Speaker 1: Bloomberg Audio Studios, podcasts, radio news. A few dozen miles
Speaker 1: off the coast of Honduras, on the Caribbean island of Roatan,
Speaker 1: there's a square mile of sun drenched sand called Prospera.
Speaker 1: It has all the trappings of a typical resort, a
Speaker 1: golf course, sprawling pools, sandy beaches, But Bloomberg industry groups
Speaker 1: Umar Faruk says there's something else about it that's recently
Speaker 1: drawn the attention of many Silicon Valley billionaires, entrepreneurs and libertarians.
Speaker 1: If you had to describe what prosper was like in
Speaker 1: a sentence, how would you describe it?
Speaker 2: I would say it's a techno utopia project. It has
Speaker 2: this ideology behind it, kind of like we know this
Speaker 2: new way of making the world better, and we want
Speaker 2: a place to be able to do it.
Speaker 1: Prospera is a city state operated by a private company.
Speaker 3: The thinking is that if you have these sort of
Speaker 3: easier regulations and lower tax codes, more companies will come,
Speaker 3: and more jobs will be created and development will spur faster.
Speaker 1: Mike McDonald covers Central America for Bloomberg. He told me
Speaker 1: Prospera is making use of a special law in Honduras.
Speaker 1: That allows it to be mostly autonomous. It can set
Speaker 1: its own tax rate and regulations, so the corporate tax
Speaker 1: rate single digits, and Prospera offers companies the ability to
Speaker 1: pick their preferred regulatory framework from a list of thirty
Speaker 1: six countries. If none of those work, they can also
Speaker 1: submit their own regulations for Prospera to approve. As of
Speaker 1: last year, about fifty companies had established a presence there.
Speaker 3: There's the Bitcoin Cafe, sort of a bitcoin school with
Speaker 3: a coffee shop.
Speaker 2: There's an American nuclear reactor manufacturer backed by Sam Alkman.
Speaker 3: There's a company that does sort of these biometric implants
Speaker 3: where you can sort of implant I guess it's computer
Speaker 3: chips right umar into your arm or something like that.
Speaker 1: And the reason those kinds of companies thrive there is
Speaker 1: it because they wouldn't be able to operate elsewhere, or
Speaker 1: because it's just a more attractive business environment.
Speaker 3: I think it's precisely because it's harder to get permits
Speaker 3: for this in the US and Europe. It's slow, it's expensive,
Speaker 3: and so it's just it's faster and easier to do
Speaker 3: it in prosper And I think that's what they're trying
Speaker 3: to do.
Speaker 1: Prospera's proponents have described it as a poverty relief initiative
Speaker 1: for Honduras, as the most ambitious experiment in self governance
Speaker 1: ever undertaken, as something that could change the world. But
Speaker 1: that dream is now facing an existential crisis. A coalition
Speaker 1: of environmental and indigenous rights activists have protested against it,
Speaker 1: members of nearby communities are pushing back, and now a
Speaker 1: little more than a decade after Honduras changed its constitution
Speaker 1: to allow for places like Prospera, a new party is
Speaker 1: in charge and they're looking to shut the whole thing down.
Speaker 2: So there's this like real legal problem, and that's caused
Speaker 2: some practical problems for Prospera. They can't move money around
Speaker 2: like they used to, they can't access Honduran banks like
Speaker 2: they used to, and it just turns off the global
Speaker 2: investors that they need to get the project going. So
Speaker 2: it is really in danger.
Speaker 1: Today on the show The Fate of Prospera, how the
Speaker 1: battle over the future of a special economic zone on
Speaker 1: an island in Honduras has captured the attention of some
Speaker 1: of the most powerful people in the world and put
Speaker 1: billions of dollars on the line. I'm Sarah Holder and
Speaker 1: this is the big take from Bloomberg News.
Speaker 4: Bloomberg Industry groups.
Speaker 1: Umar Faruk and Bloomberg's Mike MacDonald recently traveled to visit Prospera.
Speaker 1: To enter the city state, they first had to sign
Speaker 1: in with the armed guards at the security booth at
Speaker 1: Prospera's border.
