Special Status Zones in Europe

SPECIAL STATUS ZONES IN EUROPE
Legal Memorandum

July 2013


EXECUTIVE SUMMARY

The purpose of this memorandum is to identify the types of special status
zones that exist in Europe and highlight their different origins, functions, and
implementations. Special status zones in Europe range in structure and level of
autonomy, reflecting each zones unique history of origin. These zones have
varying levels of local functions and success. This memo reviews two types of
special status zones: autonomous zones and special economic zones.

Autonomous zones are typically formed for political reasons, seeking to
separate the zone after a conflict, or to prevent future conflicts. The context of the
events involved will largely determine the appropriate autonomous zone to create.
In areas where ethnic diversity is not prominent, such as the land Islands, the
unifying force of a shared language and culture is often enough for an autonomous
zone to survive, provided it is already economically stable. Conversely, when an
area is ethnically diverse, such as the South Tyrol region or the Br!ko District, the
necessity is much higher for outside actors to either represent the interests of each
party and/or mediate the implementation of autonomy. Some autonomous zones
are quite small and unique, such as the city of Bremerhaven in Germany, which
demonstrates a form of autonomy that operates under a larger federal structure
within a single state.

Special economic zones are geographic areas within the territory of a state
that operate as a separate customs area, providing benefits to enterprises willing to
locate within the zone. There are many types of special economic zones, all
sharing an economic purpose, but largely context-dependent. Developing
countries seeking to establish a dominant industry will have far different goals
from a former communist country seeking to revitalize or recreate its economic
structure. Successful special economic zones often benefit from a liberal
regulatory scheme and allow autonomous management and operations to
encourage sustainable competition (rather than short-term profit as a result of fiscal
incentives).

Each special status zone is a product of a specific need and history. While
case studies provide helpful illustration of the various forms of autonomy or
economic development each zone provides, no clear model exists for how a zone
should be established or structured. These zones are often the product of
negotiation and compromise between stakeholders and parties.
Special Status Zones in Europe, July 2013

TABLE OF CONTENTS

Statement of Purpose 1

Introduction 1

Autonomous Zones 1

Autonomous Zones in Europe 2
land Islands 2
Achieving Autonomy 3
Autonomy in Practice 4
South Tyrol 6
Br!ko District 11
Bremerhaven 15
Lessons Learned 17

Special Economic Zones 17
Incentives for Creating an SEZ 18
Administration and Regulation of SEZs 19
European SEZs 20
Lessons Learned 21

Conclusion 21

1


Statement of Purpose

The purpose of this memorandum is to identify the types of special status
zones that exist in Europe and highlight their different origins, functions, and
implementations.

Introduction

While special status zones exist in many variations throughout Europe, they
are typically formed for political or economic purposes, and occasionally both.
Zones with a political purpose are formed with varying degrees of autonomy and
are often established to relax or sever ties with neighboring states. Zones with an
economic purpose often exist within the regulatory framework of a state,
functioning as a free-market variant of the larger economy. This memorandum
provides a sampling of various types of status zones and methodologies.

Autonomous Zones

The creation of autonomous zones can allow powers to be devolved to a
section of the population, while maintaining state unity.
1
Autonomy is often
suggested as a solution to ethnic conflict in a region.
2
The Council of Europe has
recognized autonomous zones as a positive solution to internal conflict,
particularly if they are viewed as a sub-state arrangement that balances minority
rights and state unity and integrity.
3

Autonomy may refer to territorial autonomy, where a population in a
particular region is provided governance powers tailored to its geographic
concentration, or cultural autonomy, which emphasizes the exercise of cultural or
linguistic rights.
4
In some instances a region may have cultural or historic ties to a
particular state, such as the Muslim population in Xinjian, China who have ethnic

1
Ruth Lapidoth, AUTONOMY: FLEXIBLE SOLUTIONS TO ETHNIC CONFLICTS 3 (1997).
2
3
Council of Europe, Parliamentary Assembly, Positive Experiences of Autonomous Regions as a Source of
Inspiration for Conflict Resolution in Europe, Resolution 1334, paras. 7, 10 (June 24, 2003), available at
http://assembly.coe.int/ASP/XRef/X2H-DW-XSL.asp?fileid=17120&lang=EN
4
Council of Europe, Parliamentary Assembly, Positive Experiences of Autonomous Regions as a Source of
Inspiration for Conflict Resolution in Europe, Resolution 1334, para. 11 (June 24, 2003), available at
http://assembly.coe.int/ASP/XRef/X2H-DW-XSL.asp?fileid=17120&lang=EN

2
ties to eastern Russia.
5
Groups may seek autonomy for a number of reasons,
including legal equality, group rights, or self-determination, among others.
6

Autonomous Zones in Europe

Autonomous zones in Europe have been formed for various reasons, but
typically they seek to encourage post-conflict societal reconstruction or to promote
financial independence.
7
In the land Islands, the South Tyrol region, and the
Br!ko District the overarching incentive for autonomy is conflict management or
prevention, based on historical or perceived tensions. In Bremerhaven the
incentives for autonomy are political and financial. These instances demonstrate
variations in formation and structure of autonomous zones, along with certain
commonalities.

land Islands

The land Islands are located between Sweden and Finland in the Baltic Sea
and are home to 27,500 people.
8
Throughout history the Islands were claimed or
captured multiple times by Sweden, Finland, and Russia.
9
The Islands were
demilitarized in 1856 following the Crimean War.
10
The Islands were later used by
Russian troops during World War I, during which time they were officially part of
the Finnish Grand Duchy that operated autonomously within the Russian empire.
11

Following Finlands declaration of independence in 1917, the land Islands
expressed the desire to reunite with Sweden.
12
The language barrier between the

5
6
7
The term autonomous is used here to encompass a variety of levels of autonomy, including those that are semi-
autonomous.
8
Everything you need to know about land, LAND OFFICIAL TRAVEL GUIDE, available at
http://www.visitaland.com/en/facts (last visited May 16, 2013).
9
Maria Ackrn, Successful Examples of Minority Governance: The Cases of the land Islands and South Tyrol,
REPORT FROM THE LAND ISLANDS PEACE INSTITUTE, 12 (2011), available at
http://www.peace.ax/images/stories/publications/rapport_1-2011_webb.pdf.
10
Farimah Daftary, Insular Autonomy: A Framework for Conflict Settlement? A Comparative Study of Corsica and
the land Islands, EUROPEAN CENTRE FOR MINORITY ISSUES, 13 (2000), available at
http://edoc.vifapol.de/opus/volltexte/2009/1889/pdf/working_paper_9.pdf.
11
12

