Libertarian City Dream in Honduras Becomes $11 Billion Nightmare (2)

Nestled within a tropical forest on a sun-drenched Honduran island, Prospera is technically a city. But entering it feels like crossing into another country.

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Armed guards pop from a booth at the edge of the grounds, toting clipboards and pens for visitors to sign a “temporary touristic access permit” binding them to the community’s legal code.

Inside the gates stand a two-story co-working space, a 14-story residential tower, and an angular, futuristic-looking building called “The Circular Factory,” where programmable robots transform wooden blocks into construction materials.

The property slopes gently to a beach where ...