Floating city conceived as high-tech incubator
by Michael Posner  /  Feb. 24, 2012

You’re a Canadian businesswoman, let us say, with a brilliant idea for a high-tech startup. All you need is a year in Silicon Valley – time to network, sell the concept, raise capital and gain liftoff. Only one problem: You can visit, but you can’t stay. U.S. immigration officials won’t let you. Enter Blueseed, an enterprise that is the brainchild of two immigrants to the United States, Max Marty from Cuba and Dario Mutabdzija from the former Yugoslavia. They hope to launch America’s first experiment in seasteading, the creation of permanent, politically autonomous floating cities. Although skeptics consider the project impractical and the estimated cost of startup is at least $25-million, Blueseed’s basic plan to convert a cruise ship into a complex that will incubate high-tech innovation has attracted interest and money.

To avoid the reach of maritime law, the Blueseed boat would be parked in international waters, 22 kilometres from San Francisco and nearby Silicon Valley, terrestrial magnet for innovators and venture capitalists. “Unfortunately, foreigner entrepreneurs have a hard time getting visas to stay legally,” explains Blueseed’s president, Mr. Mutabdzija, a 32-year-old lawyer who emigrated to the U.S. with his family from Serbia in the 1990s. “A standard three-month work permit does not give you enough time to raise money, network, find talent or do anything significant.” A floating city, operating outside the jurisdiction of the U.S. Coast Guard and American port or immigration authorities – and offering daily ferry boat or helicopter runs into Silicon Valley – could be the answer.

If its plans proceed on schedule, Blueseed would acquire and moor its ship by the fall of 2013. Rent would constitute Blueseed’s primary source of revenue from a potential of up to 1,000 tenants, each paying about $1,200 a month. But the company also intends to claim small equity stakes in the businesses it houses. Blueseed residents would simply need a B-1 business visa. Relatively easy to acquire, they permit travel to the U.S., are valid for up to 10 years, and allow overnight stays. The ship would provide the venue for what the visa does not allow – actually doing business on American soil. Blueseed already has at least one deep-pocketed backer. Billionaire libertarian Peter Thiel – co-founder of PayPal – has injected some $500,000 in seed money. It’s one of more than a dozen investments he’s made in innovative startups, some of which (Facebook, Yelp, Zynga, LinkedIn) have become game-changers.

In principle, building semi-permanent colonies at sea is less implausible than it might seem. Small cities of people now effectively reside on vast, ocean-going cruise ships. Sizable communities also live for months on off-shore oil rigs, outfitted with basic housing and recreation facilities. And there have been a few attempts at sea-based colonization. Since 1967, for example, a retired British major, Paddy Roy Bates, and his extended clan have occupied the so-called Principality of Sealand, a Second World War U.K. naval encampment 10 kilometres off the coast of Suffolk. Laying claim to sovereign status, the Bates community has adopted all the trappings of nationhood – a flag, a currency, passports and a national anthem. But no state has yet conferred formal recognition.

In the early 1970s, Las Vegas libertarian millionaire Michael Oliver imported boatloads of sand from Australia and established the Republic of Minerva – essentially a glorified sandbar – in the South Pacific, near Tonga. Alas, Mr. Oliver’s idyll of an independent fiefdom was quickly shattered. Tonga laid claim to the “territory,” and invaded. But the seasteading ambition remains, and nowhere more prominently than at the San Francisco-based Seasteading Institute, which also claims Mr. Thiel as a benefactor.

Founded in 2008 and chaired by Patri Friedman, 35-year-old grandson of Nobel Prize-winning economist Milton Friedman, the non-profit SI springs from the libertarian assumption that current political systems are sclerotic and beyond meaningful reform. Only new frontiers, it maintains, can catalyze new experiments in democratic governance. Because habitable land is largely spoken for by the world’s nation states, what remains of virgin territory is the deep, blue sea. And, outside territorial waters, it is theoretically claimable. “We’re not about creating libertarian utopias or billionaire playgrounds,” SI president Michael Keenan said. “The goal is to have a variety of floating cities, with different political systems and social ideas. We no longer believe that one ideology, one form of government, is right for everyone.”

In fact, the potential appeal of seasteading lies in what Mr. Freidman has called “dynamic geography” – a principle that would allow any given seasteading colony to join or secede larger units within the whole. That reasoning “is deeply flawed,” said Timothy B. Lee, an adjunct scholar at the Cato Institute. “In a real-world seasteading community, powerful economic forces would…leave seasteaders no freer than the rest of us.” For now, the Seasteading Institute is nowhere close to realizing its ambitions. The obstacles – legal, financial, environmental and technical – are profound, if not insuperable. That’s why Mr. Mutabdzija, who is based in Sunnyvale, Calif., thinks Blueseed’s for-profit model represents a faster track for testing the idea, even though the project will need to navigate a minefield of U.S. regulatory agencies. “It’s like building a bridge,” he says. “You need to create segments of the bridge before you can connect them and prove the viability of the whole.” “The Institute is a useful organization,” allows Mr. Mutabdzija – until a year ago, he served as its director of legal affairs – “but it may be decades before the various hurdles are overcome.”

The engineering issues alone – designing an ecology-friendly, floating city able to absorb the ocean’s wave action and more than occasional storms – are daunting. There are ancillary questions about electricity generation, sewage and a desalinated water supply. Then there’s the potential legal quagmire. A nation’s territorial waters extend 12 kilometres offshore, although many countries claim the right to enforce criminal laws 24 kilometres out, while others claim a 322-kilometre economic exclusion zone.

If seasteads became bases for business operations, which Mr. Keenan says they must, they’d be in violation. But even 50 nautical miles away from land is likely too far to maintain logistical supply lines. Also unclear is how seasteads would protect themselves from marauders, pirates and would-be terrorists. Despite the obstacles, Mr. Keenan believes the political vacuum is urgent enough to yield solutions. “We need more experimentation and opportunities for people to live in different ways,” he says. “Let’s try a variety of ideas – libertarian, communist, direct democracy. Most startups fail – and that’s okay. We’ll find out what doesn’t work.” In the meantime, the organization’s founder, Mr. Friedman, may be hedging his bets. He is also CEO of Future Cities Development Corp, which hopes to build land-based urban centres governed by libertarian principles. The first one would be located in a special autonomous zone recently established by the government of Honduras. Mr. Keenan calls this “seasteading on land,” though another word for it might be homesteading.


“The Seasteading Institute is sponsoring a design competition to see who can most interestingly visualize a permanent, microsovereign architectural state at sea. “A seastead,” they write in the competition brief, “is a floating platform that allows people to permanently settle the ocean as they do land. Professional naval engineers have already designed a bare platform – a structure about 400×400 feet, roughly the size of a city block. What you build on the platform is up to you. It may be a hospital, a casino, a residential community, a cricket stadium, or something entirely different.”

There are some basic engineering constraints that participants will have to heed, as explained both in the call-for-entries and in this forum, and a sample design has been supplied. But I think it’d be absolutely fascinating to annualize this, and launch a kind of eVolo competition for offshore platform design. The skyscraper designs that come out of eVolo might gravitate a bit too strongly toward the biomorphic/diagrid/arbitrary fractal tiling end of contemporary architectural design, but each year’s results are always worth checking out. So if architects were asked to rethink the spatial design of offshore libertarian self-rule, and to do so as part of a high-profile annual competition, what sorts of structures might we see?

For a little more background, Wired’s Chris Baker covered the Seasteading Institute last month. Baker wrote that the Institute “doesn’t just want to create huge floating platforms that people can live on,” they are “also hoping to create a platform in the sense that Linux is a platform: a base upon which people can build their own innovative forms of governance. The ultimate goal is to create standards and blueprints that can be easily adapted, allowing small communities to rapidly incubate and test new models of self-rule with the same ease that a programmer in his garage can whip up a Facebook app.” Here, architectural design would actually help to catalyze new forms of political sovereignty. The cultural possibilities for these offshore spaces are effectively without limit – and they would be self-policed, falling outside the bounds of international law. This opens up a number of legal (not to mention moral) quandaries.

Baker reports that Patri Friedman, the Institute’s co-founder and executive director, speaking at a Bay Area conference held last fall, “notes that some enterprises – like euthanasia clinics – would incense local authorities, but almost all the ideas attendees [at that conference] come up with would capitalize on activities that skirt existing laws and regulations: Fish farming and aquaculture. Prisons. Med schools. Gold warehouses. Brothels. Cryonics intakes. Gene therapy, cloning, augmentation, and organ sales. Baby farms. Deafeningly loud concerts. Rehab/detox clinics. Zen retreats. Abortion clinics. Ultimate ultimate fighting tournaments.” So what might these platforms look like? Submissions are due by May 1.”




Seasteading Institute Interview w/ Patri Friedman
by Michael Anissimov  /  May 14 2008

Some of you may have heard of the Seasteading Institute, which announced its existence with a press release a month ago. Basically, Peter Thiel is giving them $500,000 to get started on building an awesome seastead right here in the Bay Area. Sounds like a great idea, I’d love to visit, but it could take a decade or so until we have hundreds of people living on these things. (Even so, it’s a worthy cause!) I caught up with the Executive Director, Patri Friedman, an acquaintance of mine, and asked him a few questions about this new org.

Michael Anissimov: Will $500,000 be enough to build a “safe, cost-effective, gorgeous” seastead? If not, how much will it cost?
Patri Friedman: Nope. But it should be enough to do the design and engineering work for a small (bay/coast-sized) seastead, and get our research program started. We think it will cost another $500K – $1.5M to build a nice Baystead. We’ll know a lot more about the costs after we’ve hired an engineer and done some initial design work.

MA: How many people will live on the first seastead?
PF: It depends on what the best initial application turns out to be. If it looks viable to build small seasteads as replacement yachts (much roomier, safer, and slower), then it could be as small as one family. If the initial business is aquaculture, perhaps a crew of a dozen. If it’s a resort, then more like hundreds.

MA: How many people will need to be there before it’s economically self-sustaining?
PF: This is tough to answer because seasteads are a form of real estate, so it really depends how they are used. We don’t expect our houses to be economically self-sustaining, after all. I’m also not sure that it’s a good way to evaluate success. If one person lives on a seastead and makes a living telecommuting, that’s technically economically self-sustaining. If 100 people live there as a retirement community, and pay for it with investment income, then it’s technically not economically self-sustaining. Yet the latter would look much more like success to me. I’d rather evaluate success by average population and the number of people who are able to make a living onboard.

MA: You say the notion of seasteading will be useful as a testing ground for various political systems, and that’s true, but historically, the concept is associated with libertarianism. Will the first seastead have a libertarian form of government?
PF: It seems likely, at this point, since the initial group is mainly libertarians. However, I think it will be quite awhile before seasteads are large enough to be truly thought of as countries with forms of government. For example, the single-family seastead mentioned earlier doesn’t really have a “government” per se, nor does an aquaculture farm with a dozen crew. Even a resort with hundreds of people will most likely be owned and operated by a single corporate entity. That entity will want to have a system for administering justice and resolving disputes, and that system is likely to be pretty libertarian, but I’m not sure I’d call it a government. It’s more like Neal Stephenson’s Franchise-Owned Quasi-National Entities from Snow Crash. I’d say the first place you are likely to get something like a government is when you have the first residential/multi-use seastead (or gathering of seasteads). And that’s far enough off in the future that it could be a different group of people.

MA: In 1971, a group of people calling themselves the Republic of Minerva brought sand from Australia and dumped it on a reef until it rose above the water level, creating new land. Why is this not the Seasteading Institute’s approach?
PF: Well, they did fail, after all :). But more importantly, our vision is much more ambitious. We don’t want to just make one sandy island, we want to bring competition to the governing industry by creating an affordable technology so that anyone can buy/build a seastead and start their own new country. Their method has two major flaws from this viewpoint:
1) It doesn’t scale. Every piece of rock which is above water at high tide is claimed by a current nation (because it extends oil, mineral, and fishing rights). There are very few places where reefs get high enough to make good island bases, yet are low enough to not count as existing land. So there are very few places where this technique works. Whereas if we can make seasteads affordable, there are tens of millions of square miles of empty oceans available for them.
2) It doesn’t take advantage of the ocean’s dynamic geography. We think it’s important for any new country venture to think about why the government will be better than it is on land. The US started with limited government, but there seem to be very robust effects which make small government not an equilibrium for large countries. Modular seastead communities fundamentally change the incentives facing government. Fist, they loweri the barrier to entry for starting new countries. Second, they reduce customer lock-in (since you can leave by floating your home away at any time). Together, this means they are almost guaranteed to make government work better (any government, not just a libertarian one). A new island has no such properties.

MA: In a few sentences, summarize how a seastead might get electricity, food, and generate money.
PF: Two words will suffice: “Cruise Ship” :). Floating cities are already real – millions of people take cruises every year, and they’re cheaper than the cost of living in some US cities. We have many differences in mind, but cruise ships prove that the idea is possible. Now we just have to make something safer, stabler, more spacious, more modular, incrementally built, cheaper, permanent, and worth visiting even though it mostly stays put!

MA: On your site, all the pictures of seasteads show them suspended above the water. Why is this? What if I want to go to the edge and dip my feet into the water?
PF: We have two designs in mind. The one you saw uses tall spars to elevate the living space above the waves. This minimizes waterline area which helps disconnect the structure from the waves, making it safer and more stable. We currently believe this is the best shape for a permanent structure in areas with big waves. This is how most oil platforms are designed, after all. If you don’t have to deal with waves, you can just make simple platforms, like hollow concrete boxes. This could be done near the equator (the doldrums), where waves are much smaller. Or for a large community, it could be done inside a circular breakwater.

MA: The practice of using a “flag of convenience” is frowned upon politically. Do you plan to use them for your seasteads?
PF: Wait, why is making politicians frown a bad thing? Besides, if flags of convenience are good enough for half of the world’s tonnage, they’re good enough for us! Seasteading may be a weird idea, but we think our chances of success are highest if we use as little innovation as possible. Flagged vessels are an existing category in international law which will give us a simple, clear legal status that should get us pretty much left alone. At least, that’s what our preliminary research shows – we have a volunteer who worked on the Law of the Sea treaty negotiations for the US under Reagan who is researching the subject for us.

Seasteading: engineering the long tail of nations
by Timothy B. Lee  /  June 9, 2008

New competition for sovereign nations
Until the 1960s, Europe had few commercial radio stations. Broadcasting was a government monopoly in many European countries, and listening options were limited to a few staid government stations such as the BBC. But as Erwin Strauss tells it, that changed when enterprising “pirate radio” ships began dropping anchor off the shores of European countries and blasting the latest pop music in violation of those countries’ laws. The governments were not amused, but because the ships were in international waters, there was little they could do. Most European governments began refusing the pirate radio ships access to their harbors, but the ships were able to find harbor elsewhere.

European governments finally succeeded in shutting down the pirate radio stations in the late 1960s by passing laws prohibiting their subjects from doing business with the broadcasters—including purchasing advertising from them. But the episode created a political constituency for private radio stations and the broadcast of more pop music. In the UK, for example, private, commercial radio broadcasting was finally legalized in the early 1970s. History has many examples of hierarchical institutions being disrupted by technological advances. The invention of the printing press helped undermine the authority of the Catholic Church. Today, the Internet is undermining traditional copyright industries.

An audacious new project aims to achieve a similar result by creating new competition for the world’s sovereign nations. The Seasteading Institute, the brainchild of two Silicon Valley software developers, aims to develop self-sufficient deep-sea platforms that would empower individuals to break free of the cozy cartel of 190-odd world governments and start their own autonomous societies. They envision a future in which any group of people dissatisfied with its current government would be able to start a new one by purchasing some floating platforms—called seasteads—and build a new community in the open ocean.

History is littered with utopian schemes that petered out after an initial burst of enthusiasm, something the Seasteading Institute’s founders readily acknowledge. Indeed, they chronicle these failures in depressing detail on their website. With names like the Freedom Ship, the Aquarius Project, and Laissez-Faire City, most of these projects accomplished little more than receiving a burst of publicity (and in some cases, raising funds that were squandered) before collapsing under the weight of their inflated expectations.

There are many reasons to doubt that the Seasteading Institute will realize its vision of floating cities in the sea; but there are at least two reasons to think that seasteading may prove to be more successful than past efforts to escape the grasp of the world’s governments. First, the project’s planners are pragmatic—at least by the standards of their predecessors—pursuing an incrementalist strategy and focusing primarily on solving short-term engineering problems. Second, they recently announced a half-million dollar pledge from PayPal co-founder Peter Thiel, giving them the resources to begin serious engineering and design work. While there are many obstacles to be overcome before they will have even a functioning prototype—to say nothing of a floating metropolis—their project doesn’t seem as obviously hopeless as most of the efforts that have preceded it. Ars talked to Seasteading Institute co-founder Patri Friedman about the seasteading project and the engineering and political problems it will face.

Dynamic geography
Friedman describes himself as an “enthusiastic libertarian,” a description that would fit Thiel as well. Their libertarian convictions are a major source of inspiration for the seasteading project. Frustrated with the size and intrusiveness of existing governments, they view the sea as a frontier that will allow people more freedom to experiment with different ways of organizing human societies.

They depict government as an industry that suffers from unreasonably high barriers to entry. At present, experimenting with a new form of government requires winning an election or starting a revolution, prohibitively expensive options for small groups. As a result, they argue, even democratic governments are insufficiently responsive to their customers, the voters. The seasteaders seek to lower barriers to entry in the government business in order to create more competition and choice.

While his own convictions run in a libertarian direction, Friedman is quick to emphasize that the core value of seasteading is the diversity it would allow. Not all seasteading communities would be libertarian. For example, some seasteads might be founded by environmentalists interested in more sustainable lifestyles. Others might be owned by religious communities seeking to separate themselves from the broader society. Still others might be founded as egalitarian workers’ communes.

A key advantage of seasteads is what Friedman calls “dynamic geography,” the fact that any given seasteading unit is free to join or leave larger units within seasteading communities. Seasteading platforms would likely band together to provide common services like police protection, but with the key difference that any platform that was dissatisfied with the value it was receiving from such jurisdictions could leave them at any time. He argues that this would “move power downward,” giving smaller units within society greater leverage to ensure the interests of their members are being served.

The spar platform
Friedman founded the institute with retired Sun engineer Wayne Gramlich, who coined the term “seasteading” in an essay and who serves as the institute’s engineering director. Along with Andrew Houser, they have penned an in-depth treatise on seasteading. The book-length manifesto includes an impressive depth of technical detail, with discussion ranging from the best construction materials to the the most efficient platform geometry. After considering several options, they conclude that the best design is a “floating spar” design. Under their preferred approach, the living space is lofted several dozen feet above the surface of the water.

The open ocean is an unforgiving environment, and the biggest hazard comes from waves. Ordinarily, waves on the open seas are a few feet high—small enough to pose little threat to larger boats. But under certain circumstances, waves can be as high as 100 feet, which can be difficult for even the largest ocean-going vessels to withstand. The spar platform design neatly sidesteps this difficulty by presenting only a slender concrete pillar at sea level, allowing waves to pass by largely unimpeded. The living space is hoisted high enough that waves pass harmlessly beneath it even in stormy conditions. Supporting this platform requires a large underwater system of flotation and ballast, giving the overall system a dumbbell shape. Another advantage of the small cross-sectional area at sea level is that the platform would not rock noticeably in response to waves.

In order to keep costs down, the proposal uses standard building techniques, with reinforced concrete as the primary building material. Friedman and his co-authors estimate that the early prototypes could cost as little as $100,000 per occupant—expensive, but within the reach of many a Silicon Valley millionaire. Because banks are unlikely to accept seasteads as collateral, the first participants would need to be largely self-financing, requiring them to have most of that cash in the bank before they could sign up. Initially, at least, seasteading would not be an option for those of modest means.

Nor would it be for people who are attached to creature comforts. Achieving the long-term goal of near-self-sufficiency will require significant lifestyle compromises. Seasteaders would have only a few hundred square feet of living space each and would have to carefully limit the water they consumed and the waste they produced. Vegetarianism would also be an advantage, as meat requires significantly more resources than fruits and vegetables and would almost certainly need to be imported. Diets might also be supplemented by fishing or aquaculture.

Perhaps most painful for geeks, seasteading would require significant technological sacrifices. Power would need to be tightly conserved, and Internet connectivity would be primitive. Laying fiber optic cables would be prohibitively expensive, so seasteaders would be limited to wireless communications. Smaller seasteads might be close enough to land to employ microwave links, but the larger deep-sea platforms would be limited to satellite connections that can cost hundreds of dollars a month and currently top out at 1.5 mbps, with high latencies. Telecommuting might be an option in some cases, but weekend frag-fests with landlubbers would be out of the question.

Will anyone seastead?
The seasteaders have amassed an impressive body of work on the practical aspects of living on the high seas. Dozens of details about the seasteading experience—food, water, power, transportation, waste disposal, household appliances, bad weather, anchors, piracy (both copyright and the real kind), barnacles, ocean currents, and much more—have been hashed out in detail and practical solutions offered. While many of the specifics would doubtless have to be revised once the first seasteaders have gained some experience, there is little doubt that most of the practical obstacles could be overcome with sufficient resources and determination.

However, the project faces a fundamental constraint: whether there are enough real people willing to make the required sacrifices. The first few dozen full-time seasteaders would need to be wealthy enough to make a six-figure down payment, and skilled enough to find a significant source of income that could be pursued from the middle of the ocean, yet willing to endure the privations that come with living for weeks at a time on a cramped ocean platform. There are doubtless many moderately wealthy individuals who would be interested in taking a week-long vacation on a seastead. And the response to projects such as the Free State Project suggest that there are a significant number of libertarians who are willing to pick up roots to pursue their political ideals. But the number of people who are wealthy and willing to move thousands of miles from home to live in cramped quarters to promote their political ideals is likely to be pretty small.

Friedman and his partners are counting on life in seasteading communities to grow less harsh as the communities expand. As seasteading communities grow, fixed expenses can be spread across more people, and some seasteaders can find work providing services to other seasteaders. Moreover, larger communities allow increased division of labor, which could allow seasteading communities to produce more complex manufactured goods and offer more sophisticated services. But the number of seasteaders required to create a substantial “internal market” in seasteading communities is likely to be significant—in the tens of thousands, not the hundreds. Even relatively simple manufacturing operations depend on a complex network of suppliers, employees, and distributors. This complex economic infrastructure would have to be replicated within seasteading communities before manufacturing would be viable.

Providing services, such as computer programming, legal advice, or accounting, might be somewhat more feasible, since modern communications technologies allow such services to be performed over great distances. But here, too, seasteaders would face significant challenges. It is no accident that the highest-paying service professions often require frequent travel. Most clients want to meet their lawyers, accountants, and other service professionals face-to-face on a regular basis, and that requirement would be a major disadvantage for seasteaders for whom a trip to the mainland is a multi-day ordeal.

Even software development, the quintessentially telecommuting-friendly occupation, tends to require face-to-face meetings between the developers and key users during the design and testing phases. Moreover, seastead-based software developers would face stiff competition from Indian developers willing to do the same work at a fraction of the cost.

This isn’t to say that making a living on a seasteads would be impossible. There would surely be some viable market niches that the kind of highly skilled and ambitious people likely to try seasteading could fill. But moving to a seastead will involve an enormous economic sacrifice for the foreseeable future, even in the extremely optimistic case that several thousand people can be persuaded to sign up. Hundreds of thousands of people are likely to be needed in order to produce the degree of specialization that would be required to match the standard of living of Western nations. And ideological zeal is not going to be sufficient to attract that many inhabitants.

Will governments leave seasteads alone?
An even bigger challenge to successful seasteading is convincing the world’s governments to allow new members into the cartel of nations. Several recent efforts to assert the sovereignty of new nations located in international waters have been thwarted by existing countries who have shown little regard for diplomatic niceties. Past efforts to establish sovereign nations in international waters have typically faced the active opposition of nearby governments, which have either asserted jurisdiction by force of arms or destroyed the would-be nation entirely.

Conscious of this danger, Friedman’s seasteaders do not plan to seek formal sovereignty for seasteading communities any time soon. Rather, Friedman prefers the term “autonomy,” and advocates a strategy of compromise with the world’s governments, seeking the maximum amount of freedom that can be obtained without invoking the wrath of the world’s navies. That means that despite their founders’ libertarian convictions, the first seasteading communities are likely to restrict activities such as drug trafficking, copyright infringement, tax evasion, and secretive financial transactions that might attract the attention of foreign governments.

A seastead would also seek protection by flying a flag of convenience, a maritime custom that allows a ship to adopt the flag of a foreign country and subject itself to that country’s maritime law. Because nations compete for the revenue that comes with ship listings, a flag of convenience can be had for a few thousand dollars, and many nations exercise minimal oversight over the ships under their supervision. However, it’s unclear if this will be sufficient to protect seasteading communities from interference by world governments in the long run. The legal fiction that seasteads are ships flying the flag of a foreign country may provide adequate protection when a seastead consists of a few dozen people with no assets to speak of, but a country may not feel so generous if it is someday confronted with a seastead containing hundreds of its former citizens who are earning incomes without paying taxes on them. Such a country may begin demanding that its laws be enforced within the seastead. With no military, the community may have little choice but to comply.

Cost matters
Seasteading seems unlikely to take the world by storm any time soon. The concept faces monumental challenges—both economic and political—and the Seasteading Institute will struggle to convince enough people to get on board to make the effort viable. However, cost is a major wildcard. The Seasteading Institute’s current estimates suggest that the first seasteaders will be required to make a commitment in the low six figures for a relatively cramped spot in a seastead. That transaction is unlikely to appeal to any but the most ardent ideologues.

But it’s possible to imagine these costs coming down substantially. Cheaper and more versatile building materials could be discovered. Better solar panels, desalinization technologies, and wireless Internet connections could be developed. And with each seastead that is completed, engineers are likely to discover ways to cut costs.

