FAQs: Mauritania is Host; New Zealand and Norway are Guarantors; multiple Source countries
Note: This hypothetical case involving Mauritania, New Zealand, and Norway is strictly for the purpose of illustration. It does not reflect actual projects or conversations.
Q: What kind of legal structure could establish a city in Mauritania?
A: Mauritania could sign an agreement with New Zealand and Norway which creates a development authority that has the right to administer the basic functions of government in the special reform zone. Each country could be party to the appointment of development authority officials. This kind of international agreement has many historical precedents including Hong Kong’s Basic Law and the Regional Assistance Mission to the Solomon Islands.
Q: How would the leader of the development authority be selected?
A: One possibility is for the three countries could each appoint a representative to a board. The board could appoint and replace the executive leader of the development authority by majority vote.
Q: Why would a country like Mauritania offer up 1000 sq. km of its land for such a zone?
A: Mauritania has 1 million sq. km. of land and less than 2 million citizens. 1000 sq. km., even if located on its coast, would have a very small opportunity cost. If the development authority administered a city that grew to 10 million people, the citizens in Mauritania would realize huge economic advantages from close proximity to a regional hub city—a gateway to the rest of the world. For example, they would have access to an airport with direct flights to many other hubs. Acting on their own, the less than 2 million Mauritanians are not numerous enough to develop a major node in the global network of large cities.
Q: Why would countries like New Zealand and Norway act as guarantors of legal rights in a new city in Mauritania?
A: They would do so for the same reasons that motivate foreign assistance: to make the world a better place. In particular, they might conclude that charitable aid to some other state with a weak system of governance does very little to improve the quality of life worldwide. By helping to oversee effective governance in a special reform zone, they could help to attract residents, employers, and investors from all over the world, for the benefit of all. The effort would cost their taxpayers no net outlay and would do much to improve the quality of life worldwide.
Q: How could a new city in this zone grow to a size of 10 million people?
A: If the development authority allowed free immigration into a well run city, it could easily attract 10 million people. Gallup reports that 630 million people worldwide are ready to move permanently to another country if given the chance. This figure reflects the desire of many people to escape ineffective systems of rules and seek opportunities where they feel they can be safer and more prosperous.
Q: What kind of citizenship would migrants to this new city have?
A: They would retain citizenship in their countries of origin. They would not be citizens of Mauritania, Norway, or New Zealand. They would not have rights of permanent residency in Mauritania, Norway, or New Zealand. They would have rights of permanent residency in the special zone and the new city that grows up there.
Q: Why doesn’t the government of Mauritania assume the roles of host and guarantor?
A: First, acting alone, the government in Mauritania may not be able to make sufficiently credible commitments that the contracts and regulations protecting infrastructure investments in such a zone will be protected for many decades into the future. As a result, the government would face difficulties attracting foreign investment and would have to self-finance nearly all infrastructure investment. This would make it impossible for Mauritania to build a city that can house 10 million people in any realistic timeframe. By using the institutional credibility of its allies, Mauritania can generate far higher levels of investment and job creation in a special reform zone. Second, an existing social and political system would almost surely be destabilized by inflows of immigrants that outnumber residents by 5 to 1. By establishing a special reform zone in which immigrants retain their source country citizenship and become permanent residents of the new city but not citizens of country, Mauritania can realize the economic benefits of urban immigration while avoiding political instability.
Q: What would prevent a future leader of Mauritania from expropriating investments in the new charter city?
A: Enforcement of the obligations in international agreements depends on whether the violations are observable and on the willingness of the other nations of the world to resist the violation. Many threats to private investment arise precisely because violations of the laws or agreements involve shades of grey. For example, if a firm invests in a power system in expectation of one regulatory regime and regulations change in a way that harms its investment, it may be hard even in principle to decide if this represents a violation of the original contract or an allowed use of discretionary regulatory powers.
As guarantors, New Zealand and Norway could provide the neutral, external judicial review that can send clear signals when these types of violations occur. The countries might also agree to rely on some formal body like the European Court of Justice to play this role. Public signals about violations of the agreement can deter bad behavior before it occurs simply by holding firms, the host country, and the development authority accountable. Public arbitration in such a system can also greatly reduce the possibility of conflicts that might otherwise lead to armed confrontation between city authorities and the host government.
The special feature of an international agreement which grants special administrative authority over a specific tract of land is that any armed incursion would literally involve projection of military force across a “line in the sand.” Security forces on the border of the zone, more than likely forces staffed by migrants to the zone from a diverse set of countries, would ensure that any unauthorized entry into the zone would require force. Experience suggests that it is relatively easy to mount an international response to this kind of blatant, opportunistic use of military force.
