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Newsletter of the Weatherhead Center for International Affairs  |  Harvard University  |  Vol. 27 Num. 1  |  Fall 2012

Feature

Honduran Model-Cities: A Historical Perspective
By Steven Press

In late 2011, President Porfirio Lobo Sosa of Honduras signed a decree to create a “model city” along the Honduran coast. According to President Lobo, the model city would be a territory with laws made, not by the state of Honduras proper, but rather by a consortium of international companies. To administer civil and criminal justice in this model city, the consortium of companies would contract with the Supreme Court of Mauritius—an African state located thousands of miles away. Meanwhile, the consortium would hire private security forces to do the job of police and law enforcement, in the hope of avoiding the kind of corruption for which the Honduran civil service currently has a reputation.1

Not long after being signed in late 2011, Lobo’s decree received 126 out of 128 possible votes in the Honduran parliament. The decree garnered much international acclaim on account of the jobs it promised to bring native Hondurans.2 At home, however, the public proved far from unanimous in its support, and on October 18, 2012, the Supreme Court of Honduras (henceforth referred to as “the Court”) struck down the decree in a tightly contested ruling. The Court began its verdict by conceding that, in the decree’s wake, the Honduran parliament had amended its country’s constitution to permit the creation of a “model city.” This amendment notwithstanding, the Court nonetheless ruled out the idea of a model city. The Court’s reason was that the granting of “autonomy” to the model city in the hope of economic returns threatened to “harm the territorial integrity, sovereignty, and independence” of the Honduran state.3

Was the Court correct? Without taking a position on the specific Honduran debate, I want to examine the broader conviction underlying the Court’s verdict. This is the belief that states, in exchange for financial reward, may not grant part of their sovereignty—or jurisdiction that amounts to supreme territorial authority—to external parties without harming their own territorial integrity. At first glance, it may seem improper to even broach this point. This is because transfers of jurisdiction for money are typically associated either with the European Middle Ages, or with colonialism, two constellations that are theoretically in the rear-view mirror of the twenty-first century international community. Recently, however, such scholars as Alexander Cooley have begun to challenge this taboo.4 For my part, I think it is instructive to test the Court’s position on sovereignty by bringing up several points from history.

The first point is that international legal precedent affords us an abundance of examples in which states freely exchange sovereignty over territories for money. Most Americans will have heard of the Louisiana and the Alaska Purchases, of course, but there are also less well-known cases: Woodrow Wilson’s purchase of sovereignty over the Danish West Indies in 1917, for instance. Europeans may recall cases closer to home. Here one thinks of Prussia’s purchases of sovereignty over Lauenburg and Jade Bay.5 Last, but not least, there is Asia, where, among other cases, Britain recently concluded its ninety-nine-year lease for sovereignty over the New Territories and Kowloon extension in Hong Kong.

So much for the argument that a state cannot sell or lease its jurisdiction. But this only leaves room for another objection currently made in Honduras: namely, that the proposed transfer of control over a model city smacks of colonialism. When historians of Asia, Africa, and Latin America look back at the last few centuries, they may well incline to agree with those Hondurans who fear “colonialism.” After all, much of colonial history affords us examples in which transfers of jurisdiction for money have merely been legal fictions in a colonial setting—window-dressing to conceal what was in truth a transfer of territory held under duress. This argument could certainly apply to some incidents affecting US relations: The United States’ lease for supreme jurisdiction at Guantanamo Bay Naval Station, for example, was written in 1903, at a time when the United States already occupied the site and could essentially force Cuba to comply.6 The United States’ lease for sovereignty over the Corn Islands, granted by Nicaragua in 1914, should also be seen in the same light, as should its lease for supreme jurisdiction in the Panama Canal Zone. Likewise, the leases the Qing Empire made around 1898 to Germany, France, Britain, and Russia fit this description.

Colonialism, however, is hardly a constant in all transactions where cash is given in exchange for legal control. There was no colonial factor when Jimmy Carter’s administration transferred complete control over an entire city in Texas (Rio Rico) to Mexico, in exchange for other Mexican considerations along the border.7 Nor was Peru a colony of Chile when the former accepted a six million dollar payment from the latter to compensate it for the receipt of a smaller, inferior territory.8 True, states have primarily relegated the trade in jurisdiction to peripheral sites; the Louisiana and the Gadsden Purchases come to mind.9 But where the periphery ends and begins is anyone’s guess. Not every sale or purchase risks loss of “territorial integrity,” although some do, as when the Duke of Waldeck sold off his entire jurisdiction and territory to Prussia in the 1860s.10

The Honduran debate grows still more interesting when one considers its theoretical relevance to today’s highly indebted states. Should people, or rather their elected representatives, be able to treat parts of their state’s territory as assets in transactions? Should sovereignty be utilized as a cash-equivalent, solving problems for some of a state’s citizens while consigning others to a foreign government? Statesmen have often answered in the affirmative during the twentieth century; indeed, on occasion they have alienated their own territory as a path towards fiscal salvation. Britain, for instance, benefited mightily in September 1940 when it signed a contract that “leased” to the United States the jurisdiction over inhabited patches of several Caribbean islands.11 Likewise, the Kingdom of Oman, desperate to fund a military campaign against rebels, generated vital revenue when it sold jurisdiction over Gwadar to Pakistan in 1958.12 All these transactions took place without plebiscites—that is, without the direct majority consent of the people affected by the transfer. Nonetheless, all the transactions have been held to be perfectly valid in international law.

