Since Xiomara Castro was sworn into office as Honduras’ first female president, she has chosen to align the country with backward regimes such as Cuba and China. At the same time, she appears to be moving away from trade partnerships with forward-thinking countries like the US and Taiwan.
If Castro is successful, it would be an unmitigated disaster for Honduras and the entire free world, reversing decades of economic and social progress that the country has made.
It would also be a hammer blow for the US, both politically and economically. After all, America is Honduras’ biggest trading partner, accounting for $5.2 billion in exports and $6.4bn in imports in 2021, while it also provides a host of much-needed educational opportunities.
In addition, it would play right into China’s hands as the global superpower strives to broaden its geographic footprint and influence. Were Castro to get her way, it would also undoubtedly result in a mass exodus of Honduran migrants, who would head straight for the US border in search of a better life.
US should support a free Honduras
The only way to stop Honduras from going down the same path as some of its neighbors is for the US Republicans and Democrats to join forces to defend the country’s freedom. Only the newly-elected speaker of the House of Representatives, Kevin McCarthy, has the power and drive to bring the two sides together to save the Honduran people from their perilous plight
Only through public diplomacy can the US Government alter Honduras’ economic course for the better. But it needs to make sure that it works alongside and cooperatively with President Castro. A recent letter from Senator Elizabeth Warren and more than 30 anti-trade Democrats urging the U.S. Government to intervene against fellow Americans in a case brought against Honduras by American firm Honduras Prospera has only served to worsen the ongoing dispute.
Castro has already taken steps to shut down foreign investment in Zones for Employment and Economic Development (ZEDEs), signing a measure to repeal the legislation governing them. The direct result has been to economically disenfranchise hundreds of thousands of hard-working Hondurans and, in effect, stall the economy.
The fact of the matter is that ZEDEs will raise the country’s gross domestic product (GDP) per capita to $36,000 by 2050. That’s more than 10 times above the current GDP of $2,772.
ZEDEs are already having a big impact on Honduras’ economy, driving GDP per capita growth by 17% between 2020 and 2021. A shining example of this is Prospera, a ZEDE on the island of Roatan, which has attracted almost $100 million in US private investment, with that figure expected to reach $500m by 2025.
The bottom line is that free trade zones are key to attracting foreign investment, and creating jobs and prosperity in developing countries such as Honduras. This investment is vital to kick-start a flagging economy that is still getting over the cost of the Covid-19 pandemic.
Castro’s plans to close ZEDEs are ill-conceived and, if followed through with, they will cause untold damage to both the economy and jobs. They will also scare off any potential long-term investors looking for a stable environment in which to do business that abides by the rule of law.
Honduras’ future is in the balance. It can’t afford to make the same mistakes as its Latin American counterparts Venezuela and Bolivia, both of which are now mired in poverty and corruption after decades of mismanagement by the government.
ZEDEs represent a unique opportunity to lift millions of Hondurans out of poverty. Shutting them down will only put their workers back to square one, at the worst possible time, with the world facing 40-year record inflation and a deep cost of living crisis.
