Christian Betancourt | How to Survive a Hostile Government

Timothy Allen: Right, Christian. So what most people listening to this podcast probably won’t realise, unless they’re an absolute OG, is that you were one of the first people I ever interviewed. Almost four years ago now, which is quite incredible when you think about it. Me and Peter Young from the Free Cities Foundation came to Próspera in 2022 to check out whether it was real, pretty much, because back then there was only this building that we’re in now, the Beta building, and everything else was just being built. You couldn’t even stay here. We had to stay in a little hotel, a little guest house in fact, which is where you and I met, and we recorded an audio podcast just sitting on the sofas in there. I don’t know whether you remember. But what I did was I got the AI to listen to what we talked about four years ago, and it’s really interesting. It mentions a few things, like a long discussion on sovereignty. What’s funny about it is it shows you how far I’ve come as well. The things we talked about, I didn’t really know much about anything. I was very green, very naive back then. We had a long discussion on sovereignty, Latin America’s particular problems, and then all about the ZEDE legal framework, Bitcoin treated as legal tender in Próspera because you were working on a bank project at the time, and you were deeply concerned about CBDCs. Interestingly, you probably still are, we should talk about that. The expropriation controversy. And your fifty-year vision for Próspera. You actually gave a fifty-year vision for Próspera. I’ll come to that in a bit.

Christian Betancourt: Oh boy. I don’t remember that one.

Timothy Allen: Do you want me to tell you what it said? We’ll get to it. But what’s fascinating is how bullish you were. Remember, the time we were speaking, the government were basically coming down hard, and it was quite fresh then as well. It says this was recorded right around the time the hostile Xiomara Castro government took power, around April 2022 or something.

Christian Betancourt: No, I think it was more like November 2022.

Timothy Allen: Okay. So when did they get into power?

Christian Betancourt: January 2022. But that was the first year.

Timothy Allen: Right, so they’d been in for a while and it was bad. The socialists had been in for almost a year when we spoke to you. But you were really still bullish. It says here, the legal protections you were betting on in 2022 actually held. You were right. But the way Christian speaks, he felt very sure they were going to hold, whereas a lot of other people didn’t. It says, ask him what it feels like having watched it play out from the inside.

Christian Betancourt: It was quite a ride, Tim, I can tell you that. I’m very glad to hear that I had that bullish tone back in the day. That was the first year. I trusted very much in the design, in the legal design and the legal protections that were put in place, in our initial positions, vulnerable as we were as a community. And I also trusted the team that was behind it, both Próspera the company and Próspera the zone, that we had what we needed to move forward. Maybe I did not anticipate that it was going to be so tiresome. It was like rough four years. So in 2022 they managed to repeal the law, and they started the process to modify the Constitution. And then 2023 was a very hard year, because everybody was waiting to see if Congress would be able to confirm that constitutional modification, which didn’t happen. But of course that meant there were not a lot of new projects happening inside the jurisdiction. There were just a handful of companies that had started maybe back in 2021. So we had to keep the fort together. We had to keep it running. And we did. The zone kept operating. Then Congress was not able to confirm those constitutional changes, so the figure of special economic zones is still to this day in the Constitution. So then 2024 started to get a bit better. We also had the first Infinita pop-up city, which was called Vitalia at that time, so that attracted a lot of new fresh people, and then other projects started to come as well. And then in 2025 we had some movement, and now we’re in a very good position.

Timothy Allen: But what the AI picked up on was the fact that you really believed it was going to work. You gave the impression that it was all fine. And what would I know, I was watching from afar, but I did know that people felt otherwise. For example, when I spoke to Gabe the other day, he said they sat down when the socialists won the election, they sat down with all the guys and said, look, what are we going to do? And they made a conscious decision to lean into it, to just plough on. One of the options, of course, is to hold back and put everything on hold until that point, which is kind of what Morazán did. Morazán much more put stuff on hold, whereas here, Próspera got a new round of investment during that time, which is the bit I couldn’t understand. That for me was a great sign. I was thinking, blimey, who’s investing when they’d already been told they’re shut down? So someone somewhere was thinking, let’s just go for it.

Christian Betancourt: I remember that podcast, one of your episodes where you touched on this a couple of years ago. It’s like, they got ten million dollars in investment now from Coinbase? How does that happen? It’s like sea turtles made it. Like Jack Sparrow. And it was very important for the community, for continuing to move forward, to have gained the confidence of institutional big investors like Coinbase, like Tim Draper, and everything that came around that.

Timothy Allen: Probably more so than you could have thought. And people here have definitely worked on top of that. Niklas especially, I think, and Infinita has really used that as a springboard. Because that must have been quite a kick up the backside for you guys, so to speak, that these guys want to come, so let’s push this on a bit more.

Christian Betancourt: Yeah, definitely. With Niklas we’ve been very fortunate to help out a lot in these past few years, getting people to come, to start projects here, to invest. I knew Niklas back around that time, 2022 maybe was when he first came. I moved to Próspera in late 2021 and we became friends, but everyone was working on their own project. Infinita was only initially a fund, it was the Infinita fund that Niklas managed. But then it was late 2023, Zuzalu had just happened, the first pop-up city that was promoted by Vitalik, and it had all these elements, some people into longevity, some people into crypto. Niklas went, Gabe went, and they said, what if we replicate this here? And we were coming out of these very rough years, and we had the first pop-up experience, which we were very lucky to attract some very talented people to that first edition. Balaji was here, and Brian Johnson came, and Naval was here. So that was an important signal for the market that this was moving forward.

Timothy Allen: I think it’s a massive signal for the market. Funnily enough, just thinking it through here, are you one of the longest running residents here? Because I used to think Niklas was one of the longest running residents, but you were here at the same time, right?

Christian Betancourt: I think I would be. I think I’m probably top fifty, something around those lines.

Timothy Allen: Or more, I would have thought. I mean, Eric’s been here a very long time, right?

