Foreign Investors Are Building a 'Hong Kong of the Caribbean' on a Remote Honduran Island

An American-led group of foreign investors is developing an experimental city on an island off the coast of Honduras, with ambitions to become the Hong Kong of the Caribbean. But the project has sparked fears of a land grab among locals.

The quiet fishing village of Crawfish Rock, located on the island of Roatán, is home to the last vestiges of an English-speaking Black Caribbean community.

Locals speak with a slight British twang and everyone’s called Miss or Mister. Homes are built on stilts and there’s no need for fences. The people live off the land and the sea, as they have done for generations – a custom they cite as a lifesaver during the COVID-19 pandemic. They say they weren’t consulted about the new development project.

“Everything that we know as home is in danger,” said Daysi Webster, 35, who lives along with dozens of her family members just across the dirt road from the gated development site.

A controversial law allows these experimental cities, known as “charter” or “model” cities, to use a legal right to land known as “eminent domain”, which permits a government, or in this case charter cities, to take over private property. The community is worried that it could be forced from its ancestral lands.

“Obviously we’d be pretty much the first people to be forced out,” said Webster.

Investors have said that they would not resort to the use of force to claim the right to land to fulfill their desire to expand their charter city, a 58-acre plot known as Roatán Prospera, to the entirety of the island – home to numerous indigenous communities – and beyond.

But critics said the project is a new form of colonialism and that the city could also serve as a fiscal and legal paradise – allowing corrupt politicians (which Honduras has in abundance) and entrepreneurs to evade taxes and justice. It could also sharpen inequality in one of the hemisphere’s most unequal countries, observers fear.

“We are a US, [Foreign Corrupt Practices Act]-compliant company that is obnoxiously insistent on ensuring that every interaction we engage with members of the Honduran government is compliant with FCPA rules and laws as well as our internal best practices,” said Erick Brimen, chief executive of Prospera.

The idea for these charter cities comes from Nobel Prize-winning economist Paul Romer, who presented the idea in a TED Talk in 2009. He theorized that the foundation of semi-autonomous, charter cities in the developing world with foreign nations acting as guarantors would accelerate development by creating an environment unencumbered by local corruption, bureaucracy and regulations and therefore more conducive to economic growth.

The proof, according to Romer, could be found in city-states like Hong Kong, which thrived economically under British rule and then until recently, under the one country, two systems agreement with mainland China.

The theory quickly gained traction in conservative circles for its free market approach. It was embraced by conservative politicians in cash-strapped nations that were eager to attract foreign investment. Honduras was in the middle of an ongoing political crisis and one of its darkest, most violent periods. Leaders were desperate, and according to critics, willing to sell the country to the highest bidder. 

By 2014, the Honduran government reformed the constitution and passed a law that created a framework for the charter cities, called Employment and Economic Development Zones (ZEDE), that would be mostly autonomous, governed by an international oversight committee and armed with eminent domain.

Founding members of the committee included right-wing American and European activists, such as Grover Norquist, founder of Americans for Tax Reform, and several close allies of President Juan Orlando Hernández, a suspected drug trafficker, who has been one of the principal proponents of charter cities in Honduras (Hernández denies the allegations of drug trafficking against him). Romer served as an advisor, but later pulled his support, citing a lack of transparency.

For years there were rumors of the imminent foundation of the first charter city at different sites across the country. But nothing ever materialized until the village of Prospera was quietly inaugurated this past May to the surprise of the local community, which only found out a month later thanks to a tip from a fellow islander.

“She explained to us what was going on,” said Webster, who was horrified by what she heard. “We started to investigate and realized it was true.”

Prospera investors, including chief executive Erick Brimen, a Venezuelan-American and self-styled “serial entrepreneur,” first arrived in the community in 2017, renting a small house in the village center where they established a community center in the form of a foundation.

“They explained that they were going to invest and that there would be work, but at no time did they explain that it was going to be a ZEDE,” said Webster. Instead, locals say the project was touted as a tourist development – nothing that would raise an eyebrow on an island considered one of the Caribbean’s top tourist destinations.

Meanwhile, Brimen started appearing in the community with prospective investors, showing them around Crawfish Rock and surrounding properties as if a take over of it all were already a foregone conclusion. To date, only a 58-acre plot with a steep incline and a mere 300 feet of shoreline is under Prospera jurisdiction.

But glossy renderings used in marketing materials portray a future with luxury homes designed by celebrity architects and modern office buildings and commercial centers hugging a sandy shoreline that stretches as far as the eye can see. A series of drawings that loosely outline the first three growth stages of Prospera include what appears to be all of Crawfish Rock, as well as a golfing development next door, within the future boundaries of the ZEDE.

“I’m surprised they would have the balls to advertise a project like this,” said Bill Overman, an American investor who started buying property on Roatán 13 years ago after his family fell in love with the island. He owns about 75 acres with over 1,500 feet of picturesque shoreline that appears prominently in Prospera’s marketing.

“They keep talking about millions in seed money,” said Overman, reached by phone at his home in Texas. “Why aren’t they knocking on my door to buy my land?”

As a foreigner himself, Overman said he doesn’t have anything against the idea of a charter city. But he’s against eminent domain and thinks that Brimen and investors have gone about things the wrong way, causing tension with locals.

That tension boiled over in September due to an assembly Brimen called in Crawfish Rock that violated COVID-19 restrictions and, locals say, put the community at risk. A video from the assembly shows Brimen speaking into a microphone and referring to eminent domain before being cut off by police as attendees shouted “go away.” The video quickly went viral on social media and catapulted the issue of charter cities back into prominence.

Human rights activists say the assembly was called to make up for not consulting the local community about the project as required by Honduran law. But that consultation must take place prior to a project’s beginning.

“Before we bought any property we spent a considerable amount of time getting to know the community,” said Brimen. “But as most real-estate investors, it's not generally good practice to announce publicly where exactly you intend to purchase land.”

Brimen said the locals were informed of Prospera’s intentions in June 2019, citing a document signed in a meeting at the community center by a couple dozen community members that mentions the word ZEDE, but doesn’t explain what a ZEDE is nor does it detail the charter city’s plans for expansion. 

Locals told VICE World News that they didn’t know what a ZEDE was until this year and had been under the impression that it would be a tourism development like any other on the island. Furthermore, that meeting came roughly a year and a half after investors purchased property and established a presence in the community.

Brimen also reiterated his pledge not to use eminent domain as a means of expansion.

“Prospera does not support it and it is prohibited by its legal system from benefiting directly from expropriation that even the government of Honduras could exercise in its legal powers,” he said.

Prospera has promised to create jobs and economic development for the benefit of all.

“The whole point of Prospera is to enable in Honduras conditions that are necessary to unleash the trapped potential of its people,” said Brimen. 

The locals, however, have seen enough.

“If they wanted to really do something for us, they would be more transparent and they would come and sit down with us,” said Kerry Bennett, president of the Bay Island Alliance for Social Justice. “Imagine me going into your home and just starting to shift things around and telling you what to do.” 

• This story was updated on December 22, 2020 to include comments from an interview with Erick Brimen, chief executive of Prospera.