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The Virtual Country
A Conceptual Study
by The DaVinci Institute

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SUMMARY: The Internet is facilitating a new, technocratic competitor to the nation-state. Here are several scenarios of the emerging Virtual Country.

The Internet, while still in its infancy, has created borderless economies, that are confusing the issues of power and control, and even the sovereignty of nations. We are now entering into a new era of public power and control. The true power that is beginning to emerge is Technocratic, meaning that we are beginning to reorganize the world around the technical imperatives of global competitiveness and economic efficiencies.

The nation-state has only been around for roughly 350 years. It is ludicrous for us to think that it will still be around 1,000 years from now. So if it is going to change, how is it going to change, and when is it going to change?

The surge in interest in online communities has given rise to unique groupings of people based on cross-cultural commonalities. The strength of many of these commonalities often transcends present loyalties to country or nationality. In short, the driving force of money will, in many people’s minds, force the issues of culture and heritage to take a back seat.

Emerging forces in globalism has given rise to the notion of creating Virtual Countries, countries without land and without borders. Citizens of Virtual Countries will live in existing land-based countries; abide by their laws; and, at the same time, hold two or more citizenships.

On the following pages we will look at how new countries are born, the evolutionary forces that have created our present nation-state, and some possible scenarios that may create the next Copernican Shift in the global political arena.

What exactly is a country?

The dictionary definition of a nation is "A part, or division, of the people of the earth, distinguished from the rest by common descent, language, or institutions; a race; a stock."

Law professor, Pastor Ridruejo, defines a nation as an entity with a government that totally controls a stable population in a delimited territory.

In the past we have associated the concept of country with attributes such as a single geographical territory, a common people with a common language, a common government with its own currency and its own set of laws and regulations, and a series of systems that tie the country into a functional entity.

Not all nations have their own land. Throughout history there are many examples of people in exile or nationalities with a strong heritage and a differentiated culture that exist as a people within one or several countries.

The concept of a virtual country brings into questions some of the traditional notions about what creates the cohesion or loyalty within a group of people.

Today’s Nation-State

Countries today are described as nation-states. The concept of a nation-state took root in the little remembered Treaty of Westphalia that was signed in 1648 AD. The Treaty of Westphalia sorted out some of the land issues in Europe and opened the doors to religious freedom by creating some separation between church and state. But a very significant part of this Treaty involved the recognition of one country’s ability to sign a treaty with another country. This became the operational ground rule for all major countries – self defined relationships with other countries.

Traditionally, governments that operate as a nation-state provide a protective bubble over their people, giving them systems and structures within their borders to live and operate businesses by. But several forces are beginning to complicate governmental control over their own citizens.

How Are New Counties Born?

A sovereign Nation can emerge in the international society in many different ways. The most common ways are:

1. Dismantling an existing nation, like Bangladesh in 1971, segregated from Pakistan.
2. Splitting an existing nation in two, like Germany after World War II, divided in Federal Republic of Germany and Democratic Republic of Germany.
3. Fusion of various nations into one, like Italy in 1860.
4. De-colonization – either through peaceful or violent means - like on the American continent at the end of the 18th Century, and on the Asian and African continents during the second half of the 20th century.

Recognition

Once a new country emerges, the issue of recognition comes into play. Recognition is a primary factor in an emerging country’s credibility and often determines the stability of the new government and the role the country will play in the international arena. There are two primary forms of recognition:

1. Internal – Recognition by the people living inside that country.
2. External – Recognition by other countries, or people or organizations outside the country.

The Institute of international law stated in its Brussels session in 1936:

"Recognition of a new Nation is a free decision by which one or several Nations corroborate the existence on a DETERMINED TERRITORY of a human society, POLITICALLY ORGANIZED, INDEPENDENT of any other nation, capable of complying with International Law, and their decision is made public, recognizing the new Nation as a member of the International Community".

Some European nations have taken the step of formalizing recognition standards, stating that any new nations must satisfy certain legal requirements. On Dec 16, 1991, the Foreign Affairs ministers of the European Union decided to adopt a set of criteria that new member states emerging from the old Eastern Europe and Soviet Union must satisfy in order to become officially recognized. The criteria includes the following four items:

1. Respect all points of the Charter of the UN, Helsinki Summit Final Act and Charter of Paris for a New Europe.
2. Guarantee rights for minorities and other groups as per the agreements of the CSCE (Conference for Security and Co-operation in Europe)
3. Respect the unchangeable nature of national borders that can only be changed peacefully through common agreement.
4. Commitment in reaching common agreements on all matters related to State succession and regional controversies.