3
land Islands, where the predominant language is Swedish, and Finland was one
contributing factor to the quest for reunification, and eventual autonomy.
13

Achieving Autonomy
The Islands residents demonstrated their desire to be reattached to Sweden
through a referendum that passed with overwhelming support in December 1917.
14

Residents of the land Islands made pleas to the Swedish government.
15
At the
close of World War I, Finland refused to release the Islands, but did attempt to
reassure residents by granting the Islands broad autonomy.
16
Ultimately, Sweden
and Finland submitted their dispute to the League of Nations.
17
The Council of the
League of Nations determined that Finland had sovereignty but should guarantee
the autonomy of the Islands, preserving the culture and the Swedish language
spoken by the majority of land Islanders.
18

Concerned parties and many European states signed an agreement in 1921 to
preserve the demilitarization and neutrality of the Islands, which was ratified by
Finland in 1922.
19
The treaty and the Councils recommendations were
incorporated into the 1921 land Autonomy Act.
20
Finland agreed to guarantee
certain powers and protections, such as Swedish language instruction and a
Swedish-influenced curriculum in schools, limitations on the right to acquire real
property by anyone not domiciled on the Islands, and authority over the budget for
the Islands.
21
The Act has been revised twice once in 1953 and again in 1993,

13
14
15
16
17
land Government, landAn Autonomous Region, Official Government Website (last visited Nov. 5, 2012)
available at http://www.aland.ax/.composer/upload//Kortogott_eng_liten.pdf.
18
REPORT FROM THE LAND ISLANDS PEACE INSTITUTE, 15-16 (2011), available at
19
Ministry for Foreign Affairs of Finland, Technical Delimitation of the Aland Convention, Feb. 3, 2012, available
at http://www.finland.eu/public/download.aspx?ID=110320&GUID={48729127-F827-4F9D-87C3-
00F1D8B731E5}; Maria Ackrn, Successful Examples of Minority Governance: The Cases of the land Islands and
South Tyrol, REPORT FROM THE LAND ISLANDS PEACE INSTITUTE, 16 (2011), available at
20
Act on the Autonomy of land (Finland, 1991), available in English at
http://www.finlex.fi/en/laki/kaannokset/1991/en19911144
21
Act on the Autonomy of land secs. 10, 40, 44 (Finland, 1991), available in English at
http://www.finlex.fi/en/laki/kaannokset/1991/en19911144.pdf; Ruth Lapidoth, AUTONOMY: FLEXIBLE SOLUTIONS
TO ETHNIC CONFLICTS 70-71 (1997); Heidi Harju-Luukkainen & Kari Nissinen, Good Educational Outcome on
land Islands Despite Isolation: Evidence from PISA 2009 Results from Finland, EUROPEAN EDUCATIONAL

4
when the current version came into force.
22
Notably, the 1953 amendment
formalized the right of domicilerequiring someone to have a residence in the
land Islands, to be present for five years without interruption, and to have a
certain level of proficiency in the Swedish languagewhile the 1993 amendment
expanded the economic purview of the Islands.
23
In addition, the Finnish
government and the land Islands signed the Finnish Autonomy Act in 1951,
strengthening the Islands autonomy by requiring the mutual consent of Finland
and the Islands for any amendment that impacts the interests of the Islands.
24

Autonomy In Practice
The land Islands autonomy is now pervasive, and the Islanders maintain
great control over their interests because of the powers given to them as a result of
the international led solution.
25
The land Islands have their own legislature, local
government, and governor.
26
The Lagtinget, Islands Parliament, exercises
budgetary power and may pass legislation related to its internal and regional
affairs, including education, healthcare, social welfare, industry, and the
environment.
27
Legislation must be submitted for approval by the Finnish
president; however presidential veto powers are only permitted when the Lagtinget
operates beyond the scope of its competence or the law has an impact on state
security.
28
The Islands police force is made up almost entirely of land Islanders,

RESEARCH ASSOCIATION (Sept. 19, 2012), available at http://www.eera-ecer.de/ecer-
programmes/conference/6/contribution/17556/.
22
Act on the Autonomy of land (Finland, 1991), available in English at
http://www.finlex.fi/en/laki/kaannokset/1991/en19911144; The land Islands, FINLANDS PERMANENT
REPRESENTATION TO THE EUROPEAN UNION, available at
http://www.finland.eu/public/default.aspx?nodeid=45373&contentlan=2&culture=en-US (last visited May 14,
2013).
23
the land Islands, EUROPEAN CENTRE FOR MINORITY ISSUES 21 (2000), available at
http://edoc.vifapol.de/opus/volltexte/2009/1889/pdf/working_paper_9.pdf; Act on the Autonomy of land (Finland,
1991).
24
25
Susanne Eriksson, The Example of land: Autonomy as a Minority Protector, THIS IS FINLAND, Apr. 2007,
available at http://finland.fi/public/default.aspx?contentid=160122&contentlan=2&culture=en-US.
26
27
Act on the Autonomy of land secs. 18, 44, 58-59 (Finland, 1991), available in English at
http://www.finlex.fi/en/laki/kaannokset/1991/en19911144.
28

5
and activities such as voting, running a business, and land ownership are
exclusively reserved for land Island citizens.
29

Finland maintains control over lands foreign affairs and customs, much of
its criminal and civil laws, and its court system, and land maintains one
representative in the Finnish Parliament.
30
land Islanders also pay a tax to
Finland, though some of the tax revenue is returned to lands budget for the
Lagtinget to disburse.
31

In addition to the multiple governing authorities, there is also an land
Delegation, composed of land and Finnish representatives.
32
The land
Delegation is chaired by the governor and is responsible for carrying out
equalization, which is the coordination of the sum of money paid to the state as a
cost of autonomy, and tax retribution.
33

