THE MAGAZINE

Under New Management

The coast of Honduras could be the site of a radical experiment: one in which foreign 
investors bankroll a quasi-sovereign city. Backers say it will lift the region out of poverty -- but residents are anything but convinced.

AMAPALA, Honduras — In a cinder-block building at the end of a narrow, washed-out dirt road, Alberto Cruz, the mayor of Amapala, wipes the sweat from under his white baseball cap. The July heat is oppressive, and beads of moisture form as Cruz faces the insistent stares of hundreds of his constituents, gathered for a town-hall meeting. People fill the small room before him and spill out into an adjacent, dusty lot, peering in through metal window screens. They are eager to pepper him with questions about a provocative new law that could change their lives permanently.

"I'm not here to defend or condemn a law that I didn't make or a project that I don't know about," Cruz tells the crowd. "But we need to be open to investment."

"This law was passed without consulting anyone here," protests one man in the crowd.

"We're only fishermen and farmers," says another, rising from his chair and stabbing the air with an angry finger. "We won't stand for the invasion of these model cities created for the benefit of the rich!"

The room erupts in applause.

Here, in a poor corner of one of the poorest countries in the Americas, a radical economic and political experiment may soon be underway. In May, the Supreme Court of Honduras ruled in support of a constitutional amendment and attendant statute that allow for the creation of "zones for economic development and employment" (ZEDEs). Sometimes called "charter cities" or "model cities," these zones would be quasi-sovereign entities built on Honduran soil with backing from foreign investors. Unlike the world's thousands of "special economic zones," such as Shenzhen in China, which attract foreign direct investment through tax breaks and other flexible economic policy measures, ZEDEs would operate with "functional and administrative autonomy that includes the functions, powers, and duties" of ordinary cities, according to the constitutional amendment. They could enact their own laws, set up their own courts, even establish their own police forces.

The first zone may be built on southern Honduras's picturesque Gulf of Fonseca, specifically in the small province of Valle (home to some 176,000 people, according to a recent estimate). The Honduran government has mentioned Amapala, which comprises several islands, as a potential charter-city site, and it is among the Valle municipalities that the Korea International Cooperation Agency (KOICA), South Korea's bilateral aid bureau, is analyzing in a $4 million feasibility study.

ZEDE supporters -- both in Honduras and around the world, including famous free market champions in the United States -- cheer what they see as a way to bring investment, jobs, and the rule of law to parts of Honduras, a notoriously unstable country. And admittedly, with the world's highest murder rate, rampant legal impunity and poverty, and tens of thousands of people fleeing across its borders, it's hard not to look at Honduras and think that something drastic needs to be done.

But are charter cities too drastic? Countless questions about how they would operate remain unanswered because the government enacted the ZEDEs legislation with minimal transparency and has offered little information since. Critics worry that evidence to date -- the government's opaque approach, the ZEDEs' undemocratic features, the cast of characters backing the scheme, and the vulnerabilities of people likely to be affected by development -- indicate that charter cities would be little more than predatory, privatized utopias, with far-reaching, negative implications for Honduran sovereignty and the well-being of poor communities. Diminishing confidence further, the recent Supreme Court decision is mired in controversy and allegations of corruption.

In the town-hall meeting, people's anxiety is palpable. Some want more honest talk from the government about what ZEDEs would mean for them. Others, however, insist they will never allow charter cities in their backyards.

"This is the most dangerous thing I've read in my life," says one woman, holding up a well-worn photocopy of the ZEDEs legislation. "The whole law is a deception."

Residents gather for a town-hall meeting about a possible charter city. (Click to enlarge)

***

In 2009, far from Honduras, respected economist Paul Romer, then of Stanford University, appeared at a TED conference in the United Kingdom to unveil a big idea. Against the backdrop of a satellite image of the Korean Peninsula at night, Romer compared the North's blackness with the South, which glowed with electricity and economic activity. Causing the stark contrast, Romer argued, were the Hermit Kingdom's bad or impractical regulations. Similar problems existed throughout the developing world. Romer's plan? Sign over a large tract of "uninhabited" land in a struggling country to a developed guarantor nation, which would create and oversee an investment zone free from the host country's fickle politics and troublesome rules. Enter the charter city.

Romer's idea captured headlines in the Atlantic and the New York Times. Many international development advocates criticized it for its blatantly neocolonialist features, but it found supporters too. Proponents invariably pointed to Hong Kong, China's "special administrative region" that operates under different rules than the mainland, as a shining example of the results that autonomy can yield. And charter cities almost got off the ground in Madagascar, where Romer found a receptive partner in President Marc Ravalomanana. Malagasy charter cities went down the drain, however, when Ravalomanana was forced to resign, partly because of fierce opposition to his willingness to hand over land to foreigners. (He had negotiated a plan to lease more than 1.2 million hectares to South Korea's Daewoo, to grow corn and palm-oil exports.)

