Tag Archives: charter cities

Free Havens for Refugees (mostly by Pieter Cleppe)

Pieter Cleppe, head of the Brussels office of the think tank Open Europe, has written a piece advocating something akin to my idea of passport-free charter cities. (Also see my thoughts on charter city constitutions here and here,  my post about the abortive charter city experiment in Honduras, and my post “Make More Singapores!”) Cleppe advocates “free havens” in response to the recent tragedies in the Mediterranean. The rest of this post is by Cleppe (see the original piece here, it is reprinted with his permission), except a few comments of mine at the end:


Free havens as a solution to the refugee crisis

The latest tragedies in the Mediterranean once again highlight that migration is without any doubt one of the challenging issues of our time. Few dispute that it would be a bad idea to close borders completely. On the other hand, few support opening borders completely, recognising the obvious downsides to this.

The debate mostly focuses on the type and number of immigrants allowed into wealthier societies. There is very little debate about what to do with those wanting to leave their country when even the most generous quotas would have been filled.

Since 2011, 3 million people have already fled Syria, and 6.5 million are internally displaced. The EU hasn’t accepted more than 200.000 of them, while it faces ever increasing numbers of refugees, from Syria and other places, attempting to enter illegally. Even if Western countries drastically increased their willingness to welcome refugees, this would in no way serve demand. Nearly everyone agrees refugees should have the right to flee war-torn countries, but politically, there is no willingness to welcome everyone, whether one agrees with that or not.

The solution proposed below is a humble attempt to launch this debate and provide a more sustainable solution than the ones offered in the past.

One way to deal with this challenge has been to ignore it and to let people sort it out themselves. The result has been that the most vulnerable were delivered to human traffickers, at best reaching the Western world as an illegal immigrant, at worst finding the Mediterranean Sea as their graveyard.

A better solution has been to provide shelter for them in refugee camps. This clearly is an honourable attempt to minimise suffering. There are currently estimated to be up to 50 million refugees. The United Nations High Commission on Refugees offers them protection and life-saving supplies at refugee camps in more than 125 countries. Often, these camps aren’t temporary and sometimes conditions are horrendous. Often, refugees are also banned from becoming economically active. Thailand, for example, banned Burmese refugees living on the Thai-Burmese border from leaving their camps in 2014.

One of the 120.000 Burmese refugees in Thailand describes how living in such a camp, with its travel and work restrictions, while being forced to be nearly completely dependent on outside help for food, shelter, protection and other basic needs, have adverse psychological and social effects on the refugees:

“Living in the camp is similar to living in prison because I can’t go outside or make my own decision. I can commute only in the camp. The camp is surrounded by barbed wire. If we go outside of the camp, Thai police will arrest us. In the long run, it affects not only my physical but also my mental health.” (Christine, 22, refugee, who spoke with Burma Link in Mae La refugee camp in May 2014)

Lebanon’s 470,000 Palestinian refugees, of whom over 50 percent live in 12 refugee camps who’re controlled by competing Palestinian armed groups, face restrictions to practice about 30 different professions. Whatever solutions one has for the Israeli–Palestinian conflict, surely condemning generations of Palestinian refugees to this fate can’t be one of them.

A preferable solution could be to create “Free havens”: a refugee zone but then one with stable rule of law, protection and opportunities for economic investment, where refugees can actually build up a life and aren’t condemned to wasting their precious time.

This has been tried, but only very occasionally, although with extraordinary success. Most prominently in the last century, it was applied in Hong Kong, effectively a refugee zone, governed by the British rule of law, welcoming millions of Chinese wanting to fled war, totalitarian rule and turmoil in mainland China. Refugee camps at best offer refugees safety, but Hong Kong offered those Chinese refugees something which even the best refugee camps can’t offer: the opportunity to develop yourself.

Refugees, broadly defined as people fleeing from both war and economy misery, aren’t asking for a lot. They want a better life. Not necessarily a whole of a lot better. Only slightly better, if nothing else is possible. Refugees don’t only want shelter. They want to be able to develop themselves. Why would they need to wait before their country returns to the better or before wealthier countries decide they’re willing to welcome them?