The land Islands have been able to create an international space for itself
as well. For instance, the Islands are represented within the Finnish Permanent
Mission to the European Union (EU) and also are represented in Finlands
delegation to the EU Committee of the Regions.
34

While the land Islands are often used as an international standard for
peaceful, autonomous conflict resolution, they have also benefited from a
confluence of ideal factors that made the land solution possible.
35
First, the states
disputing lands status, Finland and Sweden, were not at war and enjoyed well-
established rule of law.
36
Second, lands geographical and linguistic boundaries
were clear and its economy strong, allowing it to assert itself without needing to

29
30
Act on the Autonomy of land sec. 27 (Finland, 1991), available in English at
http://www.finlex.fi/en/laki/kaannokset/1991/en19911144; Election Act sec. 6 (Finland, 1998), available in English
at http://www.legislationline.org/documents/action/popup/id/5672.
31
32
33
Act on the Autonomy of land sec. 45, 55, 56 (Finland, 1991), available in English at
34
35
36

6
fully depend on Sweden or Finland.
37
Third, the land Islanders shared a common
cultural heritage and local customs that created a strong enough bond to gain
overwhelming support for its referendum on self-government.
38
Ultimately, the
residents are now content with autonomy, and both the Islands and the Finnish
government have presented the autonomous region as a success.
39
Having the
involved parties declare their satisfaction with the solution, after many years of
successful implementation, bodes well for the land Islands role as an
international standard.
40

South Tyrol

South Tyrol is an area of land within the boundaries of Italy on the Italy-
Austria border.
41
Unlike the land Islands, the residents of South Tyrol were
ethnically divided between Italian and German speaking peoples, and the area was
often marked by violent conflict.
42
Prior to World War I, South Tyrol was part of
the Austro-Hungarian Empire, with 86 percent of the population made up of
German-speakers.
43
After Italy entered the war, the Allied powers rewarded its
participation by pledging South Tyrol and the larger adjoining territory of
Trentino,
44
which has an Italian-speaking majority, to Italy.
45
Italy moved to annex
South Tyrol, as it provided access to the Brenner Pass, a strategic mountain pass

37
38
landAn Autonomous Region, LAND ISLANDS GOVERNMENT, available at
http://www.aland.ax/.composer/upload//Kortogott_eng_liten.pdf (last visited May 15, 2013).
39
40
41
42
Stefan Wolf, Complex Autonomy Arrangements in Western Europe: A Comparative Analysis of Regional
Consociationalism in Brussels, Northern Ireland and South Tyrol, in Autonomy, SELF GOVERNANCE AND CONFLICT
RESOLUTION: INNOVATIVE APPROACHES TO INSITUTIONAL DESIGN IN DIVIDED SOCIETIES 117, 124 (Marc Weller &
Stefan Wolff, eds., 2005).
43
Antony Alcock, The South Tyrol Autonomy: A Short Introduction, Unpublished Paper Provided by the
Autonomous Province of Bozen/Bolzano, 1 (May, 2001), available at http://www.provinz.bz.it/en/downloads/South-
Tyrol-Autonomy.pdf.
44
The region, which includes Trentino and South Tyrol, is referred to in Italian as Trentino-Alto Adige/Sdtirol.
Trentino and South Tyrol are each provinces within this region. In some writings, Trentino is referred to as Trento,
which is the capital city of Trentino. However, in order to achieve consistency, this memorandum refers to the
province as Trentino, as opposed to Trento.
45

7
through the Alps.
46
At the time, Italy claimed that South Tyrol and the Trentino
territory were a single geographical unit, and that this unit should become part of
Italy because the combined territories had a majority Italian-speaking population.
47

Prior to World War II Mussolini denationalized South Tyrol and enforced
massive Italian immigration to counter the prevalence of German-speaking
peoples.
48
Creating an industrial zone in South Tyrol to attract Italian workers,
Mussolinis efforts eventually increased the South Tyrol Italian population to 25
percent.
49
German culture and language were suppressed, and Italian was made the
official language.
50
German signage was removed, German court proceedings
prohibited, and those who did not speak Italian were not able to participate in
politics or in much of the workforce.
51
Adolf Hitler supported Italian possession of
South Tyrol, and the region remained in Italys control during Hitlers rise to
power.
52
Mussolini and Hitler gave the German-speaking South Tyrol population
the option to leave or accept complete assimilation, a choice that resulted in the
departure of some 75,000 German-speaking people.
53

The impact of the population engineering efforts before and during World
War II was vast and pervasive. The prohibition on using German in an official
capacity relegated it to an oral tradition learned in the home, and effectively
destroyed a generation of German-speaking community leaders and intellectuals in

46
47
Autonomous Province of Bozen/Bolzano, 1-2 (May, 2001), available at
http://www.provinz.bz.it/en/downloads/South-Tyrol-Autonomy.pdf.
48
Stefan Wolf, Complex Autonomy Arrangements in Western Europe: A Comparative Analysis of Regional
Consociationalism in Brussels, Northern Ireland and South Tyrol, in Autonomy, SELF GOVERNANCE AND CONFLICT
RESOLUTION: INNOVATIVE APPROACHES TO INSTITUTIONAL DESIGN IN DIVIDED SOCIETIES 117, 124 (Marc Weller &
Stefan Wolff, eds., 2005).
49
Tyrol-Autonomy.pdf.
50
51
Ruth Lapidoth, AUTONOMY: FLEXIBLE SOLUTIONS TO ETHNIC CONFLICTS 101 (1997); Antony Alcock, The South
Tyrol Autonomy: A Short Introduction, Unpublished Paper Provided by the Autonomous Province of
Bozen/Bolzano, 2 (May, 2001), available at http://www.provinz.bz.it/en/downloads/South-Tyrol-Autonomy.pdf.
52
53
Tyrol-Autonomy.pdf.