Christian Betancourt: Yeah. I mean, when I came here, Tim, Niklas hadn’t come yet. I came first, the first time in April 2021. I was doing some research for a think tank back then about the economic conditions in Honduras, and I was covering the zones. And I came here, the Beta building, that was the only thing that was happening. I was already involved in the special economic zone movement in the country, promoting the law the years before that. But when I moved here it was only this building, the Beta building. They hadn’t acquired Pristine Bay yet. And I had a job at a corporate law firm, I was a corporate attorney servicing banks and financial institutions, and I decided to quit to move here, to bring my own projects and see how I could help out with keeping this alive and keeping this running. And that was before Niklas, and that was before Dušan as well, from Amity Age, he came in 2022.

Timothy Allen: That’s worth noting. And the other thing worth noting is that you’re Honduran, because my observation at least is that Próspera specifically is very foreigner-centric, as opposed to somewhere like Morazán, where you will find mainly Hondurans living there, in fact almost exclusively Hondurans. Here in Próspera you see many more outsiders. You see a lot of Hondurans working here, but you don’t see a lot of Hondurans doing business here yet. Is that true, first of all? Is that fair to say?

Christian Betancourt: Generally I think there are different aspects to it. Of course Próspera is a different model than Morazán. They target different audiences. What happens with Próspera is it’s very much tailored for entrepreneurs, innovative businesses, also for big manufacturing operations. Hopefully we get those running soon enough in the community. But what happens with that is that you need to attract people who are very comfortable with taking risks, entrepreneurs in that sense. And of course there was a risk during the past four years, but for Hondurans to come here and put their own projects, as entrepreneurs, as businessmen, the risk was even higher, because there was an opposing government that wouldn’t just affect your business in Próspera but your broader operations in the country. So there was a leap we had to take. But now I’m seeing, as conditions have changed, that a lot more Honduran businessmen are interested in using the platform.

Timothy Allen: And how many other Hondurans, you live here, right, you live in Duna. How many other Hondurans are there that live in there, working like you, running businesses and so on?

Christian Betancourt: I don’t really have a number, but I would say maybe around half the people, or a third of the people, that live in Duna, the building, are Honduran.

Timothy Allen: Is that right? I just hadn’t noticed. Every time I get in the lift it’s always someone from Silicon Valley or Europe or something like that.

Christian Betancourt: Yeah, it’s a mixed bunch. We also have the phenomenon that you have Hondurans living in the building but maybe they work outside of Próspera, and they still like it as a housing solution in Roatán, in broader Roatán.

Timothy Allen: Yeah, okay, fair enough. Listen to this as well, I found this interesting. So the CBDC one. Because you described CBDCs as the final boss of authoritarianism three years ago. They’ve progressed a lot since then. Has anything changed your view? Are you an observer of this now? Because at the time you were doing legal work for a bank, so it was much more relevant, but you’re not doing that so much now, are you? You’re not doing legal work in financials?

Christian Betancourt: I still do provide services for financial institutions. Most of my clients are either doing financial activities, or biotech and medical, or doing projects in special economic zones. Most of my time goes now with Infinita, which has its own payment platform, so I do keep tabs on the banking world, but not as much as back then.

Timothy Allen: Have you got an opinion on it, then?

Christian Betancourt: I am still concerned. I’m still concerned. I think back then, in 2022, it was more of an existential threat. With the political changes in the United States, I think that has, if not been reduced, at least been delayed, for better or for worse. I think that’s a whole topic by itself, but at least regarding CBDCs, the policy changes in the US have served to delay that. I’m still concerned because they’re still talking about it in Europe. But I still see a more mature world nowadays that could prevent that from happening, or if it happens, find solutions around it.

Timothy Allen: I think, I don’t know, my opinion is it’s definitely happening and it’s definitely going to happen. I don’t know yet how I might deal with it, other than, for example, shifting to just using a different currency, which is very easy to do these days. Much more than four years ago. Four years ago when we spoke, using Bitcoin, you could do it, but number one there weren’t that many places that accepted it, and number two the software wasn’t as good. The wallets you had on your phone weren’t as good. They’re great now. You can live on a Bitcoin standard anywhere in the world, it’s very simple. But that would be my prediction for dealing with CBDCs, because the part of CBDCs we don’t like is the fact that they can be used to literally control every single aspect of your life. I think as time goes on, and we’re seeing this in Próspera here, parallel communities are arising around Bitcoin especially. And if it comes to it, at the end of the day you could just move to be in a place where Bitcoin is the currency. That would be my end game. But it’s not preferable. I’ll be honest, I don’t really want to have to run away to a place where everyone uses Bitcoin only. But I think the problem with CBDCs is that once you’re using a CBDC they can stop you getting on a plane or a train very easily, if your programmable money doesn’t allow you to pay for a train ticket, for example. And that can be based on almost anything. Even the fact that we’re talking about Free Cities now may put us in a category of dangerous person in those places. I don’t know what you think about that.

Christian Betancourt: Well, I think it’s more valuable strategically for the United States to continue embracing stablecoins as something that is privately issued, for several reasons. You get more flexibility about how it’s done. You reduce concerns from parties that use it that there is direct oversight from the American government. And it is a way to continue promoting the use of the dollar, and have the dollar keep being king among fiat currencies. So in the sense that I expect them to see that strategic value of just embracing stablecoins as they have been doing, maybe the CBDC threat is reduced or delayed. If they wanted to push it somehow, have the Federal Reserve issue it and then not permit USDC or USDT, I think that would be an uphill battle with its own political costs. But it’s still concerning for sure, and especially in different parts of the world. But as you say, there are more solutions nowadays. You have token-backed cards, you can use Bitcoin. So I think it’s the same type of battle that we need to continue having towards some of these principles behind Free Cities or special economic zones, separation of powers and keeping governments in check. There’s always going to be a threat just for the fact that the technology still exists. But I think we are in a better position now.

Timothy Allen: What’s the general stance of the Honduran government on things like Bitcoin, do you know? Obviously there’s been a positive change, we know that, but I’ve never asked anyone what they actually feel about all that stuff.

Christian Betancourt: This new government, they just started a couple of months ago, so they haven’t made any official posturing about crypto technology. But nowadays, Tim, it’s not that controversial. There are operating exchanges and several crypto companies in the country, inside of Próspera especially, of course. So my expectation is that during this year or next year we’re going to see some reforms towards the recognition of crypto assets and that technology, just because we have El Salvador so close by, because we have what’s happening in Próspera. So I think it just makes sense to update that policy.

