Startup Sovereigns

Foreign Policy |

By Parag Khanna and Sawsan Gad

Statehood ain't what it used to be.

The competition for authority within and between states is as intense as ever in history. And it's due not just to the current wave of democratic experimentation occurring across Africa, the Middle East, and Southeast Asia, but also the rising power of corporations, NGOs, religious groups, terrorists, and other individuals who today are financially, militarily, and technologically empowered like never before.

These non-state actors increasingly hold the tools of international power in their hands. Historically, technological revolutions -- from farming to manufacturing, and industry to information -- have catalyzed tensions over authority, as new communities seize opportunities for control. It is now happening again, allowing alternative authorities to flourish -- and in some places, even directly challenge state sovereignty.

And yet mainstream international relations thinking continues to overemphasize military might and other traditional tools of state power. The prevailing literature on the evolution of governance, for instance, assumes a state-centric order and widely neglects the role of technology. Francis Fukuyama's most recent volume, Origins of Political Order, is emblematic of these oversights: As it sweeps across the centuries, it presumes a constant quest for statehood even into the 21st century, ignoring the potential for novel forms of transnational communities. But now, as the current Information Revolution spreads around the world, aspirant communities are building economic and social capital, acquiring varying degrees of autonomy, and accruing authority in ways we have only begun to formally analyze.

All the traditional tools of state power -- the monopoly over arms and violence, dominance over tools of communication, and external recognition of exclusive legitimacy -- are eroding rapidly. As Tufts University's Itamara Lochard has documented, the number of autonomous armed militias in the world vastly exceeds the number of sovereign nation-states by a factor of at least 10, the Internet is used more to challenge governments than reinforce their power, and transnational networks funnel resources and confer credibility on non-state domestic groups that pursue their own agendas -- including challenging the state.

Technology has enabled the public to mobilize without state direction. Every day brings new headlines that support this shift: The hacker collective Anonymous targeted Israel when it attacked Gaza, and then turned its attention to Egyptian President Mohamed Morsy when he arrogated excessive powers to himself. In the aftermath of Hurricane Sandy, the Occupy Sandy movement used simple platforms such as Google Docs to coordinate greater volumes of assistance to displaced people than FEMA. And while the United States has responded to WikiLeaks' exposure of countless diplomatic cables with greater secrecy, this has only further inspired the growing ranks of whistleblower websites that enable the anonymous disclosure of material.

Ushahidi is a fascinating case study in how indigenous technology innovation spreads through multi-actor networks to reshape international politics. Scarred by the post-election ethnic violence in Kenya in 2007, activists devised this free and open-source software for information collection, visualization, and interactive mapping of government corruption and other social patterns. In short order, Microsoft, Google, Yahoo, NASA and the World Bank jumped on board -- and what's more, a community of global experts and programmers spread the technology to other grassroots movements and communities around the world. Today, Ushahidi is no longer a purely Kenyan product: It is a tool of transparency operating in multiple parts of the globe, and unites an even greater set of motivated activists and software developers.

The Arab Spring revolutions, for all their disappointments, have also been a profound example of the mobilizing power of technology. Satellite television stations such as Al Jazeera and Al Arabiya paved the way for the growth of Facebook and Twitter, which channeled greater awareness into individual mobilization. The collective power of the physical protesters in Tahrir Square, along with the virtual community joining their call for the downfall of the Mubarak regime, were not intended to directly counterbalance the military edge of the police, but rather to establish itself as a new and alternative authority altogether.

Though most states do not find themselves in the throes of revolution, dozens can be characterized as "areas of limited statehood," in which the writ of the central government does not fully apply and the government provides minimal public services in areas within its domain. This is true not only in failed states like Somalia, but even rising powers such as India, where the loosely organized Maoist Naxalite insurgency afflicts dozens of the country's 583 districts. As such sub-state groups acquire domestic leverage and international voice, they can claim greater fiscal and territorial autonomy as well. This is already the case everywhere from Spain's Basque region to Indonesia's Aceh, and is also brewing in Scotland, Catalonia, and many other areas where secessionist feeling runs high.

In places where government provides only the outline of governance, technology has allowed NGOs to step in to provide most of the content. Here's one example: In India, despite the country's rapid growth, the majority of the labor force is employed in the unofficial grey economy, lacking basic protections such as insurance. One of the largest organizations filling this gap is the Self-Employed Women's Association (SEWA), a trade union for informal female workers in the western state of Gujarat. With more than 1 million members, SEWA has grown into a micro-finance organization and credit union, and provides a host of services for participants. As the Indian government pioneers a universal identity card system with cash transfer functionality, it will also likely be used as much by these diffuse and empowered NGOs as by New Delhi.

There is also a new class of territorial units -- special economic zones -- that are governed not by domestic laws but by transnational commercial regulations. This makes them nodes in the global supply chain that benefit both host countries and international investors: Bangladesh, to take just one example, would never have become the world's second largest textile exporter, behind China, if not for the technology provided by Western garment industry investors.

The Dubai International Financial Center (DIFC), meanwhile, has evolved into an enclave of the global banking elite in the Persian Gulf, allowing them to access and service all countries in the region. As of 2011, the jurisdiction of DIFC's arbitration courts now extends to cases involving claimants not housed within DIFC, such as local Emirati businesses. Given the complexities of international commercial law, it is no surprise that Emirati courts have voluntarily abdicated this jurisdiction to more competent but effectively foreign entities.

The need to attract foreign talent and standards into special economic zones can have unexpected impact on domestic change. For example, Saudi Arabia's King Abdullah Economic City features plans for low-emissions buildings, mixed-gender universities, and women allowed to drive cars -- all taboo elsewhere in the kingdom. Even in the most rigid regimes, therefore, international capital and technology force change rather than reinforce the status quo.

New technology has also allowed innovative individuals and companies to physically move beyond the cumbersome restrictions of government regulation. Recent years have witnessed the engineering of ever more Very Large Floating Structures (VLFS), which are already in use for oil rigs, airport runways, landfills, parking lots and soon to harness oceanic wave power for electricity. SeaSteading, a planned offshore VLFS backed by libertarian Silicon Valley billionaire Peter Thiel, would provide a platform for selected residents of any nationality to develop business ideas in a technology rich environment unencumbered by visa restrictions. More than 100 firms have already expressed interest in locating staff and other assets to its first location, called Blueseed.

Soon, novel alliances among sub-state civil society groups and transnational commercial ventures might even emerge that promote parallel economic self-governance. Virtual currencies such as Bitcoin, a digital currency unpegged to any real world currency, could become a vital medium for enabling the trade and exchange of virtual goods and services. Sweden-based Pirate Bay, already a key leader of the anti-copyright movement, now plans to elevate private data-sharing to a new level by locating servers in Arctic caves and plans to fly them on drones in international airspace -- or perhaps house them on Blueseed. Through such tools, the sovereign mandate and regulatory power of central governments is diminished in favor of technologically enabled horizontal networks of consumers and civic groups, as well as the technology providers whose software allows them to evade government control.

Neither international relations theory nor modern political institutions have adequately caught up to the new marriage of technology and authority. From Pirate Bay to Ushahidi, governments cannot eradicate or wish away such transnational, technologically empowered start-ups any more than they can eliminate terrorism. The virtual arms race is far more difficult to contain than even the military one. The ranks of the world's hackers and coders already far outnumber the world's terrorists -- and there is no virtual bottle in which to reinsert the digital genie.

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