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Speaker 1: Bloomberg Audio Studios, podcasts, radio news. A few dozen miles

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Speaker 1: off the coast of Honduras, on the Caribbean island of Roatan,

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Speaker 1: there's a square mile of sun drenched sand called Prospera.

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Speaker 1: It has all the trappings of a typical resort, a

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Speaker 1: golf course, sprawling pools, sandy beaches, But Bloomberg industry groups

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Speaker 1: Umar Faruk says there's something else about it that's recently

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Speaker 1: drawn the attention of many Silicon Valley billionaires, entrepreneurs and libertarians.

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Speaker 1: If you had to describe what prosper was like in

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Speaker 1: a sentence, how would you describe it?

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Speaker 2: I would say it's a techno utopia project. It has

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Speaker 2: this ideology behind it, kind of like we know this

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Speaker 2: new way of making the world better, and we want

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Speaker 2: a place to be able to do it.

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Speaker 1: Prospera is a city state operated by a private company.

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Speaker 3: The thinking is that if you have these sort of

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Speaker 3: easier regulations and lower tax codes, more companies will come,

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Speaker 3: and more jobs will be created and development will spur faster.

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Speaker 1: Mike McDonald covers Central America for Bloomberg. He told me

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Speaker 1: Prospera is making use of a special law in Honduras.

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Speaker 1: That allows it to be mostly autonomous. It can set

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Speaker 1: its own tax rate and regulations, so the corporate tax

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Speaker 1: rate single digits, and Prospera offers companies the ability to

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Speaker 1: pick their preferred regulatory framework from a list of thirty

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Speaker 1: six countries. If none of those work, they can also

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Speaker 1: submit their own regulations for Prospera to approve. As of

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Speaker 1: last year, about fifty companies had established a presence there.

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Speaker 3: There's the Bitcoin Cafe, sort of a bitcoin school with

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Speaker 3: a coffee shop.

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Speaker 2: There's an American nuclear reactor manufacturer backed by Sam Alkman.

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Speaker 3: There's a company that does sort of these biometric implants

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Speaker 3: where you can sort of implant I guess it's computer

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Speaker 3: chips right umar into your arm or something like that.

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Speaker 1: And the reason those kinds of companies thrive there is

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Speaker 1: it because they wouldn't be able to operate elsewhere, or

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Speaker 1: because it's just a more attractive business environment.

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Speaker 3: I think it's precisely because it's harder to get permits

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Speaker 3: for this in the US and Europe. It's slow, it's expensive,

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Speaker 3: and so it's just it's faster and easier to do

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Speaker 3: it in prosper And I think that's what they're trying

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Speaker 3: to do.

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Speaker 1: Prospera's proponents have described it as a poverty relief initiative

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Speaker 1: for Honduras, as the most ambitious experiment in self governance

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Speaker 1: ever undertaken, as something that could change the world. But

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Speaker 1: that dream is now facing an existential crisis. A coalition

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Speaker 1: of environmental and indigenous rights activists have protested against it,

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Speaker 1: members of nearby communities are pushing back, and now a

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Speaker 1: little more than a decade after Honduras changed its constitution

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Speaker 1: to allow for places like Prospera, a new party is

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Speaker 1: in charge and they're looking to shut the whole thing down.

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Speaker 2: So there's this like real legal problem, and that's caused

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Speaker 2: some practical problems for Prospera. They can't move money around

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Speaker 2: like they used to, they can't access Honduran banks like

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Speaker 2: they used to, and it just turns off the global

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Speaker 2: investors that they need to get the project going. So

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Speaker 2: it is really in danger.

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Speaker 1: Today on the show The Fate of Prospera, how the

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Speaker 1: battle over the future of a special economic zone on

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Speaker 1: an island in Honduras has captured the attention of some

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Speaker 1: of the most powerful people in the world and put

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Speaker 1: billions of dollars on the line. I'm Sarah Holder and

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Speaker 1: this is the big take from Bloomberg News.

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Speaker 4: Bloomberg Industry groups.

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Speaker 1: Umar Faruk and Bloomberg's Mike MacDonald recently traveled to visit Prospera.

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Speaker 1: To enter the city state, they first had to sign

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Speaker 1: in with the armed guards at the security booth at

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Speaker 1: Prospera's border.