Timothy Allen: Do people here, especially your average Honduran, do they know about El Salvador and what turnaround has happened? Is that common news?

Christian Betancourt: Yes, very much so. People go to El Salvador for tourism. It’s a success story in matters of security. The country did improve a lot. They’re still moving towards making that become more directly involved with investment, having the country grow more, but at least regarding security it is a clear investment. The downtown in San Salvador is so nice nowadays.

Timothy Allen: Well, I wondered, because we hear about it a lot but I wasn’t sure whether it was something that, I mean, the simple fact that you tell me Hondurans know about it, I think that’s great, because it’s going to inspire them to insist that their government does better. That’s competition for them, hopefully. Gabe talked about this a bit the other day when I was speaking to him. It’s a big signal to the market that look, if you can get on top of this, that and the other, in El Salvador’s case get on top of the violence and stop it, you can literally turn your country around in a couple of years, which appears to be what’s happened. And correct me if I’m wrong, but in Honduras the violence problem is not as bad as it was in El Salvador, is it? Or is it?

Christian Betancourt: No, it’s not as bad. And first of all, I do agree with what you were saying. It’s the base layer. Those are the primary functions that a government should do. Provide security, provide access to justice, rule of law and courts. That’s the basic stuff. So once we figure that out, or we improve those conditions, the other institutions in the country can continue growing. The conditions in Honduras, the darkest period, when people think about violence in Honduras they may be thinking around the time between 2009 and 2015, 2016, where there was a lot of violence happening. You had San Pedro Sula, which is actually my hometown, which was the most violent city in the world for quite a few years.

Timothy Allen: When did you leave? Just when it got better?

Christian Betancourt: No, actually it was when I started my undergrad. I was still living in my hometown. And it was very isolated in certain parts of the city, so it’s not like the whole city was very dangerous. But still, during those times you had clubs and bars shutting down, and when you’re in your early twenties, you had to party a lot in houses and so on. So there was a lot of gang violence back then, and drug trafficking related violence, clashes. But that did improve, fortunately, around 2016 there were new measures taken. There was what they called a maritime shield, big raids for detecting drug trafficking. So conditions did improve. There are still a lot of challenges in the country, but it’s not as bad as it was.

Timothy Allen: Do you think it needs someone like Bukele, then? Does it need that absolute iron fist version of government?

Christian Betancourt: I do believe you need someone with decision, who’s able to implement policies and implement plans, not thinking about the immediate PR backlash that may happen. I think the El Salvador model worked very well for them. There are people that have concerns about some of its implications, but it’s also a different scenario. El Salvador is a very small country, much more culturally homogeneous than Honduras. So Honduras presents different challenges. But what you can be impressed by is the decision and the drive that they had to move forward and to implement this.

Timothy Allen: Do you know what the rest of Latin America thinks about Honduras at the moment? Does it have an opinion on where Honduras is going, and does it even know anything about the ZEDEs, for example? Like you say, Latin America knows about Bukele, it’s a story that everyone knows. Does anyone know what’s going on in Honduras at the moment?

Christian Betancourt: What I’ve seen is something very interesting, not just about Honduras specifically but generally in the region, and I have an article about that recently. Marxist governments, Marxist parties, have been in communication always, for the last few decades, and they were able to coordinate among themselves very well. That was not what was happening with more conservative parties or libertarian parties. That only started happening recently, probably being led by Argentina and its own government. So now when elections happen it becomes a regional matter, so there can be more coordination between the different sides of what’s happening. So in that sense, Hondurans who are into politics and read international news paid a lot of attention to what happened in the last elections. Honduras has always been traditionally conservative, a close ally to the US. We have one of the biggest US military bases. So they did pay attention to what happened here, and to the fact that the Marxists came into power in the previous elections, essentially lying to people. They were part of a moderate coalition. They didn’t present themselves as a Marxist alternative. And I think that was very clear for people seen from afar. That being said, there’s still a lot to improve about the PR, the communications, the image that Honduras transmits to the world, because there’s a lot happening here, especially with the zones. People who are in the know, who know about special economic zones and Free Cities, they know what’s happening here, or at least have some reference to Próspera or to Morazán. But mostly I think it’s still being associated as a place that has a lot of challenges that we need to overcome.

Timothy Allen: And what about within the country? I heard that the ZEDEs were used as a bit of a punching bag during the election. But does your average person on the street in Honduras know anything about Próspera or Morazán or the ZEDE idea? Is it something that people know about?

Christian Betancourt: Most people don’t really think about this.

Timothy Allen: Or even know about it. Would they have heard about it?

Christian Betancourt: They for sure would have heard about the ZEDEs. It was part of the political campaign in the elections in 2021. It was a big thing. And the government did take us out to dance every few months as a punching bag, to make us guilty of something that happened in the country, or to divert attention. That being said, because the previous government, the Marxist government, ended up being, people really didn’t like them. They only received around ten per cent of the electoral mass. They lied a lot, almost compulsively, so people caught on to that. So that, paired with the fact that Próspera has been growing, these zones have been growing, have been moderately successful even in those conditions with a hostile government, made people think about it a lot. Because back then in 2021 these things were just starting, so all of the attacks were against the idea of what the zone would be, what it could do. So it was very abstract. But now that they actually exist as communities, and people tell their stories, and maybe you know someone that went or worked there, slowly the perception has been improving. I would say most people are indifferent to it. They just see it as some free zones, and if they’re good for the country, that’s great, and if not, somebody should deal with them. So I think that’s the stance of most people. Hopefully the government will find a way forward. Of course there are people who have really seen the value of it and have come and really liked the idea and the potential for the country. And of course there’s always going to be a minority that is against it for ideological reasons. But at least the lies that were said, I think it’s very clear that they were not true. Like the ideas that the zones would expropriate people who live close by, that this would serve as havens for criminals, nonsensical things. I think it’s very clear that that is not true.

Timothy Allen: One of the things I used to hear about a lot in the early days was voices coming out of Crawfish Rock. For those listening, Crawfish Rock is the nearest village to the Beta building, to where this district was actually built. And so as a Honduran, what’s your impression of that situation now? Do you know anyone down in Crawfish Rock? What’s the general consensus that comes out of Crawfish Rock? Are people still complaining, are people for it, against it?