Figure 2
Map of the Alaska Purchase lands, 1867. Painting done by EverGreene Painting Studios, oil on canvas, 1993–1994. Photo credit: Architect of the Capitol. http://commons.wikimedia.org/wiki/File:Flickr_-_USCapitol_-_Alaskan_Purchase,_1867.jpg

One of the more interesting documents I have come across in my research on this subject dates back to the late 1930s. This document is a memorandum prepared by several legal advisors to the British Crown. Its subject? The legality of selling British territory to Hitler—an idea first floated by Hjalmar Schacht as a means to ameliorate the restructuring of war reparations.13 In the memorandum, the advisors admit that the sale of sovereign rights over any part of the British Empire would prove politically disastrous—especially in the absence of a plebiscite. At the same time, the advisors use the memo to insist that selling sovereignty over part of a state’s territory is perfectly valid in international law, without the people’s consent.14 “Modern opinion,” the advisors say, “would require that the fullest consideration should be given to any objections raised by inhabitants” in any affected territory.15 But even the sale of governing rights over “home territory”—integral parts of Britain—might be arranged without a plebiscite, however improbable such a project seems. The key is to recognize that “the transfer of a part of the United Kingdom—say of Wales or of Devon and Cornwall—is not in the same order of ideas as the transfer of Sierra Leone.”16

Over the last decade states have made dozens of handovers of partial jurisdiction across the world. Recent treaties for drone bases in Africa “lease” jurisdiction over certain matters, often including foreign detainees and drone strikes. The treaties also do so at an agreed price, which is sometimes high enough to constitute a sizeable portion of the “host” state’s budget. It is true that the treaties put on a show of attributing the word “sovereignty” to the host countries. However, the legal execution of these same treaties absolutely indicates the transfer of supreme authority in several cases. What’s more, “host” governments actively haggle with their “guests” over the price of alienating jurisdiction, threatening to not renew the “lease” upon its expiration if the right price is not agreed.

Many critics currently object to this practice because it reduces the state to something banal: to the level of a business run, as William Jennings Bryan once said, only “for our own profit.”17 But precisely such objections have a long history of futility, and today’s critics may find it difficult to win their case as well, if recent developments are any indication. One prominent legal scholar has just written an editorial suggesting that Greece, in the throes of insolvency, can reduce its debt by selling jurisdiction over some of its islands.18 Finally, in what amounts to an endorsement of these ideas, the United States Special Operations Command recently went on record with the opinion that jurisdiction was “a commodity driven by market-like forces” that will go to the “state, organization, corporation, tribe, gang, etc. that can best meet individual security, economic, and demographic interests.”19

This last point gets us back to the issue facing Honduras, and it could represent the most intriguing aspect of the marketplace I have described so far. If parties that are not states wish to purchase or lease jurisdiction from states which, like Honduras, find themselves under economic pressure, then there are plenty of precedents for this option, too. Some of these examples are old, such as when Charles II transferred full jurisdiction over Pennsylvania to William Penn in order to settle gambling debts; or when the Mughals transferred control over taxes in Bengal to the East India Company.20 Some, examples, however, come from the late-nineteenth and early-twentieth centuries, when adventurers and companies paid (or more often claimed to pay) beleaguered rulers to acquire sovereign rights in international law. The areas affected by this era now include the modern states of Nigeria, the Democratic Republic of the Congo, Tanzania, Zimbabwe, Cameroon, Zambia, Namibia, Mozambique, Malaysia, and Papua New Guinea.

Western states in the twentieth century ultimately decided that private parties should not hold jurisdiction in such areas. As important, however, was that upon so deciding, states did something quite familiar: They bought jurisdiction and sovereign rights from the recognized “owners.”21 Whatever the orientation of Honduras and its court system in the twenty-first century, these precedents attest tothe existence of a marketplace open to all.