If viable seasteads could be built for tens, rather than hundreds, of thousands of dollars per occupant, it would open the concept to a whole new audience. Buying a spot on a seastead would be less like buying a second home (and paying for it in cash) and more likely buying an RV or a boat. It could create a thriving market for seasteads as vacation homes, which in turn would create a demand for full-time workers in the seasteading hospitality industry. As seastead technology became more advanced, seasteads would become more comfortable, and it would be easier to convince people to stay on them for longer periods.

History suggests that technologies don’t have really revolutionary effects until they become cheap enough for ordinary people to buy them. Computers have been around since the 1950s and packet-switched networks have existed since the 1970s, but their really disruptive social effects—such as the emergence of peer-to-peer file sharing—came only when a computer could be had for a few hundred dollars and an Internet connection could be had for less than $50 per month. If seasteading is to have the revolutionary effects that Friedman envisions, it will require seasteads that can be made cheap enough that they are affordable to a large number of ordinary people.

Friedman regards cost as the most pressing challenge facing the seasteading effort. He and Gramlich scorn past proposals that required raising billions of dollars before they could achieve the first tangible results. The half-million dollars that Thiel has pledged to the project will be used largely for design and engineering work on the initial prototype, which they’re hoping to splash down in San Francisco Bay within the next few years. Any effort to start new countries is bound to be a little bit crazy, but the Seasteading Institute’s relentless focus on overcoming practical engineering obstacles could make it more likely to leave a mark on the world than the starry-eyed utopian experiments that preceded it.

from the first annual Seasteading conference, held in Burlingame California on October 10th.

Floating Utopias on the Cheap
by Chris Baker  /  01.19.09
Patri Friedman wants to make it easy for anyone to build an independent country: “If we make one seastead, there’s room for thousands.”

Several dozen conference-goers are filing into the Mendocino Room of the Embassy Suites Hotel in Burlingame, a San Francisco suburb, arming themselves with coffee and muffins as they shuffle to their seats. It’s the kind of scene that occurs daily—if not hourly—in the Bay Area, where techies and businesspeople forever squeeze into drab meeting rooms to discuss how they are going to change the world. But even by local standards, the attendees gathered here are chasing a dream so grand and exotic it makes the typical Internet confab look like an OSHA seminar. Anyone can build a game-changing social-network platform or a virtual community or a set of open APIs. But the people here want to start a nonmetaphorical revolution by creating their own independent nations. In the middle of the ocean. On prefab floating platforms.

At 9:12 am, Patri Friedman stands up to address the group. A former Google software engineer, Friedman is 32 but comes off much younger, with close-cropped hair and a slightly nasal voice. He is executive director of the Seasteading Institute, the nonprofit he founded in April 2008, and this is the group’s first major event. He surveys the room, taking in a cross section of Silicon Valley culture: A white-haired nanotech millionaire in a suit sits next to a grad student in a Transformers T-shirt. If you were to break down the audience into high school classifications, you’d find a couple of hippies and goths, a few hipsters, and several preppies. The rest would definitely be at the nerd table. The male-female ratio is 7 to 1. “This isn’t enough to create a whole new civilization,” Friedman says. “But this is a seed.”

Friedman and his followers are not the first band of wide-eyed dreamers to want to build floating utopias. For decades, an assortment of romantics and whack jobs have fantasized about fleeing the oppressive strictures of modern government and creating a laissez-faire society on the high seas. Over the decades, they’ve tried everything from fortified sandbars to mammoth cruise ships. Nearly all have been disasters. But the would-be nation builders assembled here are not intimidated by that record of failure. After all, their plans are inspired by the ethos of the modern tech industry, where grand quixotic visions are as common as BlackBerrys, and they see their task not as a holy mission but as something like a startup. A couple of software engineers came up with an innovative concept, then outsourced it to a community and let the wisdom of the crowd improve on it. They scored financing from a top-tier venture capitalist and assembled a board of directors. They will be transparent, blogging their progress. If they fail—which, let’s face it, is the most likely outcome—they will do so quickly, in time-honored Valley fashion. But if they succeed, they have one hell of an exit strategy.

Friedman launches into what he calls “my standard rant”—a spiel about government’s shortcomings and why they’re so hard to repair. In his eyes, government is a sclerotic monopoly that can count on high customer lock-in thanks to inertia and the lack of alternatives. “Government is an inefficient industry because it has an insane barrier to entry,” he says. “To compete with governments on existing land, you have to win a war, an election, or a revolution.” He points to the democracy that emerged from the American Revolution as the last successful rollout and attributes the subsequent dry spell to the lack of uncolonized space on the map. “We’ve run out of frontier,” he says. But there’s still one virgin realm left, and it covers 70 percent of the earth’s surface.

The purpose of the Seasteading Institute—and of this gathering—is to figure out how to make aquatic homesteads a reality. But Friedman doesn’t just want to create huge floating platforms that people can live on. He’s also hoping to create a platform in the sense that Linux is a platform: a base upon which people can build their own innovative forms of governance. The ultimate goal is to create standards and blueprints that can be easily adapted, allowing small communities to rapidly incubate and test new models of self-rule with the same ease that a programmer in his garage can whip up a Facebook app. “You could roll your own government out of pieces copied from all the societies around you,” Friedman says. “Google set my standards for how fast something should grow. This has potential to exceed those standards—if we make one seastead, there’s room for thousands.”

Friedman’s optimism is easier to buy into if you ignore the history of previous would-be nation builders. There was Operation Atlantis, created by Ayn Rand admirer Werner Stiefel in the late 1960s. Stiefel, who made a fortune selling dermatology products, devoted his life to creating a sovereign society with the freest markets imaginable. He started with a ferro-cement boat that made a single successful voyage on the Hudson River. He erected a system of seabreaks near the coast of Haiti but was run off by president Franè7ois Duvalier’s gunboats before he could put land on it. He bought an oil rig and tried to anchor it between Cuba and Honduras, where it was destroyed by a storm. Stiefel died in 2006 with little more than a sporadically published newsletter to show for his efforts.

In 1971, real estate millionaire and committed libertarian Michael Oliver dumped large quantities of sand on two coral reefs in the South Pacific and dubbed it the Republic of Minerva, a land with “no taxation, welfare, subsidies, or any form of economic interventionism.” Minerva was soon invaded by the nearby kingdom of Tonga, and it dissolved back into the ocean shortly thereafter.

The Oceania city project, a plan for a vast floating settlement off the coast of Panama, emerged in 1993. The founders took out a two-page ad in Reason, a libertarian magazine, promising to free prospective residents from governments “entangled in bureaucracy, corruption, and the free lunch philosophy.” The project was disbanded the following year due to lack of interest and funds. “The Libertarian party is small in number and too few members have the financial resources to bankroll their beliefs,” founder Eric Klien wrote on Oceania’s Web site.

Other projects still exist as hypothetical concepts. There’s the Freedom Ship, a mile-long floating tax haven, which will come into being just as soon as its organizers can drum up the $10 billion needed to build it. (They’ve accused their former president of absconding with the first $400,000 they raised.) The concept of failed aquatic libertarian havens has even entered the pop consciousness, providing the setting for the blockbuster videogame BioShock.

Wayne Gramlich will never move to the middle of the ocean—his wife forbids it. But when the former software engineer, who has been “on sabbatical” since the late 1990s, stumbled across the Oceania Web site about a decade ago, he was both enthralled by the vision and dismayed at the execution. An early Sun Microsystems employee who worked on browser security at the dawn of the World Wide Web, he thought what was needed was a dispassionate perspective—a realistic plan to build floating autonomous countries. “Oceania had a lot of pretty pictures, pretty concept art, but that was it,” he says. In 1998 he wrote a modest proposal, SeaSteading—Homesteading on the High Seas, to get beyond the grandiloquence. “Big and expensive projects will have a very difficult time attracting the requisite capital,” Gramlich wrote. An engineer at heart, he tried to devise a way to build islands on the cheap. His report outlined how thousands of empty 2-liter soda bottles could be used to create a floating platform.

That sounded like paradise to Friedman when he saw the paper on Gramlich’s site. He had always been interested in big-picture socioeconomic theories. The son of libertarian legal theorist David Friedman and grandson of the Nobel Prize-winning free-market economist Milton Friedman, Patri had until then expressed his worldview mainly through his lifestyle: engaging in “radical self-expression” at Burning Man, experimenting with drugs, living in intentional communities with several other families, and maintaining a polyamorous relationship with his wife. His BMW 328i has a customized license plate: FRRREAK.

Friedman had read about money holes like Oceania and considered them too fantastical to bother with. But the relative practicality of Gramlich’s ideas appealed to the software engineer in him. Here was a simple kludge for a floating platform that might be affordable. And if it could work, Friedman would love to be among the first settlers to live on the open sea. “My dad and grandfather write about stuff,” he says. “What interests me is doing something.” He sent an email to Gramlich, and the two discovered that they lived a few miles apart in Sunnyvale, California. In late 2001, they began to collaborate on a new paper on seasteading. They posted everything online, including their notes to each other. (Friedman coded a Perl script that would allow anyone to submit comments on each paragraph.)

Over the next couple of years, Friedman and Gramlich assembled a 150-page book on the logistics of seasteading. Their guidelines were intensely pragmatic, explaining everything from how to fend off barnacles (a “continuous discharge of low-level chlorination”) to how to fend off foreign navies (“sea-skimming anti-ship cruise missiles like the Chinese Silkworm are fairly cheap and quite effective”). They described the least far-fetched, least expensive design for a safe seastead they could find—the floating spar. The hypothetical dwelling looks like a giant dumbbell standing on end, with a large steel ballast underwater and a 48,000-square-foot platform suspended above, where 120 people could live. They estimated it could be built for about $3 million. “That’s the same price as a nice house in San Francisco,” Friedman says. (Their design has since evolved, as shown at above.)

Gramlich and Friedman’s online tome captured the imagination of like-minded geeks, who peppered it with suggestions and criticisms. It was also brought to the attention of millionaire tech investor Peter Thiel, who shared Friedman and Gramlich’s dissatisfaction with land-bound governments. Thiel was a cofounder of PayPal, and he viewed that company as a way to further his libertarian ideals—a way to move money around the world as 1s and 0s without the involvement of nations or their currencies. After selling PayPal to eBay and walking away with a reported $55 million, Thiel started the hedge fund Clarium Capital, which made a fortune earlier this decade by correctly betting that oil prices would rise and the dollar would weaken.

Thiel has invested in Facebook, Friendster, LinkedIn, and Slide. He has also donated $3.5 million to Aubrey de Grey’s Methuselah Foundation, which seeks to extend longevity, and given money to the campaigns of small-government conservatives like Ron Paul. “Peter wants to end the inevitability of death and taxes,” Friedman says. “I mean, talk about aiming high!” Last April, Thiel pledged a $500,000 investment and installed his right-hand man, Joe Lonsdale, as chair of the Seasteading Institute. “Decades from now, those looking back at the start of the century will understand that seasteading was an obvious step toward encouraging the development of more efficient, practical public-sector models around the world,” Thiel said in a statement at the time. Three months after the wire transfer went through, Friedman left his job at Google.

Friedman is quick to acknowledge that not everyone will share his vision. “At first blush, this all sounds kind of crazy, and to see the potential beyond that—that’s pretty awesome,” he tells his fellow enthusiasts at the seasteading conference. “There’s a lot of good craziness in this room!” But good craziness alone will not make seasteads work, and most of the day is spent discussing the nuts and bolts of creating a floating community. First is the question of structure. “The ocean is a harsh and corrosive environment,” Friedman says. In addition to rust and barnacles, there’s wave motion, which is disorienting in the best of times and potentially fatal during a storm. The Seasteading Institute hired Marine Innovation & Technology as a consultant to solve these problems. Naval architect Alexia Aubault takes the lectern to describe the results of wave-motion analyses her engineering firm performed. To protect the organization from frivolous infringement lawsuits, she is barred by the institute’s lawyer from showing off the refined design until a patent gets filed. (That has since been done.)

And that’s just one of the legal torpedoes that seasteaders must dodge. According to the UN’s Law of the Sea, the jurisdiction of traditional nations extends up to 200 miles from shore, an exclusive economic zone within which countries can control fishing and mineral rights and police polluters. Friedman hopes there will someday be self-sufficient seasteads that can thrive on the high seas, beyond the purview of any country. But for the near future, he concedes, they’ll probably need to remain near shore and operate like cruise ships, which are bound by the laws of the country where they’re registered. Most governments won’t attack these kinds of vessels as long as they behave. “At this point, it matters who you piss off,” he says. (Raymond Peck, a former Reagan administration official, has agreed to do further research for the institute on the Law of the Sea.)

At 11 am, attendees break up into small groups to brainstorm business models. Seasteaders can depend on like-minded benefactors for only so long. Ultimately, these nations will need to pay the bills. Friedman notes that some enterprises—like euthanasia clinics—would incense local authorities, but almost all the ideas attendees come up with would capitalize on activities that skirt existing laws and regulations: Fish farming and aquaculture. Prisons. Med schools. Gold warehouses. Brothels. Cryonics intakes. Gene therapy, cloning, augmentation, and organ sales. Baby farms. Deafeningly loud concerts. Rehab/detox clinics. Zen retreats. Abortion clinics. Ultimate ultimate fighting tournaments. (Lonsdale has his own ideas. “Bazooka bikini bachelor parties,” he says. “You get there and a Lithuanian model hands you a rocket-propelled grenade launcher.”)

But in the end, the seasteaders may face an even more fundamental challenge. During an afternoon session, Friedman asks, “How many people here know how to sail?” Few hands go up. He says plans are under way to offer group instruction at discount rates.  The first annual seasteading conference adjourns at 6 pm. A kayaking trip around the bohemian houseboat community just off Sausalito has been scheduled for the following morning, but it is canceled because of high winds.

Forbes Island isn’t really an island at all but a 5,000-square-foot, 700-ton sea vehicle decked out with palm trees, a white-sand beach, and a lighthouse. A houseboat designer named Forbes Kiddoo, inspired by the science fiction of Jules Verne, spent five years building it. In 1999, he converted it into a restaurant that today floats near San Francisco’s kitschy Pier 39, serving $35 rack of lamb to tourists who watch sea lions flop around on the nearby docks. Tonight, the eatery is hosting the Seasteading Institute’s post-conference dinner.

Kiddoo himself ferries the seasteaders from shore to restaurant in a tiny pontoon boat. On the way over, he explains that obtaining clearance for his island was a nightmare. “I had to get city, county, state, and federal permits,” he says, shouting to be heard over the bellowing of sea lions. “I had to deal with the ADA, the ABC … I had to become a merchant marine captain.”  Afterward, in the island’s bar, Friedman seems happy with how the event went, though he says some of his plans will have to be scaled back. He had wanted to hold a floating festival dubbed Ephemerisle on Fourth of July weekend; it was to be a sort of Burning Man on the high seas, where everything is permitted. But several conference attendees expressed concern about the logistics—and advisability—of a free-floating bacchanal of guns and drugs. He’ll still host some sort of gathering to test a few miniature floating-island prototypes but expects it to be held in San Francisco Bay, not out on the open sea. “It’ll probably take a few iterations to get there,” he says. “But at least we’re doing something.”

Eventually, the seasteaders move to the Tahiti Room, which has a lovely moonlit view of Alcatraz. Chatter around the table gets louder as the wine flows, but the subject matter remains wonky. “The interesting issues are social and legal,” says Mikolaj Habryn, a site reliability engineer at Google. “You’ll get slavery. You’ll get drug dealing. Maybe there’ll be polygamous Mormons. The first people involved will inevitably be those who want to do things they can’t do on land, and we have to deal with that.” A ship passes, and even though Forbes Island is firmly moored a few hundred feet from shore and separated from the bay by a breakwater, the restaurant sways so much that some diners have to breathe deeply and focus on the horizon to settle their stomachs.

At the other end of the table, Patri Friedman raises his glass to make a toast. “I want to see us all at the 10th Annual Seasteading Conference,” he says, implying that he expects it to take place on an actual seastead, not in an Embassy Suites or a floating theme restaurant. “It’ll be in a bigger room, there will be a better view, it won’t move up and down as much, and there’ll be a better wine selection and better things to smoke!” Friedman is joined by a raucous round of toasts. “To Peter Thiel for financing this!” “To having more women here!” “To being on the water!” “To freedom!” Friedman wraps it up: “To being crazy in a good way!”







FORBES ISLAND,,20097006,00.html


The next frontier: ‘Seasteading’
by Declan McCullagh  /  February 2, 2009

Palo Alto, Calif.–This chic, tree-lined California town might seem an unlikely place to begin the colonization of Earth’s oceans. Palo Alto is known for expensive modernism, Stanford University, al fresco dining, and land prices so high a modest cottage still sells for well over $1 million. If Patri Friedman gets his way, the area will also be remembered for birthing a political movement called seasteading. The concept is as simple to explain as it will be difficult to achieve: erecting permanent dwellings on the high seas outside the territorial waters claimed by the world’s governments. “Innovation in society and serving marginalized groups has always happened on the frontier,” Friedman said in an interview last week. “We don’t have a frontier anymore. The reason our political system doesn’t innovate anymore is that there’s no place to try out new things. We want to provide that place.”

Designing an offshore place to live is one of the first tasks of the Seasteading Institute, which Friedman, 32, founded last year and moved into shared office space near the Palo Alto Caltrain station two weeks ago. Another task is attempting to legitimize living on the seas as practical–and perhaps, given possibilities for offshore businesses, even profitable. Friedman previously worked in Google’s Mountain View headquarters as a software engineer, identifies himself as a Burning Man aficionado, and counts himself as an unabashed libertarian. (His father, David Friedman, is a well-known libertarian law professor, and his grandfather, the late Milton Friedman, won the Nobel Prize in economics.)

Given the large number of like-minded souls in Silicon Valley circles, including at the Googleplex, it should be no surprise that a few dozen have coalesced to form a core group of would-be seasteaders, some of whom met last week for a social gathering inside downtown San Francisco’s Metreon entertainment complex. “I’d say that libertarian geeks are our most common audience so far. But in order to succeed, we’ll have to branch out beyond that,” Friedman said. “I think people are a lot better at inventing technology than changing human nature or changing social organizations. This is a technological solution to the problems of politics…I’m a libertarian, but I’m not a libertarian who believes that everyone should want to live in the same kind of society as me.”

The Seasteading Institute plans to gather a kind of ad-hoc flotilla, called “ephemerisle,” in the San Francisco Bay near Redwood City over the Fourth of July weekend. The plan for July 2010: find a way to hold the gathering off the coast in the Pacific Ocean. Other supporters of the project include PayPal co-founder Peter Thiel, who runs a hedge fund called Clarium Capital Management and donated $500,000 to the Seasteading Institute. Former Sun Microsystems engineer Wayne Gramlich is the group’s director of engineering; former Paypal manager James Hogan is its director of operations; Liz Lacy of now-defunct Excite@Home heads its development efforts.

While their affection for seasteading has varying origins, the broadest theme is to allow people to escape overreaching governments and replace conventional political systems with something of their own creation. (A section of their Web site is titled: “Land = Crappy Government” and says that terrestrial governments do a “terrible and sometimes horrific job” at serving the taxpayers that are their customers.) Yet the Seasteading Institute’s official position is, to put it in terms that Washington politicians might employ, thoroughly nonpartisan. Once the engineering work is complete and groups can purchase, outfit, and launch their own platforms, Friedman and his colleagues predict that some of the first ‘steaders will not be nudists, recreational drug users, pacifists, environmentalists, or religious groups hoping to create an enclave far away from secular influences.

A history of failure
One way to look at the prospect of colonizing the oceans is that it represents the continuation of a westward trend that began with Greece and continued through Rome, Gaul, Britain, and the North American continent. “When people got to California that was as far west as they could go,” said David Boaz, executive vice president of the Cato Institute, a free-market think tank in Washington, D.C. “Maybe this will turn out to be an opportunity to revive that search for a frontier.” Boaz questions whether the United States is sufficiently repressive to prompt enough people to move offshore. “In a prosperous, comfortable society, it might be hard to get people to take those kinds of risk,” he said, referring to “the risk aversion of a wealthy society.” Plus, colonizing land even at the wilderness’ edge is trivial compared with the technical and engineering challenges of colonizing the ocean. Can a floating platform weather typhoons and so-called rogue waves that can swell to more than eight stories tall? Should it be stationary or mobile? Will food be grown, harvested, or imported? And what about more prosaic matters, such as communications and waste disposal?

History is littered with examples of similar projects that failed. There was Marshall Savage’s Aquarius Project, which wanted to start by colonizing the ocean’s surface and then move to the stars. A Las Vegas real estate tycoon behind the Republic of Minerva wanted to form a no-tax utopian society by reclaiming land on a Pacific atoll; alas, the colonists were given the boot by a few troops from the island nation of Tonga. The free-marketeers behind Laissez-Faire City who wanted to found the next Hong Kong were never able to find a sympathetic government to lease them land. An engineer named Norman Nixon has been trying for years to find investors for a so-called Freedom Ship, which would be a colossal project three times longer than any existing ship, with 25 stories above the waterline and a fully functioning airport. Nixon acknowledged last July that the project was on indefinite hold because his business partner “turned over our entire bank account to a man who promised him a ‘Peruvian Gold certificate’ worth a billion dollars.”

The current crop of seasteaders is acutely aware of their predecessors’ failings and has gone so far as to draft a critical history of the movement as part of a larger Internet-published book. “I’d like to see lots of different things tried in lots of different places and we’ll see what works,” Friedman said. “We want to create a turnkey system by which any committed organized group can go out and make their own country and try out some new system.”

Jason Sorens, an assistant professor at the University of Buffalo, SUNY, specializes in the study of secessionist movements. His dissertation was titled “The Political Economy of Secessionism,” and he was the founder of the Free State Project, an effort to convince freedom-loving Americans to move to New Hampshire. (Some 700 have taken the leap so far.) Sorens said the seasteading concept reminds him of microstates like Monaco and Tuvalu. “They sustain their government budgets and their economies on niche economies that are based on commercialized sovereignty,” he said. “Many of them sell top-level Internet domains, and that’s a source of their revenue, or they’re financial or data havens, or they raise money through philately (selling stamps). They use all these trappings of sovereignty to bring revenue into their coffers.”

That raises the obvious question: assuming the engineering questions can be answered, and assuming that adequate capital can be raised, what about the legal and diplomatic challenges? Friedman’s answer is that in the short term, seasteads can pay money to purchase a vessel registration from Panama, Liberia, or the Bahamas, in the same way that most merchant ships do. Eventually, seasteads could assert their own sovereignty–something that likely will be met with something less than enthusiasm on the part of terrestrial governments. (Floating pseudo-cities could choose to remain within a nation’s 200-mile exclusive economic zone, or sail deeper waters further offshore.) “They may need to establish some sort of sovereignty of their own, and that’s where the secessionist aspect comes in, to protect themselves from legal or military maneuvers,” Sorens said. “Those are really uncharted waters. We don’t have any other examples in international law of man-made structures becoming sovereign.”

One case study can be found in HavenCo, an Internet hosting business created nine years ago atop a windswept gun emplacement six miles off the coast of England. The rusting, basketball-court-size fortress was abandoned by the British military after using it during World War II to shoot down Nazi aircraft, and was claimed in 1967 by Roy Bates, the self-described “crown prince of Sealand.” A HavenCo executive said in 2003 that the business was failing, and the hosting service went offline last year. Meanwhile, no member of the United Nations appears to have recognized Sealand as a sovereign state, and it lies within the territorial boundary of 10 miles claimed by England.

The Seasteading Institute candidly admits floating platforms will be outgunned by a modern navy, concluding the wiser option is to “avoid angering terrestrial nations enough to provoke an attack.” That means that, ironically, seafaring communities created by liberty-loving libertarians may ban businesses from their platforms that dabble in controversial practices such as offshore banking with complete privacy. (Medical tourism–think hip replacement surgery at 80 percent discounts–coupled with gambling, on-platform use of recreational drugs, adult prostitution, and genetic engineering may prove sufficiently profitable.) “As long as what happens on seasteads stays on seasteads, then terrestrial governments hopefully will not feel too threatened,” Friedman said. “The whole nature of seasteading is that it’s a very experimentalist, very diverse world we’re trying to create. People are welcome to create seasteads that violate any of my recommendations. I could be wrong: if they want to take that risk, we’ll see what happens and we’ll learn from it.”


The Oil Rig Resort : Luxury adventure + environmental stewardship
“The challenge: Create a truly unique hospitality experience. Given Morris’ commitment to environmental stewardship, our solution went beyond high-end design – we showcased how sustainable strategies can inform the luxury resort experience. The Rig Resort’s aesthetics evoke an ocean reef with modern flair. Views include ocean vantages – even through the lobby’s glass floor – as well as of the roof-top white sand “beach” and infinity pool beyond. Spaces are organized around a core of water that stabilizes the rig while serving as a venue for aquatic shows. To explore the lush habitats often spawned at rig sites, resort amenities highlight ocean-going and undersea sports. Morris’s emphasis on sustainability mandated maximum re-use of the existing rig infrastructure. Pre-fabricated guest-room modules “close up” for protection during adverse weather. The resort harnesses wind, waves, and sun to generate energy miles from shore. Grand Prize, Radical Innovation in Hospitality. National Design Award of Excellence, SARA.”

OIL RIGS as LUXURY HOTELS,713732.shtml

(Business Wire) Morris Architects, a 70-year design firm with offices in Houston, Orlando, Los Angeles and Rio de Janeiro, announces major awards in hospitality design. Morris Architects took top honors for its two entries to Radical Innovation in Hospitality, an international design competition co-sponsored by the John Hardy Group and Hospitality Design magazine. Projects from around the world were submitted by hospitality brands, designers, and consulting professionals. Morris Architects captured the competition’s $10,000 Grand Prize for design of the Oil Rig Resort, Spa, and Aquatic Adventure. The concept refits one of the Gulf Coast’s 4,000 oil rigs into an exclusive resort, creating an eco-luxe oceanic experience. According to Morris Architects Director of Design Douglas Oliver, “In a twist on the symbol of oil dependence, the rig is transformed from obsolete industrial infrastructure into a vibrant component of the biosphere’s ecosystem and a destination for discerning travelers.”