Christian Betancourt: Well, there’s a lot of backstory, in the sense that Crawfish Rock is a very small community, I don’t think it’s more than four hundred people living there. They had their own community association. And then there was a community well, a community water well, which was owned by the president of the community association. And then Próspera, this is early on, this is maybe 2020, wanted to be a good neighbour, provide a well for the community, but apparently that touched some interest there. So it ended up being just a very local interest that ended up being touched. At this point I think it’s the same position. Most of them just don’t care. It’s like, hopefully this works out, and if this works out people can get more jobs. Right now I think it’s maybe around thirty per cent of the community that works in some project adjacent to Próspera. So it’s fairly divided.

Timothy Allen: Are you saying that with the well, the guy that owned the well got annoyed because Próspera offered them free water, did you say? Or a free well?

Christian Betancourt: Something like that, yeah. I was not involved directly in that, but then they would have lost their ability to make people pay for the water.

Timothy Allen: It’s a bit dodgy.

Christian Betancourt: I don’t know.

Timothy Allen: I’ve got another one for you here which I thought was interesting, and I think you know this because you’re a lawyer. I’m very much interested in your opinion on this, because when I was talking to Gabe the other day, we were talking about what happened with the socialist government. I said to him, oh yeah, and they rescinded the law from the Constitution, and he told me I didn’t actually get that correct. So can you tell me exactly what happened, in layman’s terms, bearing in mind I’m not a lawyer, so that I can say the right thing from now on? Because I don’t want to keep saying the wrong thing. Give me the timeline first of all, and lay it out in layman’s terms.

Christian Betancourt: Yeah, it has become a complex thing with the years, for sure. But essentially there are four or five layers of legal protection for the regime, for the special economic zones in Honduras generally, which were included in the organic law, in the constitutional reforms, and in international treaties. This is back in 2013, 2014, when the current version of the zones, the ZEDE, was approved. So we can start with covering those layers and then see how they were able to peel some of them off, or not. So the first one was contractual. There were stability agreements between the government and the companies here that acted as promoters and organisers of the zones, in this case HPI, Honduras Próspera Inc. Of course the government did not respect that agreement. They never recognised it. And then the second layer was the organic law. So the actual law, the regular law, let’s say, about the special economic zones, that included how they get approved and a lot of the details about how they worked. That law required a supermajority in Congress to be repealed, and it was approved that way. They were able to get those votes in the first year of the last Congress. So that law got repealed.

Timothy Allen: So that’s the part that allowed new ZEDEs. That was the bit that said, if you want to create a new ZEDE, here are the rules for that. Is that right?

Christian Betancourt: Exactly. So without that law, there cannot be new ZEDEs.

Timothy Allen: Right. So did they repeal the first one as well, the contract one, or did they just ignore it?

Christian Betancourt: They just ignored them, essentially.

Timothy Allen: Okay. So they ignored number one. They rescinded number two, retracted number two.

Christian Betancourt: They retracted number two, yeah. And then the third layer of protection was in the Constitution. When the special economic zone regime was approved in Honduras, it was included in the Constitution. For making constitutional changes in Honduras, you need to approve it once and then confirm it in the second year of Congress. That’s what they did back in 2013, 2014. Here, in 2022, when they repealed the law, they managed to approve the modification of the Constitution to take the ZEDE regime out. So they did the first approval.

Timothy Allen: But not the second one?

Christian Betancourt: Not the second one. That’s the thing.

Timothy Allen: So, okay, right. So why does everyone say they repealed the law then?

Christian Betancourt: They repealed the organic law, the second layer.

Timothy Allen: But they didn’t change anything about the Constitution?

Christian Betancourt: They did not touch it in the Constitution.

Timothy Allen: That’s crazy. I think most people think they changed the Constitution back to what it was.

Christian Betancourt: No, they did not. And yes, there was a lot of expectation in 2023. Would they actually do it? So they had to confirm it in 2023. But what happened is that by 2023 they had eroded any political capital they may have had at the beginning. So they were not even near to getting the votes to approve this. And also, when Congress approved the repeal of the law and approved starting the process for modifying the Constitution, the opposition parties back then were very clear that they were voting for this as long as the government talked with the investors and figured out a way to continue moving forward, to protect the existing investments and the existing jobs. That of course didn’t happen. They were radicals. They were ideologically opposed to everything that we want to do here. So by 2023 all this stuff had happened in the country and they had no political capital. They were not able to confirm that modification. So there was no modification to the Constitution. You go look for it and they’re still there.

Timothy Allen: And what about, you said there were five layers, four and five, which they obviously didn’t touch. So they touched the first two, but three, four and five they didn’t touch.

Christian Betancourt: Three, four and five they didn’t touch, yeah. Four would be, well, it depends how you want to see it, essentially on top of the Constitution, or at the same time, depending on how you want to interpret it. But alongside these changes there was also an investment treaty with Kuwait that granted certain protections for investments made by Kuwaitis in the special economic zone regime. Now, Honduras has historically very good relations with Kuwait, as with many other countries, but it’s not like you see a lot of Kuwaitis here. So what was the point? By including those protections in that treaty, you triggered the free trade agreement with the United States, which is CAFTA-DR, the free trade agreement between the United States, Central America and the Dominican Republic. CAFTA-DR has a most favoured nation clause. Essentially in layman’s terms it means that any protection or any benefit that a country recognises to investments from any particular country should also be recognised for American investments. So that’s how you bring the US into the fold.

Timothy Allen: Wow. Was that four and five?

Christian Betancourt: Four and five. Five is CAFTA and four is the agreement with Kuwait.

Timothy Allen: So this is fascinating. I don’t know what it’s like in the world of law and legality. Tell me if this is true. When they were creating the ZEDE regime, people are thinking like this, right, we need to create some ways to protect this, and then they look into precedents, or they look into other things around the world, and they go, right, if we do this then this can happen. They don’t go, for example, to the US and say, would you like to make an agreement with us? Why do they do it in these roundabout ways? Because people don’t take Honduras seriously, or because you can’t get in the room with the US, or what? How does it work?