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Speaker 2: When you enter this area, you sign an agreement almost

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Speaker 2: an idea of like having a visa that says you're

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Speaker 2: agreeing to abide by the set of rules that Prospera

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Speaker 2: has in place.

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Speaker 4: It's like going through customs or something.

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Speaker 2: A little bit. Yeah, they don't like check your bags

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Speaker 2: and stuff, but I think down the line they have

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Speaker 2: the authority to set up a checkpoint like that if

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Speaker 2: they wanted to.

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Speaker 1: Umar says the source of Prospero's authority dates back to

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Speaker 1: twenty thirteen, when Honduras changed its constitution to allow for

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Speaker 1: special economic development and Employment zones known as zeeds, that

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Speaker 1: could function mostly autonomously within the country. Mike says that

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Speaker 1: at the time, Honduras was still recovering from the fallout

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Speaker 1: from a two thousand and nine coup, and Sete proponents

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Speaker 1: presented the zones as a way to bring international business

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Speaker 1: back to Honduras.

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Speaker 3: The law was controversial when it was passed, and it

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Speaker 3: went through a couple different iterations, and one was struck

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Speaker 3: down by the Supreme Court. But I were really really

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Speaker 3: desperate for international capital.

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Speaker 1: A few years later, a Venezuelan born wealth fund manager

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Speaker 1: named Eric Briman was searching for a potential home for

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Speaker 1: this radical new project called Prospera. He had teamed up

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Speaker 1: with Stephen Moore, who would go on to become a

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Speaker 1: senior economic advisor to President Trump during his first term,

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Speaker 1: and a Project twenty twenty five co author. Together, they

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Speaker 1: had pitched a version of the project to several US states,

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Speaker 1: but after lawmakers balked at the idea of allowing autonomous

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Speaker 1: zones in the US, Briman started looking south.

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Speaker 2: And around twenty seventeen, Eric Briman decided to talk to

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Speaker 2: folks in the government in Honduras and found a permissive

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Speaker 2: environment to do this there.

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Speaker 1: Briman formally applied to established Prospera in Honduras. That year,

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Speaker 1: he incorporated the entity that would control it in Delaware,

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Speaker 1: and through a network of about two dozen companies, he

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Speaker 1: set up in the US and the Cayman Islands. He

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Speaker 1: raised about one hundred and twenty million dollars to fund it.

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Speaker 1: From Hong Kong to Dubai to Shenzhen. There are examples

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Speaker 1: of places all over the worlds that have tailored their

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Speaker 1: laws to attract capital, but the way Honduras's Special Economic

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Speaker 1: Zones were set up allows far greater freedom.

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Speaker 2: They have an additional level of autonomy that other special

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Speaker 2: Economic zones around the world don't have.

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Speaker 1: Is the community about a grand mission or is it

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Speaker 1: really about making money?

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Speaker 3: I think it's probably both. I mean, they are a

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Speaker 3: private corporation, they do want to make money, and at

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Speaker 3: the same time, you know, their mission is to sort

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Speaker 3: of provide a platform for these young startup companies that

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Speaker 3: sort of get bogged out in regulation in the developed world.

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Speaker 1: And along the way, show that their style of governance can,

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Speaker 1: as they say, unleash human prosperity. By twenty twenty, Prospera

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Speaker 1: had shovels in the ground. By twenty twenty four, when

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Speaker 1: Mike and Umar went to visit, Prospera had a fourteen

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Speaker 1: story reds residential tower offering two bedroom condos with Caribbean

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Speaker 1: views for about two hundred and fifty thousand dollars. There

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Speaker 1: was also a two story coworking space and a wood

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Speaker 1: factory where programmable robots transform wooden blocks into construction materials.

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Speaker 1: And Prospera had also taken over pre existing facilities nearby.

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Speaker 3: For example, the golf course and the resort next door

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Speaker 3: that had been built decades ago, and they just sort

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Speaker 3: of absorbed it and incorporated it.

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Speaker 1: But Prosper's buzziest draw so far has been its burgeoning

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Speaker 1: biotech sector. Last year, Prospera hosted a biohacking conference with

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Speaker 1: the tagline make Death Optional, which drew hundreds of biohackers

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Speaker 1: and venture capitalists. Brian Johnson, the forty seven year old

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Speaker 1: software entrepreneur who's become widely known for his obsession with

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Speaker 1: his own longevity, has traveled to the island for gene

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Speaker 1: therapy that's not legal in the US. Still for a

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Speaker 1: planned techno utopia, there's not a lot there.