“As the adaptive reuse of an abandoned oilrig,” added John Hardy, president and CEO of the John Hardy Group, “the Rig Resort offers a potentially commercially viable solution to an environmental hazard by providing alternative adventure travel opportunities based on a natural setting, simultaneously creating new jobs previously non-existent in the area.” In addition to attracting the adventurer and luxury traveler, this destination resort will also draw conferences, business retreats, and can serve as a cruise ship’s main port of call en route to other locations in Mexico and the Caribbean. Miles from shore, the Rig Hotel will function autonomously through the use of alternative energy. Upon entering the “reef lobby,” guests enjoy spectacular views of the Gulf — including vantages through the lobby’s glass floor. Spaces are organized around a core of water that serves as ballast while also providing a deep-water venue for evening shows similar to Cirque du Soleil’s Las Vegas ‘O’.

The Morris Architects entry titled Extreme Birding was named one of the contest’s finalists and received an Honorable Mention. Bird-watching, also known as birding, presents tremendous untapped potential for the hospitality industry. According to the U.S. Fish & Wildlife Service, bird-watching is a hobby for over 47.8 million Americans, and that number is growing. Explaining the concept, Oliver stated, “There is a strong connection between bird-watching and travel. Up until now, hospitality offerings for birders tended to be ad-hoc. This design proposes to integrate luxury hospitality into the birding experience, creating a methodology that can be adapted for sites around the globe.”

In receiving both the Grand Prize and an Honorable Mention, Morris Architects is the first firm to have been nominated for two of the four finalist positions in a single year. Said Michelle Finn, vice president of Hospitality Design Group, publisher of Hospitality Design magazine, “Innovation deserves a platform. This award offers a glimpse of what is truly cutting-edge thinking.”

The Rig Resort also received the SARA National Design Award of Excellence, the highest design honor awarded by the Society for American Registered Architects. According to Chris Hudson, Morris Architects President and CEO: “These entries exemplify the firm’s commitment to ADVANCEDESIGN, expanding the boundaries of what design and architecture can do for our clients and our communities.” Under the leadership of Design Director Douglas Oliver, the team responsible for the Morris Architects hospitality concepts included Yoonah Chang, Dallas Felder, Sandra Guerrero, Melanie Herz, Paul Kweton, Shawn Lutz, and John McWilliams. Continued Chris Hudson, “The firm’s experience with top hospitality developers and hotel brands, as well as our commissions at some of the world’s most innovative entertainment and performance venues, has enabled us to create a truly unique experience that embodies the best in luxury, sustainability, and adventure.”


From the archive, originally posted by: [ spectre ]








“Government is an industry with a really high barrier to entry,” he
said. “You basically need to win an election or a revolution to try a
new one. That’s a ridiculous barrier to entry. And it’s got enormous
customer lock-in. People complain about their cellphone plans that are
like two years, but think of the effort that it takes to change your

Peter Thiel Makes Down Payment on Libertarian Ocean Colonies
BY Alexis Madrigal  /  05.19.08

Tired of the United States and the other 190-odd nations on Earth?

If a small team of Silicon Valley millionaires get their way, in a few
years, you could have a new option for global citizenship: A
permanent, quasi-sovereign nation floating in international waters.
With a $500,000 donation from PayPal founder Peter Thiel, a Google
engineer and a former Sun Microsystems programmer have launched The
Seasteading Institute, an organization dedicated to creating
experimental ocean communities “with diverse social, political, and
legal systems.”

“Decades from now, those looking back at the start of the century will
understand that Seasteading was an obvious step towards encouraging
the development of more efficient, practical public-sector models
around the world,” Thiel said in a statement. It might sound like the
setting for the videogame Bioshock, but the institute isn’t playing
around: It plans to splash a prototype into the San Francisco Bay
within the next two years, the first step toward establishing deep-
water city-states, or what it calls “seasteads” — homesteads on the
high seas.

Within the pantheon of would-be utopian communities, there’s a
particularly rich history of people trying to live outside the nation-
state paradigm out in the ocean. The most ambitious was Marshall
Savage’s Aquarius Project, which aimed at nothing less than the
colonization of the universe. There was also Las Vegas millionaire
Michael Oliver’s attempt to create a new island country, the Republic
of Minerva, by dredging the shallow waters near Tonga. And the Freedom
Ship was to be a mile-long portable country costing about $10 billion
to construct.

None of these projects has succeeded, a fact that The Seasteading
Institute’s founders, Google’s Patri Friedman and the semi-retired
Wayne Gramlich, are keenly aware of throughout the 300-page book
they’ve written about seasteading. Instead of starting with a grand
scheme worthy of a James Bond villain, the Institute is bringing an
entrepreneurial, DIY mentality to creating oceanic city-states.
“There’s a history of a lot of crazy people trying this sort of thing,
and the idea is to do it in a way that’s not crazy,” said Joe
Lonsdale, the institute’s chairman and a principal at Clarium Capital
Management, a multibillion-dollar hedge fund.

The seasteaders want to build their first prototype for a few million
dollars, by scaling down and modifying an existing off-shore oil rig
design known as a “spar platform.” In essence, the seastead would
consist of a reinforced concrete tube with external ballasts at the
bottom that could be filled with air or water to raise or lower the
living platform on top. The spar design helps offshore platforms
better withstand the onslaught of powerful ocean waves by minimizing
the amount of structure that is exposed to their energy. “You have
very little cross-sectional interaction with waves [with] the spar
design,” Gramlich said. The primary living space, about 300 square
feet per person, would be inside the tube, but the duo envisions the
top platform holding buildings, gardens, solar panels, wind turbines
and (of course) satellites for internet access. To some extent, they
believe the outfittings for the seastead will be dependent on the
business model, say aquaculture or tourism, that will support it and
the number of people aboard. “We’re not trying to pick the one
strategy because we think there will be multiple people who want one
for multiple reasons,” Gramlich said.

Dan Donovan, a long-time spokesman for Dominion, an energy company
that operated Gulf of Mexico-based gas rigs, including Devils Tower,
the world’s deepest spar structure, said the group’s plan wasn’t too
far-fetched. His company’s off-shore rigs, which are much larger than
the institute’s planned seasteads, provided long-term housing for its
workers. “They were sort of like mobile homes. We could move them from
one place to another,” Donovan said. “People did live on them.” But
even the institute members admit that their plans aren’t far enough
along to stand up to rigorous engineering scrutiny. Some engineers,
Gramlich said, have been skeptical of their plan, particularly their
desire to do it on the cheap. “We have some legitimate doubting
Thomases out there,” Gramlich said.

But if the idea turns out to be just crazy enough that it works,
Friedman, following in the footsteps of his grandfather, the Nobel
Prize-winning economist Milton Friedman, envisions transforming the
way that government functions. “My dad and grandfather were happy
arguing their ideas and were happy influencing people through the
world of ideas,” Friedman said. “I see a real need for people to go
out and do something and show by example.” True to his libertarian
leanings, Friedman looks at the situation in market terms: the
institute’s modular spar platforms, he argues, would allow for the
creation of far cheaper new countries out on the high-seas, driving
innovation. “Government is an industry with a really high barrier to
entry,” he said. “You basically need to win an election or a
revolution to try a new one. That’s a ridiculous barrier to entry. And
it’s got enormous customer lock-in. People complain about their
cellphone plans that are like two years, but think of the effort that
it takes to change your citizenship.”

Friedman estimates that it would cost a few hundred million dollars to
build a seastead for a few thousand people. With costs that low,
Friedman can see constellations of cities springing up, giving people
a variety of governmental choices. If misguided policies arose,
citizens could simply motor to a new nation. “You can change your
government without having to leave your house,” he said. Of course,
one major role of government is to provide security, which would seem
to be an issue on the open sea. But Friedman’s not worried about
defense beyond simple firearms because he thinks pirates will lack the
financial incentive to attack the seasteads. “More sophisticated
pirates will take entire container ships that have tens of millions of
dollars of cargo and 10 crew [members],” he said. “On a seastead,
there’s a much different crew-to-movable assets ratio.”

In fact, his only worry is that a government will try to come calling
and force their jurisdiction upon them. Toward that end, they are
planning to fly a “flag of convenience” from a country that sells
them, like Panama, to provide them with protection from national
navies. “If you’re not flying a flag … any country can do whatever
they want to you,” he said. Even if their big idea doesn’t end up
panning out, their story should live on in internet lore for
confirming the dream that two guys with a blog and a love of Ayn Rand
can land half a million dollars to pursue their dream, no matter how
off-kilter or off-grid it might seem. “Everything changed when we got
the funding,” Friedman said. “Before that, it was two guys with some
ideas writing a book and blogging about their ideas…. Now that we’ve
got some funding, it’s something I plan to make a full-time job out





Dynamic Geography: A Blueprint for Efficient Government
by Patri Friedman

This article briefly discusses the fundamental reasons why governments
function so poorly, and why many libertarian solutions are
insufficient to solve the problem. Government is modeled as an
industry which is shown to be lacking in competitive feedback. Based
on this, we examine ways of making government more efficient,
including an odd but elegant way of fixing this problem which has not
previously been analyzed in this context. So if you’re ready to get
your feet wet, read on!

The Problem
Those who do not learn from the mistakes of history are doomed to
repeat them.

Given how far all current governments stray from the libertarian
vision, it is natural that some of us have considered designing or
even founding a new nation. In doing so, we sometimes assume that the
major failing of present nations is the mental attitudes of their
residents. Thus to ensure that a political system works, we merely
need to start with libertarians. This is incorrect, because much of
what we don’t like about current states stems from the behavior of
systems – behavior which is to some degree independent of which humans
are involved. As an example, the USA started with liberty-minded
founders and degenerated anyway.

Alternatively, it is tempting to think that some structural problems
or lack of specificity in the constitution are the issue. If laws
required a supermajority to enact but a 1/4 vote to repeal, or if the
constitution made it clear that RKBA really means the right for anyone
to possess the most deadly weaponry available, maybe that would solve
the problem. While these issues matter, the approach is still too
superficial. Again, the USA started with a pretty darn good
constitution, and still degenerated. No matter what your starting laws
(and the Bill of Rights is pretty clear), judges must interpret them.

When we look at the empirical evidence of the twentieth century, the
libertarian case is bleak. However much we may admire it, small
government does not appear to be a stable equilibrium. Instead, the
clear pattern is growth of government spending, in absolute and
relative terms, in a variety of different first-world countries. The
budget-maximizing bureau and the ratchet of government appear to be
robust phenomena. We must not dismiss this evidence simply because it
is distasteful. Laissez-faire may be efficient, but if it is
inherently unstable there can be no Libertopia.

This stability problem is a crucial one for libertarians, perhaps the
most fundamental issue we face. We know a great deal about how things
would/should/could/did work in our vision of society. But why are such
societies so rare? Why aren’t they forming? Why do they disappear? How
can we create one that lasts? Some excellent analysis has been done on
this topic (thanks, public choice economics!). But these pressing
questions seem to receive little attention compared to minor technical
issues, despite the fact that we must answer them if we are ever to
create a stable libertarian society.

The Governing Industry
Traditional government consists of a monopoly on the use of force in
some geographic area. Generally it is extended to include monopolies
on a large number of services as well, such as courts, police,
military protection, roads, and licensing. We’ll consider all of these
as government services, and call the provision of these services the
governing industry. There are two aspects which make this industry
uncompetitive: a high cost of switching and a high barrier to entry.

High Cost of Switching
Government service providers have monopolies over wide areas. Most
people live in buildings and own lots of physical property. They are
likely to have family and friends in the surrounding geographical
area, and to work at a nearby job. While there may be people who live
in RV’s, only have friends on the internet, and telecommute every day,
they are surely rare. Thus if an individual wishes to switch
providers, they must physically relocate to a new country. This
involves an onerous series of steps: sell their house, pack up all
their possessions, quit their job, move to a new country, deal with
immigration requirements, buy a new house, get a new job, make new
friends, learn a new culture. This is an extremely costly process.

Because it is so expensive to switch service providers, the industry
has little market feedback. Jurisdictional arbitrage is ineffective
because the difference to an individual between two governments must
be higher than the cost of switching – and that cost is huge. Thus its
a great temptation for residents to stay and hope things get better,
or perhaps try to change them despite slim odds.

If it is not clear why this leads to poor service, consider a business
example. Suppose there were many competing phone companies with no
interconnection, so that you could only call people subscribed to your
provider. It is likely that your friends, family, and coworkers all
use the same provider, because convenience of communication is so
important. In fact, they’ve probably all used the same provider for
their whole lives. Once a provider had many customers signed up, it
would not have to treat them very well to keep them as customers,
because it would be so difficult for them to switch. When all phone
networks are interconnected and it takes only a few minutes to change
providers, service is vastly more efficient. The effect with
government is even stronger because physical proximity is more
important and all-encompassing than the phone network, thus people are
willing to bear higher costs to maintain it.

High Barrier to Entry
Consider two industries. One has few economies of scale, thus small
firms can enter easily. In the other, high economies of scale mean
that only a huge, highly-funded new venture can be competitive with
current firms. The first might be the computer applications market and
the second the computer operating system market. When the barrier to
entry is low, many innovative firms will compete to provide the best
product. When it is high, a small number of entrenched firms fight to
maintain their position.

The barrier to entry in the government market is gargantuan. While it
is possible to control small parts of a democracy without great
expenditure, creating a new system or taking over the existing one are
very difficult. Bloody revolution is the usual route, and those
attempting it must risk death with little chance of success. All land
is claimed, and its current possessors have a great deal of interest
in maintaining the status quo. The recent US invasion of Iraq
demonstrates the tremendous expense and difficulty of regime change.

This high barrier means that the governing market contains a small
number of large firms. The industry lacks the continual growth,
innovation, and energy produced by a constant stream of small
experiments and ventures. Currently, small groups of people cannot
readily experiment with new systems. This deprives the world of useful
information about improved ways of governing – as well as letting
people keep their illusions about methods which would prove disastrous
in practice.

Further evidence that these two conditions are key to the poor
provision of services is found by examining the few governmental
services with a much lower cost of switching and barrier to entry. For
example, incorporation and ship chartering do not require physical
presence, and both are among the minority of profitable government-run
businesses. It is no surprise that for this small subset of “virtual”
services, jurisdictional arbitrage is alive and well.

Aside: applying these two criteria to the Windows OS explains why it
is of low quality, while Microsoft makes much better products for more
competitive industries.

Now that we have considered government as an industry and realized
that it is a very uncompetitive one, we should be unsurprised that
existing governments do such a poor job. Without competition and
market feedback, we should not expect significant improvement –
regardless of superficial reforms. Changing one part of one system is
not enough, we must change the meta-system under which systems evolve.

There are a thousand hacking at the branches of evil to one who is
striking at the root.
— Henry David Thoreau

Industries are not made competitive by rhetoric, and the governing
industry is no exception. Instead, we must change the incentive
structure which leads to stagnant, exploitative governments. The above
analysis suggests that lowering the barrier to entry and the cost of
switching is likely to be effective. How can this be done?

One answer is a heirarchical system of alliances like medieval
feudalism. Each unit can choose which higher-level unit it is
affiliated with, and thus shop around for the best deal. This actually
created a competitive system, as Robert Wright describes in Non-Zero

Why were these ruling elites more open to change than Rome’s
ruling elites? One reason, some historians say, was the decentralized
nature of feudalism. Feudal lords often had the leeway to rewrite the
rules in their territory, and they also had the incentive –
competition with neighboring lords. As savvy lords tried to foster
more prosperity than their neighbors, the many fractal units of
feudalism became, in effect, laboratories for non-zero-sumness,
competing with each other to raise productivity. [1]

He also reports that this competition in the governing industry may
have contributed substantially to Europe’s technological advantage.
Unfortunately, there are problems with this method. For example,
stable units in feudalism tend to be geographically compact, and
geographic features constrain the possible configurations. So a unit
will often have only 2 options for affiliation – or if its not on a
border, no options at all.

One system fairly well-known in libertarian circles is called anarcho-
capitalism. The idea is that all of the services of government are
provided by private businesses. No one provider has a monopoly on any
service or area. For example, police functions would be the domain of
“protection agencies”, and disputes would be settled in private
courts. We will not examine the system in detail here (see [2]).
Instead, we will examine how AC fits into our model.

AC lowers the barrier to entry, because a new firm would only have to
enter a specific industry (like fire protection) in a certain area.
Some governing service industries may have high economies of scale and
be natural monopolies, but it is unlikely that all are. Unlike
monolithic governments, anarcho-capitalism allows for competition in
the non-monopolistic fields. AC also dramatically lowers the cost of
switching because people would not have to physically move in order to
change service providers – it would be like changing insurance agents
is today. Additionally they are free to choose a different provider
for each service. Thus to stay in business a provider must be
competitive, or its stream of customers will dry up. It is not merely
protecting a rent-generating resource like a traditional state.

The main objection raised to AC is stability – whether the power
vacuum of having no central government will inevitably lead to one
forming [3]. Critics say the protection agencies will just join
together to tyrannize the population. While the scant historical
evidence does not support this prediction of failure via swift descent
into totalitarianism, it does not point towards long-term stability
either. Rather, situations such as an external threat to the anarchy
cause centralized control to develop. Once in place, regardless of
what happens with the original threat, government gradually
strengthens its hold. This is a typical example of the so-called
ratchet effect which is a major contributor to the continual growth of
government [4].

Dynamic Geography
In The Machinery of Freedom, David Friedman used the following
metaphor to show the benefits of anarcho-capitalism:

Consider our world as it would be if the cost of moving from one
country to another were zero. Everyone lives in a housetrailer and
speaks the same language. One day, the president of France announces
that because of troubles with neighboring countries, new military
taxes are being levied and conscription will begin shortly. The next
morning the president of France finds himself ruling a peaceful but
empty landscape, the population having been reduced to himself, three
generals, and twenty-seven war correspondents. [2]

Taking this metaphor literally suggests an alternative strategy.
Suppose that the cost of physically switching countries really could
be dramatically reduced. Even though each country retained a monopoly
on its geographic territory, governments would be forced to compete
for citizens by providing services more efficiently. Governing would
be more like long-distance phone carriers less like operating systems.
But how?

While the answer is not to put wheels on our houses, some may find it
equally counterintuitive – to build floating cities from detachable,
modular units. The general concept is by no means an original idea, as
floating cities have long been a part of the nation-founding fringe.
Because all land is under the control of nations with no interest in
selling sovereignty, nation-founders have been forced to consider the
oceans. Yet far from being a booby prize, it appears that the sea may
be ideally suited to sustaining free societies.

The geography of land is fixed, and the cost of transporting things
over it is high. Moving buildings is rarely feasible. Buildings and
heavy possessions are valuable and important, which makes control over
physical territory important. Water, however, is a fluid medium. Even
large buildings, if floating, could be towed to new locations quite
cheaply (think cruise ships). So the geography of the oceans is
dynamic – pieces of territory need not maintain a fixed spatial

The consequences of this geography should be clear from Friedman’s
story. If an individual structure can cheaply relocate to another
jurisdiction, the cost of switching governments is low. The streets
which make up a town, the towns which make up a county, the counties
which make up a state – each level can switch its affiliation to get a
better deal. This switch is not merely virtual as in feudalism, since
it can involve physically moving the entire area. If the state tries
to impose a sales tax on Monday, the capitol building may be all
that’s left of the city by Tuesday. When leaving is easy, exploitation
is difficult.

The barrier to entry is much lower on the ocean as well, because the
geography of floating cities can be dynamically grown as well as re-
arranged. A new government no longer has to fight a war over some
already-claimed piece of land. It can simply take some small bit of
the vast empty oceans as its own. While location does matter, the
oceans are far more homogenous than land, and so there will be less
contention for prime real estate.

As mentioned earlier, one of the major factors bloating governments is
the ratchet effect. Because dynamic geography can also be shrunk, it
provides a potential “reset button” to help counter ratcheting.
Imagine a platform city where the government has become too repressive
or inefficient. A single platform decides to disengage and anchor a
mile away, forming a new government. More follow. Eventually, the
entire city may have relocated to the new position, with exactly the
same set of platforms, but an entirely new government. In practice, it
is likely that the threat of this possibility will keep it from being
necessary. While a reset policy could be made part of a terrestrial
constitution, the powers-that-be will have great incentive to fight
the reset. When citizens can just walk out and take friends, family,
and office with them, resetting is harder to stop. This sort of reset
is incremental, so it has no single point of failure. Stopping a
terrestrial reset might just require winning a vote. Stopping a
dynamic reset requires limiting the freedom of movement of every
module in the city.

This solution can be foiled. If a government physically prevents
modules from leaving, they have terrestrialized the city – and can
proceed to terrorize it. But while this is a genuine danger, the
aquatic city is still relatively better off. On land, buildings and
land are inescapably trapped in place. On the ocean there is always
some chance that a platform might, through valour or stealth, make a
daring escape. Further, this restriction will have to be sprung quite
suddenly, as I believe that the freedom of physical association will
be considered the most fundamental right of a platform. It will be
revered as free speech and property rights are by libertarians today,
for it ensures explicit, voluntary participation in the social

Dynamic geography moves power downwards towards the smallest separable
unit. Depending on various factors, the smallest economically feasible
unit might be as small as a single residence, or it might have to
house some 10-100 people. Either way, this size will allow far more
individual influence and accountability than in current huge,
monolithic, winner-take-all political systems. Not only will
government be more efficient, but it is likely to be more diverse.
There seems to be a fair variety in people’s tastes for political
systems, so with a lower barrier to entry firms will arise to serve
many niche markets.

Part of why this idea is so powerful is that you don’t need to believe
in it for it to work. The governing market will have different
characteristics under a different incentive structure, regardless of
the particular political beliefs of its citizens. This avoids the weak
link of many utopian ideas, which require everyone to See The Light.
The only convincing required is to start the process, and since its
incremental only a few people need be persuaded at each step. As
floating cities grow, the additional evidence that they are nice
places to live convinces those on the margin, which produces more
evidence, and so forth.

A disadvantage to DG is that the oceans are a difficult and resource-
poor environment. One might ask whether the advantages of efficient
government are worth it. Empirically, the answer appears to be yes.
For example, consider cities like Hong Kong and Las Vegas. With few
natural resources, they have enjoyed tremendous economic growth by
providing an environment of freedom. In our complex global economy,
there is plenty of work to be done besides extracting natural

You can see why governing floating cities will be a dynamic,
competitive industry. As with any such industry, I have great
confidence that it will produce useful innovations I would never have
dreamed of. DG, like AC, produces good government through competition.
I don’t claim this will result in utopia, but it will increase both
private freedom and the efficiency of public efforts. Note that the
advantages of dynamic geography are not specific to libertarian or AC
politics – all kinds of government will be made more efficient by DG.
In fact, it may turn out that both communism and anarcho-capitalism
are infeasible on land but workable at sea.

Are such settlements technologically feasible? I have done a fair
amount of research on the subject and concluded that they are not only
practical but reasonably cost-effective. I am currently writing a book
on the subject, called Seasteading. For more detailed information, see
the draft, which is available on the web [5]. Note that even if the
technical problems are an issue, we have transformed a political
problem into an engineering one – and humans are good at solving
engineering problems.

Dynamic Anarchism
Under anarcho-capitalism, individuals are free to switch providers of
any individual service without physically moving. In dynamic
geography, modules can always choose an entirely different government
by switching location. There is no conflict between these ideas, and
in fact a great deal of synergy. An AC system seems much more likely
to form and remain stable under DG, for several reasons.

For example, governments currently have huge profits from their
monopolies on coercion. This gives them a great deal of incentive to
fight the emergence of an AC system, and a large pool of resources to
fight it with. In the competitive market of governing a dynamic
geography, the profit for providing services is dramatically
decreased. This will make it much it easier for AC (or other
alternative systems) to emerge.

As we mentioned earlier, a frequent criticism of AC is the stability
problem – what happens if all the protection agencies gang up to form
a government. This is much less of a worry when potential victims can
physically move away at low cost. Like the president of France, the
protection agency cartel may form a monopoly – only to discover that
its territory consists of its corporate headquarters and a few waves.
Its rank and file should be able to get new jobs easily, as the
protection agencies in the newly formed city on the horizon are hiring
like mad – but its executives will have a more difficult time.

Thus dynamic geography may finally strengthen anarchy’s weakest link.
It is difficult to seize hold of water – it tends to fragment into
tiny pieces and swirl away. Counterintuitive though it may be, this
apparently shifty foundation will provide a stable base for anarchy.

Dynamic geography leverages the peculiar nature of the oceans to
create a free society. It is interesting to consider how broadly
applicable this technique is. Well, the next frontier will be space.
Space contains planets, some of which have static geographies, and
others (gas giants, worlds with liquid surfaces) have dynamic ones.
But most of space consists simply of…space – which is clearly an
environment of dynamic geography. Gravity wells do place severe limits
on movement, but the utter lack of friction means that gigantic
objects can be moved cheaply. In other words, dynamic geography is not
merely a local quirk, it holds for most of the universe.

So the bad news is that our current residences are unlikely to ever
enjoy high levels of freedom or support stable anarchy. The good news
is that 70% of the earth’s surface and 99.9999…% of the universe
have the necessary characteristic. The landlubbers and groundhogs can
keep their monopoly-inducing dirt – we’ll take everything else.

Mark Twain once said “Buy land. They’ve stopped making it.” When he is
finally disproved, I predict that a great deal of political change
will result.