Christian Betancourt: Well, it’s like the CAFTA-DR was already in place, already had the most favoured nation clause. And free trade agreements or trade agreements in general with the US take a lot of time, a lot of negotiations, so if they wanted to be agile I don’t think that was really an option. And they already had the good relationships, and again, we already had it in CAFTA-DR, so there was no need to do anything else that would compromise that agility.

Timothy Allen: I’m going to ask you whether you think this is a good set of rules, but let me tell you what ChatGPT said about our previous conversation first. It said, on the ZEDE legal framework, Christian considers that it’s the most advanced special economic zone framework in the world. The key innovation is being able to choose regulation from OECD countries and so on. Do you still think it’s that good? And is this also that good, like if you were doing this in Costa Rica, for example, would you follow the same protocol?

Christian Betancourt: Well, every country is different. But essentially I think we figured out a framework that worked, that evidently resisted a very hostile government. There were elements in place that worked towards this. We had these five layers of protection, yes. Also the country was part of ICSID, which is essentially the International Centre for Settlement of Investment Disputes. So that was already in place. We already have CAFTA-DR. And in this part of the world, of course, many times the US is your primary trade partner. The US has a very big present influence in Central America. So we already had all those elements in place. I believed in it very much, to the extent, Tim, that I waged my own career and my own life by coming here. It had to resist. If it hadn’t resisted, I probably, I used to joke that if it hadn’t resisted I would have stopped practising law, stopped believing in it. There could be specific things that could have been added. For example, what Disney did in Florida when they got their own special economic zone, there’s a bond that acts as a guarantee. So that’s an additional thing that could have been included in the stability agreement, perhaps seeking out immunity from decision makers from the government, in the sense that they could be personally liable for their decisions. So there could have been other details. But generally speaking, that was the architecture, those levels of protection.

Timothy Allen: In those four or five layers, where’s the fifty years bit? In which layer is the bit that says you can do this for fifty years?

Christian Betancourt: Kuwait.

Timothy Allen: Oh, so it’s in number four. So that didn’t get touched either.

Christian Betancourt: That didn’t get touched either.

Timothy Allen: So essentially we’re at a point where, even with everything that had been done, and this is even when the last government were in power, because nothing’s changed since then, has it, yet?

Christian Betancourt: Not formally.

Timothy Allen: Right, okay. Even then, ZEDEs were allowed to exist, they just weren’t allowed to make new ones. Is that the long and short of it?

Christian Betancourt: Yeah, essentially. With what they did in Congress afterwards there was a ruling from the Supreme Court. I don’t know if you want to get into that right now.

Timothy Allen: Absolutely.

Christian Betancourt: Okay. So by the time Próspera starts building, that’s 2020, there had already been, I think, three or four confirmations from the Supreme Court of Honduras about the legality of the ZEDE regime, of the special economic zones moving forward. Then the new government comes into power. They repealed the law in 2022. They were not able to confirm this in 2023. So then what happens? They were not able to. We continue operating.

Timothy Allen: Can I just stop you again there? I’m still not sure. I do not understand that. When you say they rescind the law, does the law exist within the Constitution, or is the law separate to the Constitution?

Christian Betancourt: Separate from the Constitution. That’s the organic law.

Timothy Allen: But does the Constitution give rise to the law?

Christian Betancourt: Yes, yes, of course.

Timothy Allen: Okay. I just don’t understand why that’s a separate thing. Is that just something to do with law?

Christian Betancourt: Yeah, just legal technique.

Timothy Allen: Like, if you create a constitution that says you can have these zones, they need fifty years of guaranteed existence and here are the rules. Or do the rules for making ZEDEs not exist in the Constitution, they exist as a separate law? Is that how it worked?

Christian Betancourt: The minimal requirements are in the Constitution, and they’re still there now. Like, what is the zone? What sort of abilities does it have? Where can they be built and set up? All that basic stuff is the Constitution. But then the law actually creates the procedure. What are the specific requirements, the things to attach, the things that you can touch and cannot touch. So the details were in the law.

Timothy Allen: But who has the right to repeal laws, then, in the government?

Christian Betancourt: Congress.

Timothy Allen: Congress. Okay, Congress can. And what does precedent matter in those cases? As in, the fact that the law was created has a precedent. There’s a precedent there as to why it was created. How do you get to repeal it, just purely by vote?

Christian Betancourt: Essentially. Sometimes laws do have requirements, conditions like this, they had to be repealed by a supermajority. But yeah, essentially if you get the votes, you can. Well, there was an argument back in the day that they should not have been able to repeal the law because it was protected in different ways. But we decided not to move down that path because it would have made things more complex back in the day. So it was a complex legal scenario, for sure.

Timothy Allen: Okay, sorry, go back to that other thing you were talking about when I butted in. Sorry, I was a bit rude. Are you getting hot, by the way? Do you want me to put the air conditioning on?

Christian Betancourt: Oh, that would help.

Timothy Allen: It’s the noise. I’ve just added an extra two hours’ worth of post-production time. I thought, you’re a Honduran, you should be able to put up with this.

Christian Betancourt: Because I’m a Honduran it means I sweat well. So I have a good cooling system.

Timothy Allen: We were talking about, you said that there was, oh, completely forgotten. There was something else. We did the five layers.

Christian Betancourt: The ruling.

Timothy Allen: Yes, the ruling, that’s it.

Christian Betancourt: Okay. So they were able to repeal the organic law in 2022. They were not able to confirm the modification of the Constitution in 2023.

Timothy Allen: I’ve got another question, sorry, keep butting in. When they failed to repeal the Constitution, what was the political makeup of Congress at the time? Was it mainly socialists? How come it didn’t get passed?

Christian Betancourt: Nobody got a majority. Again, Honduras has always been a very conservative country. So the socialists were the party that had most votes in Congress, but they didn’t have a majority by themselves either. So when they repealed the law they got the votes from the opposition parties, again on the condition that government should figure out a way forward with investors. That didn’t happen. Then the opposition parties did not accompany them.

Timothy Allen: And were they being less socialist at the beginning as well? Like you said, they came in on certain policies.

