Charter Cities Attempting to Create a Libertarian Paradise

Yves here. Sadly, with the possibility of breakdown of traditional governance looking all too imminent, libertarians have been attempting to square the circle of their anti-colllective-control beliefs with the need for things like infrastructure and security. The charter city approach sounds a bit too much like the Snow Crash Franchise-Organized Quasi-National Entities like Mr. Lee’s Greater Hong Kong for my taste.

This article focuses on charter cities set up in poor nations. But it does acknowledge that there have been some in America, such as ones sponsored by the Irvine Company. Oddly, there is no mention of the Disney-created town of Celebration. Perhaps things got better, but I know someone personally who invested there in the Disney years. It was not a happy experience.

By John P. Ruehl, an Australian-American journalist living in Washington, D.C., and a world affairs correspondent for the Independent Media Institute. He is a contributor to several foreign affairs publications, and his book, Budget Superpower: How Russia Challenges the West With an Economy Smaller Than Texas’, was published in December 2022

Since late 2022, Honduras Próspera Inc. (HPI), a Delaware-based developer of a semi-autonomous zone on a Honduran island, has been locked in a nearly $11 billion legal battle with the Honduran government. After having its project outlawed, HPI sought damages while continuing operations, and in February 2025, a tribunal allowed the case to proceed. The dispute has drawn some attention in the U.S., with 33 Democratic lawmakers urging Washington to intervene on behalf of Honduras against HPI in 2023. Meanwhile, both parties are trying to manage the situation, with Honduras wary of scaring off other investors by appearing hostile to business, and Próspera wanting to avoid accusations of neocolonialism and extortion.

Próspera promotes itself as a “pro-innovation governance framework,” and is one of the most visible modern attempts to build a charter city. It operates as a semiautonomous zone with its own tax, legal, and regulatory systems, and though its future is uncertain, the concept itself is not new. Colonies and frontier ports have long attracted settlers, capital, and trade through special legal privileges. Carthage, an ancient city-state established in North Africa, thrived from commercial and political experimentation, and medieval charter towns and Hanseatic cities like Lübeck and Danzig flourished under self-rule. Private enterprises have also played a role, such as the English East India Company establishing Kolkata in India to further its business interests.

The rise of centralized states and colonial empires diminished the independence of formerly autonomous cities over the last few centuries, but new versions resurfaced in the 20th century. American company towns offered one model of corporate-controlled living, while the Irvine Company’s master-planned communities in California showed the potential for private development (though most were largely absorbed by municipal governments). In 2005, Sandy Springs, Georgia, incorporated and initially outsourced most of the public services to private contractors, with mixed results. Globally, special economic zones (SEZs) became laboratories for economic and urban experimentation, with China paving the way for their evolution for decades.

Próspera and similar projects are making governance itself their focus. Designing tax, legal, and regulatory frameworks with limited oversight, they are drawing capital and curiosity and are tied to technologies like blockchain and digital identity systems. Many may collapse or remain unfinished, but they provide examples of a search for governmental and urban innovation when conventional models seem inadequate. Whether lasting alternatives or future historical footnotes, the push to build them continues worldwide.

Much of today’s charter city movement draws on the thinking of 20th-century economists. Ludwig von Mises and Friedrich Hayek argued that prosperity emerged from institutional competition and spontaneous order when existing rules fail. In 2009, Nobel laureate Paul Romer built on these ideas by reviving the charter city concept, proposing that struggling countries should set aside territory to be administered by a successful outside country with strong protections for property and individual rights, eventually leading to economic prosperity and the strengthening of human rights in the host country.

Parallel proposals emerged in tech circles, inspired by economists like Milton Friedman’s experiments with charter-style institutions. Curtis Yarvin outlined “neocameralism,” which imagined governments as joint stock corporations with shareholders choosing a CEO-like ruler in place of electoral democracy, viewed as “a refinement of royalism.” His writings, along with those of philosopher Nick Land, inspired the Dark Enlightenment, which rejects egalitarianism and democracy while promoting a “patchwork” of competitive, hierarchical city-states, attracting the interest of tech figures like PayPal co-founder Peter Thiel and Mosaic founder Marc Andreessen, and sees governance as a competitive good.

Not all charter city projects in the broader term embrace this ideology, and their variations are evident in the variety of labels they use: startup cities, free private cities, freedom cities, network states, and more. Yet all present themselves as alternatives to conventional governance, appealing primarily to libertarians, anarcho-capitalists, and related movements.

