

President Lobo's chief of staff, the Harvard educated lawyer Octavio Sanchez, saw Romer's TED Talk and thought it was just what Honduras needed to achieve economic prosperity. Sanchez arranged a meeting in Miami among Romer, Lobo, and the President of Congress, Juan Orlando Hernandez. Lobo told Romer that to do something as significant as he proposed, to create a zone that would replace Honduran laws with those of a wealthier nation, they'd need to amend the constitution.

Romer visited Degusi Alpa soon after. Honduras, a country where over half the population lived in poverty, and 75,000 people left each year for better opportunities in the United States, was an ideal testing ground for his vision. When Romer returned home, he recorded a follow-up TED Talk titled, The World's First Charter City? A tumultuous three years followed. Romer and the oversight board he helped set up were sidelined, and the Honduran Supreme Court initially rejected the constitutional amendment. But Congress, led by Hernández, dismissed the four opposing judges in what some critics

called a technical coup. Hernández, who succeeded Lobo as president of Honduras, continued to have a career marred by corruption, and was recently sentenced to 45 years in a United States federal prison for drug trafficking. In 2013, Honduras amended its constitution to allow for the creation of autonomous zones following China and the United Arab Emirates. I met Corlindres outside his office on a wellness Wednesday. Catering staff had set out fruit and granola bars on the counter of an open air cafeteria at the city's headquarters.

A small complex of three interconnected buildings on a manicured tropical lawn. A guard in black combat fatigues with a double-barreled rifle paced near a porch swing. Colindres, who is 31, peeled an orange as he began to tell me about his family's history in Honduras. One of his grandfathers fought in the Andorran armed forces against communism during the Cold War. Later, his uncle, the president of the Chamber of Commerce,

was taken hostage by communist guerrillas. Kolindris' hero is the family's capitalist success story, his great-grandfather, Konstantinos Marinakis, who immigrated from Greece after World War I and built a fortune, in part by opening grocery stores during the country's banana boom in the early 20th century. In the late 1800s, Honduras owed immense debt to Britain and began offering land and financial incentives to attract foreign investment.

Eventually, U.S. banana companies, like Cuyamal and United Fruit, now Chiquita, built railroads, port infrastructure and other projects in exchange for land. By the beginning of World War I, O. Henry had named the country the original Banana Republic. The six largest banana companies owned more than a million acres of fertile land on Honduras' northern coast. And in 1911, one orchestrated a coup to install a puppet government. Where many see a story about exploitation,

Colindres describes one of private sector productivity. As workers migrated to the coasts to work, the plantations grew into small cities with their own housing, schools, hospitals and stores. Back then there was very poor infrastructure, and so when the banana companies came, everything had to be done, Colindres said. No roads, no electricity.

All of what we consider public infrastructure in Honduras, it was put in by the private sector. Goliindris' political views started hardening as a teenager living through the coup of 2009. He went to law school and came to the conclusion that he'd have to leave Honduras for the United States if he wanted to have a fulfilling career. But then came news that the Sede constitutional amendment had passed. Honduran law preserved national authority over a few fields, like criminal law, but granted the Zones broad freedom to establish their own courts, fiscal policies, and labor

and environmental protections. In 2014, as required by the amendment, Juan Orlando Hernandez appointed a group to oversee the CEDES. Early members included a granddaughter of the final Austrian emperor and a band of Republicans from the U.S. that included the former Reagan speechwriter Mark Klugman, the anti-tax activist Grover Norquist, the former Reagan aide Faith Whittlesey, the libertarian economist Mark Skousen, and Ronald Reagan's son Michael Reagan. A couple of years later, Honduran lawmakers heard about an Arizona entrepreneur named Eric Bremen, who was lobbying Washington to make creative use of the U.S. Constitution's Compact Clause

to pass a bill establishing low regulation prosperity zones. Bremen was having a hard time implementing his vision in the states. So took the Hondurans up on their offer to develop a zone like the one Roemer imagined, but run by a private company rather than by another nation. Bremen, who grew up in a wealthy family in Venezuela until he moved to the United States at 12, met Gabriel Delgado, a Guatemalan entrepreneur who had already identified a couple of plots of land

in Roatan as potential sites. In 2017, they decided to work together, with Bremen acting as chief executive and Delgado heading up fundraising and real estate development. They secured early investments from Fre Friedman's Pronomos Capital and an unnamed investor behind SpaceX. But their success in establishing the first Sede, they said,

is due in part to keeping their ideological beliefs quiet. Instead of saying we are trying to create a libertopia, Bremen told the libertarian magazine Reason in 2021. We shifted the conversation away from advancing a political ideology toward, yes, liberty, but as a tool to development. After a brainstorming session, Bremen came up with a name that might accomplish that, Honduras Prospera Inc. When Colindres heard the news that the project had broken ground, he reached out to Bremen,

who expressed interest in his 2019 paper, Make Honduras Great, Charter Cities as a Development Program. He said, I also want to make Honduras great, Golindres recalled. He promised Bremen his support. Let me bring all my contacts and all my clients and everybody to join, he told him. And then that's what I did. Prospera has now incorporated 222 businesses into the CDE, including an outsourced staffing agency and scores of experimental medical centers.

