Have you ever waited at the airport passport control queue on holiday and thought of skipping the line as a local resident? Do you dream of leaving all the stress behind and starting a new life under palm trees and endless sun in the Caribbean? Alternatively, would you hope for better study and employment opportunities for you and your family as a citizen in another country? If you have some, or in fact, quite a hefty amount of spare cash to spend, you are not far from making your dreams reality.
Citizenship by investment programs, often called CIPs, are schemes designed for wealthy individuals to acquire new citizenship in return of significant investments in a country’s economy. Around a hundred countries, such as the Netherlands, offer long-term golden visas and residency, while others, more than a dozen countries, grant full citizenship in no time. The difference is that citizenship is forever, whereas residency or visa can be taken away. Typically, the costs for new citizenship through a CIP ranges from 100.000 U.S. dollars to several million and the investments are recognized in the form of property, business, government bonds, or direct cash.
Henley & Partners, a global citizenship and residence advisory firm lists on their website the most credible and successful citizenship programs they offer to be in Antigua and Barbuda, Austria, Cyprus, Grenada, Malta, Moldova, Montenegro, St. Kitts and Nevis, and St. Lucia. Furthermore, only residence programs are available in Canada, Portugal, Switzerland, Jersey, Hong Kong, Malaysia, Monaco, New Zealand, Singapore, Thailand, the United Kingdom, and the United States.
Reasons to seek another residence
The number of investment migrants is growing, and the matter increasingly draws media attention. However, this industry is not new. The small Caribbean islands St. Kitts and Nevis pioneered in the field back in 1984. Today, the wealthy of the 21st century has found a new status symbol of the CIPs to show off from multiple passports, as some individuals seek for the second, third or even fourth passport.
While for some a citizenship or residency might be a way to show off, for many buyers there is a legitimate reason for the desire. According to Nuri Katz, founder of Apex Capital Partners, an international financial advisory firm, “most of the individuals making these types of investments are high net-worth entrepreneurs with net worths of about $2- to $15 million”. Katz mentions to CNN Travel that generally customers seeking new citizenship come from countries whose passports considerably limit the holder’s abilities to travel. Such countries include, among others, China, Russia, and Middle Eastern countries. Besides, businesspeople from Muslim or just poor countries encounter never-ending visa struggles.
Travel benefits and different options to manage tax-burdens create interest for CIPs, but there are also other more fundamental reasons for investment migration. As nationalism, protectionism, isolationism, and financial instability are all growing fears around the world, the state of the citizenship by investment industry may be seen as a useful barometer to view both political and economic uncertainty globally. Hence, many individuals feel the need for security and decide to look for access to another citizenship as an insurance policy for themselves. The prevalent “restrictionist environment” in many countries complicates the other legal ways to relocate and obtain a residence, such as work visas and asylum.
Why do countries offer CIPs?
For countries setting up CIPs, there is a clear benefit – easy money. According to Paddy Blewer from Henley & Partners, typical countries offering CIPs are “small countries with limited industrial capacity looking to kick-start their economies”. Significant investments to these economies give the governments an effortless way to raise money to spend on public services. For example, the Caribbean states hit by Tropical Storm Erika in 2015 and Hurricane Maria in 2017 would most probably have suffered significantly more without selling passports to foreigners. The International Monetary Fund (IMF) reports that 10 percent of the Gross Domestic Product (GDP) of Dominica and 16 percent of government revenue is covered by CIP income. In other countries, such as Malta, CIP income contributes to the strong economic performance of the country and Turkey has cut the investment level of their citizenship scheme since the lira sinking in 2018.
Although the money from CIPs may be able to increase the welfare of some countries and offer them a lifeline, the system has been widely criticized. An EU passport gives access to all EU countries and the Schengen area, which could pose potential security threats as crimes and terrorism. Moreover, enabling to buy a way in a country sets the rich and poor in an unequal position.
There are many examples of questionable use of these schemes, where the new passports have given high-net-worth individuals an escape from the old. A Malaysian born financier Low Taek Jho, wanted in connection with a multi-billion-dollar scandal at a Malaysian state investment fund, became a St. Kitts and Nevis passport holder until canceled through Interpol. An Indian billionaire Mehul Choksi, connected to a two-billion-dollar fraud at Punjab National Bank is now a citizen of Antigua and Barbuda and out of reach for the Indian officials.
Money nowadays cannot only buy you a luxury holiday in your favorite white sand beach Caribbean island but most probably will also buy you a passport. Thus, the rules should be clear. Is the highest paying applicant always the best and most desired one? Or, should other attributes play a more crucial role in the selection process as it does in the traditional ways of obtaining a residence or citizenship, such as work visa and asylum? Since the CIP industry continues to grow and future citizenships will increasingly be bought, these are essential economical and ethical questions to consider. After all, there are things money cannot and should not buy, yet even in the future citizenship does not seem to fall in this category.