Thanks to Wayne Gramlich and David Friedman for their inspirational
ideas, and to the Libertarian Nation Foundation for giving me a reason
to write this up.

[1] Nonzero: The Logic of Human Destiny by Robert Wright. Pantheon
Books, 2000. ISBN: 0-679-44252-9.
[2] Friedman, David D: 1973. Machinery of Freedom: Guide To A Radical
Capitalism (New York, NY, Harper & Row).
A few chapters are webbed at:
[3] For an example of an article arguing that AC is unstable, see Paul
Birch’s Anarcho-Capitalism Dissolves Into City-States
[4] Crisis and Leviathan: Critical Epsiodes in the Growth of American
Government, Robert Higgs, Oxford University Press.
[5] The seasteading website and book can be found at:







Shipping Out U.S. Jobs — to a Ship
BY Michael Hiltzik  /  May 2, 2005

The public reaction was predictable when word first got out of SeaCode
Inc.’s proposal to house 600 foreign software engineers on a cruise
ship moored three miles off the California coast, thus undercutting
U.S. wage rates and circumventing local labor rules. The veteran
technology columnist John Dvorak described the vessel as a “slave
ship.” Other critics preferred the label “sweatshop.” The words
“exploitative” and “inhumane” caromed around the Web. The image that
first leaped to my own rather more literary mind was of the floating
prison hulks that housed the convict Abel Magwitch in “Great
Expectations.” Roger Green tried to take the rhetoric philosophically.
“We know we’ll be a lightning rod,” Green, 58, a co-founder and chief
operating officer of the San Diego company, told me. “But my hope is
we’ll get our story out.”

The story is SeaCode’s plan to help clients overcome the drawbacks of
outsourcing sophisticated engineering work overseas. The chief benefit
of offshoring — the low pay scales in India and elsewhere — often is
offset by the cost of flying executives out to monitor progress, the
time difference (you have to be awake at 10:30 p.m. in California to
reach India at noon) and the doubtful security of intellectual
property abroad. When a mutual friend hooked up Green, a manager of
corporate software projects, with David Cook, 42, a former tanker
captain who had moved into the information technology business, their
complementary skills suggested a way to bring low-cost offshore labor
near to hand. (The mutual friend, Joe Conway, is SeaCode’s third co-

For all the skepticism that has greeted this proposal, it hardly
sounds like the launch of a slave ship. SeaCode says it will pay two
to three times the going rate for foreign IT workers, which works out
to as much as $24,000 for lower-level jobs and $60,000 for senior
programmers. They’ll work in two shifts of 12 hours each, spending
four months on board and two months off, with flights home provided by
contract. Assuming they’re cleared by immigration authorities, they’ll
be able to take shore leave whenever they’re off duty.

Clients, meanwhile, will gain an inexpensive workforce no farther away
than a coast-to-coast flight, allowing for more direct supervision of
projects than they could achieve at longer range. SeaCode also
promises to provide better security for client data than can be
offered abroad. The company says that the cost of maintaining a
floating software lab requires it to look for high-value software
development, not grunt work; it expects most of its employees will
have master’s degrees or better. The actual recruiting of engineers,
along with the acquisition of a ship, won’t take place until it signs
one or two major clients, which it hopes will happen in the next few

The ship’s location just outside the three-mile limit will exempt it
from California labor and environmental regulations, but not
international maritime labor rules or federal regulations forbidding
the dumping of fuel, trash and sewage. Because the ship will be
registered under the Bahamian flag or another foreign registry, the
workers won’t need H-1B visas, unlike foreign employees housed
temporarily on U.S. territory. SeaCode’s U.S. clients might consider
that a plus because H-1Bs have become extremely scarce since 2003,
when the government slashed the annual quota by more than half, to

Plainly, one’s opinion of the scheme depends on one’s opinion of
offshoring — whether it’s a scourge to be fought from every battlement
or a fact of life to be made the best of. If the former, then it’s
easy to view SeaCode as threatening to hasten the disappearance of
decent-paying jobs for American professionals. The drawbacks of
offshoring “are real, and this may be a way of addressing that,” says
Ron Hira, author of “Outsourcing America: What’s Behind Our National
Crisis and How We Can Reclaim American Jobs.” If the latter, then it’s
a means of salvaging some domestic profit from the inevitable shift of
certain work overseas. The firm expects to spend millions of dollars a
year on fuel, food and supplies in local communities. Indeed, Green
and Cook say only 10% of SeaCode’s total revenue will be spent on
foreign labor, with the rest staying in the U.S. “We’ll be creating a
lot of jobs on the mainland,” Green says. Even a small onboard cadre
of 200 engineers will require support from 35 or more workers on land.
The engineering jobs, he says, “are ones that have already gone out of
country. We’ll be taking jobs from Indians over there and bringing
them back here.”

In any event, while the founders dream of eventually running multiple
ships off the U.S. coast and even expanding to Europe, their initial
goal of 600 jobs won’t make a ripple in the overall employment
picture. The biggest Indian outsourcing company, Infosys, employs more
than 30,000 workers outside the U.S. Still, offshoring is bound to
remain a hot-button issue. Some researchers say the share of global
information technology jobs domiciled in low-cost locations like India
could double to 7% over the next three years. Most of that work will
be for American companies.

Accordingly, SeaCode’s big challenge may not be logistical but
political. While the company’s plans appear to conform to existing
law, says James P. Walsh, a maritime lawyer at Davis Wright Tremaine,
critics might charge that classifying software engineers as maritime
crew and using a temporary mooring as a long-term anchorage amount to
exploiting legal loopholes. “Someone in Congress might say these
people are taking advantage of a set of rules that never were designed
for them,” Walsh says. Protectionist legislation has been enacted on
far less provocation. Green says he hopes that once SeaCode lines up
some major clients, its model’s economic logic will become clearer.
“The very definition of a brilliant idea,” he says, “is that it’s
obvious after you know it.”


ROBOT VS. PIRATES,15240,158732,00.html?
Pirate Hunting Drone Boats Unleashed

The U.S. Navy and Coast Guard have expressed interest in the 30-ft.-
long Protector, which comes mounted with a machine gun and could be
retrofitted for commercial use. Robots versus pirates — it’s not as
stupid, or unlikely, as it sounds. Piracy has exploded in the waters
near Somalia, where this past week United States warships have fired
on two pirate skiffs, and are currently in pursuit of a hijacked
Japanese-owned vessel. At least four other ships in the region remain
under pirate control, and the problem appears to be going global: The
International Maritime Bureau is tracking a 14-percent increase in
worldwide pirate attacks this year.

And although modern-day pirates enjoy collecting their fare share of
booty — they have a soft spot for communications gear — they’re just
as likely to ransom an entire ship. In one particularly sobering case,
hijackers killed one crew member of a Taiwan-owned vessel each month
until their demands were met.

For years now, law enforcement agencies across the high seas have
proposed robotic boats, or unmanned surface vessels (USVs), as a way
to help deal with 21st-Century techno Black Beards. The Navy has
tested at least two small, armed USV demonstrators designed to patrol
harbors and defend vessels. And both the Navy and the Coast Guard have
expressed interest in the Protector, a 30-ft.-long USV built by BAE
Systems, Lockheed Martin and Israeli defense firm RAFAEL.

The Protector, which comes mounted with a 7.62mm machine gun, wasn’t
originally intended for anti-piracy operations. But according to BAE
Systems spokesperson Stephanie Moncada, the robot could easily fill
that role. “Down the line, it could potentially be modified for
commercial use as well,” she says. Instead of being deployed by a
warship to intercept and possibly fire on an incoming vessel, a non-
lethal variant of the Protector could be used to simply investigate a
potential threat.

A favorite tactic of modern-day pirates is to put out a distress call,
then ambush any ships that respond. The unmanned Protector could be
remote-operated from around 10 miles away, with enough on-board
sensors, speakers and microphones to make contact with a vessel before
it’s too late. “Even without the machine gun, it could alert the crew,
give them some time to escape,” Moncada says. The 55-mph Interceptor
could become the long-range patrol boat of the future, while the
jetski-size Sentry could help prevent a terrorist plot such as Al
Qaeda’s attack on the USS Cole in December 2000.


In international waters, are you beyond the reach of the law?  /  23-

Dear Straight Dope:
I have heard that in international waters you can commit endless
crimes with no jurisdiction to prosecute you. Is this true? Do such
ungoverned spaces exist? I am in no way interested in going to them,
but I know they exist and my friends say they don’t. Please help
settle this argument. –Michelle

SDSTAFF gfactor replies:
Nope, it doesn’t work that way. Freedom of the seas is a fundamental
principle of the law, but it only applies to countries. At sea
ordinary folks remain subject to at least one nation’s jurisdiction–
sometimes more. Freedom of the seas is often credited to the Dutch
jurist Grotius. In the early seventeenth century the Dutch wanted part
of the East Indies trade. Several nations, especially Spain and
Portugal, claimed control over all the oceans, which prevented the
Dutch from reaching foreign ports. The idea that a country could claim
control of the sea was called mare clausum (closed sea). Grotius, a
pioneer in international law, argued for the right of innocent passage
(or navigation) on the high seas. He noted, “the sea is called
indifferently the property of no one (res nullius), or a common
possession (res communis), or public property (res publica).” Grotius
contended that the sea could not be owned, and that no country could
deny another country’s ships innocent passage right up to the

Grotius didn’t dream up freedom of the seas on his own. He relied on
Roman law and the maritime customs of Asian and African countries
dating back to “before history was ever recorded,” according to Ram
Anand, in his essay, “Freedom of the Seas: Past, Present and Future.”
Spanish theologians of the sixteenth century had argued for freedom of
the seas as well. Grotius’s work, Mare Liberum, didn’t make much
headway at first. Welwood argued against him in Abridgment of all Sea
Lawes (1613). So did Selden in the unoriginally-titled Mare Clausum
(1635). Grotius himself changed his mind about it. Anand summarizes:

“[N]either Grotius nor Holland were in favour of the freedom of
the seas as a principle. . . . as soon as the Dutch defeated the
Portuguese and seized the profitable trade of the Spice Islands, they
sought to create their own monopoly . . . . Grotius conveniently
forgot his freedom of the seas principle propounded in 1609 with such
fervour, and went to England in 1613 with a Dutch delegation to argue
in favour of a Dutch monopoly of trade . . . . In fact, he was
surprised that his own book, published anonymously . . . was being
quoted by the British against him.”

Nevertheless, the idea of a sea where no vessel could interfere with
another one took hold. America fought the War of 1812 partly to
vindicate the principle and entered World War I in part because of its
violation. Woodrow Wilson relied on it in his Fourteen Points, and
Franklin Delano Roosevelt asserted it in 1941. The United States
Supreme Court traced the doctrine to “no later than the latter half of
the 18th century.”

The notion that freedom of the seas should extend up to the beach
never worked out in practice. Fear of smuggling and armed attack led
coastal nations to claim control of the water immediately offshore.
There was a lot of disagreement about how far out territorial waters
extended. According to the Head Department of Navigation and
Oceanography of the Russian Federation of Ministry and Defence:

“At the beginning of the 18th century, a widespread doctrine
proclaimed that “the authority of the coastal nation terminates where
she can no longer control it with her weaponry.” From that time, the
limit of sovereign authority of the maritime countries over coastal
waters has become to limit by a swath, the width of which does not
exceed distance of the flight of a cannonball from the shore. The
average distance of flight was about 3 miles.”

Outside this limit, no country could claim the seas. As we will see,
this rule survives today, although the 3-mile limit has been extended.
The 1982 United Nations Convention on the Law of the Sea (LOSC) lays
out the current rules. As of April 2006, 149 nations had ratified the
LOSC. The U.S. played a major role in the drafting of the LOSC, but
then decided not to sign it. Never fear: the rules we’re discussing
here apply to the U.S. The U.S. is party to other treaties with
similar provisions, has asserted rights available only under the LOSC,
and has said that its provisions are part of existing international
law. So it’s the best place to start looking for answers.

You asked about ungoverned spaces. Technically they exist–the LOSC
calls them the high seas: “No State may validly purport to subject any
part of the high seas to its sovereignty.” But that doesn’t mean you
can avoid prosecution for crimes committed there. For one thing, every
ship is subject to the jurisdiction of the country whose flag it
flies. So are its occupants. And you can’t just pick the flag of a
country whose laws are most favorable to you, either. The LOSC says
there must be a “genuine link” between the ship and the state. If you
want to fly a country’s flag, you have to ask the country’s permission
and provide it with your ship’s “name and particulars.”

The idea that there is no jurisdiction on the high seas comes from
confusion about the meaning of jurisdiction. Jurisdiction describes
the limits of the legal power of a nation (international lawyers call
them States) to make (prescriptive jurisdiction), apply (adjudicative
jurisdiction), and enforce (enforcement jurisdiction) rules of
conduct. One basis of jurisdiction is territory–a State can make and
enforce laws in its own territory. The confusion arises from the
assumption that this is the only basis of jurisdiction. It isn’t.
There are five:

(1) The territorial principle, which we’ve already covered.

The other categories are forms of extraterritorial jurisdiction:

(2) The nationality principle, also sometimes called the active
personality principle. That’s the one involved where ships are
concerned. LOSC says, “Ships have the nationality of the State whose
flag they are entitled to fly.” The nationality principle says that
states have the right to regulate the conduct of their nationals. One
example of this principle at work is section 4 of the Indian Penal
Code, which says, “The provisions of this Code apply also to any
offence committed by (1) any citizen of India in any place without and
beyond India; (2) any person on any ship or aircraft registered in
India wherever it may be.” Another example is the U.S.’s application
of its civil rights laws to Americans employed abroad by American

(3) The passive personality principle, which is jurisdiction based on
the nationality of those injured by the conduct. This kind of
jurisdiction is controversial. An example is 18 USC §7, a statute by
which the U.S. asserts jurisdiction “[a]ny place outside the
jurisdiction of any nation with respect to an offense . . . against a
national of the United States.”

(4) The protective principle. According to Amnesty International:
“National law in most states permits courts to exercise
jurisdiction over conduct by persons abroad which harms the national–
particularly the security–interests of the forum state in violation
of its own national criminal law (protective or security principle or
compétence réelle ou compétence du protection). This principle has
been used to prosecute national security offences; currency offences;
counterfeiting currency, stamps, seals and emblems; desecration of
flags; economic crimes; forgery, fraud or perjury in connection with
official documents, such as passports and visas; immigration offences
and political offences.”

(5) Universal jurisdiction. According to Henry Kissinger, “the
doctrine of universal jurisdiction asserts that some crimes are so
heinous that their perpetrators should not escape justice by invoking
doctrines of sovereign immunity or the sacrosanct nature of national
frontiers.” Under the relevant treaties, any State can board a ship on
the high seas if the ship is suspected of piracy, transporting slaves,
or broadcasting illegally. A ship and its occupants can be arrested
for piracy and illegal broadcasting by a warship of any State. For
other crimes, the arresting State must get the consent or assistance
of the flag state. Also, a ship that flies two flags (flags of
convenience) or a ship flying no flag may be visited for further
inquiry by any State’s ships. Ships without flags, and those that fly
flags of convenience are subject to the jurisdiction of any State.
While some scholars disagree, national courts have upheld convictions
based on such arrests.

Territory still plays a big part in the law of the sea. States’
territorial claims have expanded considerably since the 18th century.
Two hundred miles offshore (when I say mile, I mean the nautical mile,
which is 6076 feet, or 1.150779 statute miles) is the limit of a
State’s potential exclusive economic zone. I say potential because
States must claim the territory they want within this limit, and not
all of them do so. In this zone the State has some exclusive rights to
exploration and resources. However, other States’ ships have a right
of innocent passage through the EEZ, just as Grotius argued.

The next territorial boundary marks the State’s potential contiguous
zone, which extends 24 miles offshore. Within this zone, a coastal
state can stop and inspect vessels and act to punish (or prevent)
violations of its laws within its territory or territorial waters. The
contiguous zone solves a vexing problem. As Malcolm Evans describes

Traditionally, where the territorial sea ends, the high seas began
and the laws of the coastal State no longer apply. However, policing
maritime zones is no easy matter and, unlike land boundaries, they are
simple to cross. It would therefore be easy for vessels to commit
offences within the territorial sea but to evade arrest by moving just
a little further seaward. The answer is to permit coastal States to
arrest vessels outside their territorial seas in connection with
offences that either have been committed or which it is suspected are
going to be committed within their territorial sea.

In 1999 President Clinton extended the U.S.’s contiguous zone from 12
to 24 miles.

The potential territorial sea extends 12 miles off the coast. Here the
State has territorial jurisdiction, but only up to a point–the right
of innocent passage still applies. The LOSC says:

1. The criminal jurisdiction of the coastal State should not be
exercised on board a foreign ship passing through the territorial sea
to arrest any person or to conduct any investigation in connection
with any crime committed on board the ship during its passage, save
only in the following cases:

(a) if the consequences of the crime extend to the coastal State;
(b) if the crime is of a kind to disturb the peace of the country
or the good order of the territorial sea;
(c) if the assistance of the local authorities has been requested
by the master of the ship or by a diplomatic agent or consular officer
of the flag State; or
(d) if such measures are necessary for the suppression of illicit
traffic in narcotic drugs or psychotropic substances.

Because coastal State jurisdiction is limited, even in its territorial
waters, the flag State’s laws still apply aboard its ships. U.S.
courts adjudicate crimes committed aboard ships flying U.S. flags,
even if the crime was committed in foreign territorial waters.

In the territorial waters of the United States, ships can be subject
to the jurisdiction of individual U.S. states, too. Under federal law:
“The seaward boundary of each original coastal State is approved and
confirmed as a line three geographical miles distant from its coast
line or, in the case of the Great Lakes, to the international
boundary.” In Skiriotes v. State Of Florida, 313 U.S. 69 (1941), the
United States Supreme Court held that within the three-mile limit,
“[w]hen its action does not conflict with federal legislation, the
sovereign authority of the State over the conduct of its citizens upon
the high seas is analogous to the sovereign authority of the United
States over its citizens in like circumstances.” At the time, the
U.S.’s territorial sea was three miles wide, so the states had the
same territorial jurisdiction as the federal government. In 1988,
President Reagan extended the U.S.’s territorial sea to 12 miles. The
states’ territory was left at the three mile mark. For historical
reasons, Texas and Florida’s claims in the Gulf of Mexico are three
marine leagues, which is about nine miles.

Individual U.S. states can apply their laws to their citizens aboard
U.S. flag ships, even in foreign territorial waters. In State v. Jack
(2005) the Alaska Supreme Court upheld Alaska’s right to prosecute the
defendant for a sexual assault committed on the Alaska state ferry
while it was in Canadian territorial waters. The court based its
decision on the power of a sovereign state to regulate its citizens
(the nationality principle) and the effects doctrine (an application
of the territorial principle when conduct outside the state has
effects within it).

The right of innocent passage ends at the coastline of the State–you
need permission to enter the State’s internal waters. Once there,
ships and their passengers are subject to all of the State’s laws.
Even on the high seas, a foreign flag vessel isn’t completely exempt
from the jurisdiction of other States–vessels are subject to
”visit” and arrest under certain circumstances. LOSC also provides a
right of hot pursuit. According to Article 111,

“The hot pursuit of a foreign ship may be undertaken when the
competent authorities of the coastal State have good reason to believe
that the ship has violated the laws and regulations of that State.
Such pursuit must be commenced when the foreign ship or one of its
boats is within the internal waters, the archipelagic waters, the
territorial sea or the contiguous zone of the pursuing State, and may
only be continued outside the territorial sea or the contiguous zone
if the pursuit has not been interrupted.”

As a nod to the territorial principle, “The right of hot pursuit
ceases as soon as the ship pursued enters the territorial sea of its
own State or of a third State.” States can also agree to permit
another state to arrest vessels flying their flags. Even if none of
these exceptions apply, U.S. courts have held that arrest in violation
of international law doesn’t necessarily bar prosecution. For example,
in United States v. Postal, the defendants were U.S. nationals
arrested on board a vessel registered in the Grand Cayman Islands, 16
miles from shore (which at the time was the high seas). The United
States Court of Appeals for the Fifth Circuit found that though the
arrest violated the Convention on the High Seas (1958), the treaty
violation didn’t impair the court’s jurisdiction. The Court of Appeals
for the Third Circuit followed suit in 2002. So on the high seas not
only are you not beyond the reach of any nation, sometimes you’re with
the reach of two.

–   Anand, Ram, “Freedom of the Seas: Past, Present, and Future,”
reprinted in Caminos, Hugo, ed., Law of the Sea (2001)
–   Bryant, Dennis, The U.S. Territorial Sea and Other Lines in the
Water, Holland & Knight, November 14, 1997:
–   Churchill, R. and Lowe, A., The Law of the Sea (1999)
–   CIA World FactBook, Field Listing – Maritime claims (listing of
most States’ maritime jurisdictional claims):
–   Evans, Malcolm, “The Law of the Sea,” in International Law,
(Malcolm Evans, ed., 2003)
–   Grotius, Hugo, The Freedom of the Seas, or the Right Which Belongs
to the Dutch to Take Part in the East Indian Trade (1608) (Ralph Van
Deman Magoffin, transl., 1916):
–   Head Department of Navigation and Oceanography of the Russian
Federation of Ministry and Defence, untitled web page available at:;
(tracing ancient history of maritime claims and their resolution)
–   Kissinger, Henry, “The Pitfalls of Universal Jurisdiction: Risking
Judicial Tyranny,” Foreign Affairs, July/August 2001:
–   Molvan v. Attorney-General for Palestine (The Asya), [1948] A.C.
351 (stateless vessel subject to jurisdiction)
–   Reagan, Ronald, Statement on United States Oceans Policy, March
10, 1983:;
–   Skiriotes v. Florida, 313 U.S. 69 (1941) (states have criminal
maritime jurisdiction to the three-mile limit):
–   State v. Jack, 125 P.3d 311, 2006 A.M.C. 206 (Alaska 2005) (Alaska
had criminal jurisdiction over sexual assault committed aboard ferry
operating in Canadian waters)
–   Stewart, Robert, Our Ocean Planet: Oceanography in the 21st
Century–an Online Textbook (work in progress, rev. 2006):
–   The United Nations Convention on the Law of the Sea (A Historical
Perspective), United Nations:
–   United State v. Best, 304 F.3d 308 (3d Cir. 2002) (approving
prosecution of foreign national seized on foreign flag ship outside
the territorial waters of the United States):
–   United States v. Conroy, 589 F.2d 1258 (5th Cir. 1979) (upholding
conviction where defendants were arrested on American vessel in
Haitian waters)
–   United States v. DeLeon, 270 F.3d 90 (1st Cir. 2001) (arrest and
prosecution for attempted immigration violation in international
waters were based on United State’s effects jurisdiction despite lack
of authorization in relevant treaty):
–   United States v. Flores, 289 U.S. 137 (1933) (United States had
jurisdiction to prosecute murder committed aboard American vessel in
Belgian territory):
–   United States v. Louisiana, 363 U.S. 1 (explaining the basis for
Texas and Florida”s claims in Gulf of Mexico) final decree, 364 U.S.
502 (1960):
–   United States v. Maine, 475 U.S. 89 (1986) (part of Nantucket
Sound was United States territorial waters and part was high seas;
rejecting Massachusetts’ claim that it was part of the state’s
internal waters based on claim of “ancient title” because
Massachusetts did not effectively occupy the territory before the
freedom of the high seas became a part of international law):
–   United States v. Marino-Garcia, 679 F.2d 1373 (11th Cir. 1982)
(upholding arrest of stateless vessel found 300 miles from Florida).
–   United States v. One Big Six Wheel, 166 F.3d 498 (2d Cir. 1999):
(Congress did not intend to extend the three-mile limit for gambling
cruises under the Gambling Ship Act)
–   United States v. Postal, 589 F.2d 862, 874 (5th Cir. 1979)
–   United States v. Rodgers, 150 U.S. 249 (1893) (United States had
jurisdiction to prosecute assault committed on ship bearing its flag
despite fact that assault occurred in Canadian waters):
–   United States v. Suerte, 291 F.3d 366 (5th Cir. 2002) (Due process
does not require a nexus between foreign citizen and US where flag
state has consented or waived objection to the enforcement of United
States law by the United States):
–   “Vice President Al Gore Announces New Action To Help Protect And
Preserve U.S. Shores And Oceans: Extension of Federal Enforcement Zone
in U.S. Coastal Waters Will Help Prevent Violations of Environmental,
Customs, or Immigration Laws,” press release (September 2 1999):
–   Wildenhus’s Case, 120 U.S. 1 (1887) (United States had
jurisdiction to prosecute stabbing committed aboard Belgian steamship
docked at port of New Jersey):

Though buccaneering is back with a vengeance, stepped-up law
enforcement and high-tech tools are helping protect shipping on the
high seas
BY Paul Raffaele  /  August 2007

The attack came after daybreak. The Delta Ranger, a cargo ship
carrying bauxite, was steaming through the ink-blue Indian Ocean in
January 2006, about 200 nautical miles off Somalia’s coast. A crewman
on the bridge spied two speedboats zooming straight at the port side
of his vessel. Moments later, bullets tore into the bridge, and vapor
trails from rocket-propelled grenades streaked across the bow:

A member of the Delta Ranger’s crew sounded the ship’s whistle, and
the cargo ship began maneuvering away as bullets thudded into its
hull. The captain radioed a message to distant Kuala Lumpur, Malaysia,
where the International Maritime Bureau (IMB) operates the world’s
only pirate reporting and rescue center. In describing the attack, he
added that the pirates seemed to be using a hijacked Indian dhow, a
fishing vessel, as their mother ship.

The center’s duty officer immediately radioed an alert to all ships in
the Delta Ranger’s vicinity and found that two other cargo ships had
escaped similar attacks in recent days. The duty officer’s next
message went to the USS Winston S. Churchill, a Navy guided-missile
destroyer on patrol about 100 nautical miles from the pirates’ last
reported position. Soon after, the Churchill headed for the dhow.

