Imagine a system in which a private company as a “government service provider” offers you the protection of life, liberty, and property. This service includes internal and external security, a legal and regulatory framework, and independent dispute resolution. You pay a contractually fixed amount per year for these services. Besides that, you take care of everything else by yourself, but you can also do as you please, limited only by the rights of others and the contractually agreed rules of coexistence.
A private free city is a new concept of coexistence in which the free market prevails and where no taxes are paid beyond the annual contribution
Today we interviewed Titus Gebel, the inventor of the Free Private Cities concept, Director at the Free Private Cities Foundation and CEO of TIPOLIS.
Please tell us a little about yourself and your career path
I am a German entrepreneur with a PhD in international law and an extensive worldwide network. I eventually went on to work in the mining and resources industry and became an entrepreneur. Amongst other things, I founded Frankfurt-listed mining company Deutsche Rohstoff AG, retired as their CEO in 2014, and emigrated with my family to Monaco. Having been a long-term promoter of ideas of freedom and self-determination, which enable wealth and stability, I found out over the years that these ideas will never get a majority, in no system. So I had to follow a different strategy. Now with Free Private Cities, I want to create an entirely new product in the “market of living together”, and have dedicated the rest of my life to making Free Private Cities a reality.
What is a Free Private City (FPC) and how is it different from the cities we know?
A Free Private City is a system in which a private company as a “government service provider” offers you the protection of life, liberty, and property. This service includes internal and external security, a legal and regulatory framework, and independent dispute resolution. You pay a contractually fixed amount per year for these services. Besides that, you take care of everything else by yourself, but you can also do as you please, limited only by the rights of others and the contractually agreed rules of coexistence. The government service provider as the operator of the community cannot unilaterally change this “citizens’ contract” with you at a later date.
Disputes between you and the government service provider will be heard before independent arbitration tribunals, as is customary in international commercial law. If the operator ignores the arbitral awards or abuses his power in any other way, his customers leave and he goes bankrupt. He therefore has an own economic risk and therefore an incentive to treat his customers well and in accordance with the contract.
In the real world, the establishment of a Free Private City requires a contractual agreement with an existing state. In this agreement, the Host Nation grants the operating company the right to establish the Free Private City on a defined territory in accordance with the agreed conditions.
This is a new level of governance. People would be treated as customers that can make most of the decisions on their own and not as subjects that have to accept what the government decides for them.
Is there any study or report that talks about the advantages of FPC?
Not directly using the name Free Private City, but using very similar terms (Free Cities, Prosperity Zones, Charter Cities).
The following study projects the economic impacts of a Prosperity Zone, the closest kind of project to a Free Private City: http://bitly.com/PZReport
The following paper explores how free cities and special zones can reshape global governance: https://instituteforcompgov.org/s/ICG-2-NewHanseaticLeague071318-V2.pdf
The following paper makes the case that charter cities are a highly cost-effective way to ignite long-run growth: https://www.chartercitiesinstitute.org/post/case-for-charter-cities-effective-altruism
The following paper makes the case of how charter cities could make Honduras great: https://www.chartercitiesinstitute.org/post/make-honduras-great
Lastly, I have written an entire book exploring the idea: https://www.freeprivatecities.com/en/book/
What requirements should a person who wants to live in a FPC meet?
In principle, anyone who can support themselves and who accepts the basic rules will be allowed to immigrate. These basic rules include the payment of the contribution and some rules of conduct, which can vary from city to city, and above all that everyone can do what they want, as long as they do not interfere with the rights of others. In this respect, applicants who hold views from the outset that are incompatible with this order or even aimed at eliminating it, such as communists or Islamic extremists, will not be allowed to immigrate.
How are citizens’ fundamental rights guaranteed?
The city operator is bound by the contract, which limits his competencies to a few areas and in which the rights of the citizens are stated explicitly. To guarantee this, the operator has submitted to an independent dispute settlement, outside of his area of influence.
Of course, the territorial monopoly on the use of force would in fact allow him to ignore such awards and violate other’s rights. However, most citizens would then leave the city again and it would be impossible for the operator to successfully establish new private cities elsewhere due to the loss of reputation. In this respect, he is no different from the captain of a cruise ship on the high seas or the manager of a secluded holiday settlement. Both have the theoretical possibility of acting as dictators, but distance themselves from this because of their commercial interest. Lastly, the city operator will also be bound by human rights conventions the host country has signed.
Let’s talk about a specific case. Could you tell us about a FPC that is currently operating?