Q: Couldn’t a future leader of Mauritania limit the flow of goods and people in and out of the zone and use this as a less observable way to threaten and harass the government in the zone into giving it additional concessions?
A: Because of this threat, viable zones would be those located on the coast with their own ports and airports.
Q: Could one afford to build a new port and new airport, and to run new fiber cables, to a new city in Mauritania?
A: If it will grow to 10 million people with 3.3 million workers, these fixed costs are totally manageable. For example, if a new airport costs $5 billion and long term real returns are 5%, then the interest cost of a new airport would be $75 per worker per year. This would be a minor cost for a firm that located in the zone.
Q: Would the agreement specify that the territory be returned to the sole control of the government in Mauritania at some future date?
A: If Mauritania had a large population and supplied the majority of the residents of the new city, it might make sense for the treaty to provide for eventual reunification with Mauritania. However, if the city is populated by 10 million people who move there from other nations, Mauritania might not ever want to allow for a reunification that forces it to recognize the residents as citizens. Nor might the residents of the city want to be forced to become citizens of Mauritania.
One flexible arrangement might be to allow for the consideration of proposals for reunification after some specified date. A proposal would be accepted only if citizens of Mauritania and residents of the city both agree. The agreement might even specify that the city’s charter remain in effect even after the host government reassumes sole control. Without a proposal accepted by both sides, the existing arrangement could remain in force.
Q: How might the new city be governed?
A: In the beginning, something similar to the “central bank” model of governance might be the most desirable, with powers of appointment that rest in the three member board with representatives from the three nations. This kind of arrangement might be the one that is most likely to provide the credibility to make the city a safe destination for people from many nationalities, tribes, ethnicities, and religions. It also might be the best one for rapidly building out infrastructure.
Over time, the system of local government could evolve toward more voice for local residents and local democratic control, subject perhaps to some form of external judicial review that helps ensure adherence to the rule of law and the city’s charter. For example, the court of final appeal for judicial decisions in the independent nation of Mauritius is the Privy Council in Britain. In the same way, the charter for the city could provide instead that the European Court of Justice or a similar body, provide the same function for judicial proceedings in the zone.
Q: Before the leaders of the zone face the threat of removal or the reward of reinstatement in local elections, how would the rights of the residents be protected?
A: First, the citizens would be protected by the legal system established by the charter. As mentioned above, it could provide for judicial review of executive decisions. The review could terminate with final appeal in an external court like the European Court of Justice or a similar body. From the beginning, this would offer legal protections far greater than those afforded by most source countries. Second, an unrestricted right of exit would also protect residents from forms of bad governance that are not illegal. The right of exit would be even more valuable if there were many comparable charter cities, all eager to attract new migrants.
Q: How could the zone prevent illegal immigration from Mauritania? How could Mauritania prevent illegal entry by residents in the zone?
A: The government in the zone would have to patrol its border with Mauritania and stop illegal movement in either direction. A city of this size, located on a coast, would have roughly 60 to 90 kilometers of border to monitor. Monitoring a border of this size is much less difficult than monitoring the 3200 kilometer long border between the United States and Mexico.
Q: Would the new city have its own currency?
A: A city of 10 million people could indeed have its own currency. The nation of Singapore, a city of just 5 million people, manages its own currency very effectively.
Q: Wouldn’t this amount to a form of colonialism?
A: Colonialism is a word that people use when they want to stir up emotions and stop rational discourse. The intended emotional response is guilt by association: “This sounds like colonialism. Colonialism was morally wrong. This must be morally wrong.” The best response when someone uses this term is to ask people to explain whether they mean that creating a charter city is morally wrong.
Q: Would it be morally wrong for rich nations to participate in the establishment of a new system of government on the African continent?
A: The best way to think about this question is through the lens suggested by Amartya Sen. If an initiative gives people who suffer from limited freedom new choices, it offers the most important type of development, the type that offers more freedom.
Many families in the developing world do not have the freedom to move to places that offer safety and opportunity. They do not have the chance to make a choice between staying in their country, where they might be able to exercise a right to political voice, and moving somewhere that offers more safety or opportunity. Each year, millions of high income individuals move to countries where they can’t vote because they want to pursue opportunities that they can’t get at home. It is difficult to see how giving poor families a comparable choice can be viewed as morally wrong.