Speaker 2: When you enter this area, you sign an agreement almost
Speaker 2: an idea of like having a visa that says you're
Speaker 2: agreeing to abide by the set of rules that Prospera
Speaker 2: has in place.
Speaker 4: It's like going through customs or something.
Speaker 2: A little bit. Yeah, they don't like check your bags
Speaker 2: and stuff, but I think down the line they have
Speaker 2: the authority to set up a checkpoint like that if
Speaker 2: they wanted to.
Speaker 1: Umar says the source of Prospero's authority dates back to
Speaker 1: twenty thirteen, when Honduras changed its constitution to allow for
Speaker 1: special economic development and Employment zones known as zeeds, that
Speaker 1: could function mostly autonomously within the country. Mike says that
Speaker 1: at the time, Honduras was still recovering from the fallout
Speaker 1: from a two thousand and nine coup, and Sete proponents
Speaker 1: presented the zones as a way to bring international business
Speaker 1: back to Honduras.
Speaker 3: The law was controversial when it was passed, and it
Speaker 3: went through a couple different iterations, and one was struck
Speaker 3: down by the Supreme Court. But I were really really
Speaker 3: desperate for international capital.
Speaker 1: A few years later, a Venezuelan born wealth fund manager
Speaker 1: named Eric Briman was searching for a potential home for
Speaker 1: this radical new project called Prospera. He had teamed up
Speaker 1: with Stephen Moore, who would go on to become a
Speaker 1: senior economic advisor to President Trump during his first term,
Speaker 1: and a Project twenty twenty five co author. Together, they
Speaker 1: had pitched a version of the project to several US states,
Speaker 1: but after lawmakers balked at the idea of allowing autonomous
Speaker 1: zones in the US, Briman started looking south.
Speaker 2: And around twenty seventeen, Eric Briman decided to talk to
Speaker 2: folks in the government in Honduras and found a permissive
Speaker 2: environment to do this there.
Speaker 1: Briman formally applied to established Prospera in Honduras. That year,
Speaker 1: he incorporated the entity that would control it in Delaware,
Speaker 1: and through a network of about two dozen companies, he
Speaker 1: set up in the US and the Cayman Islands. He
Speaker 1: raised about one hundred and twenty million dollars to fund it.
Speaker 1: From Hong Kong to Dubai to Shenzhen. There are examples
Speaker 1: of places all over the worlds that have tailored their
Speaker 1: laws to attract capital, but the way Honduras's Special Economic
Speaker 1: Zones were set up allows far greater freedom.
Speaker 2: They have an additional level of autonomy that other special
Speaker 2: Economic zones around the world don't have.
Speaker 1: Is the community about a grand mission or is it
Speaker 1: really about making money?
Speaker 3: I think it's probably both. I mean, they are a
Speaker 3: private corporation, they do want to make money, and at
Speaker 3: the same time, you know, their mission is to sort
Speaker 3: of provide a platform for these young startup companies that
Speaker 3: sort of get bogged out in regulation in the developed world.
Speaker 1: And along the way, show that their style of governance can,
Speaker 1: as they say, unleash human prosperity. By twenty twenty, Prospera
Speaker 1: had shovels in the ground. By twenty twenty four, when
Speaker 1: Mike and Umar went to visit, Prospera had a fourteen
Speaker 1: story reds residential tower offering two bedroom condos with Caribbean
Speaker 1: views for about two hundred and fifty thousand dollars. There
Speaker 1: was also a two story coworking space and a wood
Speaker 1: factory where programmable robots transform wooden blocks into construction materials.
Speaker 1: And Prospera had also taken over pre existing facilities nearby.
Speaker 3: For example, the golf course and the resort next door
Speaker 3: that had been built decades ago, and they just sort
Speaker 3: of absorbed it and incorporated it.
Speaker 1: But Prosper's buzziest draw so far has been its burgeoning
Speaker 1: biotech sector. Last year, Prospera hosted a biohacking conference with
Speaker 1: the tagline make Death Optional, which drew hundreds of biohackers
Speaker 1: and venture capitalists. Brian Johnson, the forty seven year old
Speaker 1: software entrepreneur who's become widely known for his obsession with
Speaker 1: his own longevity, has traveled to the island for gene
Speaker 1: therapy that's not legal in the US. Still for a
Speaker 1: planned techno utopia, there's not a lot there.
