Invasion of the tuk tuks; soft handshakes; barred by the eco-KKK; shoe-tossing and an unlikely place for a charter city: final impressions of Central America

Things that have changed since I roamed Central America as a ‘Sandalista’ in the 1980s:

- Even though the civil wars are long gone, the homicide rates are some of the highest in the world, razor wire is everywhere, and the security brief for Oxfam staff makes it sound like a war zone.

- Cellphones, obviously. A new ritual at the end of meetings with committees of campesino leaders. Everyone gets out their cellphone and starts exchanging numbers with the visitors.

- The global tuk tuk (see pic) – they apparently arrived from India about ten years ago, and have become an essential part of public transport. Viva frugal technology. Has anyone seen any analysis of the global spread of India’s tuk tuk multinationals, Reliance Industries and Bajaj?

Other things haven’t changed, like the fine gradation of handshakes – gnarled, soft peasant hands become firmer among peasant leaders and strong grasps among NGO activists. Or the enormous importance applied to calendar dates – for invasions, laws, the signing of documents, and more soberly, for attacks and assassinations

Then there’s the weird stuff. Being stopped in my tracks by a truly disturbing picket line (see pic) of students that looked like members of some green wing of the KKK. Apparently it is a pre-Easter tradition at Guatemala’s San Carlos University for the kids to dress up like this and stop academics entering the building – after posing for photos, they were happy to make an exception for my seminar, though (some random thoughts on rural change in Latin America and beyond – powerpoint here for Spanish speakers).

And why are Honduran telegraph wires liberally hung with pairs of dilapidated shoes? When I ask if it shows that drugs are on sale, (a story I vaguely remember from somewhere) the local guys laugh and say, no it’s just a fun way to get rid of your old trainers. Really must try it sometime. Needless to say Wikipedia has a whole page on theories of shoe-tossing.

Finally, the sudden realization that I was in Trujillo, a sleepy cobble-stoned town on the Honduran coast that recently hit the global headlines because the government wants to locate the world’s first charter city there. No-one I ask knows much about it, but rumours swirl – that 30 square km has been allocated in the middle of the Garifuna people’s traditional lands; that a local landowner has bought up all the land and stands to make a killing. The charter city has already been declared unconstitutional by one court and is destined for the supreme court. Should it go ahead, it will be in the middle of a drug trafficking zone. Good luck to Nancy Birdsall and her colleagues on the city’s ‘transparency commission’ in keeping a check on all this.  Trujillo is home to the old colonial fort at Santa Barbara, where the US ‘filibustero’ William Walker (infamous in Central America, pretty much forgotten elsewhere apart from one not very good film - see right) was shot by firing squad and buried. Hope the same fate doesn’t await the godfather of the charter cities, economist Paul Romer……

Honduras is building a charter city? This is never going to work

A couple of years ago, I wrote a pretty critical post on Paul Romer’s proposal for ‘charter cities’. According to last week’s Economist, Honduras is now about to try and turn that blueprint into reality. I’m prepared to make a small bet it won’t work – any takers? 

Romer proposes building cities from scratch in the world’s poorest nations, outsourcing their design and government to rich countries. Like their kindred proposal, Paul Collier’s ‘independent service authorities’, the underlying motive seems to be to liberate development from the supposedly dead hand of dysfunctional and corrupt states, transferring it instead into the hands of benign and honest technocrats. There’s probably some folk memory of the Pilgrim Fathers (below) at work somewhere. Here’s an excerpt from the Economist piece:

“The Honduran government wants to create what amounts to internal start-ups—quasi-independent city-states that begin with a clean slate and are then overseen by outside experts. They will have their own government, write their own laws, manage their own currency and, eventually, hold their own elections. This year the Honduran legislature has taken the first big steps towards the creation of what it called “special development regions”. It has passed a constitutional amendment making them possible and approved a “constitutional statute” that creates their autonomous legal framework. And on December 6th Porfirio Lobo, the Honduran president, appointed the first members of the “transparency commission”, the body that will oversee the new entities’ integrity.

The idea of setting up a charter city echoes the way that big companies adapt to change. They often set up new divisions unencumbered by old rules. These can be dramatic successes. Target, America’s second-largest discount retailer, began life as an internal start-up but eventually took over its parent company, Dayton Hudson.

