Ciudad Morazon: A Libertarian City Without Any Libertarians

[Judi Lynn]

Blog Posts April 29, 2024

Introduction

Massimo Mazzone can have a prickly demeanor. The sixty-year-old Italian businessman is usually abrupt and to the point, especially when discussing business. He is unafraid to raise his voice when addressing an employee who isn’t performing up to standard or when discussing his closely held libertarian beliefs, however, his stereotypical Italian temper is paired with an equally stereotypical Italian warmth and ability to select a good wine. He is quick to joke and, like most Italians, is very kind to small children.

Massimo is the Founder and President of Centroamerican Consulting & Capital (3C), a business conglomerate focused on pharmaceutical retail and wholesaling in Latin America, though it has other interests, including distribution, agriculture, real estate, and private education. Owing to Massimo’s role as a pharma executive, Mark Lutter, the founder of the Charter Cities Institute (CCI), has joked that Massimo is one of the largest drug dealers in Latin America. A joke that plays well with English speakers, but falls flat in Spanish as the words for narcotics and prescription drugs are different in that language.

I am sitting with Massimo in an AirBnB in Ciudad Morazán, Honduras while he chain smokes through the course of our interview. Morazán is a Zone for Employment and Economic Development (ZEDE), a type of special economic zone in Honduras that enables radically decentralized governance. Under the ZEDE law, ZEDEs themselves are recognized as local administrative divisions with the same degree of operational and administrative autonomy as municipalities under Honduran law. Massimo, it so happens, is the mastermind behind Morazán, which is likely the most successful charter city project in the world today, based on the number of residents actively living onsite. This is in large part because Massimo is a highly effective business operator. He is laser-focused on customer satisfaction and improved service provision. Massimo believes that good governance should be a service, and he wants to provide the best service possible.

Massimo is a natural libertarian and a natural entrepreneur. As a libertarian, Massimo is very concerned about expanding opportunities for more people to live with more liberty. Outside of Bitcoin, he says, the ZEDEs are the most interesting thing happening in the liberty movement today. This brings in his entrepreneurial side. If he were in charge of Monaco, the micro-state perched on the French Riviera, he would franchise it, he says. He would have one in the Caribbean serving North Americans, and one in the South China Sea serving the Chinese. With a well regarded reputation for effective governance and luxury, “Monaco: Caribbean Sea” or “Monaco: South China Sea” could easily attract top clientele from North American and East Asian countries who would prefer to live in a lower tax environment with better services. While this opportunity isn’t open to him, providing the working class of Honduras with better services than what they would get otherwise is.

Morazán is the culmination of over a decade of political struggle, applied economics, and entrepreneurial sweat. While the road that Massimo has taken to get Morazán to where it is today has been long and tough (with the journey being far from over), Massimo has big plans for Morazán and its model.

How Honduras Got Here

The story of how Honduras got ZEDEs is one that you’ve likely read before if you’re remotely connected to the innovative governance space. However, it’s worth going over broadly to properly understand the environment that led to Ciudad Morazán’s current position. Though feel free to skip this section if you’ve heard it all before.

In 2009, economist and Nobel Laureate Paul Romer pitched the idea of charter cities in a TED Talk. Ultimately, both the governments of Honduras and Madagascar took interest. However, it’s important to note that the Romer Model differs significantly from what charter city advocates today propose. Under Romer’s Model, a host country partners with a “guarantor” or trustee country, with the host turning over land to the trustee to run under the laws and administration of the trustee. This model proved to be unpopular on a number of margins and hasn’t been seriously advanced outside of the initial TED Talk. Though, the general idea of creating a special jurisdiction that operated under a different legal system than that of the host country took off. Ultimately, the idea of charter cities landed in the realm of special economic zones, with a host country creating a special jurisdiction that would be operated either via a public-private partnership (PPP) or as a solely private entity.

More:
https://chartercitiesinstitute.org/blog-posts/ciudad-morazan-a-libertarian-city-without-any-libertarians/

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(You may recall during the time right after the government of President Zelaya was overthrown, after the continually ruling small group of oligarchs and their legislators sent the armed military to the home of Zelaya's family, and violently arrested him, threw him on an airplane, and dumped him out
on an airfield in Costa Rico.

During the following events, the idea of the charter city was raised. There was an odd feature that alarmed some part of the population in the fact that they would be creating and using their own legal system, with their own officials and police, etc. The idea didn't get too far at that time.)