8
the South Tyrol area.
54
Making Italian the official language caused a socio-
economic disparity between largely rural German-speaking persons and largely
Italian-speaking city dwellers.
55

Following Mussolinis fall, South Tyrol fell under Nazi control in mid-1943
until the end of the war.
56
While Austria and the German-speaking South Tyrolese
pushed for the region to be returned to Austria, Italy objected to the move, in part
motivated by the regions hydroelectric resources.
57
As a reconciliation measure,
Austria eventually signed an autonomy agreement with Italy over South Tyrol.
58

Achieving Autonomy
South Tyrols autonomy began to emerge after World War II in the 1946
Paris Agreement, if only slightly.
59
Austrian and Italian representatives signed the
treaty, preserving the cultural and linguistic rights of South Tyrol and Trentino
within one autonomous region.
60
Austria was designated as the protector of the
German speakers interests, which were a minority after Mussolinis enforced
Italian immigration, thereby giving the Italian and German speaking populations an
outside overseer throughout the implementation process.
61
The treaty was made
unchangeable except by concurrence of all interested parties: Italy, Austria, and
the German-language minorities.
62

Under the 1947 Treaty of Peace, which incorporated the Paris Agreement,
German language protections were provided for, including education instruction in

54
Tyrol-Autonomy.pdf.
55
Tyrol-Autonomy.pdf.
56
57
Ruth Lapidoth, AUTONOMY: FLEXIBLE SOLUTIONS TO ETHNIC CONFLICTS 101 (1997); Antony Alcock, The South
Tyrol Autonomy: A Short Introduction, Unpublished Paper Provided by the Autonomous Province of
Bozen/Bolzano, 4 (May, 2001), available at http://www.provinz.bz.it/en/downloads/South-Tyrol-Autonomy.pdf.
58
59
60
61
Autonomous Province of Bozen/Bolzano, 22 (May, 2001), available at
62
Karl Rainer, The Autonomous Province of Bozen/Bolzano-South Tyrol, in MINORITY GOVERNANCE IN EUROPE 92
(Kinga Gal, ed., 2002).

9
German and modified curricula for primarily German-speaking schools, the right
to return to the use of German surnames, as well as the establishment of legislative
and executive regional governments.
63
However, this agreement would prove to be
insufficient to satisfy both sides. An Italian implementing statute was criticized by
the German-speaking South Tyrolese, who believed the statute fell short of the
guarantees provided for in the agreement and claimed that the consultation process
provided in the Paris Agreement was not fulfilled.
64
In addition, the German-
speaking South Tyrolese were unhappy with Italian efforts to join South Tyrol with
Trentino, as it was seen as an effort to create an Italian majority in the region and
limit the power of the South Tyrol German-speaking population.
65
Inequality for
German-speaking South Tyrolese was the hallmark of this period, characterized
largely by the slow pace of re-integrating a policy of bilingualism into public life,
which would not become official until 1959.
66
Violent protests, bombings, and
calls for autonomy throughout the next decade eventually put the South Tyrol
question on the agenda of the United Nations General Assembly, and the parties
were urged to settle the conflict bilaterally.
67

Increasing violence directed at Italy during the 1950s and 1960s prompted
the Italian government to establish a multi-ethnic commission to investigate the
South Tyrol question.
68
Austria, Italy, and members of the leading South Tyrol
political party eventually agreed to a revised Autonomy Statute in 1972.
69
The
new statute officially adopted the name South Tyrol and gave South Tyrol and
Trentino individual legislative powers as provinces of Italy, combined into one

63
Ruth Lapidoth, AUTONOMY: FLEXIBLE SOLUTIONS TO ETHNIC CONFLICTS 102 (1997); Katrin Pircher, Ulrike
Huber & Herbert Taschler, The German Language in Education in South Tyrol (Italy), MERCATOR-EDUCATION 13-
14, 16 (2002), available at http://www.mercator-research.eu/fileadmin/mercator/dossiers_pdf/german_in_italy.pdf.
64
65
66
67
68
Emma Lantscher, History of the South Tyrol Conflict and Its Settlement, in TOLERANCE THROUGH LAW: SELF
GOVERNANCE AND GROUP RIGHTS IN SOUTH TYROL 3, 12 (Jens Woelk, Francesco Palermo, Joseph Marko, eds.
2008).
69

10
autonomous region.
70
The statute created the region of Trentino-Alto-Adige, and
the Trento and Bolzano, or South Tyrol, provinces.
71

Autonomy In Practice
The regional parliament is divided into two constituencies of Trentino and
South Tyrol provinces. South Tyrols government and its portion of the regional
parliament are proportionally divided by ethnicity, and any majority in parliament
is prohibited from creating a government if it is composed of only one ethnic
group.
72
Ethnic proportionality was accompanied by efforts to gradually create
linguistic equality in all areas of life, as the German-speaking South Tyrolese saw
language as a crucial connection to their nearly depleted culture.
73

Given the desire to preserve language identity, calls to create integrated
schools with multilingual instruction were highly contentious.
74
The South
Tyrolese rejected such proposals, instead wishing to have children educated in
their mother tongue.
75
Under the Autonomy Act, parents were given the right to
choose the preferred language of instruction.
76
Moreover, subsequent legislation in
1996 provided the autonomous provinces the discretion over certain aspects of
education, such as the ability to regulate teachers salary, fill teaching positions,
develop schools, determine the hours and subjects taught, and alter the curricula
and exam structure.
77
The German language is similarly preserved in other areas,
including court and administrative dealings.
78

70
71
72
73
74
75
76
77
Katrin Pircher, Ulrike Huber & Herbert Taschler, The German Language in Education in South Tyrol (Italy),
MERCATOR-EDUCATION 6 (2002), available at http://www.mercator-
research.eu/fileadmin/mercator/dossiers_pdf/german_in_italy.pdf.
78

11
In terms of governance, both the laws of the region and the provinces must
be in conformity with the Italian Constitution.
79
The initial phase of South Tyrols
autonomy gave it primary legislative powers for most internal affairs, including
some aspects of education, public health, communications, and public works, and
gave it secondary legislative powers (secondary to the regional parliament shared
with Trentino) over teaching, trade, and healthcare.
80
The Autonomy Statute
provides the region and provinces with a council (legislature), government, and
president.
81
While the region holds power over municipal boundaries, land
registers, fire brigades, healthcare, and land expropriation, the provinces mostly
have authority over economic, social, and cultural matters.
82
The provinces, within
the purview of these areas, have authority over public housing, the environment,
transportation, agriculture, and water, among other things.
83