A tiny percentage of land in the world is urbanized, perhaps around three percent. Would it really be so impossible to identify a place where no-one lives and welcome anyone willing to go there? Would it really be impossible to identify a place where really no-one would be bothered? If a city the size of Las Vegas can be successfully developed in the middle of a desert, there shouldn’t even be any requirements in terms of average temperature or access to the sea, although a climate like California would clearly be preferred.

It’s highly likely that such a place would be part of the territory of a State. But why would this State not allow “Free havens” to be hosted? Perhaps in some remote part of it, not to bother any of its citizens with any possible burden, especially if it would be financially compensated for it, for example by charity organisations wanting to offer refugees a better perspective or by companies investing in these Free havens, which could attract a lot of skilled individuals?

Why would companies not be interested to invest in these Free havens, just as they invest in the poorest parts of the world already, which often would not offer the same standards of justice and safety that such a Free haven would offer, given that these Free havens could be administrated by officials from countries with a certain level of rule of law?

Why would such a Free haven offer standards of justice and safety that are sufficiently high to make such a project succeed, so people would actually voluntarily want to go there, and companies would actually want to invest, thereby freeing up the resources needed to compensate the host State to actually allow such a Free haven to exist on its territory?

The answer is simple: For this project to be a success, it needs to become more safe than the most unsafe place in the world and its investment climate should beat the most horrible place on earth to do business, to attract those fellow human beings who actually have to survive there at the moment. Surely that shouldn’t be too much of a challenge. Would it really be so hard to do better than North Korea, Syria or Congo?

This project, which could be driven by the private sector, states, supranational organisations or various actors working together, doesn’t exclude everything that’s already happening: opening borders for trade, trying to develop poor countries, attempting to pacify violent conflicts, providing emergency aid to the most needed, allow more migrants to enter wealthy countries or develop refugee camps when no other option is there. This project simply offers a solution for immigrants who are not or insufficiently helped by what is already been done: the vast majority of them. If it is so simple, why not just take action?

So what is this again?

Let’s create “Free havens”: refugee zones but then with rule of law, protection and opportunities for economic investment, where refugees can actually build up a life and aren’t condemned to wasting their precious time

Which countries would allow such zones on their territory?

That’s a challenge the EU is currently facing, at least if it continue with its idea to establish immigrant-processing centres outside the EU. These offshore centres may be based in key transit countries such as Niger, Egypt, Turkey or Lebanon. France, Germany and Malta would reportedly be keen on the idea. When seeking refuge there, asylum seekers would get the chance to indicate in which EU country they’d like to apply for asylum, and at one point there may even be a system of forced “burden sharing”, which is however unlikely, given that national politicians in the EU rightly think such sensitive policies should be decided at the national level.

To convince them, Niger, Egypt, Turkey, Lebanon or maybe even Morrocco would logically need to be compensated for hosting such centres. Given the huge amount of funds available in national and European aid budgets, reaching a compromise shouldn’t be impossible.

The only element the EU Commission would need to change in its current plan, is to combine its welcoming of refugees offshore with a rule of law – mission. The EU has some experience with “rule of law”-missions. Part of its EULEX-mission in Kosovo was to administer justice in the most delicate sectors over there. It must be said that there have been major problems with the implementation, but at least Kosovo has known some kind of stability. Either way, the main difference between Free havens and the mission in Kosovo would be that anyone moving to such a Free haven would do so voluntarily.

Has something like this ever been tried?

As I made clear earlier: yes, indeed. Hong Kong effectively served as such a Free haven to Chinese refugees. It probably also served to convince mainland-China to choose the path of international trade.

Why would companies want to invest there?

Fair question. The likes of Ikea or Coca Cola would certainly need to consider this carefully, but a safe investment zone governed by officials from countries with a relatively high level of rule of law surely should be able to compete with countries where a revolution or social unrest is always only around the corner?

How much would this cost?

The Belgian police and justice system costs around 3 billion euro per year, to serve 11 million people. With 10 billion per year, which is not even 10 percent of the EU’s 130 billion euro budget, 20 million refugees could already be welcomed, as 7 billion euro would be reserved for basic infrastructure. Also co-financing from investors could be attracted. Even if only 1 million out of 50 million refugees could be welcomed at first, it would be a massive step forward.