Perhaps the most important feature of the new venture is the “transparency commission”, a kind of board of trustees that appoints the governors, supervises their actions and is meant to make sure that the entities are beyond reproach, not least when it comes to the corruption (often fuelled by the drugs trade) that plagues the region. “It is easier to create a board of trustees than to give control of part of your territory to a foreign nation,” says Octavio Sánchez Barrientos, the presidential chief of staff. A role for foreign government is still an option, but only Mauritius has so far signed on—as part of its push to become a global provider of legal services.

Much will depend on the transparency commission. The first batch of members appointed this week comprises George Akerlof, another economist and Nobel laureate; Nancy Birdsall, formerly at the Inter-American Development Bank, who now runs the Centre for Global Development, a think-tank; Ong Boon Hwee, a former senior executive at Temasek Holdings and Singapore Power; and Harry Strachan, an investor who used to run INCAE, a leading Latin American business school, with Mr Romer himself in the chair.

The commission’s first job is to fill all of its nine seats. Then the hard work will start, first on investigating whether any foul play has already taken place: rumours are circulating that insiders have bought land in or near Trujillo and other potential sites. Next comes helping pick the regions’ locations and choosing developers in a way that inspires confidence not suspicion. The Honduran agency for public-private partnerships has already signed several memoranda of understanding with firms including South Korea’s Posco and two start-ups with libertarian leanings.

Last, but not least, comes security. Private security firms will have to protect the population in the new cities. Honduras is one of the world’s more corrupt countries, in 129th place out of 183 in a survey of outsiders’ perceptions by Transparency International, a Berlin-based lobby group. It also has the region’s highest murder rate. The local police have a poor reputation. Last month 176 police officers were arrested in a corruption crackdown.”

On the basis of the Economist piece, at least, the Trujillo charter city looks like a mess. The government is going to bypass constitution, laws etc, outsource the lot to private interests and rely for good governance on a commission of overstretched VIPs. If the hyperactive  Birdsall is typical, they will have so many other commitments that they really are not going to be able to invest the time to micromanage a potentially chaotic period of institution-building. I emailed Nancy about this and she replied that yes, there are big risks, but the world needs more experiments like this not least because ‘we don’t know in the development community how to ‘produce’ good governance’. She points out that there are resources, e.g. to pay at least one aide per member of the transparency board. But that still seems like a pretty skeletal arrangement and many of the criticisms I quoted in my original post apply in this case too. Got a bad feeling about this one.

Charter Cities – visionary, naive or bonkers?

Charter Cities are a proposal to build cities from scratch in the world’s poorest nations, outsourcing their design and government to rich countries. Visionary, naïve or plain bonkers? Probably a bit of all three.

They are the brainchild of US economist Paul Romer, who explains his idea on this (20 minute) video.

He’s serious – last year he gave up his professorship at Stanford to devote himself to selling his big idea. He argues that if poor people like the cities, they will migrate there, creating a ‘global archipelago of economic powerhouse city states’ in the words of a Boston Globe piece.

Here’s one example, from the Charter Cities website

‘For decades, the Unites States and Cuba have been parties to a treaty that gives the United States administrative control over a portion of Cuban territory straddling Guantanamo Bay. In a new treaty signed by the United States, Cuba, and Canada, the United States could give up its treaty rights, and Canada could take over local administration for a defined period of time.
An administrator appointed by the Canadian prime minister would be responsible for setting up and enforcing the rules that apply in this special territory. The legal protection and institutional stability that the Canadians provide would attract foreign investors and foreign citizens to the city.

As the city grows, the Cuban government would gradually allow freer movement of people and goods between the land it governs and the charter city. At the same time, supporting cities and suburbs would grow up on the Cuban side of the city’s boundaries. The charter city itself would eventually return to Cuban control.

In this case, a treaty creating a special administrative arrangement already exists and Hong Kong provides a model for how a city might be governed. An interesting variant would be one in which several countries (e.g. Canada, Spain, Norway, Mexico, and Brazil) stand in place of Canada alone.’