Around the same time, in Honduras, President Manuel Zelaya was ousted in a coup and replaced by the more conservative Porfirio Lobo Sosa. The new president faced a dire national situation: 60 percent of Honduras's citizens lived in poverty, its murder rate was climbing (from 50 homicides per 100,000 people in 2007, to 70.7 in 2009), and immigration to the United States was rising so fast that a domestic manufacturing association launched a campaign beseeching workers, "Stay With Us." While looking for ways to kick-start investment in the country, a Lobo aide named Octavio Sánchez discovered Romer's TED talk. It echoed similar ideas being proposed by Mark Klugmann, an American political consultant and former speechwriter for President Ronald Reagan who had worked on Lobo's campaign. Romer and Sánchez set up a meeting and began working on a plan to build charter cities in Honduras. "My sense was that it was worth putting some of my time and effort into doing something that might help," says Romer, now a professor at New York University's Stern School of Business.

In early 2011, the Honduran National Congress passed a constitutional amendment allowing for special development regions (REDs), which were like charter cities but without Romer's guarantor nation. They would have investors and be overseen by a government-appointed Transparency Commission -- Romer says he was to be a part of it -- which would select a Honduran governor for each RED. The regions would set their own regulations and jurisdictions; only when it had been determined that they had developed the necessary institutions and populations to hold their own elections would regions transition to democratic control.

The legislation provoked a raft of legal challenges and protests from critics who saw it as a threat to sovereignty and human rights, particularly when it was revealed that the government was considering northern indigenous areas as possible development sites. (Land disputes between indigenous people and both the Honduran government and developers have a long, bloody history.) People also resented that there was little public discussion about REDs. When the government signed a memorandum of understanding with a group of investors without consulting Romer, even he distanced himself from the project, citing poor transparency.

Opponents rejoiced when, in October 2012, the Supreme Court's constitutional chamber ruled REDs unconstitutional in a 4-to-1 vote. Two months later, however, the four justices who voted against the regions were dismissed from their posts by the National Congress, which was controlled by Lobo's National Party. Officials in Tegucigalpa rejected claims that the firings were related to the ruling. Then-leader of the National Congress, Juan Orlando Hernández -- now Honduras's president -- swore in replacement magistrates. The only justice to vote in favor of REDs, Óscar Chinchilla, is now the country's attorney general.

In January 2013, ZEDEs surfaced in new legislation, bearing striking resemblance to REDs but with a few notable -- and, to some people, worrying -- tweaks. Opposition rekindled and more than 50 NGOs appealed the constitutionality of the zones, but the newly composed Supreme Court unanimously rejected their arguments this summer. This has left critics more worried than ever that charter cities and their backers are poised to wreak havoc.

***

Every morning in Tegucigalpa, economist Fernando García buys at least three of the capital's four daily newspapers, clipping stories and filing them in binders organized by subject. His ZEDEs binder is fat with more than 100 pages of stories and legal documents, including a copy of La Gaceta, the official state paper, from Feb. 11, 2014 -- the day the names of the 21 members of the Committee for the Adoption of Best Practices (CAMP) were published. Under the new charter-city law, the CAMP is the successor to the Transparency Commission; its functions include approving regulations and recommending judges in a ZEDE, and setting aside areas for a zone's future expansion, in accordance with an undefined set of "international best practices."

"I had an expectation that they would be people with great international renown and importance, but when you investigate," García says, that isn't the case.

The CAMP is stacked with free-marketeers, mostly non-Honduran: Barbara Kolm, the libertarian president of Austria's Hayek Institute; Cato Institute senior fellow Richard Rahn; Ronald Reagan's son Michael; Mark Skousen, producer of the libertarian FreedomFest conference; U.S. anti-tax crusader Grover Norquist; and even a member of the Habsburg family. A subset of this committee, a five-member permanent commission, will handle the finer details of zone oversight. A technical secretary, approved by the CAMP, will run each zone day to day. Critically, unlike with REDs, there is no legal provision outlining how a local population would ultimately gain control of a ZEDE.

García and other critics worry that the backing of free-marketeers and the lack of democratic safeguards indicate that charter cities will cater to their corporate benefactors. "They may establish any rules and regulations that its governing panel determines are right, without submitting them to the entire population for approval," Russell Sheptak and Rosemary Joyce of the University of California, Berkeley, and co-authors of the Honduras Culture and Politics blog, wrote in an email. Even some vocal supporters of charter cities as a general concept are worried about what might take shape. Romer, for one, says he is "concerned that the far-reaching delegation of what really are powers of government to private entities and foreign, private individuals is taking place without sufficient debate" between the government and critics of ZEDEs.

Klugmann, who is one of the permanent commission's co-chairs and lives in Tegucigalpa, argues that dissenters who don't propose better ideas are just defenders of the status quo. "What if we say, 'OK, done'? Everybody on this committee resigns; the government repeals the law," he says. "Then where are we?"

A plebiscite is technically required for a charter city to be created. There are exemptions, however, for areas with low population density, including some along Honduras's coasts -- places that are "too empty to fight over," Klugmann says.

Currently, there is strong momentum for a charter city in Valle province, which includes exempted areas. In no small part this is because South Korea's KOICA is conducting the feasibility study, due out in September, and creating a master plan for a potential ZEDE there. In June, a delegation of Honduran officials, including Mayor Cruz and other local leaders, traveled to Seoul, where, among other things, they heard a presentation on how to work with investors. "They also talked about the complex issue of financing and the efforts that the Honduran government must make" to find investment partners, says José Alfredo Saavedra, a Valle congressman. "They were clear that they have an interest in Valle because Honduras is the center of Central America and Valle is the path from the Pacific to the Atlantic."