Próspera

The rise of Próspera shows the opportunism and fragility of charter city projects. In Honduras, a 2009 coup tacitly supported by Washington brought a more business-friendly government. By 2013, the country passed a law allowing for Zones for Employment and Economic Development, known by their Spanish acronym ZEDEs, autonomous areas with their own political, judicial, and economic systems.

Honduras’ weak institutions and high corruption made it an early candidate for experiments, and Paul Romer initially worked with Honduran officials to shape the ZEDE model, but later distanced himselffrom the project in 2012 stating that “he had not been given the powers and information necessary to fulfil his role as chairman of the transparency commission, which is meant to ensure governance of the new development zones,” according to the Guardian. Romer had originally envisioned administration by foreign governments such as Switzerland, but sovereignty concerns and a lack of willing partners shifted the model to private developers, aiming to make good governance profitable.

Honduras Próspera Inc. became the first ZEDE in 2017. Erick A. Brimen is the founder and CEO of HPI, and he earlier launched NeWay Capital, a “social impact investing” corporation focusing on Latin America. With backing from investors including Pronomos Capital, a venture fund created in 2019 to build charter cities worldwide, Próspera became Pronomos’s flagship project. Pronomos envisions “crowd choice in governance providers,” startup societies sanctioned by existing states, and eventually new settlements in international waters or even outer space. Its aim is to create a model “where the city is the product.”

Próspera is also linked to the Seasteading Institute, which sought floating charter cities in international waters. Patri Friedman, who founded the institute and is the grandson of Milton Friedman, helped shape Pronomos with support from entrepreneurs like Peter Thiel, Marc Andreessen, Naval Ravikant, and Balaji Srinivasan. Próspera markets itself as an alternative to weak state institutions, offering Hondurans and foreigners the option of voluntarily accepting Próspera’s rules for more reliable governance and economic opportunity.

Próspera’s governance is outlined in its code of laws and includes some democratic regulations. In high-density areas (35 or more inhabitants per square kilometer), residents can elect a technical secretary and vice technical secretary through majority vote. Candidates are nominated by the Próspera Council and submitted to the national oversight body (CAMP). While residents can vote for some positions, ultimate control over laws remains with the private corporation.

The zone writes its own regulations, zoning codes, and tax structures, and though criminal law remains under Honduran jurisdiction, Próspera sets its own civil and commercial law centered on arbitration. Parties signing contracts may choose their arbitrator or default to the Próspera Arbitration Center.

Residents sign an “Agreement of Coexistence,” a social contract recognizing Próspera’s authority. They have to pay a platform fee of 7.5 percent of income or business revenue, plus an annual membership fee—$260 for Hondurans and $1,300 for foreigners, with higher rates for corporations. The city also offers “e-residency,” inspired by a 2014 Estonian initiative, allowing virtual residents to register companies. HPI even recruited Ott Vatter, former head of Estonia’s e-residency project, to design its initiative, before his accidental death in 2024.

The city has promoted innovative 3D property rights, modular construction, and medical reciprocity laws. Próspera’s leadership even emphasizes internal competition. Chief of staff Trey Goff explained in an interview that communities can adopt their own “interest declarations,” displacing Próspera’s administration within their boundaries (similar to homeowners’ associations). These enclaves would establish their own rules, provided they are consistent with overarching statutes, allowing groups to test alternative models.

Related Projects

Próspera’s survival is far from certain. Its population remains well below the short-term target of 10,000, and its territory is still just a little more than 1,000 acres. Tensions with the Honduran government since 2022 have added uncertainty, with the company turning to the Investor-State Dispute Settlement (ISDS) under the World Bank, claiming protections under the Honduras-Kuwait Treaty of Reciprocal Investment, and that the treaty preserves ZEDE law for 50 years. The UN has meanwhile criticized Honduras’ regime for ceding excessive sovereignty to private investors. “In 2021, the United Nations expressed strong concern over Honduran ZEDEs, stating that they posed a potential threat to human rights in Honduras. The UN estimated that ZEDEs could wind up controlling approximately 35 percent of the country’s territory,” stated a 2024 Foreign Policy article.

Founder Erick Brimen, however, insists Próspera is not a location, but a “platform that delivers governance.” Alongside its presence on the island of Roatán, Próspera has already annexed a port near La Ceiba in Honduras for its “first satellite” community with plans for expansion along the country’s north coast. It is also exploring possibilities in Guatemala, the Dominican Republic, and Haiti (despite none authorizing ZEDEs). As of mid-2025, it was also in talks with dozens of African governments for a 750-1,000 hectares zone, primarily focused on reforming commercial laws.