In terms of electoral politics, each province has its own legislature, called a
provincial parliament, with thirty-five members per province.
84
These provinces
elect each member of parliament, called a deputy, under a proportional
representation scheme; however, each province has its own independent system of
political parties.
85
Each provinces parliament then automatically becomes part of
the Regional Parliament, made up of seventy members, which establishes regional
policy.
86

Austria and Italy formally closed the dispute before the UN General
Assembly in 1992, after a much longer than anticipated implementation period
finally came to a close.
87
As a measure of lasting representation for the minority
populations, a Standing Committee was set up to monitor social, cultural, and

79
80
81
Guiseppe Avolio, Institutions of Self-Government, in TOLERANCE THROUGH LAW: SELF GOVERNANCE AND
GROUP RIGHTS IN SOUTH TYROL 53, 54 (Jens Woelk, Francesco Palermo, Joseph Marko, eds. 2008).
82
Ruth Lapidoth, AUTONOMY: FLEXIBLE SOLUTIONS TO ETHNIC CONFLICTS 104-05 (1997).
83
84
"#
"$
87
The Austrian Foreign Ministry, South Tyrol, para. 4 (accessed November 10, 2012), available at
http://www.bmeia.gv.at/en/foreign-ministry/foreign-policy/europe/neighbourhood-policy/south-tyrol.html

12
economic issues that impact the various ethnic groups with the ability to propose
changes as necessary.
88

Br!ko District

Following the dissolution of the former Yugoslavia, the Dayton Peace
Accords established Bosnia and Herzegovina (BiH) as a state divided into two
entities: the Federation of Bosnia and Herzegovina (FBiH) and the Republika
Srpska (RS).
89
Br!ko is located at the meeting point of the borders of Croatia,
Serbia, and BiH, and saw fierce battles and ethnic cleansing during the war,
changing its demographic composition from 20 percent Serb to 99 percent Serb
and destroying 40 percent of its residences.
90
Due to the symbolic value that both
BiH entities attach to Br!ko, as well as its strategic location, fertile farmland, and
water access, the parties could not agree at Dayton on which entity would possess
Br!ko, so the Dayton Accords provided that the entities would settle Br!kos status
later through binding arbitration.
91

Achieving Autonomy
The first of three decisions of the Arbitral Tribunal in 1997 determined that
the Br!ko area would remain under the shared control of the entities, with an
international supervisor overseeing reconstruction objectives for the area.
92
The
international supervisor was given the power to enact orders that superseded local
laws when such laws were against the object and purpose of the Dayton Accords.
93

Br!ko demonstrates a situation where external executive authority was exercised
over a post-conflict scenario, creating a period of enforced reform that some
members of the international community saw as an experiment in reform

88
89
History and Mandate of the ORH North/Br!ko, OFFICE OF THE HIGH REPRESENTATIVE REGIONAL OFFICE, BRCKO,
Aug. 28, 2001, available at http://www.ohr.int/ohr-offices/brcko/history/default.asp?content_id=5531.
90
Henry Clark, Br!ko District: An Example of Progress in the Basic Reforms in Bosnia and Herzegovina, WILSON
CENTER, para. 2 (Feb. 4, 2004), available at http://www.wilsoncenter.org/publication/293-Br!ko-district-example-
progress-the-basic-reforms-bosnia-and-herzegovina.
91
Valery Perry, Shepherding Sovereignty? Slow Democratization in Bosnia and Herzegovina, 10 BC JOURNAL OF
INTERNATIONAL AFFAIRS 75, 82 (2007).
92
Republika Srpska v. Federation of Bosnia and Herzegovina, Arbitral Tribunal for Dispute Over Inter-Entity
Boundary in Brcko Area, para. 93 (1997), available at http://www.ohr.int/ohr-
offices/brcko/default.asp?content_id=5327.
93
Republika Srpska v. Federation of Bosnia and Herzegovina, Arbitral Tribunal for Dispute Over Inter-Entity
Boundary in Brcko Area, Para. 104(b)(1) (1997), available at http://www.ohr.int/ohr-

13
implementation.
94
The Tribunals second decision in 1998 confirmed the need for
continued international supervision efforts to bring Br!ko to a point of stability,
and gave the international supervisor additional powers to implement the Dayton
Accords, including the power to dismiss local officials.
95

In 1999 the Arbitral Tribunal issued its last award, settling the final status of
the Br!ko District as an area held in condominium by both entities, though
existing outside of the administrative and legal entity structures.
96
This ruling
meant that Br!ko would be an autonomous district, while also subject to the
common institutions of the sovereign state of BiH.
97
Under the ruling, all authority
of both the FBiH and the RS was permanently suspended within Br!ko.
98

Autonomy in Practice
As required by the arbitration awards, the Br!ko Districts international
supervisor used his/her increased authority to establish an ethnically diverse
District Assembly to work towards the implementation of the Dayton Accords.
99

Working with a transitional government in this fashion allowed for comprehensive
and efficient societal reforms on many levels.
100
For instance, revisions to the
Br!ko legal system created an independent, multiethnic judiciary, while
introducing criminal and civil codes. A multi-ethnic police force was established
and certified by the U.N. Mission, and became widely respected in public opinion
polls.
101
Similarly, popular educational reforms implemented a more balanced, less

94
Valery Perry, At Cross Purposes? Democratization and Peace Implementation Strategies in Bosnia and
Herzegovinas Frozen Conflict, 10.1 HUMAN RIGHTS REVIEW 35, 43 (2009)
95
Federation of Bosnia and Herzegovina v. Republika Srpska, Supplemental Award, Arbitral Tribunal for Dispute
Over Inter-Entity Boundary in Brcko Area, para. 24 (1998), available at http://www.ohr.int/ohr-
96
Federation of Bosnia and Herzegovina v. Republika Srpska, Final Award, Arbitral Tribunal for Dispute Over
Inter-Entity Boundary in Brcko Area, para. 11 (1999), available at http://www.ohr.int/ohr-
offices/brcko/arbitration/default.asp?content_id=42738.
97
Valery Perry, Democratic Ends, (UN)Democratic Means? Reflections on Democratization Strategies in Br!ko and
in Bosnia-Herzegovina, in BOSNIAN SECURITY AFTER DAYTON: NEW PERSPECTIVES, 51, 56 (Michael Innes, ed.,
2006).
98
Peter Farrand, Lessons from Br!ko: Necessary Components for Future Internationally Supervised Territories, 15
EMORY INTERNATIONAL LAW REVIEW 529, 548 (2001).
99
Valery Perry, Democratic Ends, (Un)Democratic Means? Reflections on Democratization Strategies in Br!ko and
in Bosnia-Herzegovina, in BOSNIAN SECURITY AFTER DAYTON: NEW PERSPECTIVES, 51, 57 (Michael Innes, ed.,
2006).
100
Valery Perry, Democratic Ends, (UN)Democratic Means? Reflections on Democratization Strategies in Br!ko
and in Bosnia-Herzegovina, in BOSNIAN SECURITY AFTER DAYTON: NEW PERSPECTIVES, 51, 59 (Michael Innes, ed.,
2006).
101
CENTER (Feb. 4, 2004), available at http://www.wilsoncenter.org/publication/293-Br!ko-district-example-progress-
the-basic-reforms-bosnia-and-herzegovina.