For now, precise details on what a charter city in Valle might look like are hard to come by. An initial survey conducted by KOICA in March mostly analyzes the area's development potential in general terms: for instance, cost of land, population density, and monthly rainfall. Kim Dae-hwan, director of the Latin America team at KOICA, says Valle's capital, Nacaome, is being considered as the heart of a prospective charter city; it could play host to a logistical center and be connected to a port on the nearby gulf coast. KOICA and the Honduran government, he adds, plan to start recruiting investors next spring. Officials in Tegucigalpa, meanwhile, are tight-lipped; Ebal Díaz, a government official and a member of the permanent commission for ZEDEs, declined to provide specifics about the future, citing a confidentiality agreement between KOICA and the Honduran government.

The lack of clarity has left people on the ground scrambling, wondering whether a ZEDE would bring economic bounty or strip away what little they have now. In many Valle communities, including Amapala, that's no small question.

***

The oft-contested borders of Honduras, Nicaragua, and El Salvador meet somewhere in the placid waters of the Gulf of Fonseca. Under a vast dome of sky, the gulf's largest island is El Tigre ("The Tiger"), formed from a conical, extinct volcano that is commemorated on the back of Honduras's 2 lempira note. On the front is a portrait of former President Marco Aurelio Soto, sporting muttonchops; Soto briefly made the island the country's capital in 1876. Today, El Tigre forms the bulk of Amapala.

The island was once Honduras's most important port, but lacking a bridge to the mainland, its economic prospects eventually disintegrated: In 1979, the port was moved to the mainland. This plunged Amapala into a depressed state that persists today. Most residents are poor, many living in mud-walled shacks with dirt floors. On some of the municipality's smaller satellite islands, people lack regular access to fresh water and electric power.

Economist Miguel Cálix has fond memories of growing up in Amapala, where as a boy he was the best student in his class despite not being able to afford shoes. He recalls spending days at the port helping inventory boxes of goods. Today, Cálix, a former presidential advisor and retired economic consultant at the Central Bank of Honduras, would like nothing more than to see his hometown and the region in which it sits make a comeback -- and he believes charter cities could make that happen. "To lift up the south, we have to make these model cities," says Cálix, who now lives near Tegucigalpa.

Omar Guillén, a government commissioner focused on development in the gulf region, agrees. An enhanced port in a Valle ZEDE, he suggests, could potentially be connected to another charter city near the Caribbean port of Castilla. (The government recently signed a memo of understanding with a Chinese firm for a proposed $20 billion interoceanic railway between the two locations.) "I am imagining … a zone that sells all the Japanese, Chinese, and Korean products, that generates employment, business, buildings, schools," Guillén says. "[This] is a depressed zone, but it's beautiful. In the future, it could be like the southern coast of France."

Others, however, are less sure that unelected administrators and investors could do -- or would want to do -- much to improve the lives of gulf residents. About a 10-minute speedboat ride away from El Tigre, on the tiny island of Inglesera, it's harder to imagine a container ship sailing into port than it is to picture developers salivating over the chance to erect a five-star resort among swaying palms and gently breaking waves. Rodolfo Núñez Pacheco, a fisherman whose family has lived here for six generations, worries about being evicted. About two years ago, "money men," as he calls them, started showing up -- lawyers and people with guns who told him the island had been sold and his family could be jailed for illegally squatting.

Fisherman Rodolfo Núñez Pacheco (right) says his family has lived on the same island for six generations. (Click to enlarge)

According to Father Roger Rudery Galo of Amapala's Santa Cruz Church, "The majority of the inhabitants … don't have papers" for their land. This leaves people like Núñez vulnerable to dispossession, which Galo worries a ZEDE might exploit. He also opposes charter cities because he doubts their overseers will keep promises pertaining to employment. The ZEDEs law stipulates that Hondurans must comprise 90 percent of a zone's workforce and receive 85 percent of all wages. "We don't have enough trained people for it to be 90 percent Honduran," Galo argues. "These poor people, what can they offer to the ZEDE? Here there are no architects; there are no engineers. The people here are illiterate." He also worries that there will be weak legal protections for workers.

Ebal Díaz points to maquilas -- assembly plants, often run by foreign companies -- as proof that local people could get jobs in a ZEDE. "They made the same criticism when they installed the maquilas in Honduras … and it turns out that they are one of the most important sectors for job creation in the country," Díaz says. Hondurans "didn't know [how to do the required jobs] when the maquilas arrived, but they learned."

The maquila sector employs around 120,000 Hondurans, who earn salaries about 60 percent higher than the minimum wage. But, as it happens, Korean-owned maquilas have been investigated for allegedly violating labor laws.

Back on his island, Núñez pulls in a length of empty fishing net after a fruitless morning on the water. With little to sustain his household, he says he welcomes investment that could bring jobs. Yet he doesn't know much about charter cities or how one might affect his family. "We live poor," Núñez says, crinkling his eyes as he looks out over the gulf, "but we live happy."

