Bernard Darnton
Click Here For Freedom
Major Roy Bates has good libertarian credentials. As a young man he fought for freedom against the Nazis in North Africa and Italy. Twenty years later he was running Radio Essex, a pirate radio station that broadcast from just off the English coast. Today, he has his own little country which boasts the world's skinniest law books.
Major Bates' radio station was located on Fort Knock John, a World War II anti-aircraft platform in the North Sea. The offshore platform was inside Britain's territorial waters, then three miles, and in 1966 he was convicted of operating a radio transmitter without a licence. Radio Essex was silenced.
£100 wiser, Bates dismantled the radio station and shifted to another abandoned anti-aircraft platform, Roughs Tower, about seven miles off the coast. The British did nothing to stop the occupation but did destroy a similar platform also located in international waters.
On September 2, 1967, Major Roy Bates declared independence and recast himself as Prince Roy of Sealand. England has a long history of tolerating eccentrics, a thousand years of feudalism having built up a stock of people with too much money and not enough genetic depth, and eccentric is simply how the 'Royal Family' of Sealand has been regarded. When they weren't being ignored they were being laughed at, thought of as amusing but harmless.
They may have just become a little less harmless. Half a century ago, Roughs Tower was responsible for the downing of around a hundred German aircraft. Today the sights are trained on a new target. A company called HavenCo has leased all of the territory of Sealand and plans to locate a 'data haven' there. With the British government having just passed the Regulation of Investigatory Powers Act, an electronic snooping law, a jurisdiction with no laws covering data traffic and away from the prying eyes of police, security agencies and taxmen is the ideal place for a computer data centre.
Will the British government really allow this off-beat family and a bunch of upstart American businessmen with their Caribbean-based company to get away with it? Not likely, but they may have unwittingly dropped the ball over thirty years ago. Shortly after the declaration of independence, the Royal Navy decided to take a look at what was happening on Roughs Tower. They were informed that they were entering Sealand's territorial waters and Prince Michael, Roy's son, fired warning shots at them. Britain is notorious for its antipathy towards privately-held firearms and Bates soon found himself up on serious weapons charges.
At the subsequent trial, Bates argued that Sealand was outside the jurisdiction of the English court. The trial judge agreed and declared the court not competent in the case.
A decade later, Sealand won what it describes as its first war. A group of German and Dutch 'businessmen' decided that their own little passport-issuing principality could be a useful addition to their shady enterprise. After luring Roy and his wife, Joan, to Austria for a meeting, they arrived on Sealand by helicopter and took Michael hostage. With no one to meet him, and unable to contact Michael, Roy returned to England, found out what had happened, hired a helicopter and recaptured the tower, taking the invaders prisoner.
The Dutch and German governments asked the British government to intervene. Referring back to the previous court case, they replied that they had no jurisdiction over Sealand and couldn't help. Germany sent a diplomat directly to Sealand and he negotiated the prisoners' release.Since then, adding to Sealand's tax haven aura, Prince Michael has received a ruling that he doesn't have to make National Insurance (social welfare) payments while he's on Sealand and has also been investigated for further firearms offences without charges.
When asked about the status of Sealand, the British Home Office (Britain's equivalent to the Department of Internal Affairs) has, for thirty years, referred people to the Foreign Office as Sealand wasn't considered part of the United Kingdom. Until the HavenCo announcement on June 5 last year.
While having your own private country, accessible only by helicopter and speedboat, packed with millions of dollars worth of computer equipment sounds like a geek's wet dream, why does it bother the government so much?
If Sealand manages to maintain its independence from Britain, computers located there will only be subject to Sealand's laws. And there aren't many. Lots of governments get huffy about things like pornography, gambling, and the like. With the exceptions of child porn and network-clogging bulk email, anything goes on Sealand. While traditionally dubious projects will undoubtedly be early adopters of the data haven concept there are other activities that could have much greater long term impact.