14
biased curriculum.
102
The integrated schools of Br!ko were also the first in BiH.
103

The supervisors power to oversee local elections, including the power to alter
results or remove officials if necessary to ensure compliance with the multi-ethnic
objectives of the Dayton Accords, was a contributing factor to establishing a
lasting multi-ethnic government structure.
104

The adoption of the District Statute, which officially instituted a three-
branch government, including the District Assembly, mayor, and judiciary, was
another step towards complete autonomy for Br!ko.
105
The District Statute and the
above-mentioned reforms set a foundation for a period of economic success,
establishing business-friendly, anti-corruption policies that attracted foreign
investment.
106
The economic successes in this early period were bolstered by the
decision to allow Br!ko to have its own tax and customs revenues, and eventually
allotting it a portion of BiHs VAT income.
107
The reforms also attracted refugees
back to the area, and created an environment conducive to more moderate
perspectives on ethic identity than are found elsewhere in BiH.
108

Br!kos initial reform efforts notably took hold easier than in BiHs entities
where local political parties were given a stronger presence in reformation
efforts.
109
Nationalist politics that could interfere with the establishment of
institutions were prevented from doing so, and residents were instead encouraged
to guide these institutions prior to holding elections in the District.
110
For this to
happen, security was a prerequisite, as demonstrated by the success of Br!kos

102
and in Bosnia-Herzegovina, in BOSNIAN SECURITY AFTER DAYTON: NEW PERSPECTIVES, 51, 60-61 (Michael Innes,
ed., 2006).
103
Valery Perry, At Cross Purposes? Democratization and Peace Implementation Strategies in Bosnia and
Herzegovinas Frozen Conflict, 10.1 HUMAN RIGHTS REVIEW 35, 43 (2009)
104
EMORY INTERNATIONAL LAW REVIEW 529, 550-55 (2001).
105
Statute of the Br!ko District of Bosnia and Herzegovina arts 23-41, 46-57, 62-69 (1999), available at
http://www.ohr.int/ohr-offices/Br!ko/default.asp?content_id=5367
106
107
International Crisis Group, Br!ko Unsupervised, 4 (December 8, 2011), available at
http://www.crisisgroup.org/~/media/Files/europe/balkans/bosnia-herzegovina/B66%20Br!ko%20Unsupervised.pdf.
108
Florian Bieber, Local Institutional Engineering: A Tale of Two Cities, Mostar and Br!ko, 12 INTERNATIONAL
PEACEKEEPING 420, 430 (2005).
109
and in Bosnia-Herzegovina, in BOSNIAN SECURITY AFTER DAYTON: NEW PERSPECTIVES, 51, 60-61 (Michael Innes,
ed., 2006).
110

15
multi-ethnic police force, which allowed the reconstruction of religious buildings
that might have been prone to opposition without a significant deterrent.
111

Judicial and legal reforms strengthened the rule of law and laid the foundation of
economic and government reforms. Increased rule of law as a result of judicial
reform attracted foreign investment.
112
The presence of neutral civilian oversight
helped to ensure that the terms of the Dayton Accords and the Arbitral Tribunal
decisions were implemented in the agreed upon format and integrated into
constitutional reforms.
113
At a state level, Br!ko was the subject of the only BiH
constitutional amendment to date, giving Br!ko the same access and protections of
the BiH Constitutional Court as the FBiH and the RS already had, essentially
providing domestic safeguards for Br!kos status.
114

Nonetheless, the early success of Br!ko has not easily endured. After seven
years without district-wide elections, 2004s elections brought political stalemate
that has become a regular occurrence.
115
Corruption at all levels and disputes
between ethnically aligned political factions are ever-present obstacles in
maintaining an equal, functioning autonomy.
116
Many have lamented Br!kos 4-
4-2 rule, an ethnic quota for government posts that some say has become the
standard for all jobs and disbursement of funds.
117
Disagreements over the
distribution of funds have stalled local development, while the end of preferential
economic treatment for the District and increased corruption has dried up much
foreign investment.
118
Br!ko will likely be pressed to address these issues
internally, as the most recent Br!ko international supervisor announced the
suspension of his supervisory role as of August 31, 2012, retaining his powers
under the Arbitral Awards, but deferring to District officials unless absolutely

111
112
113
EMORY INTERNATIONAL LAW REVIEW 529, 535 (2001)
114
115
Valery Perry, Shepherding Sovereignty? Slow Democratization in Bosnia and Herzegovina, 10 BC JOURNAL OF
INTERNATIONAL AFFAIRS 75, 82-83 (2007).
116
International Crisis Group, Br!ko Unsupervised, 5-6 (December 8, 2011), available at
117
118

16
necessary.
119
Recent developments in Br!ko concerning District resident
citizenship, voting rights, and the assignment of personal identification numbers
suggest that more issues related to the rights and obligations of BiH citizens living
in this special status District could increasingly be brought to public attention.

