Future domicile decision for rulers

For dictators, emperors, and autocratic rulers, the selection of the future domicile, after they lose power, is a critical decision. Often a portfolio of crimes is committed by these actors while in power, some of which could be severe enough to warrant jail time or worse. They may also have illegally accumulated assets within their current country. So, the future domicile decision needs to be optimized by minimizing the probability of extradition while maximizing the chance of holding onto illegal assets. History may provide useful guidance in this regard for those struggling with these types of decisions presently.

The chart below shows (1) likely destinations for rulers based on the receptivity of countries to host powerless dictators. It is no surprise that certain large democracies and perpetual autocracies top the table.

However, it is getting more difficult for dictators to find a haven (1). This is problematic for a dictator as a lack of choice would require her to take higher risks to hold onto power longer. This is likely suboptimal for the dictator and her current country.

Given the high frequency of dictators across the world, it may be better for the world to designate a haven country, perhaps an island with no extradition laws to host dictators when they lose power. Although this creates a moral hazard and encourages dictatorship, it may be a way to cleanse the system for a period of time as a large share of the world’s population currently is under some sort of dictatorship.

In the absence of a haven, the dictator’s domicile selection needs to consider a variety of risks. For example, if she chooses to minimize extradition risk, it cannot be a single decision in time. The most likely choice would be a country ruled by another dictator who has appointed himself to power for an extended period of time, ideally her expected life span. The domicile seeking dictator may want to move the assets to the selected future domicile before the power loss. Often, this is difficult to accomplish as it might signal the dictator's intent.

One way aspiring dictators with limited ruling horizons can reduce exit risk is by focusing on subsets of crimes. For example, she could just commit crimes against humanity or commit other human rights violations and then select a domicile with little extradition risk in the future. Or, she could accumulate illegal wealth and spread that across domiciles to diversify the unique risk associated with appropriation. Hence, dictators with an ex-ante optimization program may fall into either one of these buckets; one that is focused on human crimes and the other with an emphasis on economic crimes, but not both.

Economic valuation of choices that incorporates the interaction between market risks (appropriation risk may be correlated with the market) and unique risks (such as extradition risk) may be needed to reach optimal decisions. A Decision Options ® framework that combines stochastic simulation with dynamic programming may be useful to fully analyze decision choices that may be a basket of interacting options over time. This means that the dictator’s staff need to include finance and economics professionals, a fact that is often overlooked. Successful exit strategies of dictators always included assuring a safe passage by appointing paid or otherwise compensated personnel in the justice and foreign policy departments. Often these individuals can do the pre-work and paperwork needed to select and prepare the domicile such as reaching agreements with the host country.

The ability to become, manage, and exit a dictatorship is a skill that is in demand around the world. This could be an emerging opportunity for educational institutions, especially those focused on executive education.

(1) https://www.washingtonpost.com/news/monkey-cage/wp/2017/01/30/where-do-ousted-dictators-go-fewer-countries-now-offer-a-warm-welcome/

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Gill Eapen is the founder and CEO of Decision Options ®, Mr. Eapen has over 30 years of experience in strategy, finance, engineering, and general management

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Gill Eapen

Gill Eapen

Gill Eapen is the founder and CEO of Decision Options ®, Mr. Eapen has over 30 years of experience in strategy, finance, engineering, and general management

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