MiniCircle, founded by two young biohackers, offers a product that they say might cure Alzheimer's and suppress all tumors. Symbiont Labs manufactures implants that turn people into self-sovereign cyborgs. The Bay Islands Fitness and Transformation Center offers affordable semi-glutide injections. And the Global Alliance for Regenerative Medicine provides stem cell treatments. A man sitting next to me on my flight from Roatan showed me severe burns on his arms that he'd come to treat at the clinic. While I was visiting, a pop-up city called Vitalia used a dome it had erected on

Prospera's grounds to host events for biotech innovators who want to make death optional. Much of the activity at Prospera takes place not in the area where the Duna Tower stands and Golindres works, but a 15-minute drive away at Pristine Bay, a green gated golf community and beach club. Starting in 2021, Prospera began incorporating parts of the resort into the zone. Down by the tennis courts, I saw Vitalia's white tented dome, though organizers did not allow me to attend any of its events. Reason wouldn't grant me access to a conference it was hosting at the hotel

either. So I hung out by the pool and down the street at Amity Age Academy, an old restaurant that a Slovakian math tutor had turned into a Bitcoin education center and cafe. That's where I met Susel Ramos, at the time Amity Age's 25-year-old lead educator, next to a bookshelf stocked with Ludwig von Mises' bureaucracy, Ayn Rand's capitalism, and Jordan Peterson's 12 Rules for Life. I bought a coffee.

The barista let me pay with fiat, paper money, on a one-time basis. And then Ramos took me on a tour. On the walls downstairs hung a Bitcoin mining machine, a portrait of Guy Fawkes astride a bucking green stallion, and a map of Roatan, with colored squares of paper marking the dozens of businesses that now accept Bitcoin, largely thanks to Ramos' door-to-door persistence. Ramos told me sheto-door persistence. Ramos told me she couldn't wait to move to Prospera, probably to the Duna Tower.

Then she'd apply for physical residency, giving her the right to vote for Sede leadership. One vote for every square meter of land she owned under the current rules. For now, very few people actually live full time in the Sedé, which is a checkerboard of territory across both the island and the mainland. It started out with 58 acres in Robatan, but since a Sedé's territory doesn't need to be contiguous, it has added 385 acres in La Seba on the mainland, followed by another 239 acres of Roatán's Port Royal, and then 322 acres of Pristine Bay. Just how much land the Prospera Sede plans to absorb is the source of much of the conflict that now vexes the project. Early promotional images sparked outrage for depicting the north coast of the island dotted with skyscrapers,

futuristic houses, and yacht-filled ports, rather than the wooden shacks and jungle that exist there now. One image that forecast the growth of Prospera from a village to a town to a city made it look as if the project had started engulfing the areas around it, says Ricardo González, a legal consultant for Honduras Prospera Inc. It was taken literally by the people who lived in those areas, he says. But it shouldn't have been. Everything is voluntary. We cannot just pick up your land and say now it's part of us.

But it is also true that the CEDE law allows the Honduran government to compel landowners to sell to a zone, so long as they are paid fair market value for the property. Bremen insists that Prospera would never take advantage of that provision, because it violates the sanctity of private property rights, and that the company has self-imposed

the highest possible limitations on this and its charter. Nevertheless, the provision's existence set in motion a spectacular series of events as Prospera Gate, manned by guards carrying guns and contracts, and the other winding down a dirt path to a small fishing village called Crawfish Rock. Ruatan, thanks to its thriving tourism industry, generates more money than many parts of Honduras.

But Crawfish Rock, home to a Black English-speaking community — Roatan is a former British colony — is an exception. Turquoise and peach houses sag and lean on stilts. Their roofs patchworks of corrugated metal scraps. According to Vanessa Cardenas, vice president of Crawfish Rocks Patronato, or Community Board, it was 2019 when the first Prospera representatives came to the community, informing them of plans to develop a nearby resort. It's quite normal for us to have this kind of restricted gated community popping up,

Gardena said. The island is full of them. They also wanted to do community development, they told her, and offered small business loans to crawfish rock residents. But then odd things started to happen, Gardena said. When odd things started to happen, Cardenas said. Prospera stationed armed guards on the road. Then Bremen tried to form a new patronato that Cardenas said was stacked with Prospera employees.

A Prospera representative disputed this. In 2020, Cardenas received a voice message from someone in the community that said, this project is not a normal project. So she and Luisa Connor, the president of the Patronato, began to research Prospera. They learned about the Sede law and about the involuntary sale of land. By no means did they explain to us what a Sede was, Connor says. They came as a normal resort they were going to build next to the community.

