Honduras gets new support from crypto island Próspera for $11B.
A group of 85 economists has backed the Honduran government's decision to withdraw from the World Bank's arbitration panel – adding a new twist to the ongoing battle between Honduras and disgruntled crypto island developer Próspera Inc.
Prospera, Bitcoin (BTC) – Lover of the special economic zone on the Honduran island of Roatan, named after a US company, is seeking $10.8 billion in compensation from the government following a 2022 law change that killed the island's special status.
The fight has been taking place in the International Center for Settlement of Investment Disputes (ICSID).
However, in a March 19 open letter, the economists said Honduras' February withdrawal from the International Court of Justice was “a critical safeguard for Honduran democracy.”
In the year At the end of 2022, Prospera brought the case before ICSID, claiming that Honduras owes billions in violation of its “50-year guarantee of legal stability” after the government in April 2022 repealed the crypto island's special economic zone status and laws affecting legal certainty on investments.
Economists in their open letter have little evidence that governments benefit from the arbitration body.
“We find little economic evidence that mechanisms such as ICCID encourage meaningful foreign direct investment,” said the economists' letter, organized by the left-wing think tank Progressive International.
“For decades, international arbitral tribunals like ICSID have allowed corporations to sue governments and limit their freedom to regulate in the interests of consumers, workers and the environment.”
In the year Since the 2021 election of President Xiomara Castro, Honduras has faced ten ICSID cases, the largest of which is from the United States' Prospera, whose claim is about $11 billion – a third of the country's gross domestic product.
In particular, Castro rescinded laws aimed at attracting ZEEVs to boost the Honduran economy.
In June 2021, the United Nations expressed human rights concerns over the ZDE legal framework and called for an alternative system.
About 35% of Honduras – areas with a majority of indigenous and Afro-descendants and who had no “informed consultation” on the plan – was earmarked for ZEDE use.
Prospera founded ZEDE on the Honduran island of Roatan, 40 miles (65 km) off the country's northern coast, and the laws at the time gave it sovereignty over the island, including the ability to make its own laws, including courts. Police and taxes.
Related: Honduran regulator bans banks from holding, trading with crypto
The autonomous charter city has made it attractive to crypto enthusiasts by making Bitcoin a legal tender, creating a Bitcoin education center and opening up its internal framework to embrace blockchain technology and decentralized autonomous organizations (DAOs).
Concerned about Prospera's growing population and fear of being evicted from their ancestral lands, he watched as the islanders retreated.
The UN also claimed that communities near Prospera were not consulted and informed about the project – a claim Prospera denies.
Reuters reported in February that the former head of Honduras' financial watchdog, Jose Luis Moncada, said the deal between the country and Prospera was still ongoing.
Moncada said Honduras “has an obligation to respect the outcome” of any arbitration submitted before the end of August – when it is scheduled to withdraw from ICSID.
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