The Principle of Self-Determination

At the end of WW1, USA President Woodrow Wilson promoted the concept of "self-determination", a powerful idea in the 19th century, particularly for Europe. The message from President Wilson on Jan 8, 1918 stated:

"…every peace-loving nation which, like our own, wishes to live its own life, determine its own institutions, be assured of justice and fair dealing by the other peoples of the world as against force and selfish aggression. All the peoples of the world are in effect partners in this interest, and for our own part we see very clearly that unless justice be done to others it will not be done to us."

Wilson’s efforts led to the formation of the League of Nations, the forerunner to our present United Nations. Although it did not formally recognize the principle of self-determination, it did promote the concept, going so far as to introduce a new legal framework for allowing colonies to determine their own fate.

Later, in the United Nations Charter, the acquisition of territory by force is prohibited, soas to ensure that existing right of self-determination will not be extinguished by military conquest.

"the principle of equal rights and self-determination of peoples' is said to be the basis for 'the creation of conditions of stability and well-being which are necessary for peaceful and friendly relations among nations".

But the Charter also emphasizes the principles of territorial integrity and of non-interference in the internal affairs of member states, provisions that may have encouraged leaders to think that self-determination would be applied only to colonial dependencies. The incompatibility between the principles of self-determination and territorial integrity was overlooked, and both were reemphasized in the Declaration on the Granting of Independence to Colonial Countries and Peoples.

Modern International Law grants a basic right to people, its own survival as a social group. "All peoples have the right of self-determination. By virtue of that right they freely determine their political status and freely pursue their economic, social and cultural development."

The Forces of Global Change

At this point, the strength of technology’s influence on global politics is still unknown. Some of the key deciding influences will be:

• Unregulated Transportation. Technology has begun to outdate the old systems used by governments to monitor and control activities of their citizens. When people were first able to communicate, without restriction, across country borders, governments began to loose control of commerce. When people are able to travel, without restriction, across national borders, traditional governments will lose control of their captive citizens. This is an impending eventuality. As we begin to open the doors of technology to private air cars and space tourism, restricting people to the confines of their own country’s borders will no longer make sense. Geographical territory will diminish as a determining factor in deciding citizenship.

• The "Peeling Apart" Process. It is our belief that we will begin to see a "peeling apart" of the Law of the Land and the Law of the People. People are the mobile entities that will travel freely around the globe and from planet to planet. They will require a very different kind of governance than what we have today. Traditional governments will become entities serving as landlords, responsible for handling territorial issues, property rights, and providers of emergency services.
  
  Another way to view this separation in government is by looking at tax revenue streams. A government that controls the land will be funded with property taxes and other types of tax generated from the land. A government that controls the people will be funded through income taxes and other types of tax levied on the individual.

• Degrees of Loyalty. The degree of loyalty that people will form with the various online communities. As an example, it is still unknown as to whether or not people will feel a greater affinity towards an online community centered around artistic freedom or to their own Norwegian heritage.

• Future Technology. New technologies will enable the governance of people as they travel through the Universe. This governance will insure the rights of individuals and their business enterprises, and the protection against illegal actions and natural disasters.

What is a Virtual Country?

Probably the simplest definition of a virtual country is a country without land and without borders. The country, or land, on which members of a Virtual Country reside will be referred to as a host country.

Throughout history we have had many examples of displaced people without a land of their own. In December 2000, the United Nations High Commissioner for Refugees (UNHCR) reported a caseload of 22.3 million refugees and displaced people resulting from fighting in some of the most difficult and dangerous places on earth. The UNHCR also estimates that some 25 million ethnic Russians are currently living outside the borders of the Russian Federation.

The idea of people without a country is not new. However the concept of giving these people legitimacy to permanently exist outside of their former government is a new concept.

Possible Scenarios

Since the evolution of earth politics is never linear, we have developed some possible scenarios that may foster the development of virtual countries.

In each of the following scenarios, the United Nations will play a critical role as the legitimizer of the Virtual Country. If the UN itself initiates the formation of a virtual country, it will have instant legitimacy.

Listed here are examples of events that could possibly trigger global changes in earth politics.

1. The UNHCR Scenario – After carefully mapping out all the options, the United Nations High Commissioner for Refugees will establish a series of virtual countries for administrative purposes. With over 20 million displaced people roaming around the world trying to carve out a new existence, the UNHCR will establish a series of Virtual Countries to give legitimacy to groups of people that have been driven from their homeland. As an example, a virtual country called New Bosnia might be established for the purpose of granting temporary citizenship, handing out passports and visas, opening bank accounts, granting authority to travel internationally, and to help unify a people whose lives were uprooted after the ravages of war in Bosnia.
2. Immigration Scenario – Immigration laws have continually evolved over time. Every country on earth contains people who are not citizens of their country. People wishing to become citizens of a country often have to wait many years before the process is complete. In Germany, as an example, the right to asylum is enshrined in Germany's constitution. The country commits itself to offering refuge to people persecuted for political or racial reasons. One controversial aspect of this law is whether to recognize those persecuted by non-government groups in their home countries. And secondly, how to deal with those seeking asylum on the basis of gender discrimination, as in the situation of women coming from Afghanistan.
   