Bremerhaven

Bremerhaven is a city in the German city-state of Bremen, which exists as a
sort of financial and administrative anomaly.
120
Bremerhaven and Bremen City
together compose the Bremen Land (state), or Free Hanseatic City of Bremen,
which is the smallest state in Germany.
121
The city of Bremen is located on the
Weser River, which used to provide it with access to sea-borne trading.
122
When
the Weser began to fill with silt, Bremen bought the land that became the city of
Bremerhaven on the North Sea in 1827 to maintain a coastal presence, and
therefore preserve its trading power.
123

Bremerhaven boasts the largest container handling port in Europe.
124
It is
also home to one of the larger fish processing industries in Europe, despite the
absence of a formerly prosperous fishing fleet in its port.
125
Bremerhavens port is
the main driver of its economy, though the economic downturn in Europe
registered a 20 percent decrease in container handling in 2009.
126
Bremerhaven
became one of the main points of emigration to the United States, and a key
German base in World War II.
127
The cities of Bremen and Bremerhaven later

119
Press Release, Br!ko Supervisor Roderick Moore Suspends Functions, Office of the High Representative
(August 31, 2012). available at http://www.ohr.int/ohr-dept/presso/pressr/default.asp?content_id=47427
120
Strange Bremen: Freedom Doesnt Come Cheap, ECONOMIST, May 19, 2011, available at
http://www.economist.com/node/18713878.
121
Jutta Kramer, Local Government and City States in Germany, in THE PLACE AND ROLE OF LOCAL GOVERNMENT
IN FEDERAL SYSTEMS 83, 90 (Nico Steytler, ed. 2005), available at
http://www.kasyp.net/fileadmin/kasyp_files/Documents/reused/Loc_Pol__KAs.pdf#page=89.
122
123
124
The Free Hanseatic City of Bremen, BUNDESRAT, available at
http://www.bundesrat.de/nn_11646/EN/organisation-en/laender-en/hb-en/hb-en-node.html?__nnn=true.
125
European Commission, Assessment of the status, development and diversification of fisheries-dependent
communities: Bremerhaven Case Study Report, 3 (2010).
126
127

17
separated, but rejoined after the war in 1947 to form a state with a joint
constitution.
128

Autonomy in Practice
Bremerhaven, with a population of 112,109 in 2012,
129
is the only city in
Germany to maintain its own constitution, though it recognizes Bremens
possession of the Bremerhaven port area.
130
A city council and mayor run
Bremerhaven.
131
As a sub-unit of the Bremen state, Bremerhaven is distinct from
Bremen City, which is directly overseen by the state.
132
Along with its own
constitution, Bremerhaven is governed by its own set of laws, rather than the
traditional by-laws of a city.
133

Bremerhaven is represented in the Bremen state parliament (Brferschaft),
134

sending its own, locally elected parliamentarians to promote its interests.
135
It also
autonomously manages its schools and police, and operates outside of the reach of
state spending sanctions, allowing it to incur debt and pursue its own investment
projects, which have included offshore energy and a sports arena.
136

Lessons Learned

Autonomous zones in Europe have developed due to a number of different
reasons, including political interests, financial interests, ethnic differences, or as a
result of lingering tensions deriving from a conflict. In each instance, a state or an

128
The Free Hanseatic City of Bremen, BUNDESRAT, available at
http://www.bundesrat.de/nn_11646/EN/organisation-en/laender-en/hb-en/hb-en-node.html?__nnn=true.
129
Population Size and Population Movement, BREMEN NATIONAL STATISTICAL OFFICE, available in German at
http://www.statistik-bremen.de/aktuelle_statistiken/01b.htm.
130
131
132
133
IN FEDERAL SYSTEMS 83, 90-91 (Nico Steytler, ed. 2005), available at
134
Parliament, BREMISCHE BRGERSCHAFT, available at http://www.bremische-
buergerschaft.de/index.php?id=6&L=1 (last visited May 16, 2013).
135
136

18
international agreement has created an autonomous zone unique to the particular
circumstances.

The most successful autonomous zones have devolved much power to the
autonomous zone itself. For instance, in both the land Islands and Bremerhaven,
the autonomous zones are provided political representation in whatever state or
legislature that has ultimate authority over that zone. Additionally, tensions in
South Tyrol began to ease after Italy provided more autonomy to the South
Tyrolese to dictate things like the parameters of the education system. These
situations have allowed one state to peacefully have authority over an autonomous
zone, while still preserving the cultural and ethnic integrity of the people within
those zones.

Special Economic Zones (SEZs)

International financial organizations
137
use the term special economic zones
(SEZs) to refer to geographic areas under singular management that operate as
separate customs areas within a host state, providing economic and financial
benefits to enterprises willing to locate within that zone.
138

Within this definition are many variations, depending on the objective of the
state that creates the SEZ and the industries the state seeks to attract. A free trade
zone is an enclosed area often located in ports of entry throughout the world that
seeks to support international trade generally by providing facilities for
warehousing, distribution, and re-export operations.
139
An export processing
zone, in its traditional form, is an area designated for export-oriented
manufacturing facilities that is often fenced off from the local economy, though it
may take a hybrid form by encompassing areas for non-export and export-focused
industries.
140
A freeport is a broadly defined zone that combines internal,
commercial activities with export-focused activities, even accommodating tourism,

137
Such as the International Finance Corporation, the World Bank, the Multilateral Investment Guarantee Agency,
and the Multi-Donor Investment Climate Advisory Service of the World Bank Group.
138
Special Economic Zones: Performance, Lessons Learned, and Implications for Zone Development, FIAS, 9
(April 2008), available at https://www.wbginvestmentclimate.org/uploads/SEZs - Performance, Lessons Learned
and Implications for Zone Development.pdf.
139
Megan Murray, What Are Special Economic Zones?, THE UNIVERSITY OF IOWA CENTER FOR INTERNATIONAL
FINANCE AND DEVELOPMENT, Feb. 9, 2010, available at http://blogs.law.uiowa.edu/ebook/faqs/what-are-special-
economic-zones.
140
Michael Engman, Osamu Onodera, and Enrico Pinali, Export Processing Zones: Past and Future Role in Trade
and Development, ORGANIZATION FOR ECONOMIC CO-OPERATION AND DEVELOPMENT (OECD), 10 (May 23, 2007),
available at http://www.oecd-
ilibrary.org/docserver/download/fulltext/5l4bd48h62q4.pdf?expires=1349561482&id=id&accname=guest&checksu
m=9E5AC05078A66735D3C80E119DAA5EF0