Christian Betancourt: Yeah. I mean, when they started, people want to trust the government. You want to trust them in good faith, maybe. Well, not me. But many times people, I guess, try to believe that governments have good intentions. So yeah, it was very early on. People were still giving them the benefit of the doubt. They were not as authoritarian as they tried to be afterwards. So they went along with it. But by 2023 it was clear that these people meant no good.

Timothy Allen: Right. Okay. Sorry, go back to where you were.

Christian Betancourt: So they were not able to confirm the constitutional amendment. So then the court issued, this was late 2024, a very strange ruling about the supposed unconstitutionality of it all. And it was an irregular process. They had to get some deputy magistrates to vote for it. So it was an irregular approval by itself. But even when you go to the ruling, it’s very strange in the sense that it doesn’t individualise rights. I don’t want to get too lawyerly, but essentially it doesn’t refer to the consolidated rights that Próspera and the other zones had, which is a big part still of our defence, that we have consolidated rights. Even if you declare it unconstitutional retroactively, which is also illegal, you shouldn’t be able to touch us. So they declared it unconstitutional. Again, this was already confirmed as constitutional by three rulings earlier. But now in 2024 they declare it unconstitutional. But how it works in Honduras, and that’s the general standard of rule of law in the free world, is you declare unconstitutional towards the future. Consolidated rights of citizens should not be affected by this. But they didn’t believe in the most basic fundamentals of the law. It was ideologically motivated, so they decided to do it unconstitutional retroactively, which is completely out of line, completely out of basic law principles.

Timothy Allen: Has anyone ever done that anywhere in the world? Because that seems counterintuitive completely, because that then makes all constitutional changes not real. That means everyone that voted on that did something illegal, so all of a sudden those people in the past become illegal. So how can you do that? You can’t change what people were at the time.

Christian Betancourt: Exactly.

Timothy Allen: Has anyone ever done that in the world?

Christian Betancourt: Maybe in some other place, in some authoritarian countries, but it had for sure never happened in Honduras before. It was completely out of line. It was nonsense, Tim. And you’re very right in saying that this was then used as a threat to the congressmen who had very validly approved it years before, that they had committed treason or whatever nonsense they may want to use as an argument. So they declare it unconstitutional retroactively, but the ruling still doesn’t individualise the consolidated rights. It doesn’t mention what happens with these people, with Próspera, with Morazán, with Orquídea. The ruling also doesn’t order anything. It’s not like it orders a government agency to pursue this in some way or another. So first, I don’t recognise that ruling, because you cannot make something unconstitutional retroactively, so it’s null and void. But even if we were to recognise that ruling, which is what we had to do, we interpreted that it doesn’t touch us. So we continue to move forward. But yeah, right after that ruling came out, which was in late 2024, it was the legal community. There’s a group of lawyers that are involved in this special economic zones thing. You have Próspera’s legal team and Morazán’s legal team and just people like myself that don’t work with them directly but are residents and are involved. And it was very hard on us, because this shouldn’t have happened. It was completely illegal what they were doing. So how do we move forward? How do we keep this alive at least for one more year? So there was a lot of analysis. And in the end it was clear to us, at least, that it didn’t touch us and we could continue moving forward.

Timothy Allen: How much do you think the threat from Próspera suing them actually had an effect, do you think? What was the lawsuit? It was some ridiculous amount of billions, wasn’t it?

Christian Betancourt: Yeah, it started being around close to eleven billion dollars, which is substantial for a small country like Honduras.

Timothy Allen: And this was based on the CAFTA-DR agreement, was it?

Christian Betancourt: Yeah.

Timothy Allen: Which was the main thing Próspera had, to sue the government with this exorbitant amount of money. How much do you think it actually made them think about it?

Christian Betancourt: I think it was important. I think it was the right decision at the time. It was an important deterrent element, that lawsuit itself, and also the support that we got from the State Department in the US, protecting American investments, and just the recognition, the application of international treaties. If these countries don’t respect the international treaties with the US, what good are they for? So we also got some support even publicly, from the State Department and the local embassy. And it was always with the narrative of find a negotiation, find a way to move forward, but the previous government was never interested in talking about anything.

Timothy Allen: I was going to say, that’s the impression I got. By this point they’re just trying to shut the place down. And then they’ll do anything, like you say, try and retroactively change the Constitution, which doesn’t make any sense at all. But then a point came, and I remember it, when the government were reporting success because they had stopped new ZEDEs being formed. That was the success story. And prior to that the success was, we’re shutting down the ZEDEs. And that was a big moment, I think, because it showed they actually lost, but they tried to spin it into a win, because they actually downgraded their own success. And that for me was the one point where I thought, because I was following it from afar obviously, but it’s like, that’s unusual to admit. That’s a bit like Trump when he wants to shut down the Strait of Hormuz. He says we’re going to shut it down, and then the next day he’s saying we’re going to block it, because he can’t shut it down. He’s downgraded. It doesn’t look good in the public eye that you’re saying we’re going to close the ZEDEs, and now we’re going to stop the ZEDEs, and actually now you’re saying we’re not going to stop them, we’re just going to stop new ones happening. Which sounds to me like even that’s going to change now. What would your prediction be for the coming six to twelve months?

Christian Betancourt: Well, hopefully we get a new law and we can continue implementing the vision. But yeah, I agree with you. And that’s what they’re still saying nowadays. Oh, we repealed the law, so what? We still continue to operate. They were not able to shut us down. And by the end of it, they tried to make it into a matter in the last campaign, but people really didn’t care any more. So the ZEDEs were not mentioned really in any substantial way in the last campaign cycle, which I think is also a strong signal of the difference in how people are perceiving it. My expectation, Tim, is that we find a way forward to continue implementing the model. I think it’s clear at this point that it has the potential to change the country, to dramatically improve the conditions. What if we become, I don’t know, the Saudis of Central America? It’s a very small population that can be able to generate a lot of wealth. It was designed originally by Hondurans, and Hondurans were going to be the ones to figure out a way forward. I know Próspera and Morazán are open to negotiating, to making changes to the regime. It’s worth mentioning, the regime was designed before Próspera or Morazán came, so it’s not like they had any say on it. But now they’re open to changing some things, improving it, making it politically attractive for the powers that be.

Timothy Allen: That’s interesting. So do you think this could be a blessing in disguise, because it gives you the opportunity to improve the laws?

