May 9, 2015 6:21 AM

Microstate tax haven in the Balkans? Not that easy

The Associated Press

BATINA, Croatia (AP) The inauguration of a new libertarian mini-state in the war-ravaged Balkans may sound like an elaborate joke. But Croatian and Serbian authorities aren't laughing.

The so-called Free Republic of Liberland, a 7-square-kilometer (3 sq. mile) patch of swampland on the banks of the Danube, between Serbia and Croatia, has been blocked for over a week by police in both states.

The heavily forested area where deer and wild boar roam has been claimed by a group of Czech, Swiss, Danish and others who have announced they are forming of a tax haven like Monaco or Liechtenstein in the heart of the Balkans.

Things aren't going that smoothly for the new "nation," where self-declared President Vit Jedlicka planned to start inhabiting the land this week.

Croatia deployed border police units and patrol boats to prevent repeated attempts by dozens of Liberland organizers and their followers to reach the uninhabited area, whose only building is a run-down abandoned hunter lodge. Serbian police prevented them from crossing the border from their side.

"The police did their job maybe even better than expected," said Jedlicka, a member of a small libertarian Czech party. "Even the people who wanted to give us the boats were searched and were told that they are not allowed to give us the boats.

"But we won't give up that easy," he said. "We'll keep on trying."

Jedlicka in April planted Liberland's yellow-and-black flag on muddy land a little bigger than The Vatican. He says that the particular area was chosen because it is a rare "unclaimed" territory in Europe. The truth is that both Serbia and Croatia claim that land and still need to settle their border dispute stemming from the 1990s Balkan wars.

Legal experts in both Serbia and Croatia say that the territory is not a no-man's land, and that Jedlicka has no legal right under international law to claim it.

"It is legally senseless that someone sticks a flag on a disputed territory and declares it an independent state," said Bojan Milisavljevic, a law professor at Belgrade University.

This is not the first time enthusiasts have sought to create their own micro-states. Several attempts, including claiming abandoned British anti-aircraft platforms in the North Sea, have foundered in past decades.

Croatia called the Liberland "a virtual caricature" and Serbia said it is an "entertaining act which needs no further comment."

But the Liberland supporters, whose motto is "To Live and Let Live," claim they are serious.

Jedlicka said that over 300,000 people have signed up for citizenship over social media and investors have pledged billions of dollars in investment since the idea was advertised earlier this year. He has offered no proof for the financing claim. The micro-state's constitution says residency is open to anyone who does not have a criminal record or "Communist, Nazi or any other extremist past."

"The idea is of Liberland is to create a minimal state, a free state in the middle of Europe, on the Danube, and to experiment with creating a society the way we want it to be," said Niklas Nikolajsen, CEO of Bitcoin Suisse AG, the Swiss outcrop for the virtual currency Bitcoin which Liberlanders vow to use.

Jedlicka said the state will have "a voluntary taxing system" where inhabitants will pay as much as they want, or nothing.

But locals are skeptical that such a country could ever be formed in the Balkans.

"I can understand that some people are supportive of what's happening," said Dominik Galinec, who lives in a nearby Croatian village. "But realistically, you can't just go somewhere and say 'this is my country.'"


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