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Speaker 2: There's no grocery stores I think there. They don't have

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Speaker 2: like a hospital, They don't have any of these things

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Speaker 2: that you would need to be self sufficient.

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Speaker 1: Are there citizens of Prospero who lives there?

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Speaker 4: And what is its population right now?

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Speaker 2: How many people were actually living there, Mike it.

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Speaker 3: You know, it's hard to say. It's a very transient population,

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Speaker 3: so getting an actual number of people who are permanently

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Speaker 3: living there is tough. I mean, there are people who

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Speaker 3: live there because there's a school there, and Eric Briman

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Speaker 3: does live there. I think he's relocated his family there.

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Speaker 1: At a basic level, how does prosper handle services and

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Speaker 1: functions that governments typically offer, like sewage, potholes. How does

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Speaker 1: it run as a city.

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Speaker 2: Well, that's kind of one open question, and the advantage

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Speaker 2: they have is that they're pretty small right now, but

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Speaker 2: on paper, they are responsible for a lot of these

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Speaker 2: municipal services, and they should be responsible down the line.

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Speaker 1: One of those services is enforcing the law.

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Speaker 2: So there's a set of like criminal Honduran laws that

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Speaker 2: are applicable in Prospero.

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Speaker 1: Which means having a police force, a prison, a court system.

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Speaker 2: And so far they've just got kind of stop gap

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Speaker 2: things in place. For example, their court system is just

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Speaker 2: an arbitration service that runs over the Internet and it's

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Speaker 2: composed of three retired judges who live in Arizona.

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Speaker 1: And for other municipal services, Prospero depends on its neighbor.

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Speaker 3: When I interviewed the mayor of Roatan, which is the

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Speaker 3: island where prosper is located, you know, his argument is like, look,

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Speaker 3: they use Rotan's roads, they use Rotan's garbage dump, they

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Speaker 3: fly in and out of Rotan's airport. So these are

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Speaker 3: sort of municipal services that the municipality provides for everybody

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Speaker 3: it lives on Rotan, and you know the people on

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Speaker 3: prosper when they come out of prosper they use those services.

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Speaker 3: And his argument is that, you know, since they're paying

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Speaker 3: taxes only to themselves and not the municipality, in his view,

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Speaker 3: it's not fair that they get to use these services.

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Speaker 1: The mayor of Roatan is only one of the project's critics.

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Speaker 1: From the community next door to the President of Honduras,

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Speaker 1: a vocal resistance to Prospera is growing after the break

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Speaker 1: the campaign to bring an end to the city state,

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Speaker 1: and how Prospera's founders are fighting back. Ever since Prospera

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Speaker 1: broke ground in Honduras, the city state has positioned itself

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Speaker 1: as a business oasis, a libertarian dream, but for some

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Speaker 1: of its neighbors around the island, Prospera represents something more sinister.

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Speaker 3: It is unfair to us because.

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Speaker 1: We didn't want looking for this.

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Speaker 2: This came looking to us.

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Speaker 1: That's Vanessa Cardenas she spoke to Umar and Mike at

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Speaker 1: her home in Crawfish Rock, a fishing village located just

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Speaker 1: outside Prospera's borders. She's the town's council president. Many of

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Speaker 1: its roughly six hundred residents are part of Honduras's Afro

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Speaker 1: Indigenous Scottifuna population, and Bloomberg's Umar Faruk says Vanessa wasn't

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Speaker 1: the only one caught off guard by the rise of

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Speaker 1: the city state.

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Speaker 2: At first, they thought that this was another kind of

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Speaker 2: tourist resort that was opening up next to them. But

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Speaker 2: then they figured out that this is something part of

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Speaker 2: a bigger ideological project, and they went around, like you know,

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Speaker 2: they literally went on the internet to try to figure

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Speaker 2: it out.

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Speaker 1: They found a podcast where Prospera's backers talked about their

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Speaker 1: libertarian vision and about their plans to expand Prospera around

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Speaker 1: the world.

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Speaker 4: It freaked them out.

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Speaker 2: They were really alarmed. They were like, what the hell

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Speaker 2: is this in our backyard.

