Beautiful and possible

International law has in the past been sovereign states' biggest stumbling block, perhaps soon it will be their founders.

The story of Rosa Island is a short one, albeit a fun case study in network state-related gumption steeped in the spirit of the 60s.

It starts (and ends) in the coastal region of Emilia Romagna, Italy, where, in 1958 engineer Giorgio Rosa decided to stake his claim on international waters. “My initial project was to build something that could be free from any constraint, and wouldn’t require a lot of money,” he reportedly noted. “On dry land, bureaucracy had become suffocating.”

Over nine years, Rosa funded, designed, and built a 400 square metre platform 6.27 nautical miles off the coast of Italy, an area technically deemed “international waters”. Completing construction in 1967, he topped the artificial island with a bar, a post office and a shop. A testament to freedom, the island lived outside the taxation of Italy, carrying its own flag and currency, even implementing Esperanto (an international auxiliary language created in 1887 for cross cultural communication) as the local language. Rosa declared sovereignty on May 1 1968 - a month imbued by anti-capitalist and anti-authoritarian protests in France - and pronounced himself the president of the aspiring nation.

“My fondest memory is that of the first night, on the island under construction,” he recalled. “Along came a storm, and it looked like it would tear everything apart. But in the morning the sun was shining, everything seemed beautiful and possible. Then trouble began.”

The trouble came in the form of the Italian Navy. The Italian government, concerned that Rosa Island was acting as a ploy to avoid taxation while raising money from tourists, sent the national police force to occupy the island and set up a naval blockade. On 26 June 1968, all residents were evicted from the island and the structure was demolished in February 1969.

Shortly after the eviction a new set of Rosa Island stamps were created, complete with a declaration (loosely translated from latin)- “Enemy violence destroyed the work not the idea.”

The short life of Rosa Island went largely forgotten for a few decades after its destruction - confined to the niche lore of those that longed for freedom and dreamed of making a country of their own. However, in 2020, Netflix released a film based on the story, which brought Georgio Rosa’s dream back into centre field.

Between 1969 and 2020, there have been multiple attempts at achieving sovereignty and the building of new, autonomous states. During those five decades, the Honduran ZEDEs were born, as was the concept of Seasteading that lent into the idea of constructing new nations in international waters, along with various other shots at nationhood using unclaimed land (Liberland being one of the most famous).

But the reason why I bring up all of this, is due to one part of the storyline in Netflix’s retelling of Rose Island (and I reference the film specifically because I’m unable to corroborate from historical sources that this is what happened in real life). In the film version, we follow Rosa to The Council of Europe. Fulfilling the three of the four requisites for statehood – a population, a defined territory and a government – he goes in search for the fourth (and most elusive) diplomatic recognition. Ultimately, he is denied.

While this is a fictional depiction of the story, and we now all know the island was, indeed, destroyed in real life, it points to a thorn in the side of statehood - formal recognition and the capacity to enter into relations with other nation states.

The myth of “Terra Nullis”

This brings us to the Montevideo Convention. Signed in 1933 at the Seventh International Conference of American States in Uruguay, it is the closest thing international law has to a checklist for statehood.

Article 1 sets out four criteria that a territory must meet to qualify as a sovereign state: a permanent population, a defined territory, a functioning government, and the capacity to enter into relations with other states. The first three are pretty achievable through will and resources, Rosa found that. The fourth is different. It means that the nation only really exists in its own right as a new state if other nations agree that it exists. Fulfil criteria one to three without it, and you are what international lawyers call a declarative state. A private club with a flag. This is the wall Rosa hit. It is the wall every network state or the like really hits when trying to achieve full autonomy.

Over the past two months I have been making my way through The Start Up States, a book written by real estate developer and early Bitcoin investor, Andrew J Starr. It’s a hefty volume, (although on its website it has a handy video and podcast to take you through the main points) which outlines a strategy for true sovereignty in the eyes of international law.

Before getting into Andrew’s proposed solution, it’s worth understanding why he thinks everything that has come before it has failed and his assessment is not especially generous.

The romantic vision shared by most would-be nation builders is some version of the same thing - find a gap in the map (or our perception of statehood), plant a flag and dare the world to argue. The problem, Andrew argues, is that the gap doesn’t exist. Every stretch of land on earth is either formally claimed by a nation state or in ongoing border negotiations between existing powers. The frequently cited case of Bir Tawil, a small, barren strip of territory between Egypt and Sudan that neither country formally claims, owing to a quirk in competing colonial-era treaties, is a favourite of aspiring sovereigns on the internet (did anyone hear that story about the guy who wanted to claim it to make his daughter a princess?). However, the absence of a claim is not the same as an open invitation. Egypt and Sudan have each made a decision, for their own diplomatic reasons, not to assert ownership as it left them open to declaring a more valuable piece of land as not their own.

The sea, in Andrew’s eyes fares no better. Vessels operating on international waters are required under international law to register under the flag of a recognised sovereign nation. Without one, you are not a floating republic, you are, in legal terms, a pirate ship open to all manners of disputes.

Digital states, for all their ingenuity, run into the same wall from a different direction - international law is fundamentally rooted in physical territory and the ability to enforce rules on land. If they can’t do that, Andrew’s blunt view is that they are not a “sovereign digital nation” they are an enthusiastic online community.

All of which leads to what he considers the more uncomfortable truth about many of the most celebrated micronation projects. They are, in his framing, LARPing – “Without recognition you are a private club with a flag.”

