Nation-building is set to become the new extreme sport for the emerging wealthy and creative class
NOTE: The following article is a reprint of the cover article I wrote for the May/June 2009 issue of The Futurist Magazine.
On a recent trip to the Middle East, I was granted the opportunity to speak at the Leaders in Dubai Business Forum along with best-selling writer Tom Peters, former New York City Mayor Rudy Giuliani, former World Bank President James Wolfensohn, and former McKinsey CEO Rajat Gupta. Most of the speakers were addressing our depressingly screwed-up economy. I decided on a different tack and presented some thoughts on emerging new systems of government power.
One idea in particular raised a few eyebrows among the Dubai group: selling islands as autonomous countries.
Dubai and the United Arab Emirates are on the cutting edge of islandbuilding technology. Their creative approach to building Palm Island, a series of artificial islands in the Persian Gulf, along with the coming Palm Jumeirah, the Palm Jebel Ali, Palm Deira, and The World, have become an inspiration to other countries. In Bahrain, Thailand, and the Netherlands, new islands are also springing to life.
Countries in the Middle East have a distinct advantage when it comes to island building, because the Persian Gulf is a far more stable body of water than most other oceans. The question I presented to the Dubai Leaders who were anxious about how the global economic downturn might affect their tourist industry — the question I now present to you, the reader — is simple: Is there any money in this?
There has always been profit to be made and lost in coastal real estate. But these innovations in the creation of land could lead to the creation of real estate that is unattached and unaffiliated with any existing nationstate or indigenous group — land that can be sold as an autonomous country. No such opportunity has ever before existed in human history.
What Exactly Is a Country?
The dictionary definition of a nation is “A part, or division, of the people of the earth, distinguished from the rest by common descent, language, or institutions; a race; a stock.” Law professor Pastor Ridruejo defines a nation as an entity with a government that totally controls a stable population in a delimited territory.
In the past, we have associated the concept of country with attributes such as a single geographical territory, a common people with a common language, a common government with its own currency and its own set of laws and regulations, and a series of systems that tie people, geography, and property into a functional entity.
The impetus to build or settle one’s own island country would be far simpler: the freedom of self-rule. For each person, the freedoms associated with any self-governing country will be prioritized differently. Some will see this as a mere scheme to avoid taxes, while others will see it as an opportunity to build something great. Perhaps the greatest value of an independent island nation is as a proving ground for experimentation.
International Recognition: Debacle or Opportunity
Once a new country is formed, the issue of recognition comes into play. The new country would begin life as a micronation, a term referring to a newly established small-land-mass nation seeking to get recognized by other governments around the world (a micronation is really just a small nation). Recognition is a primary factor in an emerging country’s credibility and often determines the stability of the new government and the role it will play in the international arena.
There are two primary forms of recognition:
- Internal — recognition by the people living inside that country. In the case of newly formed island countries, there will be no indigenous populations, so internal recognition becomes a non-issue.
- External — recognition by other countries, or by people or organizations outside the country.
The Institute of International Law stated in its Brussels session in 1936: “Recognition of a new Nation is a free decision by which one or several Nations corroborate the existence on a determined territory of a human society, politically organized, independent of any other nation, capable of complying with International Law, and their decision is made public, recognizing the new Nation as a member of the International Community.”
Some European nations have taken the step of formalizing recognition standards, stating that any new nations must satisfy certain legal requirements. On December 16, 1991, the foreign affairs ministers of the European Union decided to adopt a set of four requirements that new member states emerging from the old Eastern Europe and Soviet Union must meet in order to become officially recognized:
- Respect all points of the Charter of the United Nations (UN), Helsinki Summit Final Act, and Charter of Paris for a New Europe.
- Guarantee rights for minorities and other groups as per the agreements of the CSCE (Conference for Security and Co-operation in Europe).
- Respect the unchangeable nature of national borders that can only be changed peacefully through common agreement.
- Commitment to reaching common agreements on all matters related to regional controversies.
Most new island nations should be able to meet these requirements. But simply conforming to these measures probably won’t secure the nations’ legitimacy in the eyes of the UN members. Indeed, the UN has received dozens of requests for recognition from various micronations over the years. For the most part, these requests are simply filed away and forgotten.
For the country selling off new islands, an economic opportunity emerges: Official recognition of new micronations could be sold or rented as part of the new-nation package. Nation creation also offers the unique opportunity to select one’s neighbors.
This is where nation creation becomes really profitable.
The Value of Proximity: From Island Building to Nation Building
A newly established nation or micronation can command a far greater return on investment than simple island real estate. The additional value comes from the supplemental rights that are conveyed along with the purchase.
People who buy a new nation will be very wealthy, and there is great value in having wealthy neighbors. The country that sells the new nations will become the host nation to all of the island satellite states it creates. In this role, the host nation will have the opportunity to vend services such as electricity, water, transportation, and trash removal to wealthy clients who will be willing to pay a premium for top service.
The presence of independently wealthy neighbors could also have a positive impact on the cultural scene of whatever city is close by. When island countries are first created, they will be rather boring places to live. Prospective buyers will place great value on their country’s proximity to good neighbors. They will be looking for host countries with good entertainment, goods, services, talented people, low crime, and other features, and they will probably be willing to invest in the creation of a good scene.