There are currently no pure Free Private Cities yet as described in our model. However, there are a number of semi-autonomous, privately operated zone developments that are in the direction of what we want to build. These include the so-called ZEDEs in Honduras, which have substantial autonomy and also offer their residents a contract. In Dubai, there is the special zone “Dubai International Financial Centre” with its own lawns and own courts, which are completely separate from the rest of the UAE. A similar model is planned in Azerbaijan. At the same time, we are in ongoing negotiations with governments to establish real Free Private Cities.
How does the regulation of a FPC fit in with the laws of the country where it is located?
In general, Free Private Cities have the autonomy to make their own laws and regulate internal affairs, but are still part of the host nation, and are thus subject to all its international treaties and its constitution. It is also expected that in many cases they will be subject to the country’s existing criminal law, as it is the case in Honduras and Azerbaijan.
What do you think about some projects, such as Lavasa in India, or Eko Atlantic in Nigeria, which seem not to have been very successful?
Where city projects are coupled with a Special Economic Zone status, such as Lekki City, in Nigeria or Tatu City, in Kenya, it is possible for the city development to provide new market opportunities that were not possible in the area before due to regulatory constraints.
However, without any level of legal autonomy, there is not much difference to a normal real estate project. It’s near impossible to overcome issue like corruption, inefficiency and instability without a new framework. That might be an explanation for the failures of said projects.
We think that the “software”, which means own rules according to international best practices with own administrative personnel and courts, is the key to make a difference. It is much more important than the “hardware”, i.e. housing and construction. We believe that if the “software” is right, the “hardware” will follow automatically.
Could you tell us about TIPOLIS, how it helps to establish a FPC or special zone?
TIPOLIS Corp. is our for-profit branch working on establishing and operating Free Private Cities and Prosperity Zones, the latter being hybrids between Special Economic Zones and real Free Private Cities. We offer help in structuring these, such as developing the legal framework and procedures. We are also prepared to operate them based on a contract with the host nation, with our own personnel and sub-contractors. Lastly, we provide consultancy to parties interested in developing their own Prosperity Zones and Free Private Cities, including legal advice, risk and market analysis, impact assessments and more. So, we are the guys who make the “software”, whereas the “hardware” would be subject to conventional real estate development. Together, if we can establish a functioning framework in an environment that was struggling with stability issues before, significant value growth can be achieved.
Do you know Liberstad, in Norway, would it conform to what you define as a FPC?
We know them, but they don’t conform to our model, at least yet. They are a private city but don’t have any level of autonomy to regulate their own affairs. There are hundreds of such private community projects worldwide, like Fort Galt, in Chile, but very few of them have any legal autonomy which would make them like the model we propose.
What do you think about eco-villages, what are the differences between them and FPC?
The main feature of a Free Private City is the guaranteed contract which gives every resident tremendous freedom to make their own choices. The “government” is a mere service provider who has to treat his customers well rather than a demigod that solves all real and perceived problems of its subjects and has the power to change the rules at any time.
Below that principle, numerous variations are thinkable for different target groups, including eco-cities or smart cities. The more products we have on the “market of living together”, the better.
What are the differences between the regulation of private property in Western countries and in a FPC?
Your property would be protected stronger in a Free Private City, you would have the right to use your property at will, provided no rights of others are affected. If there is a property fee or tax, it would be low and contractually capped for all times. There is low regulation under building regulations. No expropriation / compulsory charge is possible.
Now compare this with what you have today: Suppose you are the owner of a house you live in yourself. The mortgage has been paid and it belongs to you alone. However, you may not modify this house at your own discretion, but must take numerous building specifications into account even inside the building. Nor may you decide for yourself which energy supply you prefer, as the government has very specific ideas on this point. Also, you may not sell your house to a third party before a certain time has elapsed without special taxes being due. If you sell it, the local municipality has a right of first refusal. You must also pay taxes to the state for the mere fact that you own the house. The state also has the option of registering a compulsory mortgage on your property in order to achieve certain objectives (common burden sharing, inflation adjustment). If you do not pay any other taxes which the state demands, then your house will be seized and auctioned off. If you want to pass it on to your children, the inheritance taxes are so high that your children will probably be forced to sell the house. Does your house really belong to you?
To better understand the tremendous differences in divers areas, here is a comprehensive comparison of Free Private Cities and western countries: https://www.freeprivatecities.com/en/free-private-cities-and-western-states-in-direct-comparison/