Other ZEDEs in Honduras include Ciudad Morazán, run by Centro American Consulting & Capital. Pop-up cities like Vitalia, which Próspera hosted on Roatán in 2024, and its predecessor Zuzalu, function as temporary micro-communities for testing new ways of governing. Pronomos has also backed Itana (formerly Talent City) in Nigeria, a planned community outside Lagos with government support.

Other experiments are developing globally. Praxis (originally Bluebook Cities) envisions a full breakaway state, raising $525 million from investors including Peter Thiel, Alameda Research, and Winklevoss Capital. Billing itself as the “world’s first network state” and drawing inspiration from tech entrepreneur Balaji Srinivasan, Praxis claims to have more than 87,000 digital “Praxians,” and has floated possible locations from the Mediterranean to Greenland.

Another Thiel-backed startup explored creating an eco-industrial city in Bhutan; however, the government “disavowed the startup’s project and plans to announce its own mindfulness-focused ‘megacity’ instead,” stated the startup news website Dash Startup. The Charter Cities Institute, a non-profit based in Washington, D.C., has plans for a Specialty City in Zambia, while Babson Global Inc., the commercial arm of Babson College, unveiled a plan for a global network of charter cities in 2013.

In the U.S., ventures like Elon Musk’s Starbase are pushing the boundaries of urban creation nearly a century after company towns faded. Billionaire and former Walmart CEO Marc Lore is meanwhile bankrolling Telosa, a planned private city the size of Manhattan in the American west, scheduled for completion by 2050 for 5 million people. Trump has shown his support for freedom cities initiatives during his second term, while the Charter Cities Institute proposed using Guantanamo Bay to pilot a charter city, leveraging the region’s unique legal status.

The European Union has largely restricted charter cities and SEZs, with existing versions tending to focus on industry or logistics instead of mixed-use urban development. The continent’s denser populations, strong municipal governance, strict property laws, and historical labor struggles have limited experimentation. However, eco-villages and smart city projects have gained renewed interestin recent years.

Outside the EU, other European efforts exist. In the UK, Paul Romer advised on charter city-style “freeports” under Rishi Sunak’s government, though enthusiasm waned eventually. Russia maintains “closed cities” for military and nuclear development (a Soviet legacy), allowing limited economic autonomy with some experiencing limited revival, alongside SEZs. Switzerland’s Zug, or Crypto Valley, has attracted global investment through flexible governance and emerging technologies.

And even on the EU’s borders, libertarian experiments have also emerged: in 2015, Czech politician Vít Jedlička attempted to create the “crypto-state” of Liberland on disputed land between Croatia and Serbia, but both countries blocked it. Despite setbacks, it has received traction among global libertarian movements.

Próspera Roatán has only acquired roughly 1,000 acres of unoccupied land at market prices, yet its presence is a symbol of charter cities’ challenges to national and political sovereignty. That sensitivity is especially acute in Honduras, once branded the first “Banana Republic” under U.S. corporations in the 20th century. Since 2007, Honduras has been marred by cases like Randy Jorgensen’s resorts, which displaced Garifuna communities through violence and coercion. Fears over Próspera flared early on, when Próspera connected a nearby town to its water supply until villagers attempted to restore its old system following pricing complaints.

Critics fear that charter cities and SEZs could siphon investment away from social democracies and toward corporate enclaves with little oversight. Defenders counter that these are co-development projects, not secessions, with mechanisms like revenue sharing to ensure host nations benefit, and that poor countries need room to experiment as urbanization and population growth continue. German economist Titus Gebel, a major proponent of ZEDEs, wrote in 2018 about how the city-states in Hong Kong, Singapore, and Monaco thrived while benefiting the surrounding areas.

The recent track record of new city projects is mixed and has proven difficult even with state support. South Korea’s Sejong City was planned as a new administrative and entrepreneurial city when it started in the early 2000s, but struggled to attract agencies and businesses, limiting its appeal. Other projects, like Malaysia’s Forest City, have disappointed investors. Hong Kong’s autonomy has been largely erased since 2020, while Chinese and Gulf states zones remain tightly controlled outside of looser financial regulations. In weaker states like Honduras, autonomous ventures find more space but are vulnerable to political swings.

Still, billions of dollars are flowing into charter city projects, especially from tech firms that no longer want to merely influence governance but actively run it. Governmental experimentation is normal, and Italian city-states showed how diverse and innovative governance systems during the Renaissance allowed them to thrive while many other European states stagnated. It is still unclear whether modern charter cities will create flourishing alternatives or new forms of exploitation. The risk lies in allowing a single ideology or group to dominate their expansion and development as the concept gains public attention.