Pirates have been causing trouble ever since men first went down to
the sea in ships, or at least since the 14th century B.C., when
Egyptian records mention Lukkan pirates raiding Cyprus. A millennium
later, Alexander the Great tried to sweep the Mediterranean clear of
marauding bandits, to no avail. In 75 B.C., ship-based cutthroats took
Julius Caesar hostage and ransomed him for 50 talents. The historian
Plutarch wrote that Caesar then returned with several ships, captured
the pirates and crucified the lot of them.

That hardly spelled the end of pirating. At the beginning of the 13th
century A.D., Eustace the Monk terrorized the English Channel, and the
European colonization of the Americas, with all its seaborne wealth,
led to the so-called golden age of piracy, from 1660 to 1730—the era
of Blackbeard, Black Bart, Captain Kidd and other celebrated pirates
of the Caribbean. The era ended only after seafaring nations expanded
their navies and prosecuted more aggressively to deal with the threat.

Now the seedy romance of the golden-age legends may be supplanted by a
new reality: as governments cut their navies after the cold war, as
thieves have gotten hold of more powerful weapons and as more and more
cargo has moved by sea, piracy has once again become a lucrative form
of waterborne mugging. Attacks at sea had become rare enough to be a
curiosity in the mid-20th century, but began to reappear in the 1970s.
By the 1990s, maritime experts noted a sharp increase in attacks,
which led the IMB to establish the Piracy Reporting Centre in 1992—and
still the buccaneering continued, with a high of 469 attacks
registered in 2000. Since then, improvements in reporting, ship-
tracking technology and government reaction have calmed the seas
somewhat—the center counted 329 attacks in 2004, down to 276 in 2005
and 239 last year—but pirates remain very much in business, making the
waters off Indonesia, Bangladesh, Nigeria and Somalia especially
perilous. “We report hundreds of acts of piracy each year, many
hundreds more go undetected,” says Capt. Noel Choong, head of the
Piracy Reporting Centre, in Kuala Lumpur. “Ships and their crews
disappear on the high seas and coastal waters every year, never to be
seen again.” Even stationary targets, such as oil platforms, are at

Global commerce would collapse without oceangoing ships to transfer
the world’s fuel, minerals and bulk commodities, along with much of
its medicines and foodstuffs. According to the U.S. Maritime
Administration, about 95 percent of the world’s trade travels by
water. Boston-based Global Insight, a forecasting company, estimates
the value of maritime trade for 2007 to be at least $6 trillion.
Estimates of the pirates’ annual global plunder range into the

Unlike the galleons of old, which sat low in the water and were easily
boarded, the supertankers and bulk carriers of today may rise several
stories—and yet they pose no great obstacle to thieves. Bullets and
rocket-propelled grenades have persuaded many a captain to stop at
sea; at that point, almost any pirate can climb to the deck by tossing
grappling hooks over the rail.

Today’s pirates range from villainous seaside villagers to members of
international crime syndicates. They ply their trade around the globe,
from Iraq to Somalia to Nigeria, from the Strait of Malacca to the
territorial waters off South America. No vessel seems safe, be it a
supertanker or a private yacht. In November 2005, pirates in two
speedboats tried to attack the cruise liner Seabourn Spirit off
Somalia. The liner’s captain, Sven Erik Pedersen, outran them while
driving them off with a Long Range Acoustic Device, or LRAD—a sonic
weapon the United States military developed after the USS Cole was
attacked by Al Qaeda terrorists in Yemen in 2000.

If you enter an anonymous office 35 floors above Kuala Lumpur’s lush
tropical streets and pass through a secured door, you will come to a
small room dominated by maps of the world taped onto two of the walls.
This is the IMB’s Piracy Reporting Centre, which operates round-the-
clock. When pirates attack anywhere in the world, this office almost
always receives the first report of it and radios out the first alert.
Tens of thousands of vessels depend on the IMB’s information.

Red pins mark the latest attacks. On the day I visited, the pins
looked like a rash covering much of the world. Another wall was
covered with thank-you plaques from the admirals of many nations,
including the United States. Noel Choong, who ushered me through this
command center, spent more than ten years on oceangoing ships as a
mariner. Now, in a dark suit, the soft-spoken Choong looked more like
a corporate middle manager than a supersleuth of the seas.

Choong showed me the center’s reports on the 239 major pirate attacks
it recorded in 2006. One hundred eighty-eight crewmen were taken
hostage and 15 were killed—9 in Asia, 4 in Africa and 1 each in the
Middle East and South America. “Modern-day pirates can be just as
merciless as the Caribbean buccaneers,” Choong told me. He recalled
the 13 pirates—12 Chinese and 1 Indonesian—who hijacked the Cheung
Son, a Hong Kong-registered cargo ship, off China in 1998. “They
blindfolded the 23 crewmembers, beat them to death with clubs and
threw their bodies overboard,” he said. Then they sold the vessel to
an unknown party for $300,000. But they were caught, convicted of
piracy and murder in a Chinese court, and sentenced to death.

On their way to the firing squad, Choong said, the 13 sang Ricky
Martin’s bouncy 1998 World Cup soccer theme, “La Copa de la Vida,”
jumping up and down in their chains as they bellowed the chorus: “Go,
go, go, ale, ale, ale.” (Afterward, Choong said, “the Chinese charged
their families the cost of each bullet” used in the executions.)

Because much of Choong’s work is under cover, and because he’s been
the target of assassination threats, he’s careful to protect his
anonymity. He has a wide network of informants—usually members of
pirate gangs or corrupt government officials looking for a fat payoff—
and when a big ship goes missing, he will jet to distant cities at
short notice to launch recovery operations. The pirates’ going rate
for the return of a hijacked ship, he said, is about $800,000. “If I
can get it back by paying an informant a fraction of that, then the
owners and underwriters are happy.”

Recently, an informant called Choong’s cellphone to say he knew where
pirates were holding a hijacked ship. The next day Choong flew to
Bangkok and, in the bar of an airport hotel, listened to the man’s
offer: the ship’s whereabouts in exchange for $50,000.

Choong forwarded the offer to Chinese authorities, who found the ship
at anchor in the South China Sea, sporting fresh paint, a new name and
a fake registration. After the ship was in hand—Choong said he never
pays without results—he arranged a $50,000 deposit to an account the
informant kept under a false name. The entire transaction—from phone
call to payoff—took no more than a week.

But Choong doubted that the man got to enjoy his loot. “I heard he was
murdered by the gang not long after,” he said.

Between rounds of whiskey in a plush Kuala Lumpur bar, a ship broker
who asked not to be named because of security concerns told me that
besides buying and selling ships for his clients, he sometimes
arranges ransoms to get their vessels back from hijackers, for about
the same sum that Choong had mentioned. “The owners usually pay up
without question,” he said. Bringing in the authorities “might tie up
the ship for weeks, even months, at a port while they investigate the
crime. That could lose them millions of dollars.”

Of course, not all negotiations go smoothly. Along the coast of Somalia
—which Choong pinpointed as one of the world’s likeliest areas for
pirate attacks—brigands can, and often do, drag out negotiations for

“Somalia is chaotic, with gangs of heavily armed men roaming around
the land and its seas,” James Mriria, a strapping sailor, told me in
the Kenyan port of Mombasa. He said he had spent four months in 2001
as a hostage of Somali pirates as they haggled with the Italian owner
of a fishing trawler they had hijacked. The bandits, he said, fed
their guests just enough food to keep them alive, and often beat them
with rifle butts. “It was hell,” Mriria said.

The pirates who tried to take the Delta Ranger would head for Somalia

In pursuit of the hijacked dhow, the Churchill had the advantage of
surprise. The pirates “couldn’t see us over the horizon” during the
night, the ship’s executive officer, Lt. Cmdr. Erik Nilsson, told me
in a telephone interview. But at first light the destroyer
deliberately showed itself to the crew of the dhow, and the pirates
took off to the west. Somalia’s territorial waters—from which the
Churchill was barred by international law—were 80 nautical miles away.

Nilsson had no doubt this was the right ship. He had gotten a
description of it from the captain of the Delta Ranger. In time he
would see through his binoculars the 16 Indian crewmembers, on the
fo’c’sle, holding up a piece of plywood on which they had spray-

“We repeatedly radioed and asked [the dhow] to halt,” Nilsson said.
When the pirates refused, the U.S. sailors called to them over an
amplified megaphone, without effect. The chase went on all morning and
into the afternoon. With Somali waters only four hours away, the
Churchill closed to within 500 yards of the dhow and fired across its
bow with its 25-millimeter chain guns. “That got the pirates’
attention, and they stopped,” Nilsson said.

Some of the Churchill’s crew boarded the dhow and took everyone on it
into custody. Aboard the destroyer, a Hindi-speaking member of the
Churchill crew questioned the dhow’s captain. “She found that the
pirates had captured the dhow six days earlier and had beaten and
imprisoned the crew,” Nilsson said. “They’d given the Indians no food
during that time and had threatened to kill them if they resisted.”

Nilsson said that he had seen the Somalis throw unidentified “objects”
over the side during the night. Many pirates try to ditch their
weapons in the belief that it would provide less evidence for
prosecution, but if that were the case aboard the dhow, it didn’t
work: the boarding party found an AK-47 stashed in the wheelhouse.

Later that afternoon, the USS Nassau, a 40,000-ton amphibious assault
ship and the flagship of the expeditionary strike group to which the
Churchill was attached, caught up with the destroyer. Ten Somali
pirates were taken to the brig of the larger ship. After consulting
with the U.S. Central Command, the Nassau took the Somalis to Mombasa,
where Kenyan authorities arrested them and charged them with piracy.

Keeping the world’s sea lanes safe for commerce is one goal of what
the Navy calls Maritime Security Operations, or MSO. Another is to
prevent sea-based terrorism. Choong had told me that piracy was
prevalent even in the hazardous waters off Iraq in the northern
Persian Gulf.

To get there, I flew to the desert kingdom of Bahrain, headquarters of
the U.S. Fifth Fleet, which operates in the Arabian Sea, Red Sea, Gulf
of Oman and parts of the Indian Ocean. From there I caught a Navy
Desert Hawk helicopter for a two-hour flight to the guided-missile
cruiser USS Philippine Sea, my base for a three-day visit. Along the
way, the chopper flew fast and low over a sparkling green sea dotted
with coral islands, fishing dhows and oil rigs. With the cruiser
steaming along, the pilot put us smoothly down on the aft deck.

On board, Australian Navy lieutenant commander Tish Van Stralen, a
maritime lawyer, said that the cruiser was the flagship of an eight-
ship coalition task force guarding Iraq’s nearby Al Basrah and Khawr
Al Amaya oil terminals, which were pumping up to 1.6 million barrels a
day into the holds of supertankers. “They provide up to 90 percent of
Iraq’s GDP, and so the coalition forces have set up a pair of adjacent
two-mile-wide exclusion zones around the oil terminals,” Van Stralen
said. “We challenge and check every vessel wanting to enter them,
primarily on the watch for terrorists intent on blowing up the oil
terminals, but also for pirates and smugglers.”

The pirate hunters patrolling the zones were a Coast Guard crew aboard
the cutter Aquidneck. The next morning I rode a half hour across a
flat sea in a rigid inflatable speedboat to meet them.

Lt. Jonathan Carter and his 22-man crew had spent six months on these
volatile waters. Assault rifles were nestled in a rack, and on the
small bridge, four sailors hunched over radar and sonar equipment,
looking for any vessel trying to enter the exclusion zones.

As the Aquidneck edged up the Shatt Al Arab waterway toward Basra,
Carter pointed to an empty stretch of desert about 200 yards on our
left. “That’s Kuwait,” he said. About 200 yards to the right was Iraq—
more desert with no sign of life. The cutter passed several rusting
hulks resting half out of the water, casualties of Gulf warfare.

“Pirates have been active in these waterways for centuries. There’re
still plenty of them here, and we call them Ali Baba,” Carter went on.
“They mostly prey on the fishing dhows, especially during the prawning
season when the dhow captains carry plenty of money on board after
selling their catch to traders….We’ll hear a plea over the radio,
‘Ali Baba! Ali Baba!’ But by the time we reach the dhow, the pirates
have usually escaped. If we surprise them, they throw their weapons

Coalition naval forces are trying to train Iraqi marines to board,
search and, if necessary, seize suspicious vessels. From the north, I
saw two patrol boats roaring along the waterway toward us. On board
were Iraqi marines under the guidance of a pair of Royal Australian
Navy officers. The marines were taking part in a training exercise,
and five Coast Guardsmen and I volunteered to play potential
terrorists or pirates.

Several grim-faced Iraqi marines clad in camouflage fatigues climbed
aboard and forced us up to the front of the Aquidneck. Some pointed
their guns at us even though their trainers had ordered them not to,
and others searched us and checked our ID. I grimaced when a marine
yanked my arms above my head and I tensed as he roughly searched my
body for hidden weapons.

They made us sit on the uncovered deck in brutal heat for more than an
hour, refusing our requests for water and keeping their guns trained
on us. But for all that, our captors failed to detect a knife one of
the Aquidneck crew had secreted, and they never searched my camera
bag. Had we been actual bad guys, who knows what might have happened.

Last October I drove an hour north of Mombasa, past a string of Kenyan
luxury seaside resorts, to talk to any of the ten accused Somali
pirates who would speak with me in the maximum-security jail where
they were being held. As I waited outside the stone walls, grim-faced
prisoners in striped pajamas with short pants came and went, under

By then, the Somalis’ trial was under way; the defendants were due in
court the following day. Inside the jail, armed guards escorted two of
them as they shuffled toward me, handcuffed to each other.

We moved to a bare room with a barred window. The guards followed us,
while others crowded the window outside to stare and listen.

Moktar Mohammed Hussein and Abdi Fadar, clad in sarongs and T-shirts,
squatted in front of me but did not make eye contact. They were 17 and
18, respectively. “We’re fishermen, and our boats broke down on the
ocean,” Hussein said. “We sought help from the Indian dhow.”

Then why were they carrying assault rifles and rocket-propelled
grenades, I asked them. “Every man in Somalia carries such weapons for
protection,” Hussein said, turning his dark eyes on me. That much was
corroborated later by the BBC’s Mombasa-based correspondent, Peter
Greste, who often visits Somalia.

But why did they try to escape when they spotted the American warship?
“We thought they suspected us of being Al Qaeda. We were frightened,
and so we tried to get away,” Fadar said.

“We just want to go home,” Hussein added softly.

I reminded them that Indian crewmembers had testified that the Somalis
had hijacked their ship and beaten them? Hussein shook his head.
“They’re lying,” he said.

Did they even know any Somali pirates? Both shook their heads no, but
stared silently at the floor.

At 3 o’clock the next afternoon, all ten defendants crowded into the
dock in a small courtroom to face a senior magistrate, Beatrice Jaden,
seated high above us on a pedestal in the British manner. The
prosecutor, Margaret Mwangi, read out the charge, accusing them of
committing “acts of piracy on the high seas,” and ran through the
evidence, based on statements from the Indian crew aboard the dhow and
the U.S. sailors who had rescued them.

The Somalis’ lawyer, Hassan Abdi, argued that because no one involved—
neither the victims, the accused nor the alleged perpetrators’ captors—
was Kenyan, Kenya had no right to try this case in its courts.

Mwangi countered that the U.N.’s Convention on the Law of the Sea
allows Kenya to prosecute pirates of any nationality under the
corresponding section of the Kenyan penal code. Should the Somalis be
found guilty, Mwangi went on, they should be sentenced to death to
deter piracy.

Ten days later, Jaden handed down her verdict and the sentence.
Guilty. Seven years in prison for each man.

By then, the pirates might have considered themselves lucky. At the
time, Somalia was ruled by a fundamentalist Muslim movement called the
Islamic Courts Union (ICU), which sought to impose sharia, or Islamic
law, when it took over the capital of Mogadishu from its notorious
warlords in June 2006. Piracy was one of several crimes punishable by

Noel Choong told me that after the ICU takeover the IMB noted a lull
in piracy in the waters off Somalia. But the ICU was overthrown and
replaced by a transitional government at year’s end. Since then,
pirate attacks have surged off the Somali coast, from 10 reported to
the IMB in all of 2006 to 14 in the first six months of 2007.

In February, pirates off the coast boarded and hijacked the merchant
vessel Rozen, which had just delivered food for the U.N. World Food
Programme. They held its 12 crewmembers for 40 days until an
undisclosed ransom secured their release. Another merchant vessel, the
Mariam Queen, was hijacked and held for 24 days before it was freed
May 27 after the ship’s owner reportedly paid a $100,000 ransom. At
the end of that month, the IMB recommended that vessels keep 200 miles
offshore unless they were calling into Somali ports.

“We’ll never see the end of piracy, just as we’ll never see the end of
robbery on land,” Choong said. “But we’re doing everything we can.”

From the archive, originally posted by: [ spectre ]

More cable outages in the middle east
BY Johannes Ullrich  /  2008-02-01

“According to news reports, a third undersea cable to the middle east
got cut. The third cable cut today was less important then the other
two, but it was one of the systems used as a “backup” during the last
few days. On Wednesday, two cables off the coast of Egypt got cut.
Today, one more off the coast of Dubai was cut. Of course, three cuts
in such a short time may look suspect. But don’t forget that you have
“cascade failures” where backup systems go down due to overload once
the primary system goes down. The cable that went down today wasn’t
used much in part as it was known as less reliable. These cable cuts
are in particular challenging as repair times are long (weeks) and
there is little extra capacity. Other technologies like Satellites do
not provide the same capabilities as cables. Connectivity to and from
the Middle East as well as India is severely affected. Availability
and disaster recovery planning is a frequently neglected security
function. Newcomers to the security field are frequently attracted by
“cool exploits”. But the true professional usually knows that boring
and tedious tasks like disaster recovery planning will frequently save
the business in the end.”

New cable cut compounds net woes

A submarine cable in the Middle East has been snapped, adding to
global net problems caused by breaks in two lines under the
Mediterranean on Wednesday. The Falcon cable, owned by a firm that
operates one of the previously damaged cables, was snapped on Friday
morning. The cause of the latest break has not been confirmed but a
repair ship has been deployed, said owner Flag Telecom.

Following the earlier break internet services were severely disrupted
in Egypt, the Middle East and India. “The situation is critical for us
in terms of congestion,” Omar Sultan, chief executive of Dubai’s ISP
DU, told The Associated Press, following the most recent break.

Wednesday’s incident caused disruption to 70% of the nationwide
internet network in Egypt on Wednesday, while India suffered up to 60%
disruption. Flag Telecom said a repair ship was expected to arrive at
the site of the first break – 8.3km from Alexandria in Egypt – on 5
February, with repair work expected to take a week. A repair ship
deployed to the second break – 56km from Dubai – was expected to
arrive at the site in the “next few days”, the firm said.

Web returns

The first cable – the Fiber-Optic Link Around the Globe (FLAG) – was
cut at 0800 on 30 January, the firm said. A second cable thought to
lie alongside it – SEA-ME-WE 4, or the South East Asia-Middle East-
West Europe 4 cable – was also split. FLAG is a 28,000km (17,400 mile)
long submarine communications cable that links Australia and Japan
with Europe via India and the Middle East. SEA-ME-WE 4 is a submarine
cable linking South East Asia to Europe via the Indian subcontinent
and the Middle East.

The two cable cuts meant that the only cable in service connecting
Europe to the Middle East via Egypt was the older Sea-M-We 3 system,
according to research firm TeleGeography. The firm said the cuts
reduced the amount of available capacity on the stretch of network
between India and Europe by 75% percent. As a result, carriers in
Egypt and the Middle East re-routed their European traffic around the
globe, through South East Asia and across the Pacific and Atlantic
oceans. The cause of the break has still not been confirmed. The third
break is unlikely to disrupt commerce in the region as many business
are closed on Fridays. Initial reports suggested that it could have
been snapped by a ship’s anchor.

Internet service providers said they expected India’s to be back to
about 80% of its usual speed by the end of Friday. In Egypt Minister
of Communications and Information Technology Tarek Kamil said he
expected to be at the same capacity within two days. “However, it’s
not before ten days until the internet service returns to its normal
performance,” Kamil told the state Al-Ahram newspaper.

Mediterranean Cables Cut, Disrupting Communications
BY Camilla Hall  /  Jan. 30 2008

Internet and telephone communications across the Middle East and India
were disrupted after two submarine cable systems in the Mediterranean
Sea were cut.

Six ships were diverted from Alexandria port and one may have severed
the cables with an anchor, said a spokesman for Flag Telecom Group
Ltd., which operates one of the cables. The incident took place 8.3
kilometers (5.2 miles) from Alexandria beach in northern Egypt, the
spokesman, who asked not to be named, said in an interview from
Mumbai, India. India and countries across the Middle East experienced
slow Internet connections and problems making international calls to
the U.S. and Europe, the spokesman said. The break will take 12 to 15
days to fix, he said.

“It’s a national disaster,” said Joseph Metry, network supervisor at
Orascom Telecom Holding SAE, the biggest mobile- phone company in the
Middle East and North Africa. The problem is affecting all Egyptian
Internet users, Metry said in a phone interview from Cairo. The ships
were diverted because of bad weather yesterday, he said. Yesterday’s
bad weather conditions were felt in bordering Israel today, where
public transportation, schools and most businesses in Jerusalem shut
down, leaving the streets empty of traffic as the city braced for as
much as 20 centimeters (8 inches) of snow.

Rerouting Traffic

Emirates Integrated Telecommunications Co., the United Arab Emirates’
second-biggest mobile-phone company, is working with the cable
operators, Flag Telecom and SEA-ME-WE 4, to find out why the cables
were cut and to determine when service can be restored, the company,
known as du, said in an e-mailed release. “In the meantime, du has
already started transferring Internet and international voice traffic
through other cable systems that have not been affected, although some
congestion may be expected at peak times until this issue is
resolved,” the company said in the statement.

Customers of AT&T Inc., the biggest U.S. phone company, have been
affected, spokesman Michael Coe said. While the company is rerouting
its clients’ traffic, it anticipates congestion since other carriers
are doing the same thing, he said. He didn’t know how many customers
were affected. San Antonio-based AT&T is part of the group that owns
the cable, Coe said. AT&T had $4.7 billion in corporate sales last
quarter, or 27 percent of total revenue.

Repair Costs

Verizon Communications Inc., the second-biggest U.S. phone company,
said some customers have been affected by the cable break. The New
York-based company is switching those clients to other network routes,
said Verizon spokeswoman Linda Laughlin. Verizon also co-owns the
cable as part of a group with several other carriers, and the
companies pay regular maintenance fees that will cover the cost to
repair the cable, Laughlin said. She said she didn’t know how many
clients were affected.

“We’ll try to move customers over as soon as we can,” she said.
While it’s rare for undersea fiber cables to break, they can come
apart when geographic faults move, Laughlin said. Verizon’s corporate
sales unit, which provides phone and Internet service to multinational
corporations, had sales of $5.4 billion last quarter, or about 23
percent of overall revenue.

`Degraded Speed’

Bahrain Telecommunications Co., which holds the franchise to provide
all of Bahrain’s public telecommunications, said in an e- mailed
statement that “Internet services will still be available but at a
degraded speed during peak hours.” Batelco, as the company is known,
advised customers to give more priority to applications such as
browsing and e-mail, which consume less bandwidth than actions such as
file sharing.

“The interruption in the service is beyond Batelco’s control but
repair work is already under way by the providers and it is
anticipated that full services will be resumed soon,” Batelco
Corporate Affairs General Manager Ahmed Al Janahi said in the

Egypt’s Ministry of Telecommunications “has formed an emergency team
to bring back the service quickly through several alternative paths
such as the Suez Canal and satellite links,” according to a statement
broadcast on Egyptian television. The cables are not easily broken so
there must have been a “huge hit,” Orascom’s Metry said.

From the archive, originally posted by: [ spectre ]




WTO Gives US$21m Compensation To Antigua, by Leroy Baker, Tax-, Washington
December 28, 2007

The World Trade Organization has awarded US$21m worth annually of
compensatory measures to Antigua and Barbuda in its fight against the
USA over the country’s unilateral suspension of its WTO obligations in
regard to on-line gaming.

The islands would be allowed, for instance, to disregard intellectual
property rules under TRIPS in order to sell US-generated content such
as films and music on the open market. But Antigua had asked for US
$3.4bn in damages.

Mark Mendel, Antigua’s lawyer, said in a conference call: “I am
pleased that the panel approved our ability to cross-retaliate by
suspension of intellectual property rights of United States business
interests. That has only been done once before and is, I believe, a
very potent weapon.”

Antigua’s Minister of Finance and the Economy, Dr Errol Cort, said:
“Although we are pleased that the extraordinary sanction of the
suspension of intellectual property right protection for US interests
has been given to us – only the second such authorisation in WTO
history – we are disappointed by the portion of the decision limiting
our annual compensation to such a mere fraction of our industry’s lost

But he said that it was not Antigua’s immediate intention to apply the
sanctions; it remained preferable for Antigua to reach a compromise
solution with the US, although it’s not clear what that might be.

The office of the United States Trade Representative, never a good
loser, said sourly with a split infinitive that: “it would establish a
harmful precedent for a WTO Member to affirmatively authorize what
would otherwise be considered acts of piracy, counterfeiting, or other
forms of IPR infringement.”

The ruling by the WTO’s Dispute Settlement Body remains in place until
the US comes into conformity with the WTO’s previous ruling, which the
US rejected, or until there is a mutually agreed settlement.

The compensation for Antigua followed hard on the heels of an agreed
settlement between the USA and other countries which had demanded
compensation, when the European Commission accepted a US offer of
openings in other sectors as compensation. “A bilateral agreement was
signed in Geneva, which provides EU service suppliers with new trade
opportunities in the US postal and courier, research and development,
storage and warehouse sectors,” said the Commission. “The US also made
concessions in the testing and analysis services sector.