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Speaker 1: Since then, Briman and his employees have visited the community

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Speaker 1: and tried to win them over with mixed effects. Residents

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Speaker 1: are concerned that Prospero will strain their resources and that

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Speaker 1: it's loosely regulated industries could hurt the environment.

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Speaker 3: What are they that from that Sokoor prior whatever they're

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Speaker 3: doing up there with the terracty, whatever, where are they

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Speaker 3: putting the waste? Would that affect us in.

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Speaker 1: The lower town?

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Speaker 3: You know.

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Speaker 1: They're also worried that the law that created the special

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Speaker 1: economic zones could allow Prospera to expand and eventually displace them.

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Speaker 3: They have legitimate concerns about you know, does this legal

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Speaker 3: framework allow Prospera to kick them off their land? And

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Speaker 3: prosper always insists no, it doesn't, but you know, when

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Speaker 3: I spoke with the mayor of Roatan, he said, yes,

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Speaker 3: like the legal framework absolutely does allow them to forcibly

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Speaker 3: expropriate them.

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Speaker 1: Other residents of Crawfish Rock and Roatan are more willing

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Speaker 1: to embrace Prospera and accept its promise of economic development.

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Speaker 2: There are some folks that see optimism in that, that

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Speaker 2: want to get good jobs, that want to get good

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Speaker 2: roads built in their neighborhood, that want to you know,

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Speaker 2: clean up the area, and so there's some people that

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Speaker 2: are saying, hey, the government of Honduras has not helped

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Speaker 2: us out, so why don't we let this company and

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Speaker 2: help us out.

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Speaker 1: As the local community's closest to Prospera debate its pros

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Speaker 1: and cons, Bloombergs Might MacDonald says Honduras's federal government has

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Speaker 1: come out in force against it. In part, that's because

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Speaker 1: the leftists are now in power and Prospera was an

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Speaker 1: idea championed by their conservative predecessors.

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Speaker 3: They see it as a violation of sovereignty that their

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Speaker 3: predecessors had sort of granted large swaths of land to

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Speaker 3: these private investors, and they basically want that land back.

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Speaker 1: The former Honduran president, who welcomed Prospera is now in

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Speaker 1: prison in the US with a drug trafficking conviction, and

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Speaker 1: that's given the current president even more ammo against Prospera.

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Speaker 1: She's called the project the creation of a narco regime. Meanwhile,

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Speaker 1: Honduras's highest court has ruled that the law behind special

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Speaker 1: economic zones is unconstitutional. It's the kind of perfect storm

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Speaker 1: of opposition that could kill a project like this, but

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Speaker 1: Prospera has come back swinging its founder Eric Brimman has

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Speaker 1: filed an eleven billion dollar arbitration claim against Honduras. Eleven

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Speaker 1: billion dollars is equal to about a third of the

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Speaker 1: country's GDP.

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Speaker 3: Their argument is basically that there is language in the

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Speaker 3: law that approved these zones like Prospera, that basically guarantees

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Speaker 3: that they can make money in the future, and they're

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Speaker 3: basically claiming profits that they would lose in the future

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Speaker 3: if they lose Prospera today.

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Speaker 1: On top of filing the massive claim, which is a

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Speaker 1: waiting of ruling from an international arbitration tribunal, Brimen is

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Speaker 1: also going hard on lobbying Washington. Lobbying.

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Speaker 2: They got folks in Congress, they got folks in different administrations,

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Speaker 2: the ambassador in Tagusagalpa, they got folks in the State

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Speaker 2: Department to put pressure on Honduras to let this investment

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Speaker 2: go forward.

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Speaker 1: To get these powerful US players on board. Prosperous boosters

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Speaker 1: are using some tried and true arguments.

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Speaker 2: One of them was that our project is pushing back

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Speaker 2: against the rise of socialism in Latin America, and we're

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Speaker 2: pushing back against the influence of China and Latin America,

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Speaker 2: and we will eventually like uplift these countries out of

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Speaker 2: poverty and stop migration to the US, and all of

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Speaker 2: these are themes that resonate really well with folks in

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Speaker 2: Congress and in some cases folks that are Democrats and Republicans.

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Speaker 2: So they've used these ideological kind of intersections about what

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Speaker 2: their project is to get support from sympathetic voices in Washington.