   In this scenario the country of Germany, in an effort to preserve their national heritage will create a Virtual Country, Germany 2, to enroll and govern all people seeking refuge in their country. Germany 2 will overlay the existing country of Germany, but will have separate laws governing it. While this may easily deteriorate into an unintended class system, the creators view it as a solution to their perceived cultural deterioration.
3. Open Enrollment Scenario - The Cayman Islands begin to openly enroll citizens. If people around the world were given the option of becoming citizens of the Cayman Islands, while continuing to live in their existing country, how many would opt to take advantage of this offer?
   
   The idea of offering an "open enrollment" by countries to attract a national following around the globe is not unique. However, aggressively marketing it is. While the value proposition of creating this relationship with people living in foreign countries may be undefined, there are no doubt many who would relish the opportunity of becoming part of a new country.

   Countries will do this as a way of extending their influence and to attract revenue streams from outside their borders. Political motivations will vary greatly.

   Individuals will take advantage of this option as a way to opt out of their present political environment, and to gain new freedoms and rights.

4. Corporate Nation State Scenario - Microsoft declares itself a sovereign nation. At a point where the antitrust actions against Microsoft becomes too unreasonable, the company makes a bold move to declare itself a sovereign nation, setting itself up to be the world’s first corporate nation state. In doing so, they establish themselves outside of the US rule of law, not subject to the rulings of the court. Invariably this would take their legal arguments into a completely different realm as they attempt to set a precedence through which many other large corporations would follow.
   
   To add legitimacy to their claim of being a sovereign nation, Microsoft approaches the United Nations and requests admission. They also form political alliances with several "friendly" nations.

   Microsoft is a multinational corporation with offices around the world. Having the corporate headquarters in the US is not a requirement of the company’s existence, and the rule of law governing corporate activities changes when they declare their independence. The headquarters could be moved to an island in the Pacific, or on to a ship, or even into a satellite in space for that matter. Even the location of corporate executives is a separate matter from the rule of law governing the company.

   When it comes to money, Microsoft already has its own form of currency - Microsoft stock. They could choose to monetize their stock in a way that could be used for paying salaries to employees and for making vendor payments. Employees, as an example, may get 13.8 shares of stock on payday rather than the equivalent amount in US dollars. International smart cards are already programmed to instantly convert money from one country’s currency into another, such as Japanese yen into German marks. With a little effort, Microsoft could design a new breed of smart card that would instantly convert their stock into spendable dollars. So employees, living in any part of the world, could make purchases at their local grocery stores.

5. Tax-Free Government Scenario. Throughout history, the most contentious issue between governments and their citizens is taxes. The "take away" process of extracting taxes from individuals is seldom deemed fair, and the extraordinary efforts taken to make the implementation of taxes fair to everyone has evolved into a system so complicated that it absorbs a huge percentage of a country’s intellectual bandwidth.
   
   In conceptual terms, a tax-less government is one that operates on the principal of "parallel prosperity". In this context, a government creates an operational fund by self-generating it’s own revenue streams based on a small percentage of GNP, somewhere in the range of 3%. As an example, a small country with a GNP of $1 billion would self-generate operational funds of $30 million. Any other money needed to run the government would be levied in the form of fees-for-service.

   Monetary supplies are never static. The fine art of making new money appear before your eyes is not just some magician’s trick. It’s a legitimate way of managing a country’s monetary supply, and is steeped in rich governmental tradition. All countries have devised methods for printing money from thin air. While this process is typically cloaked in some politically approved framework to give it legitimacy and authenticity, the fact remains that this is not a new concept.

   Economics is a complicated science. We know what works and what doesn’t based on a long history of trial and error. Self-generated monetary supplies that are used to fuel a government will effectively set the stage for a continually expanding economy, which may or may not be the best approach in the future. But neither is the "take away" system of taxation that we presently have in place.

National Security Issues

Governments do not like the idea of having citizens under someone else’s control in their own territory. This creates the potential for developing an enemy army within the confines of it’s own territory, with the potential for disrupting domestic peace and tranquility.

However, all nations have "outsiders" existing within the confines of their own borders. Whether or not the person is a citizen of a virtual country is of little consequence to the host nation provided the person abides by all the laws and pays all the necessary taxes.