Canada and Japan have apparently also accepted similar US offers, and
the office of the USTR said it hoped that India, Costa Rica and Macau
would fall in line as well.

The deal between the EU and the US was probably cut in November when
EU Trade Commissioner Peter Mandelson visited Washington for meetings
on “Transatlantic Economic Cooperation.”

Mandelson met US Trade Representative Susan Schwab and Representative
Barney Frank (D-MA), who has been leading so far abortive efforts in
the Congress to modify the Unlawful Internet Gambling Enforcement Act,
passed in 2006, which prohibits the use of payment instruments by
financial institutions to handle the processing of any form of
internet gambling that is illegal under US federal or state law. It
was this law which led to the collapse of many global gaming

Barney Frank introduced legislation into the House of Representatives
in April that would create an exemption to the ban on online gambling
for properly licensed operators, allowing Americans to lawfully bet
online. The Internet Gambling Regulation and Enforcement Act of 2007
would establish a federal regulatory and enforcement framework to
license companies to accept bets and wagers online from individuals in
the US, to the extent permitted by individual states, Indian tribes
and sport leagues. All such licenses would include protections against
underage gambling, compulsive gambling, money laundering and fraud.

“The existing legislation is an inappropriate interference on the
personal freedom of Americans and this interference should be undone,”
said. Rep. Frank, who is Chairman of the House Financial Services

“I think Representative Frank takes a fair-minded, common sense
approach to this and we look forward to that being effective
legislation,” said Mandelson. But the bill has floundered so far.

US Piracy Laws Need Not Be Followed in Antigua, Says WTO Panel
BY Bob Hartman  /  December 21, 2007

In a conference call held midday on Friday the successful Antigua
lawyer, Mark Mendel, pointed out that Antigua cannot be vilified by
the United States government as criminals as they will not actually be
breaking copyright and piracy laws.

The WTO ruled that Antigua may meet the sanctions, worth $21 million
per year, by selling American company copyrighted materials, such as
music, video, and software, legally. Mendel said that Antigua should
not be looked upon as a criminal and as a violator of these laws
because Antigua was legally granted access to sell the material by the

Mendel insisted that Antigua was not aiming for this judgement,
rather, they simply would like for the US to follow the rules of the
WTO by allowing Antiguan gaming operators to offer horse race betting
to Americans, just as American gaming operators are currently allowed
to do. Until they do meet the legalities of the WTO rulings it will be
legal to sell copyrighted materials, Mendel said.

The likelihood of the US ever meeting all its obligations it must meet
after removing its commitments to the GATS are minimal because Antigua
will most likely never settle.

Although the online gambling industry has seen the $21 million ruling
as a setback, Mendel pointed out that this includes 2006, combined
with 2007, and will continue every year. After a few years the
sanctions will add up to hundreds of millions of dollars.


WTO Decision Destroys World-Wide Belief In Trading System
BY Tom Jones  /  December 23, 2007

After reviewing the decision by the WTO on compensation for Antigua,
it appears that two of the three persons who were impaneled to decide
the extent of award, violated their mandate to make such determination
which was to be based on the findings of earlier rulings.

While the WTO found that the U.S. violated its trade agreements in the
area of cross-border trade in services for Internet gambling, the
panel that released the monetary and penalty decision has narrowed the
scope of that prior ruling to include only horse-racing, and ignored
all other areas, which was the full scope of the violation.

This gives the appearance of undue influence by a major (U.S.) player
in the decision making process.

After years of trial and appeals, the WTO made clear that the
violation was in fact protectionism, and clearly was targeting only
foreign firms, and that the U.S. must come into compliance with its
treaty obligations by either opening the market to foreign companies
or restrict domestic companies from providing these services.

The award granted Antigua does not and can not accomplish this.

The final determination has undermined the spirit of the WTO decision
and has given a very weak slap on the wrist to the offender.

There is no appeal allowed by either party on this decision, yet, it
does not give the appearance of a decision that was come to in a
manner consistent with the panel’s obligations.

The WTO will now be looked at as a rubber stamp for the U.S. as a

With this narrowed decision and the minimal penalty, why would any
trading partner continue to have faith in the entire WTO process, and
more imporantly, why would they not use this as a means to withdraw
obligations they are no longer comfortable with?

A precedent has now been set that effectively sets aside any
meaningful position regarding sanctions that must and should be
effective to demand compliance by offending countries, and to ensure
that if a country violates it’s treaties, there will be major

A reasoned appeal to the WTO body regarding this decision may be the
proper method to correct this.

The WTO was developed to give all countries a balance in trade, this
decision will destroy the purpose of the WTO. Any country that is
committed to this organization should be offended by the methods used,
as they were not consistent with their own published rules.

As an American, I am glad that the final determination was minimal,
however, the decision was not just and does nothing to enhance the
faith and determination of any country that is necessary to ensure
fair trade.

Worldwide respect of the WTO has now diminished to a point that many
wonder why it even exists.

US faces sanctions for gaming ban
December 21, 2007

Antigua had hoped online betting would allow it to rely less on

The US faces $21m (£10.6m) in annual trade sanctions as a result of
its online betting ban, the World Trade Organization has ruled.
Antigua and Barbuda was awarded the right to impose sanctions that
target US services, copyrights and trademarks. Laws passed in the US
in October 2006 effectively made it illegal for foreign internet
gaming firms to trade there.

But in March the trade body delivered a final ruling saying that the
US online betting ban was illegal. Antigua had hoped to impose $3.4bn
in retaliatory measures against the US and the amount awarded was
described as a token gesture, given the massive size of the US
economy. The US said that Antigua’s claim was excessive and more than
three times the size of Antigua’s entire economy.

“The United States is pleased that the figure arrived at by the
arbitrator is over 100 times lower than Antigua’s claim,” said Sean
Spicer, a spokesman for U.S. Trade Representative Susan Schwab.
Antigua, a former British colony of about 80,000 people, had been
promoting electronic commerce as way to end the country’s reliance on
tourism, which was hurt by a series of hurricanes in the late 1990s.

Piracy risk

The Caribbean nation is the smallest country to litigate a case
successfully in the WTO’s 12-year-history. The case had drawn the
attention of US industry because Antigua has threatened to target US
trademarks and copyright, which could make the nation a safe haven for
intellectual property piracy. The ruling could “establish a harmful
precedent for a WTO member to affirmatively authorise what would
otherwise be considered acts of piracy, counterfeiting or other forms
of … infringement”, the US said. The US and Antigua cannot appeal
against Friday’s decision.

Mark Mendel, the lawyer who led the case for Antigua, said that the
country was unlikely to violate US copyrights. “Antigua doesn’t want
to negate American intellectual property rights. They don’t want to
sell … DVDs and copies of Microsoft Office.”

Unequal laws

Last year the US stopped US banks and credit card companies from
processing payments to online gambling businesses outside the country,
effectively killing off the market for overseas gambling firms. About
half of the world’s online gamblers are based in the US, and the
market is estimated to be worth $15.5bn.

The WTO ruling said the US was breaking trade law by targeting online
gambling firms, without equal application of the rules to US firms
offering online betting on horse and dog racing. Earlier this week,
the EU said the US would offer its member countries trade concessions
as compensation for its refusal to lift internet gambling laws.

US TKOs Antigua in bizarre WTO arbitration decision
Dispute strangely reaches climax
BY Burke Hansen  /  December 21, 2007

The long-running dispute between little Antigua and the mighty US over
the cross border provision of gaming services came to a head this
morning, with the announcement of a US $21 mil award in Antigua’s
favor. The amount was quite a bit less than the $3.4 bil demanded by
the Antiguans, but considerably more than the $500,000 offered by the

The panel agreed with Antigua that it had no effective trade sanctions
against the United States other than to suspend its WTO obligations to
the United States in respect of copyrights, trademarks and other forms
of intellectual property. Antigua now has the right to produce
counterfeit copies of Hollywood movies, Microsoft software, or whatnot
to satisfy the judgment.

The arbitrators assessed Antigua’s level of damages based upon a
hypothetical form of compliance proposed by the United States, rather
than through the withdrawal of the overall prohibition – a prohibition
that in fact has been expanded in the years since Antigua initially
brought the case through the passage of the Unlawful Internet Gambling
Enforcement Act, which targeted banks and other financial
institutions, and provided for a whole new series of domestic carve-
outs. In light of the way the US has been thumbing its nose at
previous WTO rulings in the case, the feeble award comes as a definite

In a conference call, Mark Mendel, Antigua’s lead attorney, referred
to the decision to use a hypothetical on gambling on horse racing
estimate of damages rather than actual damages as “unsound” and

“There was never an assessment that the only discrimination was in
horse racing. I think it’s a horrible ruling.”

“It’s an extraordinary document. It’ll have academics and lawyers
talking for years. First off, just the length. The previous record was
52 pages. Second, the existence of a dissenting opinion. There’s never
been a dissenting opinion in an Article 22 hearing.”

Although the arbitrators were tasked only with assessing damages –
after all, Antigua had already won, and won big – two of the three
arbitrators managed to knee-cap the prior compliance panel ruling by
resorting to the Article 22 principle of “reasonably expected
compliance,” and adopting the approach sought by the US. The majority
ruling essentially gutted the prior compliance panel ruling by
adopting the US position of what constitutes reasonableness under the
This decision also resulted in an unprecedented disagreement among the
arbitrators, with one panelist dissenting from the approach adopted by
the other two members over the unprecedented use of the Article 22
provision to eviscerate a prior compliance panel decision.
“What kind of precedent does this set?” asked Mendel.

Mendel did express satisfaction that the panel approved Antigua’s
right to cross-retaliate by suspension of intellectual property rights
of United States business interests. He expressed notably less
satisfaction with the amount of damages assessed. In a move sure to
throw fuel on the fire of this controversial trade dispute, the
arbitrators decided on the $21 mil figure based solely on what
Antigua’s hypothetical share of the US online horse racing market,
although previous rulings had interpreted Antigua’s trade rights far
more broadly.

“I find it astonishing that two of the three panelists would in
essence grant the United States the benefit of a hypothetical method
of compliance most favorable to the American side in assessing
Antigua’s level of trade impairment. What appears to have been done
here is assuming a form of compliance that has not happened and
probably will not happen without giving Antigua the ability to contest
the method under the WTO’s normal procedures,” he added.

Unlike other WTO rulings, awards of arbitrators are not subject to
review by the Appellate Body of the WTO. However, were internet
gambling to continue to expand in the US – as seems almost certain –
Antigua would have the right to return to the WTO to reassess the
damage award. Antigua’s position will also have to be revisited as the
US continues its Article 21 proceedings to withdraw gambling services
from its WTO commitments.

While expressing dismay at the low number and the dodgy method by
which it was reached, Mendel tried to stay upbeat about what the
future has in store.

“I hope that the United States government will now see the wisdom in
reaching some accommodation with Antigua over this dispute and look
forward to seeing efforts in this regard.”

WTO Clears $21M in Sanctions Vs. US
BY Bradley S. Klapper  /  Dec 21, 2007

GENEVA (AP) — The United States faces a token $21 million in annual
trade sanctions as a result of its online betting ban, the World Trade
Organization said Friday in awarding Antigua and Barbuda the right to
target U.S. services, copyrights and trademarks.

The decision is a setback for the Caribbean island nation, which
sought the right to impose $3.4 billion in retaliatory measures
against U.S. commercial services and intellectual property.
Washington acknowledged its Internet gambling restrictions were ruled
illegal by the WTO, but argued that Antigua should only be compensated
for about $500,000 for lost annual revenue.
The case has drawn the attention of a number of U.S. industries,
partly because of the ways Antigua has proposed retaliating against
the much larger U.S. economy. Washington’s attempt to escape its legal
loss by proposing a revision of the WTO’s key treaty on trade in
services has also fueled interest.

The office of the U.S. Trade Representative noted that Antigua was
seeking sanctions worth more than three times the size of its entire

“Antigua’s claim was patently excessive,” it said in a statement. “The
United States is pleased that the figure arrived at by the arbitrator
is over 100 times lower than Antigua’s claim.”
The U.S. and Antigua cannot appeal Friday’s decision.

Realistically, it would have been very difficult for a country the
size of Antigua’s to implement hundreds of millions of dollars worth
of trade sanctions on the U.S. without harming its own economy and the
welfare of its citizens. Ecuador was awarded similar retaliation
rights in a bananas dispute with the European Union in 2000, but
failed to come up with an effective way to introduce countermeasures.

The WTO arbitration panel said it had to adopt its own approach to
come up with a fair retaliation figure in view of the wide difference
in how the U.S. and Antigua estimated the economic effect of the
gambling ban.

“In doing so, we feel we are on shaky grounds,” the panel said in an
88-page decision.

Washington stopped U.S. banks and credit card companies last year from
processing payments to online gambling businesses outside the country.
The decision closed off the most lucrative region in a growing market
worth about $15.5 billion last year. About half of the world’s online
gamblers are based in the U.S.

The arrest in 2006 of two British Internet gambling executives while
traveling through the United States also highlighted the U.S.
government’s escalation of its battle against the industry.
The WTO, however, upheld in March previous rulings striking down the
U.S ban.

The trade body found that the U.S. had the right to prevent offshore
betting as a means of protecting public order and public morals. But
it said Washington was violating trade law by targeting online
gambling without equal application of the rules to American operators
offering remote betting on horse and dog racing.

Antigua, the smallest country to successfully litigate a case in the
WTO’s 12-year-history, had hoped the ruling would lead the U.S. to
revoke the restrictions.

The former British colony of about 80,000 people had been promoting
electronic commerce as a way to end the country’s reliance on tourism,
which was hurt by a series of hurricanes in the late 1990s. There are
32 licensed online casinos in Antigua, employing 1,000 people and
generating a yearly revenue of around $130 million. Seven years ago,
its casinos had an annual income closer to $1 billion.

But Washington responded to its legal defeat by announcing it would
take the unprecedented step of revising the conditions under which it
signed the WTO’s 1994 General Agreement on Trade in Services, or GATS.
That allowed a number of countries to seek compensation under a
separate process.

The U.S. has since agreed on deals with the 27-nation European Union,
Canada and Japan to change the treaty — but has failed to do so with
Antigua, Costa Rica, India and Macau.
Until it gains the approval of all 151 members of the WTO, the U.S.
online betting ban is illegal under international trade rules. As a
result, Antigua will have the right to penalize U.S. services and
intellectual property until the U.S. government either permits
Americans to gamble over foreign-based sites or eliminates exceptions
for off-track betting on horses, including over the Internet.
British gambling companies — which bankrolled Antigua’s efforts and
heavily lobbied Brussels for tough action — were disappointed earlier
this week when the EU announced that it had received some minor U.S.
trade concessions in exchange for accepting the U.S.-proposed revision
to the GATS.

The deal fell far short of the $100 billion in new commercial
opportunities the Internet gaming sites claimed the United States

In Trade Ruling, Antigua Wins a Right to Piracy
BY JAMES KANTER and GARY RIVLIN  /  December 22, 2007

PARIS — In an unusual ruling on Friday at the World Trade
Organization, the Caribbean nation of Antigua won the right to violate
copyright protections on goods like films and music from the United
States — an award worth up to $21 million — as part of a dispute
between the countries over online gambling.

The award follows a W.T.O. ruling that Washington had wrongly blocked
online gambling operators on the island from the American market at
the same time it allowed online wagering on horse racing.

Antigua and Barbuda had claimed damages of $3.44 billion a year. That
makes the relatively small amount awarded Friday, $21 million,
something of a setback for Antigua, which had been struggling to
preserve its gambling industry.

The United States argued that its behavior had caused $500,000 damage.

Yet the ruling is significant in that it grants a rare form of
compensation: the right of one country, in this case Antigua, to
violate intellectual property laws of another — the United States — by
allowing it to distribute copies of American music, movie and software

“That has only been done once before and is, I believe, a very potent
weapon,” said Mark Mendel, a lawyer representing Antigua, after the
ruling. “I hope that the United States government will now see the
wisdom in reaching some accommodation with Antigua over this dispute.”

Though Antigua is best known for its pristine beaches and tourist
attractions, the dozens of online casinos based there are important to
the island’s economy as its second-largest employer.

By pressing its claim, trade lawyers said, Antigua could set a
precedent for other countries to sue the United States for unfair
trade practices, potentially opening the door to electronic piracy and
other dubious practices around the world.

Still, carrying out the ruling will prove difficult, the lawyers say.

“Even if Antigua goes ahead with an act of piracy or the refusal to
allow the registration of a trademark, the question still remains of
how much that act is worth,” said Brendan McGivern, a trade lawyer
with White & Case in Geneva.

“The Antiguans could say that’s worth $50,000, and then the U.S. might
say that’s worth $5 million.” He predicted that “the U.S. is going to
dog them on every step of the way.”

The United States has aggressively fought Antigua’s claims.

A W.T.O. panel first ruled against the United States in 2004, and its
appellate body upheld that decision a year later. In April 2005, the
trade body gave the United States a year to comply with its ruling.

That deadline passed with little more than a statement from Washington
that it had decided it was in compliance.

From the start, the United States asserted that it had never intended
to allow free cross-border gambling or betting. Those activities are
restricted in the United States, though some form of gambling is legal
in 48 states.

In May, the United States said it was rewriting its trade rules to
remove gambling from the jurisdiction of the W.T.O.

Washington has agreed on deals with the European Union, Canada and
Japan to change the treaty but not with several other nations,
including Antigua.

On Friday, the United States trade representative issued a stern
warning to Antigua to avoid acts of piracy, counterfeiting or
violations of intellectual property rights while talks continue.

The trade office said such behavior would “undermine Antigua’s claimed
intentions of becoming a leader in legitimate electronic commerce, and
would severely discourage foreign investment” in the country.

US, EU reach deal over online gambling
BY Bradley S. Klapper  /  December 17, 2007

GENEVA (AP) – The United States will provide the European Union with
new trade concessions in mail services and warehousing as part of a
compensation deal over Washington’s refusal to lift restrictions on
Internet gambling, the EU said Monday.

The agreement also includes new U.S. market opportunities for European
companies offering testing and analysis services, as well as in
research and development, Brussels said in a statement.

The postal and courier concessions will affect how Germany’s DHL, the
express and logistics division of Deutsche Post World Net AG, competes
with U.S.-based companies FedEx Corp. and UPS Inc., EU officials said.

But the overall trade valuation of the package is believed to fall far
short of the US$100 billion (euro69 billion) European online gaming
sites had claimed the United States owed. EU officials could not
immediately say how much the deal was worth.

“This compensation cannot be quantified up to the euro,” the EU
mission to the WTO said in an e-mailed statement. “Nonetheless, it is
clear that new trade opportunities are created for EU service
suppliers in important sectors in the U.S.”

Washington stopped U.S. banks and credit card companies last year from
processing payments to online gambling businesses outside the country.
The decision closed off the most lucrative region in a growing market
currently worth US$15.5 billion (euro11 billion). About half of the
world’s online gamblers are based in the U.S.

In March, the World Trade Organization delivered a final ruling that
the U.S. ban was illegal.

The commerce body found that the U.S. had the right to prevent
offshore betting as a means of protecting public order and public
morals. But it said the U.S. was breaking trade law by targeting
online gambling without equal application of the rules to American
operators offering remote betting on horse and dog racing.

“While the U.S. is free to decide how to best respond to legitimate
public policy concerns relating to Internet gambling, discrimination
against EU or other foreign companies should be avoided,” said Peter
Power, spokesman for EU Trade Commissioner Peter Mandelson.

The WTO is expected to rule in the coming weeks on a request by
Antigua and Barbuda to impose US$3.4 billion (euro2.34 billion) in
commercial sanctions against the U.S. for its failure to comply with
the ruling. The tiny Caribbean nation, the smallest ever to win a WTO
dispute, has threatened to target U.S. patents and trademarks.

After losing the case, Washington sought to fix the problem by
rewriting its obligations under the WTO’s treaty on trade in services.
That allowed Canada, Costa Rica, India, Macau, Japan and the EU to
file compensation claims.

EU officials said their deal creates new U.S. market opportunities for
European companies seeking to expand investment and trade in the
international letters business.

Washington also agreed to ease access to European providers of
research and development in the natural sciences, social sciences and
humanities, and companies offering technical testing and analysis
services. The commitments do not cover programs funded by the U.S.
government, according to the EU’s Geneva mission.

The U.S. and Canada are also believed to be close to a deal.

The office of the U.S. Trade Representative in Washington declined to
immediately comment.

Offshore Business in Antigua and Barbuda
The Antigua and Barbuda Advantage…

Since its independence in 1981, the twin-island state of Antigua and
Barbuda in the Caribbean has continued to practice a tradition of
English Common Law. Located less than 300 nautical miles Southeast of
Puerto Rico, in the Leeward Islands. Its legal procedures are
structured in accordance with strong democratic principles of good
governance, patterned after the British parliamentary system. In 1982,
legislation was enacted under the International Business Corporations
Act, with subsequent amendments in 1984 and 1985, to make Antigua and
Barbuda a choice jurisdiction for offshore banking. Operations under
this Act are controlled by the Ministry of Finance in Antigua.

While Antigua and Barbuda is probably best known as an up-market
destination for more discriminating tourists, its natural and
developed assets have also allowed it to emerge as an attractive
offshore business centre. The country is in a convenient time zone,
sharing the same time as New York, Toronto, Central and part of South
America, and falling five hours behind the UK and Europe in the summer
and four hours in the winter which allows international business to be
transacted easily within an appropriate time frame. Antigua’s
international airport is a major gateway for the Caribbean, serving
British Airways, US Air, Virgin Atlantic, American Airlines, Air
Canada, BWIA and LIAT, with direct flights from New York, Miami,
Toronto and London. Its international telecommunications are
excellent, with direct access into the global stream of financial and
business data. Electronic funds transfer is readily accomplished,
providing same day value, and securities can be placed and executed
within 24 hours.

There is a prosperous English-speaking community, with a resident
population of 80,000. Its people are involved primarily in business
related to the tourism industry and in commerce. The country enjoys
the highest per-capita income in the Eastern Caribbean. First-rate
professional services are widely available, including banking, law,
accounting, and management resources.

International commercial banking has been conducted on Antigua for
many years. Offshore banking is more recent, having started in 1983.
Since that time the industry has grown rapidly. Working in co-
operation with the private sector, the Government has improved
Antigua’s offshore company and banking environment through the
introduction of new foreign residency, trust, and partnership

International Business Corporations Act of 1982

The prevailing offshore legislation provides for speedy formation of
international business corporations (IBCs) at very competitive
charges. The formation can be carried out by a locally registered
trust company or by an accountant or attorney. Formation can usually
be completed within 24 hours and full corporate and trust services are
available to both private and corporate investors including:

1. Registration and maintenance of corporate charters for offshore
2. Reception, management, and disbursement of the assets of offshore
3. Provision and maintenance of a registered office;
4. Maintenance of the company’s records and statutory register;
5. Preparation of all necessary corporate returns and reports to the
6. Provision of directors and officers on request;
7. Incorporation and management of offshore banks and captive
insurance companies; and
8. A full range of traditional trust services.

Some of the benefits provided to offshore companies formed under the
IBC Act include the full exemption of all direct taxes in respect of
any international trading, investment or commercial activity including
withholding taxes and stamp duties. For banking there is a 3% tax on
gross income (i.e. interest income and fees derived from the
operations and investments of the banking business minus interest
expense). No minimum capital is specified for an IBC and shares may
have a nominal or no par value. The transfer of the charter of an IBC
to a foreign jurisdiction, or vice versa, is explicitly permitted. The
board of directors of a corporation may consist of a single member. In
the case of banking, trust and insurance corporations, at least one
director must be a citizen and resident of Antigua and Barbuda.

Confidentiality Provisions

The IBC Act provides criminal penalties for any disclosure of the
business affairs of customers regarding banking or trust matters. The
only exception for the disclosure of information relates to sound
evidence regarding an alleged criminal offence that is triable in
Antigua (or which would have been triable, if it has been committed in

There are specific advantages for Canadian entities to form an IBC in
Antigua that generates an active business income, because dividends
paid out of income earned in Antigua are considered to be paid out of
exempt surplus. Antigua is one of the countries listed in the Canadian
Regulation 5907 (ii) which allows this arrangement. There are no tax
treaties with European countries, except in the case of the UK and
this is being updated through negotiations.

Incorporation Procedures

Every IBC must have a registered office and a resident agent in
Antigua. This function is regularly performed by the trust company or
by the professional who performed the incorporation process. The
resident agent is responsible for paying the annual government fees
and for keeping the company in good standing. The annual government
licence fee for an IBC is US$300; for an IBC licensed to carry on
international banking it is US$15,000 and for an IBC licensed to carry
on an international insurance business it is US$10,000.

Fees charged by trust companies or professionals for incorporation and
annual maintenance will vary, but fees for the formation of an IBC
without an international banking or insurance licence start at about US
$725, with an annual maintenance fee of US$350. Thus the total cost
for an IBC formation (including the government licence fee) is
typically US$975, with an annual maintenance fee of US$600. If the
applicant for an IBC wishes to have a registered agent serve as its
corporate director, an additional fee will be charged, between US$250
and US$1,000 for each director.

Incorporation and maintenance fees for an IBC with an international
banking or insurance licence are higher and may be related to the
level of required management services. Fees for trust management
services are also dependent on the nature and value of assets and the
required level of service.

Ship Registry

In 1985, Antigua enacted the Merchant Shipping Act, which further
expanded the facilities of its offshore centre. The designated port of
registry in St John’s, Antigua, is under the supervision of the
Registrar of Ships, Department of Marine Services and Merchant
Shipping. Registration can also be carried out in Germany by the
Commissioner of Maritime Affairs, Department of Marine Services and
Merchant Shipping, Patentbusch No. 4, 26125 Oldenburg, Germany.