A Prospera representative disputed this, saying the company held multiple town halls describing the project to residents. Distrust spread among members of the community, who felt they had been lied to about Prospera's intentions. In September 2020, Bremen tried to address the conflict by organizing a meeting in Crawfish Rock. Connor wrote a letter asking him to postpone it, because COVID was spreading rapidly on the island, and the hospitals there were full. Bremen, who says he was invited by village elders, held the meeting that evening anyway,

accompanied by guards. He stood on a second story porch, reading into a microphone, the parts of the C'est de la pertaining to land expropriation. That's when all hell broke loose, Gardena said. People rushed up the steps, some shouting that he should leave, others to let him speak. Shoves were exchanged, and Bremen's MacBook tumbled off the railing. He yelled at people to back up and stop violating his right to social distance.

Trucks of police officers arrived. Bremen later said that before he was interrupted, he was trying to point out the ways the law restricts rather than promotes the forced sale of land. But a video of the encounter circulated throughout Honduran media, and the fear of expropriation became a galvanizing message used by anti-Sede groups on the mainland and the other Bay Islands. From that point on, the narrative changed from, the narrative changed from, CEDES are bad because they are violating constitutional rights, González says,

to the more forceful, CEDES are bad because they are going to take your land. A national protest movement was born, and prominent politicians turned against the project. In 2021, Ciomara Castro, the wife of the ousted president Zelaya, made repealing the CEDES a central promise of her election campaign. The zones became associated with the corruption of Juan Orlando Hernandez,

the president at the time, whom many Hondurans now revile. Castro won with a clear majority. In 2022, Honduras' Congress unanimously repealed the law and passed a constitutional reform that would abolish the three existing CEDES. Never again will we carry the stereotype of the Banana Republic, Castro declared to the UN General Assembly a few months later. There was one problem, however. Congress, mired in competing legislative priorities, failed to ratify the reform.

Furthermore, the original CEDE law guaranteed the company's 50 years of legal stability, no matter what changes were made after a zone was founded. The net result is that Prospera is in a state of legal limbo. Delgado seemed bewildered by the staunch opposition to Prospera. How had his dream to enrich Central America become a political piñata? We're not crooks, he told me. We're just guys trying to get something good done. We're not crooks," he told me. We're just guys trying to get something good done.

He said he was inspired to help found Prospera after reading Machiavelli's writings on the impossibility of reforming a system from within. "'The idea is that if you go to a place where nothing, nobody has a stake, there's no entrenched interests. You can make really deep reforms that won't affect any of the players," he said. Years of dysfunction and corruption would be replaced by radically simple governance. A free market and political stability would attract top innovators and investors from the West, while empowering Latin America's legions of micro-entrepreneurs, the guys on

the side of the road selling oranges, or a chicken leg in a bag, Delgado said, to grow real businesses. But in seeking to sidestep politics, Prospera instead ran straight into them. The endemic corruption in Honduras, the sort of thing Prospera was supposed to combat, was also what enabled

its creation and has plagued its pursuit of legitimacy. For Hondurans, the prospect of American capitalists promising prosperity may instead resurrect fears of exploitation and dispossession. Despite Prospera's fantasy of exit, it uses roads, hospitals, and ports built by the municipal government. And it shares an economy and ecosystem with its neighbors in Crawfish Rock. The national government that granted its right to exist, meanwhile, may still take it away. In 2022, the government began stripping Prospera of some of the special privileges it was granted under its predecessors.

It halted the company's tax-exempt customs service, allowing the zone to continue to import goods only if it paid the same duties as the rest of Honduras. Colindres said that the National Banking and Insurance Commission also pressured Honduran banks to shut down accounts of Prospera businesses and bar lenders from financing its projects. Duna Residences, for example, was going to be financed by one of the biggest banks of Honduras, Colindres said. But once President Castro came to power, the financing evaporated and the building was delayed. The third tower would already be under construction if they hadn't done that.

At the end of 2022, Honduras Prospera Inc. and its affiliates filed an astronomical $10.775 billion lawsuit against the state in a World Bank tribunal called the International Center for Settlement of Investment Disputes, Ixen. Prospera is thought to have a good chance of prevailing in part, critics say, because the court is biased toward corporations, which can bring suit against nation-states but cannot be sued by them. A win for Prospera could demonstrate sufficient legal stability to attract investors and set the precedent for new cities around the world. If it loses, startup city founders will need to look for new legal strategies.

Colindre said that his mission now is to try to persuade the government, whether this government or the next government, to stop harassing the banks and let them finance prospera projects. That could be the government of Juan Orlando Hernández's wife, Ana García de Hernández, who would soon announce her candidacy for the 2025 presidential election. With building the Lade,

the view from the Duna Tower's rooftop looked like little more than a construction zone, a patch of dirt littered with piles of 2x4s and wooden pallets. There were as many sheds as finished buildings. Still, some think Prospera may already be too far along to fail. There is simply too much capital already invested, too many commitments made, to have them torn apart in Tegucigalpa. The government is making emotional arguments more than anything else, Gonzales told me. If they had the legal right

to do what they're trying to accomplish, they'd have already done it. Thank you.