Honduran supreme court rejects 'model cities' plan

Honduras' supreme court has struck down a plan to build a series of model cities with their own independent tax and justice systems, a proposal that was meant to spur economic growth in a country struggling with corruption and criminality.

Court spokesman Daniel Aguirre says the justices declared that a law that permits the creation of special development zones outside the jurisdiction of ordinary Honduran law is unconstitutional.

Authorisation for the private cities was passed by the Honduran Congress in January 2011 amid controversy that included objections to handing over control of Honduran territory.

A United States-based investment group had been expected to invest US$15 million to begin building basic infrastructure for the first model city near Puerto Castilla on the Caribbean coast.

Congress had given the go-ahead in September for three privately run cities that would have had their own police, laws, government and tax systems now that the government has signed a memorandum of agreement approving the project.

The project aimed to strengthen Honduras' weak government and failing infrastructure.

The project "has the potential to turn Honduras into an engine of wealth," Carlos Pineda, president of the Commission for the Promotion of Public-Private Partnerships, said at the time. It can be "a development instrument typical of First-World countries."

The three model cities were slated for Puerto Castilla, the Sula Valley, in northern Honduras, and a third in southern Honduras.

- AP