New report: Corporate attack on Honduras worsens economic, environmental and human rights crises

Washington, DC and Tegucigalpa – American and European investors are leading a corporate assault on one of the most impoverished and embattled countries in the Western Hemisphere: Honduras.

On October 3, the Institute for Policy Studiestogether with the Honduras Solidarity Networkthe Transnational Institute (TNI,) And TerraJustareleased a vital new report: “The Corporate Attack on Honduras: Mafia-Style Investments and the Honduran People’s Struggle for Democracy and Dignity”, exposing the cynical profit-driven motives behind an avalanche of corporate lawsuits aimed at draining Honduras and blocking much-needed environmental and human rights protections. If these investors succeed, the economic burden will only exacerbate the displacement crisis, pushing Hondurans to migrate.

These claims against Honduras are based on exclusive privileges that allow companies to sue entire national governments if they believe their profitability has been affected by those governments’ laws, through a system called Investor State Dispute Settlement (ISDS).

Combining fact-based in-depth analyzes of the conditions that have allowed the business community to undermine the political will of local communities, along with evidence and real-world testimonies from Honduran organizations and community leaders, the report paints a clear picture of how ISDS has become the primary legal and political mechanism through which powerful corporate interests seek to undermine, roll back, or override important government reforms and community protections in Honduras.

The report shows how a little-known tribunal in Washington, DC, called the International Center for the Settlement of Investment Disputes (ICSID), part of the World Bank, has become the main forum for such efforts.

In the last eighteen months alone, investors have made profits 14 arbitration claims against Honduras at the ICSID. Including a fifteenth ongoing lawsuit that began in 2018, Honduras is facing a total of at least $14 billion in claims from foreign and domestic companies. The US law firm White & Case is defending the investors in 9 of these claims.

The lawsuits amount approximately 40% of the country’s GDP in 2023 and almost four times the public investment budget for 2024. American and European investors are involved in six of the fifteen ongoing lawsuits, with claims of at least $11.5 billionwhich is 82% of the known claimed amount.

“Transnational companies benefited from increasing privatization and rampant corruption in Honduras following the 2009 US-backed coup. There were several warning signs that investing in such a context was both economically and socially risky, especially as violent state repression cracked down on opponents of both the post-coup governments and many of the projects related to the current claims against Honduras,” said Karen Spring, co-coordinator of the Honduras Solidarity Network (HSN). “Between 2014 and 2022, Honduras turned into a narco-dictatorship under former President Juan Orlando Hernández, who was recently convicted in the Southern District of New York for drug trafficking and gun possession and use.”

The report shows that a majority of powerful corporate investors making claims are rebelling against Honduran efforts to repeal or renegotiate some of the most excessive policies over the 2009-2022 period, many of which have led to social conflict and repression against people who oppose harmful practices. projects. The report highlights the evidence and impact of human rights abuses, violent repression, corruption and influence peddling associated with these investment deals.

Honduras has been among the three most dangerous countries for land and environmental defenders since 2010, leading to the enforced disappearances and murders of leading environmental defenders such as Berta Cáceres. Recently, the well-known environmentalist Juan López, an outspoken critic of open-pit mining and member of the Municipal Committee for the Defense of the Communal and Public Goods of Tocoa (Comité Municipal de Defensa de los Bienes Comunes y Públicos de Tocoa -CMDBCP) was murdered after leaving the church.

Key findings of the report include:

1. The US-based Prospera group has filed the largest claim against Honduras $10.8 billion after the Honduran National Congress repealed a 2013 law that allowed charter cities on Honduran territory. These privately managed areas promoted as ’employment and economic development zones’ have caused widespread local and national opposition across Honduras for more than a decade due to their violation of national sovereignty, the sole benefit to foreign investors and the negative impact on the affected population.
2. Seven investors have submitted claims at least $1.3 billion since the Honduran Congress passed a 2022 Energy Bill proposing to bail out the national power company and renegotiate a better price for electricity. Local communities in southern Honduras have faced legal prosecution and threats since 2017 for opposing the damage caused by Norwegian-owned solar farms. Communities fear that the arbitration claims could affect contract renegotiations, allowing the project to expand against their will.
3. Two more investors have brought $190 million in claims about public-private partnerships that are harmful to the public interest and plagued by irregularities. In the case of a highway maintenance deal involving JP Morgan Chase Bank and two Goldman Sachs funds, local Honduran residents camped on the highway for 421 days to protest against paying tolls since their tax dollars supported highway construction paid and worried about how this would increase the already unbearable cost of living. The toll booths were known as a “monument to corruption” and the project failed in 2018.
4. Brothers Ernesto and Juan Carlos Argüello, from Miamifor which Honduras is being sued $100 million plus $2 million in “moral damages.” Meanwhile, their company, HOLA Realty, built a gated community that was sold to maquiladora (factory) workers who say the homes were made of poor materials. Tropical storms Eta and Iota devastated the community in November 2020, and residents are still fighting for reparations and revocation of the Argüellos’ environmental permits, drawing attention to the lack of contingency plans and other protection measures that should have been in place.

“These findings are a wake-up call to end extreme corporate privileges in US trade deals and address the harms resulting from investments plagued by irregularities and corruption under the narco-dictatorship. As our report shows, it is unconscionable that the Honduran people must now pay millions just to fight corporate claims, let alone to potentially ‘compensate’ transnational corporations for their ruthless greed,” he says. Jen Moore, Associate Fellow of the Trade and Mining Program at the Institute for Policy Studies and lead author of the report. “Instead, Honduran communities should receive reparations and reparations for the harm caused by these transnational corporations.”

The report underlines the call for concrete measures to:

1. End the damage exacerbated by U.S. trade and international policy agreements and the 2009 Honduran coup.
2. Provide strong safeguards in new guidelines and frameworks for future international agreements that prioritize Honduran sovereignty and community self-determination.
3. Abolish the investor-state arbitration system That allows such corporate lawsuits against governments under existing international investment agreements and prevents their inclusion in future agreements, as requested by more than 30 members of Congress.
4. Remove the ISDS mechanism from the Central America-Dominican Republic Free Trade Agreement (CAFTA-DR)as requested by 45 Members of Congress, led by Congressman Linda T. Sánchez (D-CA) and Congressman Lloyd Doggett (D-TX).

Full report: https://ips-dc.org/report-corporate-assault-on-honduras

Shorter summary: https://ips-dc.org/summary-corporate-assault-on-honduras

Press contacts:

###