Much of the value attributed to a country initially will be determined through a weighted checklist used to assess surrounding assets. Creating an island country close to Antarctica may seem like a good idea, and some have attempted it, but a well-developed tropical paradise would likely fetch a higher price.
What’s important to keep in mind is that independently wealthy individuals won’t be the only market for these new countries. Aside from the ego boost of being one’s own sovereign, there is indeed a practical benefit to owning a tiny island nation.
The Experimental Nation-State
The primary reason to seek out and establish new territory hasn’t changed appreciably since the days of the first explorers. A new country is a blank slate that lends itself to experimentation and the testing of new ideas.
The operating system for the world today is composed of a series of intertwined, complex, smaller legal systems. Some, like trade agreements and treaties, are global in nature while others are specific to an individual country or region. Once created, these systems govern everything from operating a business to dealing with troublemakers.
No one wants to live without the protection of the rule of law. In a democratic society, however, law can move much slower than technological know-how and can have a stifling effect on innovation. This is part of the reason large corporations shop the globe for the best regulatory environment in which to conduct their operations and research.
A newly formed island with no indigenous people and no existing structures or government becomes a perfect laboratory for experimentation. Much like an artist who positions a freshly gessoed canvas onto an easel, the inhabitants of an experimental nation-state will, through trial and error, have an opportunity to create new governmental systems from scratch.
Many experiments will fail, and will have to fail in the real world, unlike the modeling being done in virtual worlds. These island countries will serve as real-world test sites for tinkering with governmental systems on a small scale. Unleashing the power of experimentation this way will give us a sense of humanity’s true potential.
In creating these living laboratories, host nations will find that they have greatly increased their influence around the globe. Any nation that becomes an expert in building other nations will command the respect of the entire world.
Many scenarios for experimental nation-states might be imagined. Here’s just one.
Scenario: Google Island
One of the first island countries to be created is purchased by Google. It becomes the first corporate nation-state not governed by a dictator, prime minister, or president; it’s run by a CEO with a board of directors whose actions are influenced by shareholders.
Google decides to use the experimental nation-state to test a new loan-matching service designed to match the money from Middle Eastern countries with prospective borrowers around the world. Google sets up this operation in its own country as a means of circumventing the banking and lending laws in nations around the world.
In setting up this experimental nation-state, Google doesn’t intend to do anything that may harm others (or its share price). The arrangement enables it to launch new types of businesses without having to deal with the onerous regulatory agencies that would prohibit that sort of thing. (When done responsibly, there’s a net gain for both lender and borrower.)
With Google’s extensive data mining capabilities, it is able to discover more about every person and every organization than any credit bureau. It can instantly match up lenders and borrowers and optimize the loan packages for both sides in the process.
Once this new vehicle is in place, borrowers and lenders around the world begin to shift to the new Google loan system, altering financial markets in nearly every country.
Whether this scenario intrigues you or frightens you, it’s easy to see the enormous potential for unleashing potent new engines of innovation.
Many of today’s micronations were founded by lone individuals without much money. Some nation founders are simple hobbyists, such as Kevin Baugh, the self-described “Master of the Ship of State” for the country of Molossia, which consists of his house. Society often views such people as eccentrics. History may view them as pioneers of an important future trend.
The idea of large, mainstream corporations using newly created land for scientific or entrepreneurial experimentation may seem unrealistic, and surely some of the above forecasts — intended as thought pieces and conversation starters — are more likely to come true than others. But consider that it wasn’t long ago that a small group of English Protestants set out on a much more perilous and unlikely journey. Their aim was simply to establish a new settlement where they might be free to live in accordance with their beliefs and experiment with self-rule. Their journey played a key role in the development of modern democracies. The yearning to live, explore, and pursue liberty has inspired people throughout history to venture out upon the waves.
In the years ahead, we may return to the sea to take up the quest again.
Seven New Nation Predictions
Here are a few forecasts for the impacts of island micronations.
- Island countries will begin to emerge within the next 10 years, and they will dramatically shift the face of global politics.
- New forms of government and unusual political models will begin to emerge, including corporate nation-states, religious states, tax-free zones, single-function countries, cause-related countries, and even rental nation-states, where organizations can “rent a country” for a year or two to test a specific project.
- Many experimental nation-states will fail, giving rise to a resale market for island countries.
- Existing nations will buy their own island countries as a way to extend their influence in other parts of the world, creating a subsidiary country to test new systems.
- “Open enrollment” citizenship may emerge. The concept of creating a virtual citizenry, where citizens do not have to reside in the country they are affiliated with, gains popularity. Open enrollment will cause many new laws to be created to sort out responsibilities between countries and their people.
- Once the number of new countries created starts to climb, many existing countries will begin asking that a moratorium or limits be placed on the building of new countries.
- As more and more countries come into being, vying to attract the wealthy and talented, existing countries will be forced to compete to retain their own citizens. A great migration of wealthy families will begin to cause grave concerns among established governments.
By Thomas Frey