Data stored with HavenCo will be lawyer-proof. With all your data stored at a co-location facility, you have nothing to hand over when regulators with search warrants come calling. When the same regulators ask the Sealand people for access to the data they will, in the words of HavenCo Chief Technology Officer Ryan Lackey, "be told to bugger off."
Perhaps the Havana House cigar store may like to move offshore. Last year, the Ministry of Health ordered access to their website blocked to New Zealand citizens. Lackey's pithy response would certainly have been appropriate.
Naughtiness such as swapping dirty pictures, pyramid selling, and even cigar-peddling pale in comparison with some of the possibilities. The prospects are truly staggering. HavenCo promises to provide "secure e-commerce, privacy-protected Internet services and uncensorable free speech." Secure electronic commerce and genuinely anonymous banking have the potential to revolutionise the world and this is what traditional governments will get really upset about. You can't tax what you can't track.
The data haven will be a tax haven on steroids. If the concept works, even briefly, on Sealand other jurisdictions will follow suit. Business can be conducted anywhere in the world but all the important transactions will take place in the data haven, away from the sticky fingers of Western welfare states.
Strong encryption software allows you to keep your communications private. If those communications are your financial transactions and the bank is located somewhere untouchable, all the better. Now there are some changes that will be popular.
There's no need to worry yet about governments being able to crack the codes you use. Strong encryption relies on well-understood mathematical facts. It doesn't matter how many laws you pass, you can't overturn number theory. (See sidebar [below].) Cheap computing means that people finally have the means to defend themselves from the predations of big government.
Many governments have already begun to crack down on the technology that threatens their income and ultimately their existence. Many countries have regulations restricting the use of strong encryption software. Usually this is done in the name of national security or to supposedly crack down on organised crime. More realistically, it's done to stop people treating their money as if it's their own.
Tax-and-spend governments won't just roll over and die. Penalties for evasion will get tougher and measures that are designed to encourage the switch to an electronic economy will be double-edged. Digital signatures will encourage electronic commerce but will also open up a paper(less) trail that could lead the taxman directly to your wallet.
Phil Zimmerman, creator of PGP (Pretty Good Privacy), was harassed for several years by the US Government for exporting his encryption software. Authorities were so concerned about the software's ability to protect communications even from American spy agencies' prying eyes and ears that it was classified and controlled along with high-tech weapon systems. Recently the ban was dropped as the government realised that a failure to protect the security of business transactions was an even worse risk.
It's an odd irony that the black market may have kept the Soviet economy healthy enough to totter on as long as it did, but ultimately modern global communications helped kill the USSR. The fall of the Berlin Wall and the break up of the Soviet Union didn't mark the end of socialism however; they merely marked the beginning of the end of socialism, a process that may take decades.
Economies like China's will need to allow a freer flow of information to keep their businesses competitive, but with the information that the country's leaders need will also come the information they don't want. Information flowing out told the world about Tiananmen Square. Information flowing in will only feed aspirations for political freedom. Like the US and its encryption software, they can't live with it and can't live without it. Perhaps appropriately, the first organisation to publicly sign up with HavenCo was Tibet Online, an organisation not unfamiliar with the behaviour of big governments.
Western governments will continue to feel the heat as well. As it becomes easier to hide information from them, the tax take will surely drop. As it becomes easier to move money around the world frictionlessly, governments will have to price themselves competitively, not charging more than their services are worth.
Four hundred years ago, Galileo used new technologies to challenge the all-powerful church and push us towards a scientific and industrial age. Today's pioneering entrepreneurs, these drivers of new technologies, are challenging the all-powerful state and thrusting us into the information age. They are our Galileos and this is our New Renaissance.
Without getting into too much detail, encryption relies on mathematical functions that are much easier to perform in one direction than another. For example, multiplying 73 by 37 is a simple operation; finding the two numbers that were multiplied to give 2701 is a much slower operation. As the numbers get bigger, the multiplication gets marginally more complex - finding the factors becomes virtually impossible. Consequently, encrypting a message can be done by anyone on their home PC whereas decrypting it by brute force requires months or years of supercomputer time.
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