Why Is the US Condemning Honduras For Fighting Corruption? — CEPR

Xiomara Castro, the president of Honduras, won a major victory for democracy earlier this year when Congress repealed the country’s Zonas de Empleo y Desarrollo Económico law (ZEDE, or “Economic Development and Employment Zones” in English). The legislation enabled the creation of special governance zones, which have “functional and administrative autonomy” from the national government. The zones allowed investors to create their own governance systems, regulations, and courts, providing room for experimentation with privatized government to create a “legal environment adequate … to be competitive at the international level.”

This policy was highly controversial, earning the opposition of Honduran labor unions, campesinos, Indigenous organizations, and even the nation’s largest business groups. As described by the US State Department, the zones “were broadly unpopular, including with much of the private sector, and viewed as a vector for corruption.” When President Castro proposed abolishing the policy, the Honduran legislature repealed it unanimously.

The Biden administration has argued that corruption is one of the largest barriers to development in Central America. The Biden administration’s “ U.S. Strategy for Addressing the Root Causes of Migration in Central America “ promises to “[p]rioritize an anticorruption agenda ….” But when this goal conflicts with others, like promoting US investment, which is more important? A recent report from the State Department criticizing President Castro for eliminating the ZEDE law suggests that private interests take priority over public transparency and accountability.

You can read the rest at The Americas Blog.

Originally published at https://cepr.net on October 6, 2022.