Visiting the Free City of Próspera

01/16/2025 Mises Wire Per Bylund

I had the pleasure of visiting Próspera, a free city located on the island Roatán off the coast of Honduras, on a rainy day in December. Jorge Colindres, the city’s mayor, generously guided and shared the city’s history, successes, and political struggles.

Próspera was founded as a charter city, as defined by an amendment to the Honduran constitution. It is formally a Zone for Employment and Economic Development (ZEDE), or an economic development zone intended to generate economic growth and thus help take Honduras out of poverty. As such, Próspera is relieved from many a burden of the national government and has its own power to tax and regulate. It is, one could say, its own “city state” or a second system within the country. And it is run based on a libertarian philosophy of private property and free markets.

Spanning over 1,000 acres, and with plans for more, Próspera has permanent residents, houses a number of businesses that provide employment for local workers, and runs a beach resort with the island’s only 18-hole golf course: Pristine Bay. The ZEDE has been very successful at attracting businesses, both local and international, to both move there and start new operations. Among others, Próspera is home to pharmaceutical companies conducting clinical studies and a woodwork factory. Próspera has also attracted capital investments from venture capital firms and wealthy individuals including Peter Thiel (PayPal, Facebook, Palantir) and Marc Andreessen (Netscape, a16z).

Residents can buy or rent a house in Pristine Bay or an apartment in the newly-finalized high-rise Duna—the first completed of three planned towers—with excellent views of the bay and a rooftop terrace with infinity pool. The climate sees warm temperatures year-round. The economic climate is also excellent: businesses in the zone’s 10 regulated industries may choose among a set of regulatory codes or operate under common law (but must obtain a Qualified Regulatory Insurance Policy). Tax rates are kept at a very low level: businesses pay 1 percent of revenue and individuals 5 percent of wages, and there is also a 2.5 percent sales tax. And Bitcoin is legal tender.

Recently, the free city has been featured in the media. Naturally, it is predominantly bad press, as one would expect. The Honduran national government has attempted to get rid of the ZEDEs and, in September 2024, the country’s supreme court declared them unconstitutional and retroactively wiped the laws off the books. But it is uncertain what the consequences of this ruling are, since the ZEDEs are guaranteed by both the constitutional amendment and international binding treaties—and protected by 50-year sunset clauses.

But the government, of course, has other tricks up its sleeve. A smear campaign in the Honduran and international media—including, of course, the New York Times—have repeatedly reported on a number of concerns and conflicts related to Próspera. Many of the stories are based on a presumed conflict with the poor neighboring fishing village Crawfish Rock, but Colindres says that it is pure fantasy. There is no conflict, he says, but the villagers dare not say so when the journalists ask questions—because they fear retaliation from local regulatory organizations. In fact, many of the villagers work at Próspera, which raises their standard of living, and Próspera has shared with the village valuable infrastructure when the national government has acted like corrupt governments typically do.

Colindres sees it as his job to not only promote and grow Próspera as a business and city, but to use it to also build constructive relationships with and help the surrounding society grow alongside it. Whereas a libertarian oasis like Próspera certainly and expectedly draws heavy fire from statist ideologues and activists who do not hesitate to use political means to thwart economic freedoms, it is clear that Próspera is doing great work. And it is a very impressive project, which Hondurans should have every reason to celebrate.