***

At the broad level of the ZEDEs debate, Fernando García, the economist, argues that charter cities simply should not exist. "When a state says that it requires a special authority to legislate, to prosecute crimes, that it requires special police," he says, "it declares itself not only a degraded state, but a failed one." Romer, however, cautions against throwing charter cities out with the proverbial bath water. "The harm that could come from some bad zones is relatively small compared to the benefit that could come from the good zones," he says.

A similar dispute plays out in Amapala's town-hall meeting. The room's energy escalates as one resident after another stands up to denounce ZEDEs. When Mayor Cruz speaks, some in the audience roll their eyes and laugh cynically, while others -- perhaps the cautiously hopeful -- listen quietly. After the event, Liana Corea, a local environmental activist, describes "the politicians of Honduras" as "thinking more like businessmen than like governors." She points to the relatively more robust economies of Costa Rica and Panama. "They haven't needed ZEDEs," Corea says. "More than model cities, we need a model Supreme Court, a model Congress, and a model government."

Cruz, however, is on the fence. Troubled that his municipality might not directly benefit from taxes collected in a charter city (they would go to ZEDE-controlled trusts), he wishes he had learned about the zones sooner (national officials alerted him earlier this year). But he is committed to Amapala's welfare and says there is still much to learn about ZEDEs. For now, he's placing trust in pledges from Tegucigalpa that he and other locals will be consulted about their future and that the government will do what's best for them.

"I have faith in the president's word," Cruz says. "The president has said, 'Mayors, if municipality X is not in agreement, we are going to respect the decision of the people.'"

Melissa Elizabeth Andino contributed to this article.

Photographs by Juan Carlos

THE MAGAZINE

The Social Laboratory

Singapore is testing whether mass surveillance and big data can not only protect national security, but actually engineer a more harmonious society.

Animation of security cameras overlaid on Singapore

The Social Laboratory

Singapore is testing whether mass surveillance and big data can not only protect national security, but actually engineer a more harmonious society.

By Shane Harris
Photo Illustrations by Leandro Castelao
Animations by Alejo Accini

In October 2002, Peter Ho, the permanent secretary of defense for the tiny island city-state of Singapore, paid a visit to the offices of the Defense Advanced Research Projects Agency (DARPA), the U.S. Defense Department's R&D outfit best known for developing the M16 rifle, stealth aircraft technology, and the Internet. Ho didn't want to talk about military hardware. Rather, he had made the daylong plane trip to meet with retired Navy Rear Adm. John Poindexter, one of DARPA's then-senior program directors and a former national security advisor to President Ronald Reagan. Ho had heard that Poindexter was running a novel experiment to harness enormous amounts of electronic information and analyze it for patterns of suspicious activity -- mainly potential terrorist attacks.

The two men met in Poindexter's small office in Virginia, and on a whiteboard, Poindexter sketched out for Ho the core concepts of his imagined system, which Poindexter called Total Information Awareness (TIA). It would gather up all manner of electronic records -- emails, phone logs, Internet searches, airline reservations, hotel bookings, credit card transactions, medical reports -- and then, based on predetermined scenarios of possible terrorist plots, look for the digital "signatures" or footprints that would-be attackers might have left in the data space. The idea was to spot the bad guys in the planning stages and to alert law enforcement and intelligence officials to intervene.

"I was impressed with the sheer audacity of the concept: that by connecting a vast number of databases, that we could find the proverbial needle in the haystack," Ho later recalled. He wanted to know whether the system, which was not yet deployed in the United States, could be used in Singapore to detect the warning signs of terrorism. It was a matter of some urgency. Just 10 days earlier, terrorists had bombed a nightclub, a bar, and the U.S. consular office on the Indonesian island of Bali, killing 202 people and raising the specter of Islamist terrorism in Southeast Asia.

Ho returned home inspired that Singapore could put a TIA-like system to good use. Four months later he got his chance, when an outbreak of severe acute respiratory syndrome (SARS) swept through the country, killing 33, dramatically slowing the economy, and shaking the tiny island nation to its core. Using Poindexter's design, the government soon established the Risk Assessment and Horizon Scanning program (RAHS, pronounced "roz") inside a Defense Ministry agency responsible for preventing terrorist attacks and "nonconventional" strikes, such as those using chemical or biological weapons -- an effort to see how Singapore could avoid or better manage "future shocks." Singaporean officials gave speeches and interviews about how they were deploying big data in the service of national defense -- a pitch that jibed perfectly with the country's technophilic culture.

Back in the United States, however, the TIA program had become the subject of enormous controversy. Just a few weeks after Poindexter met with Ho, journalists reported that the Defense Department was funding experimental research on mining massive amounts of Americans' private data. Some members of Congress and privacy and civil liberties advocates called for TIA to be shut down. It was -- but in name only.

In late 2003, a group of U.S. lawmakers more sympathetic to Poindexter's ideas arranged for his experiment to be broken into several discrete programs, all of which were given new, classified code names and placed under the supervision of the National Security Agency (NSA). Unbeknownst to almost all Americans at the time, the NSA was running a highly classified program of its own that actually was collecting Americans' phone and Internet communications records and mining them for connections to terrorists. Elements of that program were described in classified documents disclosed in 2013 by former NSA contractor Edward Snowden, sparking the most significant and contentious debate about security and privacy in America in more than four decades.