Speaker 2: There's no grocery stores I think there. They don't have
Speaker 2: like a hospital, They don't have any of these things
Speaker 2: that you would need to be self sufficient.
Speaker 1: Are there citizens of Prospero who lives there?
Speaker 4: And what is its population right now?
Speaker 2: How many people were actually living there, Mike it.
Speaker 3: You know, it's hard to say. It's a very transient population,
Speaker 3: so getting an actual number of people who are permanently
Speaker 3: living there is tough. I mean, there are people who
Speaker 3: live there because there's a school there, and Eric Briman
Speaker 3: does live there. I think he's relocated his family there.
Speaker 1: At a basic level, how does prosper handle services and
Speaker 1: functions that governments typically offer, like sewage, potholes. How does
Speaker 1: it run as a city.
Speaker 2: Well, that's kind of one open question, and the advantage
Speaker 2: they have is that they're pretty small right now, but
Speaker 2: on paper, they are responsible for a lot of these
Speaker 2: municipal services, and they should be responsible down the line.
Speaker 1: One of those services is enforcing the law.
Speaker 2: So there's a set of like criminal Honduran laws that
Speaker 2: are applicable in Prospero.
Speaker 1: Which means having a police force, a prison, a court system.
Speaker 2: And so far they've just got kind of stop gap
Speaker 2: things in place. For example, their court system is just
Speaker 2: an arbitration service that runs over the Internet and it's
Speaker 2: composed of three retired judges who live in Arizona.
Speaker 1: And for other municipal services, Prospero depends on its neighbor.
Speaker 3: When I interviewed the mayor of Roatan, which is the
Speaker 3: island where prosper is located, you know, his argument is like, look,
Speaker 3: they use Rotan's roads, they use Rotan's garbage dump, they
Speaker 3: fly in and out of Rotan's airport. So these are
Speaker 3: sort of municipal services that the municipality provides for everybody
Speaker 3: it lives on Rotan, and you know the people on
Speaker 3: prosper when they come out of prosper they use those services.
Speaker 3: And his argument is that, you know, since they're paying
Speaker 3: taxes only to themselves and not the municipality, in his view,
Speaker 3: it's not fair that they get to use these services.
Speaker 1: The mayor of Roatan is only one of the project's critics.
Speaker 1: From the community next door to the President of Honduras,
Speaker 1: a vocal resistance to Prospera is growing after the break
Speaker 1: the campaign to bring an end to the city state,
Speaker 1: and how Prospera's founders are fighting back. Ever since Prospera
Speaker 1: broke ground in Honduras, the city state has positioned itself
Speaker 1: as a business oasis, a libertarian dream, but for some
Speaker 1: of its neighbors around the island, Prospera represents something more sinister.
Speaker 3: It is unfair to us because.
Speaker 1: We didn't want looking for this.
Speaker 2: This came looking to us.
Speaker 1: That's Vanessa Cardenas she spoke to Umar and Mike at
Speaker 1: her home in Crawfish Rock, a fishing village located just
Speaker 1: outside Prospera's borders. She's the town's council president. Many of
Speaker 1: its roughly six hundred residents are part of Honduras's Afro
Speaker 1: Indigenous Scottifuna population, and Bloomberg's Umar Faruk says Vanessa wasn't
Speaker 1: the only one caught off guard by the rise of
Speaker 1: the city state.
Speaker 2: At first, they thought that this was another kind of
Speaker 2: tourist resort that was opening up next to them. But
Speaker 2: then they figured out that this is something part of
Speaker 2: a bigger ideological project, and they went around, like you know,
Speaker 2: they literally went on the internet to try to figure
Speaker 2: it out.
Speaker 1: They found a podcast where Prospera's backers talked about their
Speaker 1: libertarian vision and about their plans to expand Prospera around
Speaker 1: the world.
Speaker 4: It freaked them out.
Speaker 2: They were really alarmed. They were like, what the hell
Speaker 2: is this in our backyard.