Christian Betancourt: It was definitely, not just because of that, but it was definitely a blessing in disguise, because we got to prove that the model worked and resisted.

Timothy Allen: Sure, sure, sure.

Christian Betancourt: Because we were in the cradle. They tried to smother us in the cradle. They were not able to. And it’s like, Tim, I remember, it was four years, right? It was a four-year drama. So they did several things during this time. I remember one time they brought a whole commission of people from the Socialist International, and a lot of international Marxist actors came once to the Crawfish community, again a very small community, and they made a whole show, and there was even some altercation with other local people from Crawfish who are pro-Próspera and were very mad that that was happening. So there was some physical altercation when that happened. The government just brought these people. I remember they even brought an Indian Naxalite, this very radical Marxist group from India. They got her involved in this. So you’re dealing with a government that has so many resources and so much money to make your life difficult. And we were just like a ragtag group of people trying to push this forward.

Timothy Allen: How easy is it? The laws that were actually repealed, how easy is it to create new versions and get them passed? Is that a massive deal, a big process? Because you can’t un-repeal them. Do you have to start again and create new laws?

Christian Betancourt: Well, there are different options that are currently being analysed. But whatever mechanism is promoted in the end, it’s not going to be easy. There are always political costs to this type of thing. A lot of socialising, explaining the laws to the decision makers, especially with all of the baggage that had happened about the projects. So it’s going to be a process for sure to get a new law. And again, I’m talking about getting a new law that allows for new zones to exist. I don’t think it’s going to be that difficult to at least obtain the formal recognition of the existing zones that allows them to continue operating moving forward. My expectation, hopefully, is that we have that during this first year of government. After the first year, governments become more political, less technical. So my expectation is that we have that in the next few months. But about a new law that creates new zones, I think we can do it, but it’s not going to be easy.

Timothy Allen: But don’t you think it’s in their best interest, even this government? They seem to be very pro-business, pro putting Honduras on the map and making it into somewhere internationally respected. So wouldn’t it be good? I would imagine if a new law came back in, wouldn’t there be an explosion of new ZEDEs, do you think?

Christian Betancourt: Hopefully.

Timothy Allen: Yeah, but do you think they would? Maybe they wouldn’t, I don’t know.

Christian Betancourt: I think they would, Tim, at this point. Because back then you had three zones that were approved, but there were more applicants. And this was back in 2017, this was still very niche. Nowadays it feels like everybody wants to do their own startup society around the world. So if the opportunity arises again, I’m sure people would be interested in applying. And Honduras, there’s a vast territory available. We’re just barely ten million people. So there’s a lot of potential for cool projects like this.

Timothy Allen: It’s funny to think about what that future might actually look like, because the world is changing incredibly fast at the moment, isn’t it? There’s no question about it. So what do you think about the likelihood of new zones being able to be created in Honduras in the next four years?

Christian Betancourt: Hard to say, hard to say right now still. But hopefully we can. I think the new authorities understand what this means. Also the new government has been talking a lot about decentralisation, to give back a lot of authority and decision-making to the local municipalities. And that’s really what we’re doing here. I mean, the special economic zones in Honduras have a direct inspiration, yes, from the Asian special economic zones, what happened in the United Arab Emirates and China and South Korea, but they also have a very strong influence from Spanish municipalism. The Constitution says that these zones are equivalent to municipalities. And back when we still had the Spanish Empire, in less or more ways during the several centuries during which it existed, municipalities were the base layer for governance and social organisation, and they had many times substantial levels of autonomy. When the imperial provinces in the Americas gained independence, most of the countries maintained a lot of those structures, like we still live in municipalities, but they don’t have anywhere close to the level of autonomy that they had. It was all taken out from them by the states or the central governments or what have you.

Timothy Allen: Let me tell you what your fifty-year vision for Próspera was, and then I’m going to ask you again whether you agree. Your fifty-year vision four years ago was not Dubai with skyscrapers, but an idyllic, sustainable, nature-integrated place with world-class architecture and a prosperous mixed community.

Christian Betancourt: I think that sounds about right. Still.

Timothy Allen: Still. I think the plans are much bigger than that. Isn’t that true, even in fifty years?

Christian Betancourt: No, I mean, it’s big. What I mean by that is, if we get industrial manufacturing in La Ceiba, that’s part of the plan, but we do it in a responsible way. That’s the thing. So we still make it, and I’m talking we as a community, in a way that it’s a place that you want to live in. I don’t see a Burj Khalifa in Roatán. It would be an eyesore. But of course I see big buildings, as we already have, ten, fifteen, maybe twenty storeys high at the most, but then done in a tasteful manner, with urbanism that is responsible with the ecosystem, with the environment, and with the types of lives we want to have. And in the La Ceiba site, which is on the mainland across the channel, that’s where we can have a lot of the manufacturing projects. It’s ideal for having that. There’s already a port there. There’s strong local talent in La Ceiba. But yeah, I don’t know, fifty years, we’re going to have flying cars for sure, and I hope I can get to see them.

Timothy Allen: And you’re going to carry on living here, I take it. But if Próspera is the model for the special economic zone worldwide, you are, because you’re a Honduran, you’re the model for the Honduran citizen living in one of these places, I think, because you’ve chosen as a Honduran to come, very early adopter. Are you going to stay?

Christian Betancourt: Yeah. And thank you, Tim. I don’t think I had thought about myself in that way.

Timothy Allen: Well, I’ll tell you why. Because I’ve spoken to two hundred people on this podcast and a lot of them have been to do with Próspera, but Gabe’s from Guatemala. Most people I speak to are people who aren’t Honduran. I don’t think you’re the only Honduran that I’ve spoken to, but who has a significant thing to say. I could go to Crawfish Rock now and speak to someone, but I wouldn’t necessarily get a well-educated view of what’s going on. So that’s not something I necessarily want to do.

Christian Betancourt: Yeah, I understand that. And also that I don’t work directly for Próspera, or in any way for Próspera. I’m just a resident here, an early adopter, like you said, and I’ve tried to help out the community, tried to use the platform for my own things.