Singapore has become a laboratory not only for testing how mass surveillance and big-data analysis might prevent terrorism, but for determining whether technology can be used to engineer a more harmonious society.

Because of such uproars, many current and former U.S. officials have come to see Singapore as a model for how they'd build an intelligence apparatus if privacy laws and a long tradition of civil liberties weren't standing in the way. After Poindexter left DARPA in 2003, he became a consultant to RAHS, and many American spooks have traveled to Singapore to study the program firsthand. They are drawn not just to Singapore's embrace of mass surveillance but also to the country's curious mix of democracy and authoritarianism, in which a paternalistic government ensures people's basic needs -- housing, education, security -- in return for almost reverential deference. It is a law-and-order society, and the definition of "order" is all-encompassing.

Ten years after its founding, the RAHS program has evolved beyond anything Poindexter could have imagined. Across Singapore's national ministries and departments today, armies of civil servants use scenario-based planning and big-data analysis from RAHS for a host of applications beyond fending off bombs and bugs. They use it to plan procurement cycles and budgets, make economic forecasts, inform immigration policy, study housing markets, and develop education plans for Singaporean schoolchildren -- and they are looking to analyze Facebook posts, Twitter messages, and other social media in an attempt to "gauge the nation's mood" about everything from government social programs to the potential for civil unrest.

In other words, Singapore has become a laboratory not only for testing how mass surveillance and big-data analysis might prevent terrorism, but for determining whether technology can be used to engineer a more harmonious society.

Singapore was the perfect home for a centrally controlled, complex technological system designed to maintain national order.

In a country run by engineers and technocrats, it's an article of faith among the governing elite, and seemingly among most of the public, that Singapore's 3.8 million citizens and permanent residents -- a mix of ethnic Chinese, Indians, and Malays who live crammed into 716 square kilometers along with another 1.5 million nonresident immigrants and foreign workers -- are perpetually on a knife's edge between harmony and chaos.

"Singapore is a small island," residents are quick to tell visitors, reciting the mantra to explain both their young country's inherent fragility and its obsessive vigilance. Since Singapore gained independence from its union with Malaysia in 1965, the nation has been fixated on the forces aligned against it, from the military superiority of potentially aggressive and much larger neighbors, to its lack of indigenous energy resources, to the country's longtime dependence on Malaysia for fresh water. "Singapore shouldn't exist. It's an invented country," one top-ranking government official told me on a recent visit, trying to capture the existential peril that seems to inform so many of the country's decisions.

But in less than 50 years, Singapore has achieved extraordinary success. Despite the government's quasi-socialistic cradle-to-grave care, the city-state is enthusiastically pro-business, and a 2012 report ranked it as the world's wealthiest country, based on GDP per capita. Singapore's port handles 20 percent of the world's shipping containers and nearly half of the world's crude oil shipments; its airport is the principal air-cargo hub for all of Southeast Asia; and thousands of corporations have placed their Asian regional headquarters there. This economic rise might be unprecedented in the modern era, yet the more Singapore has grown, the more Singaporeans fear loss. The colloquial word kiasu, which stems from a vernacular Chinese word that means "fear of losing," is a shorthand by which natives concisely convey the sense of vulnerability that seems coded into their social DNA (as well as their anxiety about missing out -- on the best schools, the best jobs, the best new consumer products). Singaporeans' boundless ambition is matched only by their extreme aversion to risk.

That is one reason the SARS outbreak flung the door wide open for RAHS. From late February to July of 2003, the virus flamed through the country. It turned out that three women who were hospitalized and treated for pneumonia in Singapore had contracted SARS while traveling in Hong Kong. Although two of the women recovered without infecting anyone, the third patient sparked an outbreak when she passed the virus to 22 people, including a nurse who went on to infect dozens of others. The officials identified a network of three more so-called "superspreaders" -- together, five people caused more than half the country's 238 infections. If Singaporean officials had detected any of these cases sooner, they might have halted the spread of the virus.

Health officials formed a task force two weeks after the virus was first spotted and took extraordinary measures to contain it, but they knew little about how it was spreading. They distributed thermometers to more than 1 million households, along with descriptions of SARS's symptoms. Officials checked for fevers at schools and businesses, and they even used infrared thermal imagers to scan travelers at the airport. The government invoked Singapore's Infectious Diseases Act and ordered in-home quarantines for more than 850 people who showed signs of infection, enforcing the rule with surveillance devices and electronic monitoring equipment. Investigators tracked down all people with whom the victims had been in contact. The government closed all schools at the pre-university level, affecting 600,000 students.

By mid-April, fewer people were visiting the country, and hotel occupancy rates plummeted, along with revenues at shops and restaurants. Taxi drivers reported fewer fares. The unemployment rate ticked up. Officials slashed the country's economic growth forecast for 2003, from a strong 2.5 percent to a possible 0.5 percent. When the full effects of the outbreak were finally measured, the economy had actually contracted 4.2 percent from the same time the previous year. The SARS outbreak reminded Singaporeans that their national prosperity could be imperiled in just a few months by a microscopic invader that might wipe out a significant portion of the densely packed island's population.