The procedures for ship registration or parallel (bareboat)
registration are efficient and can be organised through several of the
offshore operators. With the submission of required documentation, the
Department of Marine Services provides quick response. The
registration fees are competitive with other jurisdictions and are
transparent, with no hidden costs. No age is set for the acceptance of
ships for registration, but all ships over 499GRT must be in class.
The Department of Marine Services does not duplicate safety
inspections, but complements and controls the work of class societies.
Unlike some other registers, Antigua has no nationality requirements
for manning vessels. For more information please see the Antigua and
Barbuda international shipping register website at

Antigua and Barbuda’s Financial Sector

Establishing a Financial Institution

An international banking licence to an IBC is granted at the sole
discretion of the Supervisor of Banks and Trust Corporations. The
supervisor may revoke the licence at any time if, in his opinion, the
revocation is in the public’s interest. The minimum capital
requirement is currently five million US dollars or its equivalent in
another major currency. However, it is exempt from any exchange
control or foreign currency levy. IBC banks are required to appoint an
auditor and to file unaudited quarterly returns and annual audited
accounts with the Supervisor of Banks and Trust Corporations. The
accounts are provided in a consolidated form.

Internet Gaming

Internet gaming facilities are deemed to be financial institutions
under the law. They are regulated by the Financial Services Regulatory
Authority (FSRC), which gives the internet gaming operators a high
level of comfort in the jurisdiction and in the ability to conduct
business on a predictable basis. It is useful to take note of the
following points:

(a) A 3% tax is payable by operators on their “Net win” defined as
“the difference between the gross stakes laid and the winnings paid

(b) Operators are entitled to deduct software licensing or software
development costs from (a) above, capped at no more than 40% of the
Net win for all companies provided claims for the deduction of such
costs are accompanied by documentary support evidencing the costs.

(c) Operators are entitled to deduct charge backs on credit cards for
a period up to 18 months after the original charge was made provided
claims for the deduction of such charge backs are accompanied by
documentary support evidencing the original credit and the charge

(d) The 3% tax on Net Win and the deductibles, as described at (a),
(b) and (c) above, are fixed until 2006, after which they will be
subject to review by the Government and the representatives of the

(e) Operators are entitled to a maximum cap of US$50,000.00 per month
on taxes and the Commissioner of Inland Revenue would have no interest
in the books of entities that pay the full cap. However, such
operators are obliged to continue to maintain financial books and
records and to provide access by the Government through its authorised
agencies in the event of the need to examine such books and records in
accordance with the laws of the State particularly the Money
Laundering (Prevention) Act, the International Business Corporations
Act and the Proceeds from Crime Act and their amendments.

(f) The maximum cap of US$50,000.00 per month on taxes and the terms
and conditions described in (e) above would remain unchanged until
2004, after which they will be subject to review by the Government and
representatives of the Industry.

(g) Gaming Licence fees are US$75,000.00 per annum for those Operators
who maintain a primary server and operations in Antigua and Barbuda
and who pay the tax as described above.

(h) Wagering Licence fees are US$50,000.00 per annum for Operators who
maintain a primary server and operations in Antigua and Barbuda and
who pay the tax as described above.

The internet gaming industry benefits from high quality
telecommunication facilities provided by Cable and Wireless. The costs
of such telecommunications are highly competitive and are lower than
in the vast majority of jurisdictions which provide a home for
internet gaming.

Applications to operate Internet Gaming Entities should be directed

Financial Services Regulatory Commission, Division of Gaming
2nd Floor – West Wing, First Caribbean Financial Centre
Old Parham Road, P.O. Box 588
St John’s, Antigua and Barbuda, West Indies
Tel: (268) 481 3300
Fax: (268) 481 3305
Email: Director: director [at] antiguagaming [dot] gov [dot] ag
General Information: info [at] antiguagaming [dot] gov [dot] ag

Insurance Licence

An internal insurance licence permits an IBC to engage in any
insurance business other than domestic insurance. The Superintendent
of International Insurance Corporations is empowered to revoke or
suspend the licence if its registration is deemed to be detrimental to
public interest. A stated capital of at least US$250,000 must be
maintained at all times. Annual audited accounts must be filed with
the Superintendent of International Insurance Corporations.

Trust Services

Trusts administered by Antigua and Barbuda trust companies are not
subject to any legislation imposing taxes on inheritance, profits,
income, or on any capital assets, gain or appreciation on any assets
or dividends, and interest paid out by an IBC as a trustee on behalf
of a non-resident of Antigua and Barbuda, for a period of 20 years
from the date of incorporation of the IBC.

Although there is no requirement that a trust instrument be recorded,
it may be recorded in the non-public records of the Director of
International Business Corporations who will issue a Certificate of
Recordation attached to the original of the trust instrument.

There is also no restriction on accumulations by trusts and the rule
of law known as the rule against perpetuities does not apply to any
property vested in a trust corporation. The minimum capital
requirement for a trust corporation is US$500,000. The IBC Act and
domestic laws governing trusts, based on the British Common Law, which
was adopted by Antigua as a colony and readopted after independence,
still apply to all international trusts.

Off Shore Banks and Companies

In 1982, the Government introduced the International Business
Corporations Act permitting off shore banking, insurance and trust
The benefits of the Act include:

* no control on exchange and freedom to operate bank accounts
* no minimum capital requirement
(except for
(i) banking where US$5 million is required together with the filing of
quarterly returns;
(ii) Trusts where a minimum capital requirement of US$500,000 and the
filing of quarterly returns; and
(iii) Insurance companies which must file annual reports and have a
reserve capital of US$250,000)
* The formation of an off shore company costs US$975 and is renewable
every year.


Antigua and Barbuda has paid serious attention to the various
initiatives by the G7 countries to ensure that the highest
international standards are applied to its financial services sector.

In 2000, the Financial Action Task Force (FATF), a body established by
the G7 as an ancillary entity of the Organisation for Cooperation in
Economic Development (OECD), declared Antigua and Barbuda to be fully
cooperative in the fight against money laundering. The FATF found
Antigua and Barbuda’s legislative regime and its regulatory and
enforcement machinery, developed and strengthened between 1999 and
2001, to be consistent with the highest international standards.

The offshore sector is regulated by the Financial Services Regulatory
Commission (FSRC) whose Board of Directors is comprised of public
officials of high repute who are subject to severe penalties under the
law for any breaches of their fiduciary responsibilities. The staff of
FSRC is also governed by strict laws governing their behaviour.

The Supervisory Authority for money laundering and other financial
crimes is the Office of National Drug Control and Money Laundering
Policy (ONDCP). ONDCP and IFSRA work closely together to ensure that
Antigua and Barbuda enjoys a good reputation in the international
banking community.

Antigua and Barbuda expects to join the OECD’s Global Tax Forum as a
full partner and will participate with OECD and other countries in
ensuring that tax practices across the globe are on a level playing
field and that the rights of persons and companies are fully respected
with regard to exchange of information on tax matters.


The original legislation governing the Antigua offshore jurisdiction
is the International Business Corporations (IBC) Act of 1982. Within
fifteen years the number of offshore banks registered in Antigua
exceeded seventy institutions. In 1998 the government of Antigua and
Barbuda undertook a major exercise to over-haul legislation for
banking and money laundering prevention. The task was challenging and
the closure of more than thirty offshore banks indicates the depth of
the major re-organisation that took place.

Offshore banks are still licensed under the original IBC Act, but
amendments to this Act as well as to the Money Laundering (Prevention)
Act (MLPA) in 1999, 2000 and 2001 have created a regulatory and
compliance environment equal to, or stronger, than most international
financial centres. The Government of Antigua and Barbuda received, the
support and cooperation of most of the private sector, which is
generally committed to meeting or surpassing the international
standards set for the Sector.

Regulatory Control

To focus regulation more closely, the Government established a
statutory authority in 1998, known as the International Financial
Sector Authority (IFSA) and charged it with responsibilities to
supervise and develop the sector. Concerns were later raised, however,
that the IFSA depended upon the private sector for assistance. In
response, the Government amended the legislation, to separate the
IFSA’s functions for supervision from any promotional activity. It
also provided for a new International Financial Sector Regulatory
Authority (IFSRA) that is fully independent of the private sector.

Know Your Customer

Entrenched in the amended IBC Act, are strong “know your customer”
requirements to govern the conduct of banks and their clients. No
anonymous accounts can be established. Each account application must
provide evidence of identity, place of residence and other current
banking relations. Also, customers cannot hide behind corporate veils.
Banks require disclosure of true beneficial ownership and the true
identity of directors and shareholders. It is the responsibility of
banks to know their customers, so that in the event the Supervisory
Authority requires information under the law, it can be made

Banking Secrecy

The confidentiality afforded to clients by banks will not provide a
safe harbour to criminals. In fact, subject to the provisions of the
Constitution, the provisions of the MLPA will stand as the governing
Act, notwithstanding any obligation to secrecy or other restriction
regarding the disclosure of information by any law or otherwise. Bank
clients need not to be concerned with this issue. It is only relevant
to those who are the subject of a criminal investigation involving the
offence of money laundering and when the Court in Antigua has, on
application by the competent Antiguan authority, ordered the
disclosure of information. In other words, the privacy of customers’
banking information remains fully confidential unless it can be
established in a Court of competent jurisdiction that a crime has been

No Cash Deposit

In April 1999, Antigua and Barbuda became the first, and possibly
only, jurisdiction to ban the acceptance of cash or bearer negotiable
instruments in any amounts. Antigua demonstrated its commitment to be
pro-active against money laundering. Given that money laundering
begins with the conversion of currency, and one of the concerns
expressed has been that anonymous and illicit funds can be returned to
their financial systems via correspondents for offshore banks, the
Antigua prohibition is a positive and innovative action. And, while it
does not prevent money laundering by other means of fund transfers,
such other means allow for full identification of the transaction

Transaction Record Keeping

The IBC Act as amended requires banks to maintain full details of all
transactions in relation to deposits and withdrawals, and to retain
the information obtained by the regulation for a period of five years.
As no offshore bank may serve as originator or recipient in the
transfer of funds on behalf of a person who is not an account holder,
all transactions should be easily traceable in the event of an enquiry
by the Supervisory Authority or from a correspondent bank.

Suspicious Activity Reports

In keeping with international standards, offshore financial
institutions are required under the MLPA as amended, to pay special
attention to all complex, unusual or large business transactions,
whether completed or not, and to all unusual patterns of transactions
and to insignificant but periodic transactions, which have no economic
or lawful purpose. On reasonable suspicion that a transaction could
institute or be related to money laundering, the bank is obligated to
promptly report the suspicious transaction to the Supervisory
Authority. The Act also requires banks to pay attention to relations
and transactions with persons, including business and other financial
institutions, from countries that have not adopted a comprehensive
anti-money laundering programme.

International Cooperation

In 1995, Antigua was amongst the first countries in the Caribbean
region to sign a maritime law enforcement counter drug agreement and
an updated extradition treaty with the US. Mutual Legal Assistance
Treaties in criminal matters were signed with both the US and the UK
in 1996. The jurisdiction is a member of the Caribbean Financial
Action Task Force (CFATF) and is in full compliance with all its
requirements. In March 2000, Antigua became the first country to sign
a commitment letter to the principals of the UN Offshore Forum (UNOF),
which confirmed government’s agreement to adhere to the UN’s minimum
performance standards relating to banking practices, transparency
rules and international cooperation.

The cooperation provided under these various agreements and treaties
is also supported under the MLPA. It allows for the Court or the
Competent authority in Antigua to cooperate with the Court or other
competent authority of another state, and to take appropriate measures
to provide assistance in matters concerning money-laundering offences,
provided the measures are in accordance with the MPLA and within the
limits of their respective legal systems. Assistance includes
providing original or certified copies of relevant documents and
records, save that no information related to a client account held by
a financial institution shall be disclosed unless the client is the
subject of a criminal investigation involving the offence of money
laundering and the Court has, on application by the competent
authority, ordered the disclosure of the information.

Antigua has successfully cooperated with the authorities of the United
States, the United Kingdom. Switzerland, Canada, Belgium and Ukraine
in enforcing the law against money laundering and drug traffickers.
The role of the authorities in Antigua has been publicly acknowledged
and praised by the governments of the US, Belgium, Canada and the

In the fiercely competitive environment of offshore centers, Antigua
has placed emphasis on ensuring that the reputation of its centre and
the quality of its regulation meets international standards. The
various steps taken to address the concerns of the international
community will benefit the offshore financial institutions and their
clients, as well as their correspondent relations with other banks.
Antigua has made the decision to remain a strong competitor in the
international financial market by maintaining a well-regulated sector
in which financial institutions are committed to providing a secure
environment for their clients, with full compliance to international

Antigua and Barbuda has comprehensive anti-money laundering
legislation in place. Below is a consolidated version of the anti-
money laundering Laws”

The Supervisory Authority for anti-money Laundering has issued
guidelines to banks and other financial institutions registered in
Antigua and Barbuda. Below are the guidelines.

High Commission for Antigua and Barbuda
2nd floor, 45 Crawford Place, London W1H 4LP
Tel: 020 7258 0070 Fax: 020 7258 7486

From the archive, originally posted by: [ spectre ]



Saddam Hussein’s yacht on sale for £17m
BY Peter Allen  /  19/12/2007

A super-yacht which was built for Saddam Hussein is on sale for £17
million. The floating palace, originally named Qadissiyat Saddam,
after a famous Arab victory over the Persians in 637 AD, was made by
Danish shipbuilders in 1981. The yacht was meant to be the sister ship
of Al Mansur (“The Victor”), another of the executed Iraqi dictator’s
vessels, but it was never delivered to Iraq.

Al Mansur was bombed by Anglo-American forces during the Iraq War of
2003, but Qadissiyat Saddam remained out of harm’s way. The yacht, now
renamed Ocean Breeze and moored off Nice, is an astonishing testament
to the playboy lifestyle enjoyed by Saddam and his entourage.

The 270ft vessel is full of customised fittings ordered by the Iraqi
leader from builders Helsingor Vaerft. It is decorated throughout with
fine mahogany, gold, silver and marble, and was described by its
builders as “lavish in every detail and very Arabic in style”. The
décor included Arabesque arches, dark wood carvings, deep-pile
carpets, and loose rugs woven in Islam’s holiest cities.

Aside from the typically Muslim features, including prayer rooms and
ornate fountains, the specification was much the same as super-yachts
owned by millionaires the world over. There are bathrooms with gold
taps, Jacuzzis, steam rooms, hi-tech entertainment suites and games
parlours, including table tennis and pool tables, and flat-screen TVs
in almost every cabin. With banquets in mind, there is silverware for
200 people. But as the yacht was intended for Saddam’s private use, it
can sleep only a relatively modest 28 people. There is a helicopter
pad and a health clinic, complete with a mini-operating theatre.

Security measures include a secret passage which would have allowed
Saddam to get to a fast boat in case of trouble. A mini-submarine pod
is also connected to the passage. The vessel’s 35-man crew was on
standby 24 hours a day, all year round. It has storage for heavy
machine-guns and surface-to-air missiles. All of the glass on board is

When the yacht was built, all of the workers involved were sworn to
secrecy, signing gagging orders. Many suspect that Saddam, who had
close links with the Saudi regime, kept Qadissiyat Saddam in Saudi
Arabia for safety, in case anything happened to its sister yacht.

Broker Burgess London is inviting offers around £17 million for Ocean

In holiday oneupmanship, the grandest gesture used to be hiring an
island. Now it’s buying one. Charles Starmer-Smith reports.

Forget the Learjet or the 60ft yacht, the villa in Tuscany or the
chalet in Verbier – the badge of true wealth is owning a island.

Or so we used to think. But now, as low-cost travel and island brokers
reach previously unchartered archipelagos, owning a tropical island
may no longer be just the preserve of the rich and famous.

A list of island owners certainly reads like a Millennium edition of
Who’s Who, including such people as Nicolas Cage, Bjorn Borg, Mel
Gibson and Bill Gates. A recent filmstar buyer was Johnny Depp, who
nine months ago stumped up £2 million for Little Halls Pond Cay in the
Bahamas, just down the stream from Cage’s luxury hideaway. And there
is nothing “little” about it – the 45-acre island came complete with a
string of cottages, six white-sand beaches, a private harbour and a
palm-fringed lagoon. But head to the Philippines and you can pick up
the 43-acre Temple Island for a tenth of the price.

Richard Branson, who has long owned Necker (frequented by Harrison
Ford and George Michael) in the British Virgin Islands, heads the
British contingent of exotic island owners, having recently bought a
60-acre island in Australia to be used by his Virgin staff. The £1.25
million Makepeace Island in Noosa River, Queensland, has a swimming
pool and a timber house, but expect much more as Branson sets about
turning it into an ecotourism haven.

Those looking for a more affordable retreat could opt for the 62-acre
island of Dumunpalit in the Palawan archipelago in the Philippines,
for sale for £325,000.

At the top end of the market, prices are rising. Despite a downturn on
Wall Street, the resurgence of the London stock market since 2003 and
growing wealth in Asia have resulted in a sharp rise in demand for the
traditionally popular Caribbean islands, such as the British and US
Virgin Islands and the Bahamas.

That’s why the asking price for Norman Island, in the BVI (believed to
be the inspiration for Robert Louis Stevenson’s Treasure Island), is
£7.5 million. Musha Cay in the Bahamas is on sale for a staggering
£31.5 million.

Cheyenne Morrison, an international private island specialist for
Coldwell Banker, a real-estate company based in Australia, says that
demand for islands close to the US has driven up prices over the past
30 years.

“The cost of an island in Belize is now eight to 10 times what it was
five years ago,” he added.

Even closer to home, islands are being snapped up as soon as they come
on to the market. A few years ago there might at any one time have
been some 15 Scottish and Irish islands for sale, many peppered with
ancient forts and castles. But according to Farhad Vladi, owner of
Vladi Private Islands (one of the world’s biggest island brokers), you
would now struggle to find a reasonably priced one.

At the other end of the market, a different picture emerges. If you
look farther afield, there are dozens of previously inaccessible
islands for sale at bargain prices.

Sacrifice a few family holidays or the price of a week’s rental of the
14-bed Jamoon Villa in Barbados and you can now buy your own hideaway
in the Philippines – the 2 1/2-acre Lover’s Island in the Palawan costs
£12,500 and is just a 10-minute boat ride from an airport.

For little more than the price of a 10-night super-luxury safari in
South Africa for a family of five with Abercrombie & Kent, you can buy
the 52-acre Goodwins Island near Cape Sable in Nova Scotia (£28,000).

Hiring Branson’s Necker Island (sleeps up to 26) for five nights in
high season costs more than the purchase price of the 2 3/4-acre Isla
Mongon in Valdivia, Chile (£108,000). Ten nights on Necker could be
exchanged for the five-acre Long Coco Cay in Belize (£219,000).

An early pioneer of the idea of a private island as the ultimate
retreat was Aristotle Onassis, the Greek shipping magnate who bought
Skorpios in 1963 and whose granddaughter Athina this week faced a
fight to retain her £107 million island inheritance.

Another was Marlon Brando, who acquired Tetiaroa in French Polynesia
in 1965. “I’ll never forget the feeling I had when I first stepped
ashore from the motor launch,” said Brando, who died last year. “The
sand was pristine, not even a footprint. I walked around that whole
island and couldn’t believe what I saw… it was one of the big
moments of my life.”

For celebrities wanting to shun the limelight, islands offer privacy.
In the age of telescopic lenses and camera phones, holiday homes in
Mustique, Tuscany or Provence are no longer the hideaways they once
were. For those wanting total escape from the glare of the paparazzi,
and perhaps to recover from their latest round of plastic surgery,
more extreme measures are needed.

But it is not just Hollywood glitterati and nouveau riche bankers and
traders who are buying island retreats. Since starting up in 1971,
Vladi has sold some 1,300 islands from his offices in Germany, New
Zealand and the United States.

Clients have ranged from members of Iran’s imperial family, who once
bought a dozen at one sitting, to run-of-the-mill lawyers and
businessmen. Vladi suggests that one of the great misconceptions is
that only the very wealthy can buy an island – the average price of
his transactions is $300,000.

“You don’t have to be a millionaire to own one. If you can afford a
car, you can afford an island,” he added.

There are up to 1,000 islands for sale at present, although if you
abide by Vladi’s definition of a “desirable” island – more than five
acres, near the mainland, an elevation of 15 feet, a natural harbour,
a choice of beaches and plenty of existing infrastructure such as
roads, houses and electricity – the number of available islands falls
to about 150.

He estimates the realistic starting cost of a decent hideaway to be
about £110,000 (£35,000 for the land and £75,000 to build a basic
house), plus another £8,000 a year for upkeep and travel costs. After
the initial outlay, a further £60,000 could be needed for a generator,
septic tank and desalination system. Solar- or wind-powered
electricity is often needed – a roof with solar cells costs from
£6,000 and a wind generator from £13,000. On top of that, wireless
communications, video conferencing facilities and other technological
advances make extended stays more palatable, but far more costly.

So where are the best buys? Many regions are wary of their jewels
being bought up by wealthy foreigners. Some Asian countries, including
Malaysia, Thailand, Indonesia and the Philippines, limit foreign
ownership to 50 per cent. But prospective buyers can use local
corporations or joint partnerships to get around this. The US Virgin
Islands put off buyers by imposing high taxes, while Tahiti demands
they make significant investments in the local economy.

Areas to avoid if you are looking for a bargain are the Caribbean
(particularly BVI, Bermuda and the Bahamas), the Mediterranean (French
and Italian coasts), Long Island and Maine in the US and Georgian Bay
in Canada.

South and Central America are seen as hot destinations, as their
relative political instability has brought prices down to a third of
those of comparable Caribbean islands. For example, Panama’s 25-acre
Pearl Islands is on sale for just £180,000, compared with more than £1
million for the 1 3/4-acre Sandy Cay in the Bahamas.

New Zealand, which has allowed foreigners to buy islands only since
1994, and Canada, which has about 300 privately owned islands, offer
some enticing places. Vladi himself has recently bought a 2,000-acre
island off New Zealand’s southern coast.

But for the real bargains look to the Philippines, where prices are a
third less than anywhere else in the world, on account of a volatile
political situation.

The 1,800 islands of Palawan – the location for the 1997 James Bond
film Tomorrow Never Dies – are as idyllic as anywhere in the Indian or
Pacific oceans. What is more, they lie just an hour’s flight from the
skyscrapers of Hong Kong. Elysian Fields Realty Group already offers
174 of these islands, ranging in price from £12,500 to £1.25 million.

Vladi warns those harbouring dreams of their own Blue Lagoon that
island life can be difficult – the lack of accessibility to basic
provisions, the daily sameness and sense of total isolation. His
advice to prospective buyers is first to rent one and get a feel for
the lifestyle.

Other caveats centre around what is often the bureaucratic nightmare
of getting ownership and planning permission for an island – even in
the Caribbean it can take up to a year, plus a few bribes and
backhanders, to get the paperwork approved. Earlier this year Mel
Gibson incurred the wrath of residents when trying to buy the 5,400-
acre Mago Island in eastern Fiji. The villagers protested against what
they felt were a series of illegal purchases dating back to colonial

Despite the costs involved, a private island can also prove a
profitable investment. The late Raymond Burr (of Ironside fame) bought
Naituba Island in the west of Fiji in 1969 for £9,000. Just 14 years
later he sold it for a reported £1.7 million.

Those worried that the best islands have already been snapped up can
opt for the man-made variety. The World, a £1 billion archipelago of
300 islands shaped in a world map, is already under way off the coast
of Dubai, but with prices already reaching seven figures, why not head
to the Philippines, where you can get the real thing?

How to Buy a Private Island

The process of buying a private island is similar to that of buying a
house. When considering a house, you check for the general condition,
the foundations, if it has rising dampness, and if there are termites
present. Buying an island is similar, but there are far more things to
consider, and in most cases, the buyer of an island has no experience
on which to base his or her judgment apart from an emotional
attachment. Considering the amount of money that you have to spend to
buy a private island, it’s critical that you are aware of the
following issues.


1. Set your price. It’s stating the obvious to say that the bigger
your budget, the better an island you can afford, but some people have
very unrealistic expectations of what they can afford. It’s better to
spend as much possible to buy the island, even to the extent of
waiting till you have funds for development. Saving money in the short
term will generally get you a poorer quality island and once you have
bought the island and developed, there is no changing your mind. It’s
better to have a more attractive island than purchasing a poorer
quality island just to save money.

2. Choose your location. The location of an island is one of the
most crucial factors in most people’s decision to purchase. It’s very
important that you strongly consider this when purchasing. You’re not
just buying an island, you’re buying its surroundings. There should be
a village nearby where one can get supplies and an airport close at
hand, for instance. In other words, what makes an island feasible is
the infrastructure that is available to it. Some islands are close to
villages which is good because you can obtain staff and supplies, but
on the other hand, it then lacks privacy. Again, islands that are
remote offer complete privacy, yet at the expense of accessibility. An
island that is in the middle of the ocean usually has no view, and
islands that are located in bays have both shelter and nice views.
Also, remote islands that are less sheltered are more prone to bad
weather and rough seas.

3. Water:
Make sure there’s a reliable water supply. You’ll find water is
the most important element of living on an island, and the second
largest factor affecting the choice of an island. In general, the
smaller the island, the less water. This applies in reverse, except if
the island is rocky (even large rocky islands have problems producing
water). Every island has some variety of options to obtaining fresh
water. Look for a ground water table high enough to dig a well. If a
well already exists, have it inspected to ensure it’s dependable. This
can be done by pumping the well dry and seeing how many minutes it
takes to fill again. The amount of water that you’ll be able to get
from a well determined by using this method will give you a figure
called cubic square meters or cubic square feet of water. However,
poor water supply isn’t as big a factor in the tropics, because a good
rain water cistern can supply enough water over the dry season saved
up from the monsoon season and the occasional shower.