Anyone dealing with the EU budget knows massive spending improvements could be made. More than 270 billion euros are still being sent to agricultural landowners, including the Queen of England, between 2014 and 2010. Given how the EU’s agricultural policies have been hurting developing countries for decades, it wouldn’t be such a bad target to find funds.

Is it politically feasible?

Former UK Prime Minister Tony Blair once proposed off-shore asylum centres, the European Commission is keen them, several member states are open to something like this. The whole idea really comes down to accepting two realities: one reality is that many people currently want to flee their country. Another reality is that a large majority of the European population, rightly or wrongly, is only willing to accept a tiny part of all the refugees in the world. So welcoming them in a safe place somewhere else is not more than obvious solution.

What if it goes wrong?

Amnesty International has criticized the European Commission’s suggestion to externalize refugee policy, warning that there may be “human rights violations” in many countries outside of the EU. Fair point, but this is being addressed when EU countries themselves would run these zones. What if EU countries would still mismanage the whole thing, and these Free havens wouldn’t be so nice at all? Even in that case, given that every refugee would obviously only go there voluntarily, people would only come if the welcoming zone would be nicer than refugee camps or the places from which they are fleeing. Surely, it can’t be hard to beat these standards?

Won’t it lead to a brain drain?

In the event that these Free havens turn out to be a massive success and start attracting not only desperate refugees but also people that are already relatively well off, we would indeed face this discussion. I won’t go into detail here, but there are also upsides to intelligent people moving to work in wealthier countries, given the fact that they can send more money back home to help their families than if they had stayed.

Isn’t this “apartheid”?

When you accept that migration should be limited, you accept a certain form of “apartheid” already. To support unlimited migration is a fair position to hold, but has very little support. Why then not try to improve the fate of those who’re not welcome in wealthier countries?

Pieter Cleppe


There’s no explicit open borders advocacy here. (Open borders is a “fair position to hold, but has very little support.”) But if a global archipelago of passport-free charter cities were established, the right to emigrate would be effectively realized, even if the more general right to migrate were not. I’m all for it. And this is a good example of how human rights can be the thin end of the wedge for open borders, as religious freedom was once the thin end of the wedge, first for freedom of speech, expression, and conscience, then for democracy. If we take seriously the responsibility of the international community not to drown desperate people or trap them in places where their lives are in danger, we will be on a path that, if followed devoutly enough, leads quite far in the direction of open borders. It would be, among other things a fitting Western repentance for the blood of the Jews of the MS St. Louis.

Related reading

In addition to the links included by Smith in the leading para, the following might be of interest to readers:

Start-Up Cities Along the Border

Open border advocates have long sought to promote open border policies in immigrant recipient countries but success has been mixed at best. Occasionally immigration policies are relaxed and sometimes they are restricted. Despite the countless energy and effort expanded, it is unclear whether the world is moving towards open borders. It may be time to consider directing efforts  towards the governments of migrant sending countries. Specifically, it may be time to lobby for the creation of start-up cities along the borders of the first world in places such as Mexico, Turkey, and Morocco.

Start-up cities are regions which remain under the jurisdiction of their host country but which are allowed a large degree of autonomy in domestic affairs and have their own independent legal and economic institutions. Start-up cities may even be allowed to operate under a different legal system than their host nation. Leading the development of start-up cities is the central American country of Honduras, which is currently setting up the framework for the creation of several start-up cities. The details of the Honduran start-up cities are still to be decided but once completed they will give Honduran citizens the opportunity to decide under which set of institutions they wish to live under.

Start-up cities are related to but distinct from charter cities, which have been discussed on the site before. Paul Romer, a Stanford Economist, first showcased his idea of charter cities on a TED talk in 2009. Romer’s charter cities though relied on help from the first world to get started up and in some variations the charter cities were administered by foreign governments. One of his examples was Canadian administration of a charter city in Cuba. Start-up cities (I take the term from Chapman University Law Professor Tom Bell), on the other hand, are initiated by and remain fully under the control of the host country. I suspect many migrants from and residents of the third world prefer the latter option. It is difficult to explain to a first world audience, but colonialism is still very much in the collective memory of the third world and anything with the trappings of colonialism will be met with heavy resistance. It is for this reason why I believe that, if they are to succeed, start-up cities will have to rely on existing overseas populations to help provide the expertise needed. This is not to say that expertise cannot be drawn from elsewhere, but it would be of great political aide nonetheless if it were perceived that start-up cities were under the control of natives.