Speaker 1: Since then, Briman and his employees have visited the community
Speaker 1: and tried to win them over with mixed effects. Residents
Speaker 1: are concerned that Prospero will strain their resources and that
Speaker 1: it's loosely regulated industries could hurt the environment.
Speaker 3: What are they that from that Sokoor prior whatever they're
Speaker 3: doing up there with the terracty, whatever, where are they
Speaker 3: putting the waste? Would that affect us in.
Speaker 1: The lower town?
Speaker 3: You know.
Speaker 1: They're also worried that the law that created the special
Speaker 1: economic zones could allow Prospera to expand and eventually displace them.
Speaker 3: They have legitimate concerns about you know, does this legal
Speaker 3: framework allow Prospera to kick them off their land? And
Speaker 3: prosper always insists no, it doesn't, but you know, when
Speaker 3: I spoke with the mayor of Roatan, he said, yes,
Speaker 3: like the legal framework absolutely does allow them to forcibly
Speaker 3: expropriate them.
Speaker 1: Other residents of Crawfish Rock and Roatan are more willing
Speaker 1: to embrace Prospera and accept its promise of economic development.
Speaker 2: There are some folks that see optimism in that, that
Speaker 2: want to get good jobs, that want to get good
Speaker 2: roads built in their neighborhood, that want to you know,
Speaker 2: clean up the area, and so there's some people that
Speaker 2: are saying, hey, the government of Honduras has not helped
Speaker 2: us out, so why don't we let this company and
Speaker 2: help us out.
Speaker 1: As the local community's closest to Prospera debate its pros
Speaker 1: and cons, Bloombergs Might MacDonald says Honduras's federal government has
Speaker 1: come out in force against it. In part, that's because
Speaker 1: the leftists are now in power and Prospera was an
Speaker 1: idea championed by their conservative predecessors.
Speaker 3: They see it as a violation of sovereignty that their
Speaker 3: predecessors had sort of granted large swaths of land to
Speaker 3: these private investors, and they basically want that land back.
Speaker 1: The former Honduran president, who welcomed Prospera is now in
Speaker 1: prison in the US with a drug trafficking conviction, and
Speaker 1: that's given the current president even more ammo against Prospera.
Speaker 1: She's called the project the creation of a narco regime. Meanwhile,
Speaker 1: Honduras's highest court has ruled that the law behind special
Speaker 1: economic zones is unconstitutional. It's the kind of perfect storm
Speaker 1: of opposition that could kill a project like this, but
Speaker 1: Prospera has come back swinging its founder Eric Brimman has
Speaker 1: filed an eleven billion dollar arbitration claim against Honduras. Eleven
Speaker 1: billion dollars is equal to about a third of the
Speaker 1: country's GDP.
Speaker 3: Their argument is basically that there is language in the
Speaker 3: law that approved these zones like Prospera, that basically guarantees
Speaker 3: that they can make money in the future, and they're
Speaker 3: basically claiming profits that they would lose in the future
Speaker 3: if they lose Prospera today.
Speaker 1: On top of filing the massive claim, which is a
Speaker 1: waiting of ruling from an international arbitration tribunal, Brimen is
Speaker 1: also going hard on lobbying Washington. Lobbying.
Speaker 2: They got folks in Congress, they got folks in different administrations,
Speaker 2: the ambassador in Tagusagalpa, they got folks in the State
Speaker 2: Department to put pressure on Honduras to let this investment
Speaker 2: go forward.
Speaker 1: To get these powerful US players on board. Prosperous boosters
Speaker 1: are using some tried and true arguments.
Speaker 2: One of them was that our project is pushing back
Speaker 2: against the rise of socialism in Latin America, and we're
Speaker 2: pushing back against the influence of China and Latin America,
Speaker 2: and we will eventually like uplift these countries out of
Speaker 2: poverty and stop migration to the US, and all of
Speaker 2: these are themes that resonate really well with folks in
Speaker 2: Congress and in some cases folks that are Democrats and Republicans.
Speaker 2: So they've used these ideological kind of intersections about what
Speaker 2: their project is to get support from sympathetic voices in Washington.
Speaker 4: Has Trump's selection helped prosper.
Speaker 2: They certainly think so, because in November, shortly after the election,
Speaker 2: Eric Briman put out a video from Washington.
