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