19
retail, and residential areas.
141
Another special status is an enterprise zone,
which is an area of urban renewal that focuses on the domestic market, providing
tax incentives and grants within a developed area in distress.
142
While SEZs have
the potential to promote policy reform throughout a state, this reform is limited to
economic policy, as opposed to political or electoral policy, both of which are not
affected by the development of an SEZ.
143

Incentives for Creating an SEZ

SEZs are created for different reasons depending on the scenario, but
typically have one or more of the following goals: to attract foreign investment, to
mitigate wide-spread unemployment, to act as a component of a larger economic
reform plan, or to experiment with new policies for broader implementation at a
later date.
144

Developing states have different incentives for creating an SEZ than a
developed state, and therefore the form each chooses will likely vary. Developing
states typically seek to present a competitive option for investment by reducing
costs of entry and operation, typically providing import/export duty exemptions,
reduced customs barriers, tax incentives, and relaxed foreign exchange systems.
145

Developed states, on the other hand, often create SEZs to aid in economic reform
by attracting new exports while maintaining existing border protections, to reduce
unemployment, to experiment with new financial and employment policies, or to
attract foreign investment.
146

Administration and Regulation of SEZs

141
Michael Engman, Osamu Onodera, and Enrico Pinali, Export Processing Zones: Past and Future Role in Trade
and Development, OECD, 15 (May 23, 2007).
142
143
144
Thomas Farole, Gokhan Akinci, SPECIAL ECONOMIC ZONES: PROGRESS, EMERGING CHALLENGES, AND FUTURE
DIRECTIONS 3 (2011).
145
146

20
SEZs operate under the supervision, regulatory scheme, and enabling
legislation of the government in which they exist, with funding for development
coming from public and/or private sources.
147
Privately developed zones have
demonstrated increased chances of success to date, typically depending on a clear
legal and regulatory framework to set forth the rights, obligations, and parameters
for its interaction with the government.
148
However, this is not to say that private
SEZs are the appropriate option in all circumstances, as many public-sector zones
have successfully achieved development goals.
149
Whether public or private,
successful SEZs typically benefit from a regulatory structure that allows for simple
and streamlined investment, work permits, licenses, and customs operations.
150
In
some cases the private sector will provide much more than just a regulatory
framework, however, even setting up infrastructure and services such as on-site
customs officials.
151

The public or private overseeing entity that controls staffing, funding,
policies, and partnerships will often operate autonomously, separating itself from
the SEZs development or operation activities to avoid conflicts of interest and
from the central government to avoid political influence.
152
Separation between
the government and the overseeing entity allows the commercial purpose of the
SEZ to thrive and encourages competition as a sustainable driving force, rather
than relaying solely on the temporary fiscal incentives that initiated the SEZ.
153

European SEZs

With the exception of eight free trade zones in Germany and in certain
Spanish and Portuguese territories, Western European SEZs must comply with
European Union regulations (internal market and state aid rules), which, inter alia,

147
148
149
150
OECD, Towards Best Practice Guidelines for the Development of Economic Zones, 1, 14, Nov. 23, 2009,
available at http://www.oecd.org/mena/investment/44866585.pdf.
151
152
153

21
restrict manufacturing in favor of packing and warehousing operations.
154
Many of
the Western European zones are located in ports or customs areas and are therefore
publicly controlled rather than private.
155
For example, the Shannon Free Zone in
Ireland, an export processing zone, remains an important point of access to
European markets.
156
Additionally, France has successfully implemented a model
for urban free zones, targeting distressed urban areas in an effort to revitalize
them by attracting certain businesses with tax and social security exemptions.
157

In Central and Eastern Europe, public and private zones have thrived,
trading with partners inside and outside of Europe.
158
The early success is partly
due to the initial absence of the European Union regulatory structure in many of
these states.
159
For instance, Poland was able to have success with its many SEZs,
typically taking the form of export processing zones and free trade zones, which it
established by renewing existing infrastructure, such as a discontinued nuclear
site.
160
Currently, the Kostrzy"sko-Slubicka SEZ is still able to provide corporate
income tax exemptions for entrepreneurs to either defray initial investment costs
161

or employment costs
162
after establishing business activities.
163
Today in Poland,
when a potential investor seeks to invest in one of Polands SEZs, Poland has
streamlined the process to involve selecting a location, obtaining a permit,
declaring intent to spend at least EUR 100,000, and generating income.
164

154
155
156
Shannon Development, An Economic Overview of Irelands Shannon Region, Feb. 2012, available at
http://www.shannonireland.com/media/Media,11785,en.pdf.
157
Urban Free Zones (ZFU) in Greater Lyon, THE GREATER LYON BUSINESS WEBSITE, available at
http://www.business.greaterlyon.com/urban-free-zones-zfu-lyon-business-location-france.50.0.html?&L=1.
158
159
160
161
Investment costs include, for instance, land purchase, building construction, equipment purchase.
162
Employment costs include, for instance, payroll for the first 2 years.
163
Offer: Tax Exemptions, KOSTRZYN-SLUBICE SPECIAL ECONOMIC ZONE, available at
http://www.kssse.pl/en/offer/tax_exemptions.html (last visited May 7, 2013).
164
KPMG in Poland, A Guide to Special Economic Zones in Poland, 21 (2009), available at
http://www.paiz.gov.pl/files/?id_plik=10800.

22
Lessons Learned

SEZs come in a variety of types, such as free trade zones, export processing
zones, freeports, and enterprise zones. While the purpose of an SEZ is to promote
economic development, each state typically configures the SEZ to meet the unique
challenges of that state.

Conclusion

While the combined experiences of states with special status zones may
serve as illustrative examples, there is no single formula for setting up a special
status zone. Any assessment of the effectiveness of each zone is closely tied to the
situation it is addressing, whether a post-conflict area, or an area simply in need of
economic growth. In some scenarios, autonomous zones are formed without the
assistance of the international community. In others the necessity of incorporating
the competing interests of ethnic groups and regional powers often requires a
neutral third party to step in.

Similarly, special economic zones form around the unique economic goals
and the level of economic development of each host government. While a
common thread of free-market policies runs throughout, decisions on public or
private funding, hybrid or traditional zone composition, and methods of
administration will vary greatly according to the subjective needs of the host
government.

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