Mexico, and other traditional emigrant countries, could pass legislation to create start-up cities that allowed its citizens to live in institutions similar to its northern neighbor, the United States, whilst still remaining in Mexican soil. Indeed countries like Mexico have a comparative advantage when it comes to creating start-up cities; they already have a large population of overseas citizens who are used to living under such institutions and therefore better able to re-create them elsewhere.

The creation of start-up cities should be favorable to all stake holders, including traditional opponents of open borders.

Migrants do not leave their homelands without reluctance. Migrants do not pack up and move their lives thousand of miles away out of whim or as a rite of passage. Migrants leave their countries of birth out of economic necessity or in order to escape  dangers to their safety. If a viable option allowed for them to continue residing in their homeland but under better institutions, many would prefer this option than migration to a foreign land.

Even migrants who have already migrated would be tempted by the lure of start-up cities in their countries of origin. Many migrants live as second or third class citizens with reduced civil liberties and limits on the economic activities they can undertake. Start up cities would enable migrants an opportunity to exert rights as fully fledged citizens and enter their elected profession with minimized legal obstacles.

Host countries should be favorable of start up-cities as it would create a wealthy region to draw tax revenues from. Start-up cities should be created in regions with low levels of populations or require that populated regions opt into them through referendum. This will ensure that minimal land disputes arise from the creation of start-up cities.

Traditional opponents of immigration should favor start-up cities as it allows them a method to rid themselves of migrants. Opponents of migration who recognize the economic value of immigration but who oppose migration out of cultural concern should favor start-up cities as a method that lets them to do business with migrants without having to live among them. Start-up cities could be created along the the border of the first world, but would be located on the third world side of the border and should therefore qualm fears by traditional opponents of migration that migration will lead to territorial losses.

Mexico is a prime candidate for the creation of start-up cities. Maquiladoras, special economic zones where Mexican labor works using capital from the United States, already litter the US-Mexican border. Maquiladoras already allow Mexicans to partially enjoy US economic institutions. Start-up cities would be a natural evolution and allow Mexicans not only to work under US institutions full time, but to live under them. Mexico also has the benefit of having a large overseas population whose expertise living under better institutions could be used to create start-up cities. Using expertise from fellow Mexicans should reduce the potential of a start-up city being mistakenly identified as an attempt to colonize the country. Mexicans would enjoy the benefits of US institutions but without reliance on US authorities to provide them. Mexico is also a prime candidate because its overseas population retains voting rights in Mexican politics and can therefore exert political pressure for the establishment of start-up cities.

Mexico is not the sole country in a favorable position for start-up cities. Turkey, with its large established overseas population in Germany and its favorable location next to the European Union is also a prime candidate as well. As is Morocco. Morocco actually presents a unique case in that it has two Spanish enclave cities, Cueta and Melilla, on its end of the sea. Both cities have high rates of illegal immigrants crossing over to enjoy Spanish institutions. The Moroccan government would do well to create start-up cities to provide better institutions for its people.

Start-up cities needn’t be located along the border of the first world. I propose this only because I believe those regions closest to the first world have a comparative advantage in regards to having overseas citizens with the knowledge necessary to recreate the desired institutions and due to geographic proximity that should favor trade.

Start-up cities are not without their flaws. Countries such as Mexico may be willing to allow start-up cities to adopt economic institutions different from the rest of country, but they may grow concerned about allowing such cities to have different political systems. Residents of start up cities may enjoy greater freedom than their counterparts elsewhere in the country, but they will still have to make certain concessions in order to appease current political elites. The current situation in Hong Kong (an example we’ve discussed before) provides us a case example of this. Hong Kong was an British settlement in China and was only transferred to Chinese authorities in 1997. British institutions allowed Hong Kong to flourish rapidly and in recognition of this the mainland government has allowed Hong Kong to retain a high degree of autonomy in its economic institutions. It has also tried to mimick the institutions that allowed Hong Kong to grow elsewhere in China through the creation of special economic zones. However it has also attempted to exert greater power over Hong Kong’s political  institutions. This suggests that the citizens of start-up cities will have to actively fight off attempts to curb their autonomy.