Months after the virus abated, Ho and his colleagues ran a simulation using Poindexter's TIA ideas to see whether they could have detected the outbreak. Ho will not reveal what forms of information he and his colleagues used -- by U.S. standards, Singapore's privacy laws are virtually nonexistent, and it's possible that the government collected private communications, financial data, public transportation records, and medical information without any court approval or private consent -- but Ho claims that the experiment was very encouraging. It showed that if Singapore had previously installed a big-data analysis system, it could have spotted the signs of a potential outbreak two months before the virus hit the country's shores. Prior to the SARS outbreak, for example, there were reports of strange, unexplained lung infections in China. Threads of information like that, if woven together, could in theory warn analysts of pending crises.

The RAHS system was operational a year later, and it immediately began "canvassing a range of sources for weak signals of potential future shocks," one senior Singaporean security official involved in the launch later recalled.

The system uses a mixture of proprietary and commercial technology and is based on a "cognitive model" designed to mimic the human thought process -- a key design feature influenced by Poindexter's TIA system. RAHS, itself, doesn't think. It's a tool that helps human beings sift huge stores of data for clues on just about everything. It is designed to analyze information from practically any source -- the input is almost incidental -- and to create models that can be used to forecast potential events. Those scenarios can then be shared across the Singaporean government and be picked up by whatever ministry or department might find them useful. Using a repository of information called an ideas database, RAHS and its teams of analysts create "narratives" about how various threats or strategic opportunities might play out. The point is not so much to predict the future as to envision a number of potential futures that can tell the government what to watch and when to dig further.

The officials running RAHS today are tight-lipped about exactly what data they monitor, though they acknowledge that a significant portion of "articles" in their databases come from publicly available information, including news reports, blog posts, Facebook updates, and Twitter messages. ("These articles have been trawled in by robots or uploaded manually" by analysts, says one program document.) But RAHS doesn't need to rely only on open-source material or even the sorts of intelligence that most governments routinely collect: In Singapore, electronic surveillance of residents and visitors is pervasive and widely accepted.

Surveillance starts in the home, where all Internet traffic in Singapore is filtered, a senior Defense Ministry official told me (commercial and business traffic is not screened, the official said). Traffic is monitored primarily for two sources of prohibited content: porn and racist invective. About 100 websites featuring sexual content are officially blocked. The list is a state secret, but it's generally believed to include Playboy and Hustler magazine's websites and others with sexually laden words in the title. (One Singaporean told me it's easy to find porn -- just look for the web addresses without any obviously sexual words in them.) All other sites, including foreign media, social networks, and blogs, are open to Singaporeans. But post a comment or an article that the law deems racially offensive or inflammatory, and the police may come to your door.

Singaporeans have been charged under the Sedition Act for making racist statements online, but officials are quick to point out that they don't consider this censorship. Hateful speech threatens to tear the nation's multiethnic social fabric and is therefore a national security threat, they say. After the 2012 arrest of two Chinese teenage boys, who police alleged had made racist comments on Facebook and Twitter about ethnic Malays, a senior police official explained to reporters: "The right to free speech does not extend to making remarks that incite racial and religious friction and conflict. The Internet may be a convenient medium to express one's views, but members of the public should bear in mind that they are no less accountable for their actions online."

Singaporean officials stress that citizens are free to criticize the government, and they do. In fact, one of the country's most popular books this year has been a provocative rebuttal to the decades-old official dogma concerning the country's existential peril. Hard Choices: Challenging the Singapore Consensus, by Donald Low and Sudhir Thomas Vadaketh, argues that the ruling People's Action Party, which has held uninterrupted power since 1959, may have invented the notion that Singapore is one step away from ruin in a bid to subdue the masses and cement the government's hold on power.

Commentary that impugns an individual's character or motives, however, is off-limits because, like racial invective, it is seen as a threat to the nation's delicate balance. Journalists, including foreign news organizations, have frequently been charged under the country's strict libel laws. In 2010, the New York Times Co. settled a lawsuit over a column in the International Herald Tribune about "dynastic politics," which implied that Lee Hsien Loong, the prime minister, owed his job to nepotism. Lee's father is Lee Kuan Yew, Singapore's first prime minister, co-founder of the People's Action Party, and the country's patriarch -- revered in Singapore like George Washington might be in the United States if he were still alive. The company paid $114,000, and the Herald Tribune published an apology.

Not only does the government keep a close eye on what its citizens write and say publicly, but it also has the legal authority to monitor all manner of electronic communications, including phone calls, under several domestic security laws aimed at preventing terrorism, prosecuting drug dealing, and blocking the printing of "undesirable" material. According to the civil rights watchdog Privacy International, "the government has wide discretionary powers … to conduct searches without warrants, as is normally required, if it determines that national security, public safety or order, or the public interest are at issue."