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Speaker 4: Has Trump's selection helped prosper.

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Speaker 2: They certainly think so, because in November, shortly after the election,

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Speaker 2: Eric Briman put out a video from Washington.

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Speaker 4: And Washington the Faniandla in teresis.

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Speaker 2: He had lobbied folks in Congress, and he put out,

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Speaker 2: you know, a little video in front of the Capitol

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Speaker 2: building saying that we had a very successful visit and

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Speaker 2: saying that they're very confident that the new administration is

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Speaker 2: going to be very supportive of what their claims are.

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Speaker 2: De la Misa, Aura Inedo early I come to say

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Speaker 2: in lotremin So they clearly do think that they have

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Speaker 2: some more backing.

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Speaker 1: The exces Montea I went, but Prospera does have US opponents.

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Speaker 1: In twenty twenty three, Massachusetts Senator Elizabeth Warren and more

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Speaker 1: than thirty other Democratic senators called on the US Trade

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Speaker 1: Representative and Secretary of State to intervene on behalf of

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Speaker 1: the hunter in government.

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Speaker 2: They think it's very exploitative, that it's part of this

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Speaker 2: long history of corporations extracting wealth from countries.

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Speaker 1: But those voices are now in the minority. How much

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Speaker 1: influence can Washington and American lawmakers really wheeled here? Can

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Speaker 1: they make or break the prosper experiment.

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Speaker 2: Yeah, they definitely can. Some of the proposals by supporters

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Speaker 2: of Prospera have included putting a visa ban on Hunduran officials,

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Speaker 2: putting sanctions on Hundur and officials, stopping all foreign and

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Speaker 2: development money aid that movie might be going from the

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Speaker 2: US to Honduras, basically pulling out all the stops in

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Speaker 2: a way that they would do against a country that

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Speaker 2: was really a world state.

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Speaker 3: I mean, the US is Honduras is top trading partner

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Speaker 3: and it's a major recipient of aid from the United States.

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Speaker 3: You know, the US has a military base in Honduras.

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Speaker 3: It's the only country in Central America that has a

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Speaker 3: US military base there. Most of Honduras's exports go to

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Speaker 3: the United States. You know, they export a lot of coffee, bananas,

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Speaker 3: some textiles. There's companies like Nike, for example, that make

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Speaker 3: some of their shirts in Honduras. So I mean it

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Speaker 3: behooves Hunduras to maintain good relations with the United States.

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Speaker 1: Prospera is just the latest example of powerful business leaders

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Speaker 1: trying to build their own utopian cities. The Silicon Valley

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Speaker 1: venture capitalist Mark and Dreesen is backing a self sufficient,

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Speaker 1: sustainable new city in the Bay Area. Billionaire Peter Tiel

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Speaker 1: wants to build floating libertarian communities in international waters. These

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Speaker 1: kinds of efforts don't typically get a warm reception and

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Speaker 1: they often stall. So I asked Umar what prosperous story

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Speaker 1: says about the trajectory of these movements.

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Speaker 2: I mean, it says that in some parts of the

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Speaker 2: world they are having pushback from different governments. But I

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Speaker 2: don't know if the idea is going to go away

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Speaker 2: anytime soon. Prospera itself is launching, or they have launched

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Speaker 2: something called Prospera Africa. They've got investors. They're shopping in

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Speaker 2: around to different governments in Africa because they need some

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Speaker 2: kind of constitutional framework like they had in Honduras to

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Speaker 2: set up a project there. So I think the idea

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Speaker 2: is continuing because it is attractive to a lot of

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Speaker 2: countries who are trying to get foreign investment. But it'll

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Speaker 2: be probably a game of looking for populations and locals

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Speaker 2: that might let it happen.

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Speaker 1: This is The Big Take from Bloomberg News. I'm Sarah Holder.

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Speaker 1: This episode is produced by David Fox. It was edited

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Speaker 1: by Tracy Samuelson, Danielle Balby, and Naomi Shaven, who is

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Speaker 1: also our senior producer. It was fact checked by Adriana

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Speaker 1: Tapia and mixed and sound designed by Alex Suguiera. Our

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Speaker 1: senior editor is Elizabeth Ponso. Our executive producer is Nicole

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Speaker 1: Beamster Boorg Sage Bauman is Bloomberg's head of Podcasts. If

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