To me, this all feels like part of an understandable but slightly alarming series of ‘lament of the technocrat’ calls for experiments in greenfield development. Politics, institutions and societies are messy, unpredictable and frustrating, so academics in particular come over all Founding Fathers and board the latest intellectual Mayflower in search of a nice ‘clean’ experiment: think Jeffrey Sachs and his Millennium Villages, or Paul Collier and Independent Service Authorities.

As for this latest grand vision.

Pluses:
The innovate, pilot and replicate model works in some cases (eg China)
Effective states are certainly needed at the city and local level, as well as national
To some extent the proposal recognizes the rise of subnational units within globalization

Minuses:
This is ahistorical: the key to China’s pilot/replicate model was an effective state. How would charter cities do anything other than suck talent and resources away from nation states?
Hong Kong is pretty sui generis – about the only example of success built on laissez faire. According to Ha Joon Chang every other country required hands-on industrial policy and state intervention to develop
Apolitical: Even if it works, you end up with some kind of modern city amid Mad Max chaos – does he really think the city can just build a wall and keep the chaos at bay? It’s a bit like Paul Collier thinking you can give the money to technocrats in ISAs to spend, and no-one will notice!

I’ve asked around, and had a few comments back. Becky Buell, an ‘exfam’ (former Oxfam) colleague who now works on urban issues at MIT’s Green Hub, has this to say:

‘It’s interesting to note a “back to the future” element to all this.  The idea that somehow cities can be planned at all was largely abandoned by the late 70s as urban growth and informality outpaced and out-smarted the urban master planner.  There seems to be a rebirth of attempts to come up with new forms of master plan that are ambitious in scope, but that are different from past efforts in that they see a minimalist role for government, and put the private sector at the center of planning and delivery.  The Charter Cities and the World Bank’s recent Eco2Cities concepts are examples of this, with differing degrees of government leadership and management in the two examples.  The most important gap in all of these is the absence of an analysis of power dynamics, and the likely failure of any attempt at planning that doesn’t recognize and work with this.  The other big gap, I think, is the lack of perspective on the informal sector, where the vast majority of people in developing countries live and work.  Any plan that does not consider this vast world will again repeat the structuring of fragmented, segregated societies.’

Tom Goodfellow, an LSE doctoral student, emailed this after a debate with fellow LSE urbanists:

‘At the moment it certainly seems like a recipe for the creations of islands of poverty or islands of wealth (depending on the country in which the charter city is ‘hosted’) which could not easily be integrated into the surrounding society even if they were to attract people and investment, as Romer assumes they would. On the one hand, the example of a city in Australia built specially for Indonesian workers sounds like labour migration designed in such a way as to maximise negative social consequences; Romer states that public services and welfare support in the city would be ‘comparable to those in Indonesia’ (i.e. considerably lower than for people in the rest of the country in which the city is located) and Indonesians in the city ‘would be subject to the same immigration controls whether entering Australia from this zone or from Indonesia’. This smacks of the deliberate creation of ghettoes and even echoes of Apartheid townships!
 
On the other hand the creation of cities in poor countries by rich governments such as Canada is no less dubious. Firstly it is very unlikely that any sovereign developing country will voluntarily relinquish sovereignty over a city of any size for both economic and political reasons. And even if this does somehow happen, the huge amounts of private sector finance necessary to get industrial cities of the kind Romer envisages off the ground would likely lead to protected pockets of wealth that largely flows out of the country generating little benefit for the host nation state. Moreover, given the weight of private interests involved the idea that the city would somehow naturally return to the control of the host nation-state after a period of time sounds highly improbable (not unlike the Marxian idea of the state ‘withering away’…)
 
Meanwhile, having highlighted the evils of slums as one reason for creating these new cities, Romer says of the Cuban example that ‘supporting cities and suburbs would grow up on the Cuban side of the city’s boundaries’…in other words, the presence of a wealth and employment generating city would create huge slums outside the island of great institutions, which doesn’t move us on very far at all. Don’t need to build a charter city to create gated communities surrounded by squalid slums, just go to South Africa, Nairobi, Brazil, wherever!’

Chris Blattman has also blogged on this, Paul Romer has responded to his criticisms here, and Chris, in determined search of the last word, has responded to Romer’s response here.