Notes

  1. http://www.economist.com/node/21541392
  2. http://www.guardian.co.uk/world/2012/sep/06/honduras-new-city-laws-investors
  3. http://www.elheraldo.hn/Secciones-Principales/Al-Frente/Ley-de-ciudades-modelo-era-insostenible
  4. See Alexander Cooley and Hendrik Spruyt, Contracting States: Sovereign Transfers in International Relations (Princeton 2009).
  5. Article IX, Gastein Convention, printed in Edward Hertslet, The Map of Europe by Treaty, vol. 3 (London 1875), 1642. See also the Prussian patent of 13 September, 1865. On Jade Bay see David Blackbourn, The Conquest of Nature (London 2006), 113–125. Text of original treaty, “Traite entre la Prusse et le Grand-Duche d’Oldenbourg pour la protection par la Prusse du pavillon oldenbourgeois et pour la cession a la Prusse d’un territoire situe sur la baie de la Jahde, signe a Berlin, le 20 juillet 1853; suivi d’une convention additionelle, signee le 1 decembre 1853,” printed in Nouveau Recueil General de Traites, conventions et autres transactions remarquables, vol. 16 part 1, ed. G.F. Martens (Göttingen 1858), 457.
  6. On Guantanamo lease, see Steven Press, “Sovereignty at Guantanamo: New Evidence and a Comparative Historical Perspective,” The Journal of Modern History (forthcoming).
  7. Larry Rohter, “South of the Border Was Once North,” New York Times, September 26, 1987.
  8. The two territories were Tacna and Arica. For eventual treaty, League of Nations Treaty Series, vol. 94 (1929), 401–411. On arbitration, see William Jefferson Dennis, Tacna and Arica: An Account of the Chile-Peru Boundary Dispute and of the Arbitrations by the United States (New Haven 1931), 260–289. Tacna-Arica and the Washington Negotiations (1922), 13.
  9. Contemporary exploration of this matter by L.S. Amery, “The Problem of the Cession of Mandated Territories in Relation to the World Situation,” International Affairs (Royal Institute of International Affairs 1931–1939), vol. 16, no. 1 (January 1937), 3–22.
  10. Fix, Die Territorialgeschichte des Preußischen Staates (Berlin 1869), 251. Ploetz, Der Anschluß Waldecks an Preußen (Corbach, 1932), 11.
  11. Agreement contained in Note from Secretary of State to British Ambassador, September 2, 1940, printed in Treaties and other International Agreements of the United States of America, ed. Charles Bevans, vol. 12 (Washington 1974), 553.
  12. UK National Archives, FO 371/98390. The sale price was the equivalent of $8,400,000. “The Sons of Sindbad,” Time Magazine, Monday, September 22, 1958 (New York 1958).
  13. Michael Dennis Callahan, A Sacred Trust: The League of Nations and Africa, 1929–1945 (Portland, Oregon 2004), 145, note 192. Andrew Crozier, Appeasement, 148, 64–65. A. Edho Ekoko, “The British Attitude towards Germany's Colonial Irredentism in Africa in the Inter-War Years,” Journal of Contemporary History, vol. 14, no. 2 (April 1979), 299.
  14. See also Brian Crozier, Franco (New York 1967), 324.
  15. Study Group of Members of the Royal Institute of International Affairs, The Colonial Problem: A Report (Oxford 1937), 103.
  16. This according to United Kingdom Memorandum No. 11: Considerations affecting the transfer of colonial territories, excerpted in International Institute of Intellectual Co-Operation, League of Nations, Colonial Questions and Peace: A Study Prepared under the Direction of Emanuel Moresco (Paris 1939), 191.
  17. William Jennings Bryan, The Second Battle: or, the New Declaration of Independence 1776–1900: An Account of the Struggle of 1900 (Chicago 1900), 132.
  18. Michael J. Strauss, “A Way to Rescue Greece,” New York Times, June 21, 2010.
  19. http://www.au.af.mil/awc/africom/documents/ussocom.pdf [PDF Download]
  20. Library of American History (Cincinnati 1855), 145. On EIC, see Philip J. Stern, The Company-State (Oxford 2011).
  21. Papua New Guinea: Stenographische Berichte, 105. Sitzung, Montag den 15. Juni 1898, 2621–2622. Malaysia: Colonial Office, Agreement for the Transfer of the Borneo Sovereign Rights and Assets from the British North Borneo Company to the Crown, 26 June, 1946 (London 1946), 3. Nigeria: Heinrich Helmut Kraft, Chartergesellschaften als Mittel zur Erchließung kolonialer Gebiete (Hamburg 1943), 41. Zambia, Zimbabwe: John S. Galbraith, Crown and Charter: The Early Years of the British South Africa Company (Berkeley 1974), 109–111. Cameroon: Helmut Washausen, Hamburg und die Kolonialpolitik des deutschen Reiches (Hamburg 1968), 115–134. Namibia: Kurt Perels, Das Bergrechtsabkommen vom. 17. February/2. April 1908 und die bergrechtliche Stellung der Deutschen Kolonial-Gesellschaft für Südwest-Afrika (Berlin 1910), 2. Mozambique: Alfred Vagts, “M.M. Warburg & Co. Ein Bankhaus in der deutschen Weltpolitik, 1905–1933,” Bilanzen und Balancen: Aufsätze zur internationalen Finanz und internationalen Politik, ed. Hans-Ulrich Wehler (Frankfurt am Main 1979), 73–74, 260–261. DRC: Debate of July 5, 1906, printed in The Parliamentary Debates, fourth series, vol. 160 (London 1906), 322. Tanzania: Botho Jordan, Die Staatsgewalt des Deutschen Reiches in den Schutzgebieten (Halle 1895), 36–38.

Steven Press is a Graduate Student Associate and Research Fellow in the Weatherhead Initiative on Global History. He is also a PhD candidate in the Department of History. His research focuses on selling and leasing sovereignty in modern international law and private selling and leasing of sovereign rights to and from states.

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