But one of the big attractions of joining a virtual country will be the ability to operate outside of the bounds of your existing country. The idea of being able to say "these laws don’t apply to me" is a huge incentive for some people. And that is where the security issues become a massive concern. Forcing an equitable rule of law among all people in a country is one of the founding principles of democracy.

For this reason, virtual countries will, by necessity, have to guarantee non-interference in the laws of the host nation. They will also have to guarantee that all of their citizens will abide by the laws, and be subject to any legal or judicial system serving to enforce compliance.

Dual Citizenship

The concept of dual citizenship means that a person is a citizen of two countries at the same time.

In general, countries define citizenship based on a person's descent, place of birth, marriage, and/or naturalization. The exact details will, not surprisingly, depend on the laws of the country in question. Automatic citizenship via marriage is rare nowadays; more commonly, marriage may allow one spouse a "fast track" to immigration to the other spouse's country, but a period of non-citizen permanent residence will still be required before the immigrant spouse can obtain a new citizenship via naturalization.

Since there can be several ways to acquire a given country's citizenship, it is possible for someone to be considered a citizen under the laws of two, or more, countries at the same time.

Countries usually frame their citizenship laws with little or no regard for the citizenship laws of other countries. Sometimes a country may seek to restrict dual citizenship by requiring one of its citizens born with some other citizenship to renounce or give up the other citizenship upon reaching adulthood. In some cases, a country will automatically revoke the citizenship of one of its citizens who acquires another country's citizenship by naturalization. Where one country requires a citizen to renounce the citizenship of another country, this renunciation may or may not be recognized by the other country. This can sometimes lead to sticky legal situations.

As a general rule, dual citizens are not entitled to any sort of special treatment by their two countries of citizenship. Each country will usually consider the person as if he were a citizen of that country alone. However, dual citizenship can have distinct advantages. In particular, a person with dual citizenship has greater flexibility in his or her choice of where to live and work.

Rich Man Scenario

After thoroughly researching this topic, we have concluded that a likely scenario for creating a virtual country will happen with a wealthy person who owns a small island.

Starting with an innocent request for recognition from surrounding countries and from the United Nations, the little island country will gain prominence through savvy political maneuvering and well-placed lobbying money.

Once established, the tiny island country will begin a process of open-enrollment citizenship, which will be marketed aggressively. Dual citizenship will allow all new citizens to remain where they are, maintain their present employment, and not affect their present standing in their home country. The incentives for joining the new country will be economic, either freedom from taxation or freedom to create some business venture outside of their present country.

The island country will have its own banking system. The banks will be touted as the most safe and secure in the world. The banks will have alliances with Swiss, Japanese, and American banks to give customers the feeling of security.

Utilizing a first-of-its-kind tax free form of government based on the concept of "parallel prosperity," the little country gains a reputation of being a tax haven for wealthy individuals, thereby attracting an elite constituency. And attracting an elite constituency will give the country its much-needed credibility.

Conclusion

The creation of Virtual Countries will be fraught with many problems. Recognition of new countries is discretionary and mainly political. New Nation-States must be recognized implicitly or explicitly by other nation-states.

It is our conclusion that a new type of country, a Virtual Country, can evolve out of the global political community, provided the following requirements are in place:

1. Bylaws of the Virtual community cannot grant immunity to its members, so they must be subject to the law in the countries where they reside. However, the Virtual Country must retain a certain level of sovereignty that no other country can violate or cancel. Treaties will make it plausible for the establishment of a Virtual Country within one or more host countries.
2. In order to guarantee international security and avoid conflicts, an International Organization, such as the United Nations, must exercise some controls. The UN could go a step further and create a framework, such as a Virtual Country Constitution, and a legal framework around that constitution. Provided all citizens are "connected", the legal framework could implement some degree of direct democracy and electronic voting as part of its creation.

Competing for citizens is not a concept that will be easily accepted by existing countries. The United Nations will invariably play a significant role in the formation of Virtual Countries. But it will be the "will" of the constituency that will determine a Virtual Country’s viability. Presently, many Internet users have voiced strong opinions against any kind of regulated environment, so any proposal for a new form of government will need to be well conceived and very attractive to prospective members.

 About the Authors

• Thomas J. Frey is the Executive Director of the DaVinci Institute, and is an internationally recognized futurist, author, and public speaker. His specialty is the future of technology and its impact on business and society.
• Juan F "Kiko" Suarez, in the Director of Global Operation at the DaVinci Institute where his primary responsibility is to lead the Institute's international activities outside the United States, mainly in Europe, and Central and South America.
• Eduardo Suárez, Attorney at Law, Court official, Spain. A special thanks to Eduardo for his essay entitled "Viability of a Virtual Country"

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