Start-up cities may also fail to provide the necessary institutions to all would-be migrants. Mexican nationals would benefit from the creation of start-up cities along the US border, but the Mexican government may be reluctant to allow Honduran or Guatemalans to reside in Mexico. It would be preferable if start-up cities were granted the freedom to set their own migration policies, but its unclear if this is politically possible. Hopefully the advent of start-up cities in some countries would exert pressure on other countries to follow suit.

Despite these flaws I believe that start-up cities are worth further attention by open border advocates. Efforts to convince the first world of the benefits of open borders should be continued, but it may be time to see if we can gain greater returns on our efforts by directing resources towards third world governments.

Charter city constitutions: filling in the blank

This post may seem off-topic, but from my point of view it’s relevant because I think of charter cities as part of the “master plan” for open borders. My master plan has four parts:

  1. Advocacy and moral suasion
  2. International migration deals, which would what the WTO has done for trade
  3. Undocumented immigration and civil disobedience
  4. Passport-free, or at least much less restrictionist, charter cities

See here, here, and here for more.

Anyway. The falling out between Paul Romer and Michael Strong/MGK Group seems to have been over a constitutional issue. What should the constitution of the new charter cities be like? Just what the two sides of the constitutional disagreement were is hard to discern and describe. It’s partly the lack of transparency by all parties, but more than that I think we’re hobbled by a lack of good theory. Theory gives us the vocabulary, the mental categories and the words to express them, with which to perceive what’s going on.

Let me start from the Concept page at the Charter Cities website:

The concept is very flexible, but all charter cities should share these four elements:

  1. A vacant piece of land, large enough for an entire city.
  2. A charter that specifies in advance the broad rules that will apply there.
  3. A commitment to choice, backed by voluntary entry and free exit for all residents.
  4. A commitment to the equal application of all rules to all residents.

The broad commitment to choice means that no person, employer, investor, or country can be coerced into participating. Only a country that wants to create a new charter city will contribute the land to build one. Only people who make an affirmative decision to move to the new city will live under its rules. They will stay only if its rules are as good as those offered by competing cities.

A charter should describe the process whereby the detailed rules and regulations will be established and enforced in a city. It should provide a foundation for a legal system that will let the city grow and prosper. This legal system, possibly backed by the credibility of a partner country, will be particularly important in the early years of the cityʼs development, when private investors finance most of the required urban infrastructure.

There are three distinct roles for participating nations: hostsource, and guarantor. The host country provides the land. A source country supplies the people who move to the new city. A guarantor country ensures that the charter will be respected and enforced for decades into the future.

Because these roles can be played by a single nation or by several countries working together as partners, there are many potential arrangements.

This is admirably lucid as far as it goes, but I am struck by (1) the way it leaves the constitution of the charter city as fill-in-the-blank, and (2) the assumption that the crucial guarantor role must be played by a country.

Why would a country want to play the guarantor role? Presumably not for territorial aggrandizement. Possibly out of altruism, the presumptive (not always the real) motive for foreign aid. Wise constitutions don’t rely too much on altruism, however. Could a country profit by serving as the guarantor of a charter city? In one sense, that could make sense, because if better rules raise productivity, the guarantor could cream off some of the surplus value created while leaving everyone involved better off. But a crucial feature of the rules in developed countries is the distinction between private sector actors such as businessmen, who can sell their services to the highest bidder but cannot use force, and public sector actors such as judges, who cannot sell their services to the highest bidder but can use force.

The problem with relying on altruism is not just that altruism is rare, but that it doesn’t give specific instructions. Live for others? How? A stylized characterization of the constitutions of the wealthy West is that the #1 rule is that the rulers don’t make the rules, the ruled do. Suppose you tell Western bureaucrats to set up shop in a vacant plot of land in a developing country. They ask, “What are we supposed to do there?” We answer, the same thing you do at home. You guys run things well in the West, do the same thing here. But in the West, they are accustomed to serving the people. So the first thing the bureaucrats might want to do is hold an election, so they’ll have political bosses to obey and mandates from the people to carry out. But if the city’s just been founded, there’s no one to vote. So you have a chicken-and-egg problem. Later, when people move in, they’ll likely vote for different rules than the West has. And that seems to be the end of your experiment with exporting good rules to poor places.