A new kind of sublet

The argument outlined in Startup States goes beyond the attempts at claiming Terra Nullis (unclaimed land), international waters or even the hallowed Special Economic Zone. An SEZ is a fatal flaw, it claims, perpetually reliant on the host country’s government - why go for bronze when you could go for gold?

Andrew starts with positing the startup state as a concept not much different from the tech startups which are now staples in our phones:

“Uber is the largest taxi company but it owns no cars, AirBnB is the largest rental company but it owns no property. A startup state can be a country that doesn’t own the underlying land title.”

The premise leans on the fact that sovereignty and land title are two entirely separate legal concepts. They don’t have to come packaged together and historically, they often haven’t. In this theory, startup states could lease the land from the host country for 99 to 999 years, structured around an international treaty in exchange for complete autonomy. The new zone is recognized as sovereign using the mechanisms of international law – a structure often much more resistant to changing political administrations than the agreements that underlie special economic zones. This would mean it could have its own immigration rules, its own tax system, its own legal framework and its own foreign policy. “A sovereign sublet.”

Andrew makes parallels with the micronation of Monaco, positioning its autonomy to make attractive laws as the asset itself:

“Cross from Beausoleil into Monaco. The views are identical. The sun is identical. The coastline is identical. The property prices are not. Monaco is expensive because it is a sovereign principality. The legal status of the territory is the asset, and that is precisely what the treaty creates.”

So why would a host country agree to this? Here the book leans on the work of Peruvian economist Hernando de Soto, whose landmark study The Mystery of Capital argued that the developing world is sitting on trillions of dollars of what he called “dead capital.” Many nations hold enormous quantities of land but lack the capital, infrastructure or institutional capacity to unlock its value.

Through granting autonomy, albeit through a lease, it allows for external investment and intentional design to develop the land to become a revenue generating asset. The host country receives a rent for the land and can negotiate shares, therefore benefitting from any of its production. A non-performing asset becomes a high-performing one without relinquishing the land itself.

Selling that land risks secession disputes and territorial loss. Leasing it does not, because ownership and title remain with the host state throughout. It’s the kind of proposed “win win” I looked at in my journey back into medieval Europe a couple of weeks back.

Founders’ choice

The legal standing of these kinds of projects is important, because then it shifts to the people that build them - the thing that creates the foundation for network states and the like to move beyond existing systems.

In a summit I went to recently, Patri Friedman noted that founders had become the main limitation he had found in his own support of charter cities - “Our biggest bottleneck is incredible founders. Startups are hard and this is even harder. It’s a startup where we need to be talking to heads of state and putting together not only a real estate project, but also an economy and finding the right tenants to make jobs.”

I’ll go into that summit and my takeaways from the discussions that happened around it in a later newsletter but Andrew rests on a similar conclusion - The world map has become, always was really, a snapshot of time rather than an end state. The limitation now is founder talent and drive.

This brings me back to Georgio Rosa, sitting on his artificial island that had survived the physical storm with the hope that “everything was beautiful and possible”. His sovereign dream was destroyed by the Italian Navy, but a future where that doesn’t happen could now be in sight. What “everything” means for these new states may soon be entirely what these founders (and hopefully their community) decide.

Q: Why do most new nations and micronations fail to achieve legal sovereignty? A: Most fail because of the fourth Montevideo Convention criterion (1933): the “capacity to enter into relations with other states.” This requires diplomatic recognition from existing nations — without it, even a territory with a permanent population, defined land, and functioning government is what international lawyers call a declarative state. As one framework for new nation-building puts it: “Without recognition you are a private club with a flag.” Rosa Island, Próspera, and digital network states have all hit this wall.

Q: What is the Montevideo Convention and what are the four criteria for statehood? A: The Montevideo Convention (1933) is the foundational checklist in international law for statehood. Article 1 sets four criteria: a permanent population, a defined territory, a functioning government, and the capacity to enter into relations with other states. The first three can be achieved through will and resources; the fourth requires diplomatic recognition from existing sovereign nations — and it remains the decisive obstacle for every aspiring new state.

Q: What is a startup state and how is it different from a special economic zone? A: A startup state, as proposed in Andrew Starr’s The Startup States, is a territory that leases land from a host country via international treaty rather than claiming or conquering it. Unlike a special economic zone or charter city — which remain legally subordinate to and revocable by the host government — a startup state would have its own immigration rules, tax system, legal framework, and foreign policy, protected by international treaty law. The core insight: sovereignty and land title are legally separate concepts. You don’t need to own the land to be sovereign on it.

Q: Why would a sovereign nation agree to lease its territory to a new autonomous state? A: Drawing on Peruvian economist Hernando de Soto’s concept of “dead capital,” the startup state argument holds that many nations own enormous tracts of land they cannot monetise. A sovereign sublet turns a non-performing asset into a revenue stream: the host state receives rent and negotiated equity without relinquishing land title — avoiding the secession disputes that outright sale would trigger. The new state gets treaty-based recognition; the host gets development without territorial loss.

Q: What was Rosa Island and why was it destroyed? A: Rosa Island was a 400-square-metre platform built over nine years by Italian engineer Giorgio Rosa, 6.27 nautical miles off the coast of Emilia-Romagna. Declaring sovereignty on May 1 1968, Rosa established a bar, post office, and shop, issued its own stamps and currency, and implemented Esperanto as the official language. The Italian government, concerned about tax evasion, sent the navy to occupy the island in June 1968. It was demolished in February 1969. A Netflix film in 2020 revived interest in the story.