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Governments can and will just criminalize the act of peering with them, so any ISP/transit provider will be liable if they peer. Problem solved.

You'd need every government to agree not to peer with them, otherwise you'd just route to whoever has agreed to peer. You might get shit latency, but it'd still work.

Getting everyone to agree not to peer seems like a rather tall order.

Your a bit more than 20 years late with the oil rig idea https://en.m.wikipedia.org/wiki/Principality_of_Sealand

In case you hadn’t seen this story, which I believe fits a similar bill, here is the case of the Cyberbunker. This took place in the Netherlands.

Darknet Diaries has an (excellent, as always) episode about it. If it wasn’t that podcast it might have been Malicious Life.

https://www.newyorker.com/magazine/2020/08/03/the-cold-war-b...

You might enjoy the book Cryptomnicon which is remarkably truthalized.

https://arstechnica.com/tech-policy/2012/03/sealand-and-have...

You mean Sealand?

https://en.wikipedia.org/wiki/Principality_of_Sealand