Leaders in Honduras had all but bet on privatized cities as the country’s ticket to economic development, but last Wednesday the Honduran Supreme Court declared them illegal, the non-profit news service Common Dreams reports.

In a near-unanimous (13-2) decision, the court overturned legislation passed early last year that had approved the creation of such cities on the grounds that it made them exempt from Honduran law.

For readers not keeping up with the happenings down in Central America, here’s some background:

Writing for Forefront back in May, author Greg Lindsay reported on one of the more audacious urban policy schemes in recent memory: Economist Paul Romer’s plan to lift Honduras out of poverty by building from scratch what he termed “charter cities” — or brand new cities with their own laws, immigrants and investors — in the drug war-ravaged country. 

The idea was simple enough, and rang vaguely of white saviorism. Romer would first appeal to a frustrated national government. With its blessing, he would then independently create a city with an emphasis not on planning and form, but on rules and institutions — they dual key, according to Romer, to any successful city. The result? Economic activity generated by the new metropolis would spread throughout the country, single-handedly ushering in a new era of prosperity.

After initial talks with Madagascar fell through following a military shakeup, Romer found a receptive audience in the administration of Porfirio Lobo, president of Honduras (Lobo warmed to the charter cities idea after seeing a video of Romer championing them in a 2009 TED talk). 

Things went smoothly between the unlikely partners until last month, when it was revealed that the Honduran agency overseeing the projects went over Romer’s head to strike a deal with an investor, the New York Times reported at the time. 

That the government would act on its own accord without first clearing the move with Romer undermined a basic premise behind charter cities, which is that they would operate outside the scope (and corruption) of the established political system. Romer, the brains behind the project in the first place, withdrew. 

For another month, it looked like Honduras would pick up where Romer left off, appropriating his idea and implementing a charter city without his oversight. But last week’s ruling casts doubt on whether any charter city will get built at all.

As for Romer, he’s now back on the road, shopping around for a new host nation willing to gamble on charter cities. Most recently, he has been drumming up support among potential Canadian investors.

Previously:

• Chartered Territory: Can a New Model for Cities Thrive in Honduras?
• INTERVIEW: Greg Lindsay on Charter Cities and “The Final Build-Out of Human History”