Speaker 4: And Washington the Faniandla in teresis.
Speaker 2: He had lobbied folks in Congress, and he put out,
Speaker 2: you know, a little video in front of the Capitol
Speaker 2: building saying that we had a very successful visit and
Speaker 2: saying that they're very confident that the new administration is
Speaker 2: going to be very supportive of what their claims are.
Speaker 2: De la Misa, Aura Inedo early I come to say
Speaker 2: in lotremin So they clearly do think that they have
Speaker 2: some more backing.
Speaker 1: The exces Montea I went, but Prospera does have US opponents.
Speaker 1: In twenty twenty three, Massachusetts Senator Elizabeth Warren and more
Speaker 1: than thirty other Democratic senators called on the US Trade
Speaker 1: Representative and Secretary of State to intervene on behalf of
Speaker 1: the hunter in government.
Speaker 2: They think it's very exploitative, that it's part of this
Speaker 2: long history of corporations extracting wealth from countries.
Speaker 1: But those voices are now in the minority. How much
Speaker 1: influence can Washington and American lawmakers really wheeled here? Can
Speaker 1: they make or break the prosper experiment.
Speaker 2: Yeah, they definitely can. Some of the proposals by supporters
Speaker 2: of Prospera have included putting a visa ban on Hunduran officials,
Speaker 2: putting sanctions on Hundur and officials, stopping all foreign and
Speaker 2: development money aid that movie might be going from the
Speaker 2: US to Honduras, basically pulling out all the stops in
Speaker 2: a way that they would do against a country that
Speaker 2: was really a world state.
Speaker 3: I mean, the US is Honduras is top trading partner
Speaker 3: and it's a major recipient of aid from the United States.
Speaker 3: You know, the US has a military base in Honduras.
Speaker 3: It's the only country in Central America that has a
Speaker 3: US military base there. Most of Honduras's exports go to
Speaker 3: the United States. You know, they export a lot of coffee, bananas,
Speaker 3: some textiles. There's companies like Nike, for example, that make
Speaker 3: some of their shirts in Honduras. So I mean it
Speaker 3: behooves Hunduras to maintain good relations with the United States.
Speaker 1: Prospera is just the latest example of powerful business leaders
Speaker 1: trying to build their own utopian cities. The Silicon Valley
Speaker 1: venture capitalist Mark and Dreesen is backing a self sufficient,
Speaker 1: sustainable new city in the Bay Area. Billionaire Peter Tiel
Speaker 1: wants to build floating libertarian communities in international waters. These
Speaker 1: kinds of efforts don't typically get a warm reception and
Speaker 1: they often stall. So I asked Umar what prosperous story
Speaker 1: says about the trajectory of these movements.
Speaker 2: I mean, it says that in some parts of the
Speaker 2: world they are having pushback from different governments. But I
Speaker 2: don't know if the idea is going to go away
Speaker 2: anytime soon. Prospera itself is launching, or they have launched
Speaker 2: something called Prospera Africa. They've got investors. They're shopping in
Speaker 2: around to different governments in Africa because they need some
Speaker 2: kind of constitutional framework like they had in Honduras to
Speaker 2: set up a project there. So I think the idea
Speaker 2: is continuing because it is attractive to a lot of
Speaker 2: countries who are trying to get foreign investment. But it'll
Speaker 2: be probably a game of looking for populations and locals
Speaker 2: that might let it happen.
Speaker 1: This is The Big Take from Bloomberg News. I'm Sarah Holder.
Speaker 1: This episode is produced by David Fox. It was edited
Speaker 1: by Tracy Samuelson, Danielle Balby, and Naomi Shaven, who is
Speaker 1: also our senior producer. It was fact checked by Adriana
Speaker 1: Tapia and mixed and sound designed by Alex Suguiera. Our
Speaker 1: senior editor is Elizabeth Ponso. Our executive producer is Nicole
Speaker 1: Beamster Boorg Sage Bauman is Bloomberg's head of Podcasts. If
Speaker 1: you liked this episode, make sure to subscribe and review
Speaker 1: The Big Take wherever you listen to podcasts. It helps
Speaker 1: people find the show. Thanks for listening. We'll be back tomorrow.