Alternatively, the Western bureaucrats could obey their home governments. But those governments are democracies and obey their home electors, who will not have the interests of the charter city at heart. That the policies of a charter city should depend on the domestic politics, as distinct from the technocratic expertise, of another country, seems to be an unwelcome feature of a charter city whose staff are the servants of a foreign country. Is it possible to give Western bureaucrats, likely to have knowledge and integrity but not accustomed to taking initiative or setting policy, specific instructions to carry out, without letting good rules be overridden by local democratic politics or tied to irrelevant democratic politics abroad?

The following constitution is my attempt to resolve the question.

Continue reading “Charter city constitutions: filling in the blank” »

Honduras

Bad news from Honduras:

The Honduran Supreme Court has ruled unconstitutional a project to build privately-run cities, with their own police and tax system.

The “model cities” project was backed by President Porfirio Lobo, who said it would attract foreign investment and create jobs

By 13 votes to one, Supreme Court judges decided that the proposal violated the principle of sovereignty.

Demonstrators celebrated the decision outside the court in Tegucigalpa.

“This is great news for the Honduran people. This decision has prevented the country going back into a feudal system that was in place 1,000 years ago,” said lawyer Fredin Funez.

The government proposal to create some 20 “special development zones – as the new cities were officially called – was approved by Congress last year.

The Supreme Court has now ruled that the law approved in Congress is unconstitutional, as it violates the territorial integrity of Honduras, as well as the sovereignty of the government.

“I am sad. All the Congress wanted was to give jobs to all Hondurans,” said Congress speaker Juan Orlando Hernandez.

Prior to this, there was a kerfuffle when Paul Romer, the great economic theorist and leading promoter of the idea of charter cities, made a stormy exit from the project which he had earlier been promoting, after a deal was made with a private development group without his knowledge. His complaint seems to be lack of transparency. For what it’s worth, that’s kind of my impression, too. MGK Group needed to proclaim to the world, and to Hondurans, what they were going to do, fill their minds with dreams of the future, sell the plan. Michael Strong, head of the MGK development group which would have built the charter cities, seems to have wanted to build a free-market paradise. But it seems to me they didn’t offer enough detail. Would more detail, faster, more publicly, have reassured the Supreme Court? What if MGK Group had managed to make the project popular enough to mobilize their own demonstrators in the street? MGK Group defends their lack of transparency thus: Continue reading “Honduras” »

Response on Charter Cities and Extraterritoriality

This post is a response to Tyler Cowen’s recent post on the topic of charter cities and extraterritoriality, prompted by the recent charter city experiment in Honduras (more background on immigration and charter cities here). Cowen is sympathetic to the idea of charter cities, but he has some concerns. Cowen:

It would be a mistake to equate charter cities with extraterritoriality.  For one thing, a charter city has its own laws and governance, possibly enforced by overseas courts, rather than imposing foreign courts upon domestic governance, a’la Shanghai through the early 20th century.  Still, the history of extraterritoriality gives us some sense of what it looks like to have foreign courts operating outside their usual domestic environment.

The problem with extraterritoriality, as I read the literature, is not the Chinese courts had a superior system of commercial or criminal law which was tragically pushed out by inferior Western ideas.  The problem was that the foreign courts were not supported by comparably strong domestic interest groups and there was a clash between the foreign courts, national symbols, fairness perceptions, domestic rents and the like, all in a manner which led to eventual talk of foreign devils and violent overreaction against the influence of outsiders.

The history of extraterritoriality focuses one’s attention on the question of who has an incentive to support the external system of law, when such a system is transplanted abroad.  This question does seem relevant to charter cities and related concepts.

Hong Kong worked because the UK and USA were able to exert enough control at a distance, at least for a long while, and because China was weak.

One vision is that a charter city works because a dominant hegemon — perhaps at a distance — supports the external system of law.

A second vision is that a charter city works because the external system of law serves up some new and especially tasty rents to domestic interest groups.  In the meantime, avoid Tongans.

A related question is what it means for the external legal system to be “invited” in, and how much such an invitation constitutes prima facie evidence of real domestic support.

I would like to see these topics receive more discussion.

Happy to oblige! Continue reading “Response on Charter Cities and Extraterritoriality” »