Timothy Allen: Don’t forget, I’m going to butt in again, don’t forget four years ago I came to Próspera looking for interviews and there weren’t many people to interview, and I interviewed you, and you knew all about ZEDEs, the history. Like I say, we had an hour-long conversation about personal sovereignty, and I was looking at it here, it’s like from medieval divine rights through to the Enlightenment. It’s not like you don’t know anything about this stuff. So I do consider you an early adopter, I think that’s absolutely fine to think of yourself like that. But as an early adopter, you are, apart from, say if you went to Morazán, and sure there are lots of Hondurans living in Morazán, they’re early adopters, but I think pretty much they don’t think of Morazán in the same way that you think of special economic zones or Free Cities or charter cities or whatever you want to call it. You’re thinking about it from that angle. They’re in Morazán and they’re thinking, well, living in this town is dangerous, living in Morazán is great, better standard of living, cheaper. That’s the way they’re thinking. And sure, there’s an element of you thinking like that, but you’re also kind of ideologically driven, and I don’t like that word ideological necessarily, philosophically driven. So you chose as a Honduran to live in this place in Honduras. So you’re a good early adopter, a very good example of one.

Christian Betancourt: Did we talk about Dune last time, the film or the book?

Timothy Allen: Yeah, I don’t think so. Why?

Christian Betancourt: Maybe. It’s like, I like to think of ourselves as these early adopters, and you also have other Hondurans that understand this very well, Jorge and all the people that are involved.

Timothy Allen: Oh yeah, sure, I spoke to Jorge last time. He’s Honduran. Jorge is the mayor of Próspera still.

Christian Betancourt: So in the first book of Dune there is this section, and you see this, I think it’s in the second film, when they get to see the water reserves that the Fremen had to terraform the planet, because Arrakis is the planet, Dune is a big desert, essentially a desert planet. So they’re working towards, in the long term, changing the ecosystem and enabling vegetation and rivers and that type of thing. So I do see ourselves in a way like that, like those early Fremen. We have that long-term vision, and we are convinced that this can change the conditions and improve the country more towards where we want it to be. There was a lot of uncertainty in the last few years, but it’s a great place to be. And for me as well, I have family on the mainland. Also the US is close by, you’re two hours away from Miami. And I do love the island. I love going scuba diving and doing stuff in the outdoors.

Timothy Allen: Amen to that. And as I’ve been telling everyone here after this trip, I’m nearly at the end of my month, I’m going to put a month in my diary every year from now to come back here and work from here, because it’s such an innovative experience for me working here, especially now. That may change in the future, but right now there are a lot of really vibrant and interesting people here, and you meet them and everyone says hi, why are you here? It’s that stage, isn’t it, when you meet people, there’s no social weirdness in literally going up to someone and saying, what are you doing here? So that’s great. Anyway, look, Christian, thanks, mate, great conversation. Thanks for giving me the layman’s legal eye as well, because I’ve realised in the last few months how important the whole legal structure was. I know everyone went on about it for many years, but now you can see that it’s probably the most important part of the whole ZEDE thing, is making sure the legal stuff is right. And if anyone’s thinking of doing anything in their own country and starting anything new, that’s what you need. Sure, you need a bit of land, but you need the legal protections there, preferably at a very high level, that is, constitutional. I think that goes without saying, right?

Christian Betancourt: Definitely, people have taken notice. And Patri Friedman said at the Liberty Acceleration Summit recently that what he thought was the main innovation in Honduras was that you allowed for these zones to be developed, promoted by private parties, by companies, by startups, by local communities, not depending on the central government, which I do agree with. But if you’re doing it that way, you’re going to need the legal protections. So what Patri says has become the standard of thinking of what you would want to achieve in a host country, a country that recognises you as a primary operator of the zone, that you get that level of legal protections. And I’ve been very fortunate to help out with some projects happening in South America and sub-Saharan Africa, and conditions are different everywhere, but they are aware that you want some level of equivalent legal protection.

Timothy Allen: There you go. You heard it here first. Well, actually you didn’t hear it here first, because Patri’s interview is coming out tomorrow, and it’s like eight things I’ve learned from investing in Free Cities, and one of them was exactly that. He said, make sure, I forget how he worded it now, but it’s like you need land and protection. Land and legal, or something he said. I forget what he said. But anyway, that’s absolutely fantastic. And like I say, Próspera is like the sandbox for all this stuff, and I feel like it’s reached a point where it’s proved the majority of the potentials now. So I don’t see why anywhere around the world now you can’t look at your own country and go, that’s what happened in Honduras, why don’t I do it here? And thanks for being a small part of that as well. And great talking to you, Christian, four years later. Let’s do another one in four years. You’ll probably be living in the Burj Khalifa in Roatán at that point, and I’ll go, guess what you said. Remember you said we’re going to be living in huts.

Christian Betancourt: Oh boy. Thanks for having me, Tim.

Timothy Allen: That’s all right, man. No problem.

Notes on this transcript

This transcript was produced from the audio recording of the episode. The host’s opening introduction, the sponsor message and the closing remarks about supporting the show have been left out, so the text begins where the conversation itself begins and ends where it ends.

Speaker names are shown in bold. The recording is a two-person conversation between host Timothy Allen and guest Christian Betancourt, and each speaker’s turns are labelled accordingly.

The transcript has been lightly edited for readability. Filler words, repeated false starts and verbal tics have been removed, and a small number of overlapping or fragmented exchanges have been smoothed into complete sentences. The wording, meaning, order and character of the conversation have been preserved throughout, including its digressions, its interruptions and its humour.

Names, places and specialist terms have been rendered in their standard spellings. Among those that appear are: Próspera, Morazán and Orquídea; the ZEDE regime; the Beta building, Duna and Pristine Bay; Roatán, La Ceiba, San Pedro Sula and Crawfish Rock; Xiomara Castro; HPI, or Honduras Próspera Inc; CAFTA-DR and ICSID; Infinita, Vitalia and Zuzalu; Niklas Anzinger, Dušan of Amity Age, Balaji Srinivasan, Brian Johnson and Naval Ravikant; Coinbase and Tim Draper; Nayib Bukele; Patri Friedman and the Liberty Acceleration Summit; and Frank Herbert’s Dune, in which the Fremen terraform the planet Arrakis. Figures, dates, legal interpretations and characterisations throughout are those of the speakers.