The tank can be topped up from the well, thus stopping the well
from running dry and damaging the water table of the island. Check the
annual rainfalls. The estimated amount of water needed annually for
part-time island living is 30,000 to 100,000 gallons, which for full-
time living will require about forty inches of annual rainfall.
Technology has also come to the rescue and state-of-the-day
desalination plants suitable for a normal house are now as cheap as
$20,000. It should be noted the fresh water creates what is called the
“Lens Effect”. This means that a low sandy island just a few feet
above sea level can have a water table which can be 3-4 times the
height of the island because the fresh water forces the salt water out
and creates a lens-shaped aquifer under the island. Another factor to
consider is that if your island is close enough to a water source on
the mainland or another larger island, you can run a PVC several
kilometers as long as the water between is not too deep.

4. Climate. Islands can be divided into three climactic types:
Temperate, Mediterranean and Tropical. In general, tropical islands
are located between the tropics of Capricorn and Cancer – this
encompasses what is termed the tropics. Mediterranean islands can be
deemed to be those that may fall in areas where there are high
temperatures but low rainfall, this is typified by islands in the
Mediterranean, the Canary islands, Bermuda, Bahamas etc. Temperate
islands are basically those that are in an area where it is generally
cold such as northern Europe, Canada and northern USA. You should
consider carefully what type of climate you prefer. Each has its pros
and cons and while many people love the tropics, some find the heat
and humidity oppressive. One person may find temperate islands to be
his or her idea of hell, but some people love the change of seasons
and the variety that produces. Obviously, Mediterranean climate
produces the best balance of heat without the high rainfall and
humidity of the tropics. Always be aware that the first day you visit
an island may not be the typical weather that the island experiences
on a day-to-day basis. The weather could be particularly uncommon in
regards to the fact that it may be exceptionally beautiful, or
exceptionally bad. You should ask local people, especially fishermen
are very knowledgeable about the weather, the typical seasons and
weather patterns for the island and surrounding area. Islands in the
ocean are prone to flooding, storms, drought, seasonal tidal
variations and strong currents. Islands located in lakes are the least
prone to problems because they have no tides or large storms, but can
be prone to seasonal variations in water level if the lakes are
dammed. Islands that are located in rivers are obviously prone to
flooding and droughts. Talk to the local authorities and ask them for
the highest and lowest recorded levels for the river. Good anecdotal
evidence can be gathered by talking to local people as well. Islands
are located in bays and estuaries with shallow bottoms are prone to
tidal variations, and access to these islands may be very difficult at
low tide. Offshore islands also experience the usual tidal patterns,
and are the most prone to dangerous weather.

5. Accessibility.
Accessibility is a prime factor in your choice of an island and
directly depends on how much discomfort and traveling time you are
willing to put up with. It also depends on how much experience you
have with boats, and how comfortable you are with the ocean because
the only way to get to an island is by boat. Travel time by boat is
also affected by many factors such as what type of boat, its engine,
and of course the seasonal weather conditions. You must take into
account that no matter how sheltered an island may be, you must still
put up with rough seas. If you are the kind of person who wants less
traveling, you will find that the closer an island is to an
established town, the more expensive it generally is.

6. Development: Determine how you will develop the island. The
style of development you plan for the island is very important when
choosing what type of island to buy.
Small Islands. For instance, if you only want a small
holiday house, then an island between 1-5 hectares (2.5 – 12 acres)
should be sufficient.
Medium Islands: If you want a larger house and maybe some
additional cottages for friends to visit, an island 5-10 hectares (12
– 24 acres) is best.
Large Islands:If you are planning a small scale resort,
then an island of at least 10-15 hectares (24 – 37 acres) should be
the minimum. If you are planning a large scale resort, then an island
of 15-20 hectares (37 – to 48 acres) should be considered the minimum,
and you will need a minimum of at least 6-10 hectares (14-24 acres) of
flat land for building. The type of construction and how remote the
island is will also affect the price that it costs to develop. In
general you can expect to pay 30% more for development on an island
than for a similar development on the mainland. The cost of building
is higher because all materials and workers must be transported to the

7. Anchorage:
Select an island with good anchorage, because without this, it
may be almost impossible to land on the island. Or, even worse, you
may be stuck on the island and not be able to get off. A good
anchorage should be sheltered from the prevailing winds, have a sandy
bottom for good holding, and have a deep water access to the beach,
without rocks or coral. If you aren’t experienced with boats, ask the
captain that takes you to the island if he considers the island to
have a good anchorage. Nearly all islands have some form of anchorage,
but the quality varies dramatically. A good island should have a good
gently sloping sandy beach with good access through the coral, and
shelter from the prevailing winds. However, a mooring buoy and a
tender can solve this problem. The ideal island should have both
shelter and good spot to land a boat. So it’s important to see the
island at high and low tides.

8. Topography.
Islands vary from the perfectly flat Caribbean style island to
the rocky cliffs and mountainous types. If you have a preference, it’s
important that you tell brokers you contact of the type of island you
want. Most islands aren’t flat, and on what are called continental
islands (the drowned tops of hills) there is only a small area of flat
land. In general, the area of flat land on a continental island is
approximately 10-12% of the island and this must be taken into
consideration when planning your development.

9. Beaches:
Find out where the beaches are. In most islands the beach
comprises only a portion of the island. It very rare to get islands
with 360 degree sand. This means that where the beach is located is
important. Firstly, the beach is generally on the opposite side of the
prevailing winds, offering a sheltered anchorage. Most people prefer
that island also have a western facing beach so that they can watch
the sunset. But if this isn’t available, there may be hill or headland
which offers a nice place to watch the sunset. While a western facing
beach is ideal, sunsets only last for 30 minutes a day, and this
should not be a deterrent when considering an island. The quality of
the sand is another major consideration that most people dream of.
Sand quality depends on two things, the degree of fineness and
whiteness. The fineness of the sand is more important than color. Fine
brown sand may be preferable to coarse white sand – it’s not as nice
to look at, but is nicer underfoot, and it’s one of the joys of living
on an island to walk barefoot along the beach at sunset and sunrise
looking for shells. Another important factor you must consider is
whether the beach is shallow or steeply dropping off and if it is
rocky or sandy. Obviously the ideal beach is fine sand which drops off
into deeper water ideal for swimming and snorkeling. If you have a
preference that’s important you should inform your broker so they can
take that into consideration.

10. Infrastructure:
Analyze the existing infrastructure. An island with buildings on
it will usually need an on-site caretaker, who will water the plants
and keep the houses clean. Building infrastructure on an island can
also be more costly than on the mainland as all supplies and workmen
must be transported by boat. Many islands are virgin islands – they
are completely natural, untouched and without infrastructure
whatsoever. In that case, there’s nothing to consider apart from the
potential of the island. But if the island has existing infrastructure
such as a resort or residence, then a detailed survey of the quality
of those infrastructures should be undertaken before purchase. If you
are buying an island with existing infrastructure, make sure that the
buildings have all necessary government permits, and possibly take
along an architect or building surveyor to give an independent
assessment of the value and quality of the buildings, and any damage
or repairs that may be necessary.

11. Caretakers.
A good caretaker is the single most important thing you can do
to protect such a large investment. Since an island is isolated, it is
hard to protect while you are not there, and whether it is a short
visit away, or you only visit the island seasonally, a caretaker
provides much need protection. Most high-end island owners employ full-
time caretakers (there’s even a newsletter called Caretaker Gazette),
while others pay local fishermen to keep an eye on things. Islands in
the highly trafficked Caribbean are more susceptible to crime than
those in entirely out-of-the-way locations, especially if they have a
trespasser-friendly airstrip. Apart from securing the property against
unwanted visitors and squatters, the caretaker can look after
buildings and equipment, making sure they’re all in good order and
condition. This is especially important in the tropics where the
monsoon can cause severe damage to buildings in a very short period if
maintenance is not kept up regularly. While you are there, the
caretaker can also act as gardener, handyman and obtain deliveries for
you from town. Generally it’s wise to employ a couple.

12. Utilities:
A prime consideration when purchasing an island is
communications. An island is separated from the mainland, and thus
communication is highly important; both for safety, and emergency
situations, as well as just ordinary day-to-day living. It’s extremely
rare for an individual island to have regular utilities such as town
water, electricity, telephone lines or even television reception. In
the majority of instances, you’ll have to be self-sufficient as far as
water and electricity go, so that should be factored into your
development costs. However, the island may have television reception,
or access to a cellular telephone signal. Having access to a cellular
network means that communication is cheap and readily available. In
some instances, the cellular network can be used to access the
Internet. It’s a good idea when examining potential islands to take a
cellphone, small radio, and hand-held TV set to see what signal is
available. But even poor signal from a cellular network can be boosted
by the use of an extension antenna. Telephone, Television, internet
and radio are all relatively cheaply available nowadays using
satellite technology. So don’t worry if services are not available
from the mainland.

13. Land Tenure:
Determine your rights of ownership. In many countries ownership
of an island only extends as far as the high tide mark, with the
beaches below that belonging to the government. In general, this means
that you own the island, but cannot develop below the high tide mark
and the beaches may therefore not be yours. When buying islands in
foreign countries, you should engage an attorney to do a full check of
the island’s documentation. At the time of inspection, find out who is
living in the island, and if they have a legal right to be there.
Squatters can be a problem, and great care should be exercised that
they are not present before the deal is concluded.


* A very critical consideration when purchasing island is the
standard and quality of the dock. Getting to and from the island
depends entirely upon the dock, and great care should be exercised in
examining the dock’s age, construction method, and condition. A poorly
built, old, or damaged dock may require complete rebuilding, or
expensive repairs. Building and repairing docks can be one of the
costliest undertakings when purchasing or developing an island. Take
along an expert to give an evaluation. In most countries there are
very little regulations covering the construction of a dock, but ask
what local permits are necessary for the construction of a dock.
* Be sure to find out how high the water level can get at most.
This information is vital for the location of your house. If you build
it too close to the beach, then it may flood often.


* Buying an island is an emotional decision, and so it’s easy for
people to fall in love with islands without considering the practical

The Republic of… what?

There’s something special about a private island. An isolated piece of
paradise, its beaches and forests yours alone to enjoy. A virtual
private kingdom under the sun. While this is enough for most of us,
for some, only a real kingdom (or republic, or principality, or …)
will suffice. For these folks, a private island is but a means to an
end – the establishment of a new, independent country. But is such a
thing really possible?

The short answer is a pretty conclusive ‘ no’. Since the early 20th
century, every square foot of dry land on Earth has been claimed by at
least one country or another, which pretty much rules out discovering
an unmapped tropical paradise, planting your flag, and setting
yourself up as the local sovereign. Similarly, existing countries are
more than a little reluctant to part with pieces of their national
territory, no matter the financial incentives offered. However, 30
years ago one man hatched an enterprising (if a little bizarre) scheme
at getting around these little details.

In the early 1970s a Las Vegas real estate millionaire by the name of
Michael Oliver decided to set up his own South Pacific island nation.
Given the tragic shortage of unclaimed private islands, Mr. Oliver
planned to do the next best thing: build one. This wasn’t as crazy as
it may at first sound. Under international law, a country may only
claim sovereignty over islands which lie outside its territorial
waters if the islands are at least a foot above the high tide point
(no part-time islands need apply). Mr. Oliver located a submerged
coral atoll called the Minerva Reefs, lying 260 miles (420 km)
southwest of the Pacific island kingdom of Tonga. At low tide, the
Minerva Reefs were exposed to the open air, but at high tide, they
were submerged. The reefs lay outside the territorial waters of all
nearby states, and as they were submerged at high tide, no country
could claim them as an extension of their national territory.

The plan was this: build up the Minerva Reefs until they remained
above the waterline at high tide, thereby officially becoming a new
island, outside the jurisdiction of any existing country. Initially,
two 7.5 acre (3 ha) islands were to be created, and once the new
country was declared, investment dollars would flood in, funding the
expansion of the islands to 2,500 acres (1011 ha), or more than twice
the size Monaco. Simple enough on paper.

In 1971 an Australian dredging ship was hired, and work was begun.
Soon enough, parts of the reefs were permanently above the high tide
mark, and on January 19, 1972 the new “Republic of Minerva” was
proclaimed. It wasn’t much to look at. No homes, businesses or
anything else you’d normally associate with a country – just a few
acres of dry, barren land peeking out from the Pacific. It did have a
flag, though, and it began issuing its own coinage.

Unfortunately for Mr. Oliver, neither investment dollars nor
international recognition was forthcoming. In fact, the only country
to react to the proclamation of the new “Republic” was the
neighbouring Kingdom of Tonga – and it wasn’t thrilled. Tonga’s
monarch, King Taufa’ahau Tupou IV, decided to throw his weight behind
eradicating the upstart new island. (At over 400 pounds (200 kg), His
Majesty held the Guinness Book of World Records title for heaviest
monarch, so this threat was not to be taken lightly.)

A Tongan force comprising 90 members of a prisoner work detail, as
well as a 4-piece band, made the voyage to the new island. Upon
landing, the party hauled down the Minervan flag, played a rousing
version of the Tongan national anthem, and claimed the land for Tonga.
The short-lived “Republic of Minerva” was dead.

The moral of the story? If you’re fortunate enough to own a private
island, by all means enjoy your “private kingdom” – just don’t be
foolish enough to call it that. Especially if you’re anywhere near

From the archive, originally posted by: [ spectre ]


Antigua calls for pirates to return to Caribbean
If US ignores our laws can we ignore theirs?
By Burke Hansen in San Francisco

Antigua and Barbuda – a nation of 70,000 in an area roughly half the
size of San Francisco – has formally requested that the WTO allow it
to suspend its intellectual property obligations to the United States,
AP reports.

Although many in the US have mocked tiny Antigua’a case against the US
with a shrug of the shoulders, the Antiguans have always carried in
their pockets a nuclear option of sorts. Most Americans view trade
disputes through the prism of tit-for-tat protectionist schemes. A
perceived price subsidy leads to retaliatory tariffs, etc; but the
obligations imposed by WTO obligations run deeper than that.

Repeated violation of WTO commitments in the face of contrary WTO
rulings allows a victimized member country ultimately to suspend its
own WTO obligations to the offending nation – a form of restitution
much more punitive than tariffs alone. America runs a steady and hefty
trade deficit in virtually every category of international trade other
than intellectual property.

Were the WTO – with possible European, Japanese, and Chinese support –
to allow the Antiguans to suspend all intellectual property
obligations to the United States, the American IP industry could face
a tiny adversary with an unlimited right to reproduce for its own
benefit American IP goods of any kind.

This is no joke – America has done everything it can to stamp out the
internet gambling industry, particularly that of Antigua in the three
years since Antigua first challenged the US before the international
body the US itself worked so hard to create. Antigua originally hoped
to develop its ecommerce segment to reduce its dependence on tourism,
but, as a result of American interference, in the last few years the
Antiguan internet gaming industry has shrunk by about 85 per cent.

And little Antigua is not the only country feeling the pinch. The UK,
which has possibly the most well-regulated gambling market in the
world – at the very least among the major economies – has sat back and
watched as the DOJ has repeatedly arrested UK businessmen and

The idea that other countries will put up with this abuse indefinitely
may finally have run its course. Once one country chooses to revise
its definitions of its own commitments, as the US claims it will do,
other impacted countries may do the same. The only question now is
whether the major American trading partners – Europe, Japan, and China
– join the party.


Antigua and Barbuda Raises the Stakes

$3.4 billion. That’s the price tag Antigua and Barbuda, the island
nation which successfully argued that the United States was violating
its obligations to open its market to foreign online gambling
providers, puts on its lost revenues as a result of the U.S. ban on
some internet gambling.

They are seeking to recover the money by withdrawing the protection
they provide for American intellectual property. The idea behind this
sort of action is to harness the power of a powerful lobby group (in
this case, Hollywood and the software industry) to counteract the
influence of anti-internet gambling groups: If intellectual property
owners are caught in the cross-fire of the dispute, maybe the United
States government would feel more pressure to comply with the series
of rulings against current U.S. regulations.



Fake Disney park faces closure
May 10, 2007

Metro UK – Disney bosses are in crisis talks with the owners of a
‘fake’ Chinese version of the famous amusement park.

The Shijingshan Amusement Park included a raven-haired woman with
seven men in elf suits, a ‘Mickey’ mouse and other Disney-style

Deputy general manager, Yin Zhiqiang, said: “The characters in our
park just look a little bit similar to theirs. But the faces, clothes,
sizes and appearances are different.”

“We do not have any agreements with Disney.”

Despite the striking similarities to foreign characters, Yin insisted
the Beijing park’s are all locally designed.

“Take our Cinderella as an example. The face of Disney’s Cinderella
face is European, but ours is a Chinese. She looks like a young
Chinese country girl,” he said.

At the center of the park is a building labeled “Cinderella’s Castle”
on park maps. It bears a striking resemblance to the original at
Disneyland in California.

The copy has led to strained ties with the United States, whose trade
deficit with China soared to US$232.5 billion last year.

Over the weeklong May Day holiday, the Shijingshan Amusement Park
filled its grounds on Beijing’s western suburbs with actors in
costumes that resembled Disney and other foreign characters.

Disney is too far, so please come to Shijingshan

A video shot by Japan’s Fuji TV showed children cavorting with Minnie
Mouse, Donald Duck, Pluto, Snow White and the Seven Dwarves and
Japan’s Hello Kitty and Doraemon.

A banner over the entrance said, “Disney is too far, so please come to

The banner has now been taken down and none of the cartoon characters
were on display, as crisis talks with Disney continue.

An employee who would give only her surname, Li, said the performances
usually occur during the summer and holidays.

Lawyers for the park and the Walt Disney Co. were in negotiations,
said Yin, the deputy general manager of the park, which is owned by
the government of Beijing’s Shijingshan District.

“The results will come out in a couple of days,” he said.

A Disney spokeswoman, Alannah Goss, declined to comment on the
Shijingshan park but sent a statement affirming Disney’s determination
to fight copying.

“Disney values and protects its intellectual property vigorously and
takes reports of suspected infringement very seriously,” the statement

In a mixup of cartoon images, the castle ticket booth is built to look
like Snow White, while a nearby statue of a woman with seven dwarves
is the golden-haired Sleeping Beauty.

Two workmen with sledgehammers could be seen tearing down the Sleeping
Beauty statue. But Yin, refused to say why.


Disney-ABC: “We understand piracy now as a business model”
By Nate Anderson  /  October 10, 2006

After years of clinging to traditional business models, media
companies have finally started embracing ad-supported Internet
distribution in a big way. Yesterday’s announcement that several major
music labels made nice with YouTube may turn out to be a watershed
moment for the industry. Instead of attempting to sue the company out
of existence, everyone got together and forged a mutually beneficial
deal that’s pretty good for consumers, too.

Now comes news from Disney-ABC that content producers have had a
revelation: instead of simply trying to squash piracy, it might be
more productive to understand and compete with it. That’s the message
brought by Anne Sweeney, the president of Disney-ABC Television Group
and one of the “50 Most Powerful Women in Business,” according to

“So we understand piracy now as a business model,” said Sweeney in a
recent analyst call. “It exists to serve a need in the marketplace
specifically for consumers who want TV content on demand and it
competes for consumers the same way we do, through high-quality, price
and availability and we don’t like the model. But we realize it’s
effective enough to make piracy a key competitor going forward. And
we’ve created a strategy to address this threat with attractive, easy
to use ways to for viewers to get the content they want from us
legally; in other words, keeping honest people honest.”

When you start thinking this way, the goal becomes offering a more
compelling product than file-swapping networks can provide, rather
that attempting (for instance) to sue the users who like your content.
For ABC, this has meant launching their own streaming media player and
providing shows like Lost and Desperate Housewives online only minutes
after they air.

Earlier this year, ABC launched its player on a two-month trial basis.
It was an instant hit (almost 6 million people requested episodes) and
did well enough for the network that they elected to bring it back
permanently in September after working out a way to compensate
affiliates who were being cut out of the revenue pie.

Our own experiences with the revamped player have been positive.
Though it does not fill the entire screen, the video looks good and
comes in 16×9 format. It won’t replace your HDTV, but it’s a nice way
to get a quick Lost fix, and the (unskippable) commercials don’t
detract from the experience. It’s nice to see a network like ABC
responding to piracy not by locking down its content even more
tightly, but by making it easily available to even more people.

While it’s hard to compete with free, it’s not impossible-witness the
success of iTunes in both music and TV shows. You just have to offer a
compelling product at a reasonable price that is simpler to use than
the alternatives. When ABC introduced its own shows into iTunes
earlier this year at $1.99 a pop, it sold more than 8 million of them
without damaging its TV ratings at all.


The Independent Review  /  Volume 11 Number 4  /  Spring 2007

The Rise, Fall, and Rise Again of Privateers
By Alexander Tabarrok

“Privateers-private ships licensed to carry out warfare-helped win the
American Revolution and the War of 1812 but fell into disuse after the
federal government made it hard to monitor their performance. Like the
government’s use of private military companies in today’s hotspots,
privateering was an instance of the “contracting out” of security
services, not the full privatization of security, and thus operated in
the context of incentives and constraints established by the



“Possible the best of PLW. A one-of-a-kind chronicle of an era of
history that the Western World would love to forget: the heyday of
Ottoman and independant Barbary Piracy. Read about thousands of
Moricos (Spanish Muslims) who joined the Barbary fleets en masse after
being kicked out of Spain after the Inquisitions and their unique
imprint on emerging Morrocan society; read about the thousands of
European “Renagadoes” who happily dropped out of the Western world and
its stifiling oppression to take up the green banner of Islam; read
about life as a Renagado Corsair and some rare accounts of their
lives. Destoy your myths about piracy and “jihad.” Despite PLW’s
eccentricites and (at times) weird agenda, this book is a masterpiece,
no doubt.

“I really thought this book was great. It has a unique stance and is
not just written from a historical perscpective. Wilson’s premise is
that the pirate republic of Salle was actually the first democracy
(leadership not based on class, race or money) even before the French
Revolution, though I’m still a bit skeptical on that point, I thought
it was well argued and a good read. I’ve actually bought this book a
few times and given it away to freinds and had to buy a it again! I
especially liked the chapter on female pirates.”

“‘Pirate Utopias’ is a refreshingly new look at an almost forgotten
episode in European/North African history. Wilson not only examines
the lives and actions of several notorious pirates in order to
identify their incentive, but paints them against a colourful backdrop
of a restricted Christian Europe, comparing this picture with the more
democratic tendencies of the Islamic nations. During the period
concerned (from the 16th to the 19th century), several thousand
European Renegadoes renounced Christianity to join the pirate “jihad”.
In Wilson’s view,only a few had been forced to convert, but the
majority may have chosen Islam in order to practise social resistance.
The author’s view on the socio-political aspects is challenging our
pre-conceived perceptions on piracy in particular and history (in the
Hegelian Monumentalist sense) in general. He describes the Bou Regreg
republics as the first democratic spaces ashore-the pirate ships
already being such. While the main subject of the book is to examine
and re-evaluate the relationship between Islamic pirates and European
renegades, Wilson also uses the figure of Corsair Captain Murad Reis
as a link to inspect piracy in 17th century Ireland. Because a closer
look would stretch the limits of this book, he kept it brief, just as
he only mentions the Uskoks in a footnote. Consequently the latter
Utopias of Hispaniola, Libertatia and Nassau are confined to the last
chapter. It is a generally well-researched book,which is very exciting
in its innovative take on piracy in relation to larger social
structures. An exciting book which satiates your literary appetite
only to leave you wanting more! And good fun to read, too…”

1. Alamariu, Dan. “Hung from the Mizzenmast: Pirate Attempts at the
Formation of Political Communities during the 17-19th Centuries” Paper
presented at the annual meeting of the International Studies
Association, Town & Country Resort and Convention Center, San Diego,
California, USA, 2006-03-22

Abstract: “The paper analyzes attempts by pirates to form stable
political communities. By drawing on Eric Hobsbawn’s work on bandits
and the state-formation theories put forward by Charles Tilly, the
paper first asks what motivates violent sea-borne economic actors to
attempt establishing political structures. Second, the paper looks at
the failure of pirates and privateers to set up their own political
communities. The first part of the paper puts forward three potential
explanations for the relatively common attempts by sea-borne bandits
during the 17th-19th century, to set up their own political
communities. First, pirate political communities grew out of simple
necessity. While operating at sea, as self-contained communities,
where rules were enforced through coercion (or threat thereof), pirate
ships behaved similar to the Weberian idea of what constitutes a
political community. Second, on many pirate vessels, there was a
specific normative utopian sentiment, emphasizing relatively
democratic and equalitarian principles. For these reasons, pirating
vessels have often been described as “republics-at-sea.” This utopian
aspect is also seen in pirate attempts at setting up political
communities on land, such as on Tortuga, Mauritius, Borneo or in
Madagascar. Thirdly, the attempts at formation of land-based political
communities, was the result of the success of piratical activities
which in turn, required safe havens, or ideally, trading entrepots
(e.g. Reunion, Tortuga and Port Royale). The second part of the paper
analyzes the success of pirates at setting up political communities,
specifically land-based communities, since ships as “republics-at-
sea,” tended after all, to be temporary, contractual operations.
Pirate attempts at forming land communities were possible because of
great power inattention or encouragement. Ultimately, pirate attempts
at the formation of land-based political communities have historically
failed. While land-based bandits have sometimes been able to make the
transition from robber barons to kings, pirates have not been
successful in this regard. Both bandits and pirates thrive in
anarchical situations. However, as land-bandits are more likely to be
domestic actors, they risk retaliation only from one state; in the
case of a weak state (i.e. anarchy), their chance to become a
political force is significant. Pirates on the other hand, by
definition act in an anarchical environment as international actors;
as such they always face the risk of retaliation from more than one
(powerful) state.”