The surveillance extends to visitors as well. Mobile-phone SIM cards are an easy way for tourists to make cheap calls and are available at nearly any store -- as ubiquitous as chewing gum in the United States. (Incidentally, the Singaporean government banned commercial sales of gum because chewers were depositing their used wads on subway doors, among other places.) Criminals like disposable SIM cards because they can be hard to trace to an individual user. But to purchase a card in Singapore, a customer has to provide a passport number, which is linked to the card, meaning the phone company -- and, presumably, by extension the government -- has a record of every call made on a supposedly disposable, anonymous device.

Privacy International reported that Singaporeans who want to obtain an Internet account must also show identification -- in the form of the national ID card that every citizen carries -- and Internet service providers "reportedly provide, on a regular basis, information on users to government officials." The Ministry of Home Affairs also has the authority to compel businesses in Singapore to hand over information about threats against their computer networks in order to defend the country's computer systems from malicious software and hackers, a defense official told me. The U.S. Congress has been debating for years now a similar provision that could compel some industries deemed crucial to the U.S. economy or security to hand over threat data, but it has been blocked by the Chamber of Commerce and businesses that see it as costly, heavy-handed government regulation of private security matters.

"In Singapore, people generally feel that if you're not a criminal or an opponent of the government, you don't have anything to worry about."

Perhaps no form of surveillance is as pervasive in Singapore as its network of security cameras, which police have installed in more than 150 "zones" across the country. Even though they adorn the corners of buildings, are fastened to elevator ceilings, and protrude from the walls of hotels, stores, and apartment lobbies, I had little sense of being surrounded by digital hawk eyes while walking around Singapore, any more than while surfing the web I could detect the digital filters of government speech-minders. Most Singaporeans I met hardly cared that they live in a surveillance bubble and were acutely aware that they're not unique in some respects. "Don't you have cameras everywhere in London and New York?" many of the people I talked to asked. (In fact, according to city officials, "London has one of the highest number of CCTV cameras of any city in the world.") Singaporeans presumed that the cameras deterred criminals and accepted that in a densely populated country, there are simply things you shouldn't say. "In Singapore, people generally feel that if you're not a criminal or an opponent of the government, you don't have anything to worry about," one senior government official told me.

This year, the World Justice Project, a U.S.-based advocacy group that studies adherence to the rule of law, ranked Singapore as the world's second-safest country. Prized by Singaporeans, this distinction has earned the country a reputation as one of the most stable places to do business in Asia. Interpol is also building a massive new center in Singapore to police cybercrime. It's only the third major Interpol site outside Lyon, France, and Argentina, and it reflects both the international law enforcement group's desire to crack down on cybercrime and its confidence that Singapore is the best place in Asia to lead that fight.

But it's hard to know whether the low crime rates and adherence to the rule of law are more a result of pervasive surveillance or Singaporeans' unspoken agreement that they mustn't turn on one another, lest the tiny island come apart at the seams. If it's the latter, then the Singapore experiment suggests that governments can install cameras on every block in their cities and mine every piece of online data and all that still wouldn't be enough to dramatically curb crime, prevent terrorism, or halt an epidemic. A national unity of purpose, a sense that we all sink or swim together, has to be instilled in the population. So Singapore is using technology to do that too.

In 2009, Singapore's leaders decided to expand the RAHS system and the use of scenario planning far beyond the realm of national security -- at least as it's commonly understood in the United States. They established the Strategic Futures Network, staffed by deputy secretaries from every ministry, to export the RAHS methods across the entire government. The network looks beyond national security concerns and uses future planning to address all manner of domestic social and economic issues, including identifying "strategic surprise" and so-called "black swan" events that might abruptly upset national stability.

The RAHS team has mounted a study on the public's attitude toward the housing system and what people want out of it. The provision of affordable, equitable housing is a fundamental promise that the government makes to its citizens, and keeping them happy in their neighborhoods has been deemed essential to national harmony. Eighty percent of Singapore's citizens live in public housing -- fashionable, multiroom apartments in high-rise buildings, some of which would sell for around U.S. $1 million on the open market. The government, which also owns about 80 percent of the city's land, sells apartments at interest rates below 3 percent and allows buyers to repay their mortgages out of a forced retirement savings account, to which employers also make a contribution. The effect is that nearly all Singaporean citizens own their own home, and it doesn't take much of a bite out of their income.

Future planning has been applied to a broad variety of policy problems. It has been used to study people's changing attitudes about how kids should be educated and whether it's time to lessen Singapore's historically strong emphasis on test scores for judging student achievement. The Singapore Tourism Board used the methodology to examine trends about who will be visiting the country over the next decade. Officials have tried to forecast whether "alternative foods" derived from experiments and laboratories could reduce Singapore's near-total dependence on food imports.

Singaporeans have even begun studying what officials describe as a pervasive "nostalgia" among many citizens, who are longing for a simpler, slower-paced time before the city-state's breathtaking economic rise, moving from Third World to First World status in a generation and a half. "But there is also an ugly side to nostalgia," the government warns. "It can be about rejecting certain aspects of the present, such as the growth of Singapore into a diverse, global city, and cultivating an insular sense of nationalism. We explore what can be done to channel this urge for nostalgia in a direction that is more forward-looking."

