I wish them well, but this idea has so many holes that explaining them all at 3:30 in the morning is going to be difficult.

So here's a brief summary of what's wrong with this proposal:

The "Initiative" is to find a government somewhere which will create a semi-autonomous zone within its borders called a "Free State" which will itself be a government, and will have its own constitution, legislature, courts, and laws. Or perhaps the existing government will just close its doors and go home, but that's probably too much to ask for.

The "Initiative" is targeting primarily desert areas (albeit with ocean coastline) with little or no population, but expects access to large amounts of cheap labor.

The "Initiative" is being planned as a top-down entity which will dictate various terms, ground rules, laws, or whatever it wants to call them, to its participants.

The "Initiative" is actually contacting existing governments to ask them to sign up!

The "Initiative" says it is for open borders, but then explains that it wants exactly the opposite, for reasons of "state security." I cannot make this up: "... anyone who wants entry to the Free State must make themselves known to the authorities, typically with a passport at an airport. . . . anyone who is found entering the Free State illegally will therefore automatically be assumed to have foul intentions and be immediately expelled."

I cannot in good conscience give these guys a single satoshi.