A consortium of 85 economists has voiced support for the Honduran government's decision to withdraw from a World Bank arbitration entity, injecting a new dimension into the ongoing dispute between Honduras and Prospera, a contentious crypto island development company.
Prospera, situated on Roatan island in Bitcoin Honduras, initiated legal action against the Honduran government, seeking $10.8 billion in compensation following legislative alterations in 2022 that nullified the island's special status. The dispute has unfolded within the International Center for Settlement of Investment Disputes (ICSID).
Honduras' withdrawal from the ICJ in February was deemed a significant assertion of sovereignty by the economists associated with Progressive International, a global coalition described as unifying progressive movements worldwide. They underscored this move as vital for democracy in Honduras.
Prospera's legal action against ICSID, initiated in late 2022, asserts that the Honduran government breached a 50-year guarantee of legal stability, resulting in significant financial losses. However, the group of economists expressed skepticism regarding the benefits governments derive from arbitration institutions like ICSID.
Highlighting Honduras' legal battles since President Xiomara Castro's election in 2021, the economists emphasized the substantial economic implications of these disputes, particularly the $11 billion claim from US-based Prospera.
President Castro's repeal of legislation establishing Employment and Economic Development Zones (ZEDEs), aimed at attracting foreign investment, has been central to these legal conflicts. The United Nations raised human rights concerns over the ZEDE legal framework, particularly regarding indigenous and Afro-descendant communities' consultation and participation.
Prospera's establishment on Roatan island, under laws granting it de facto sovereignty, has attracted controversy due to concerns over displacement of local communities. Despite these challenges, Honduras remains bound by its agreement with Prospera, as per former financial regulator José Luis Moncada, until its withdrawal from ICSID later this year.