But the future is one of the things that worries Singaporeans. In 2013, the government issued a so-called "population white paper" that described its efforts to grow the country and forecast a 30 percent population increase by 2030, bringing the number of residents to as many as 6.9 million in the already crowded city-state. Immigrants were expected to make up half the total. Singaporeans revolted. Four thousand people attended one rally against the population plan -- one of the largest public protests in the country's history. The white paper revealed a potential double threat: Singaporeans were already turning against the government for growing the country too big and too fast, and now they were turning on their immigrant neighbors, whom they blamed for falling wages and rising home prices.

The protests shook the "nation's mood" at the highest level, and the government was prepared to take drastic measures to quell the unrest, starting with cutting immigrant labor. The National Population and Talent Division -- a kind of immigration-cum-human-resources department -- intends to slow the growth of the workforce to about 1 to 2 percent per year over the rest of the decade, which is a dramatic departure from the more than 3 percent annual growth over the past 30 years. With that, GDP growth is likely to retract to an average of 3 to 4 percent per year. It is impossible to know whether wealthy Singaporeans -- and the country's foreign investors -- will tolerate an economic slowdown. (Or whether a country with an abysmal fertility rate of 1.2 children can even sustain its economy without foreign labor.) But the government has concluded that a slowdown is the right price to pay for keeping a harmonious society. The data tells it so.

Singapore is now undertaking a multiyear initiative to study how people in lower-level service or manufacturing jobs could be replaced by automated systems like computers or robots, or be outsourced. Officials want to understand where the jobs of the future will come from so that they can retrain current workers and adjust education curricula. But turning lower-end jobs into more highly skilled ones -- which native Singaporeans can do -- is a step toward pushing lower-skilled immigrants out of the country.

If national stability means more surveillance and big-data scanning, Singaporeans seem willing to make the trade-off.

"In Singapore, the threshold for surveillance is deemed relatively higher," according to one RAHS study, with the majority of citizens having accepted the "surveillance situation" as necessary for deterring terrorism and "self-radicalization." Singaporeans speak, often reverently, of the "social contract" between the people and their government. They have consciously chosen to surrender certain civil liberties and individual freedoms in exchange for fundamental guarantees: security, education, affordable housing, health care.

From the angry citizen who takes a photo of a policeman sleeping in his car and posts it to Twitter to an opposition blogger who challenges party orthodoxy, Singapore's leaders cannot escape the watch of their own citizens.

But the social contract is negotiable and "should not be taken for granted," the RAHS team warns. "Nor should it be expected to be perpetual. Surveillance measures considered acceptable today may not be tolerable by future generations of Singaporeans." At least not if those measures are applied only to them. One future study that examined "surveillance from below" concluded that the proliferation of smartphones and social media is turning the watched into the watchers. These new technologies "have empowered citizens to intensely scrutinise government elites, corporations and law enforcement officials … increasing their exposure to reputational risks," the study found. From the angry citizen who takes a photo of a policeman sleeping in his car and posts it to Twitter to an opposition blogger who challenges party orthodoxy, Singapore's leaders cannot escape the watch of their own citizens.

Watch author Shane Harris discuss Singapore’s surveillance society.

In the nation's 2011 elections, the People's Action Party won "only" 81 out of 87 seats in Parliament, an outcome that most political observers considered a disaster. The opposition had its best showing in Singapore's history. For the first time, partisan adversaries mounted a credible threat to the status quo, and Singaporeans voted in larger numbers against the government's management of the country. Even Prime Minister Lee Hsien Loong saw his party's victory as an alarming loss. "It marks a distinct shift in our political landscape," Lee told reporters after the vote. "Many [Singaporeans] wish for the government to adopt a different style and approach."

The election results had little to do with surveillance per se, but surveillance and its ostensible benefits are an integral part of how the government has defined Singapore as a nation. When Peter Ho, the senior defense official, met with John Poindexter back in 2002 about the Total Information Awareness program, Poindexter suggested that Singapore would face a much easier time installing a big-data analysis system than he had in the United States, because Singapore's privacy laws were so much more permissive. But Ho replied that the law wasn't the only consideration. The public's acceptance of government programs and policies was not absolute, particularly when it came to those that impinged on people's rights and privileges.

It sounds like an accurate forecast. In this tiny laboratory of big-data mining, the experiment is yielding an unexpected result: The more time Singaporeans spend online, the more they read, the more they share their thoughts with each other and their government, the more they've come to realize that Singapore's light-touch repression is not entirely normal among developed, democratic countries -- and that their government is not infallible. To the extent that Singapore is a model for other countries to follow, it may tell them more about the limits of big data and that not every problem can be predicted.

Shane Harris is a senior staff writer at Foreign Policy and the author of the forthcoming book @War: The Rise of the Military-Internet Complex, which will be published in November 2014.

Editor's note: Shane Harris's trip to Singapore was jointly sponsored by the Singapore International Foundation and the New America Foundation, where he is a fellow. The FP Group, which publishes Foreign Policy, is partnering with Singapore's Centre for Strategic Futures and Peter Ho, who is quoted above, to convene an expert forum on the global impacts of rapid technological change. Neither Peter Ho nor the Singaporean government had any control over the content of this article.