Cit­i­zen­ship-by-In­vest­ment Pro­grammes Of­fer the Su­per-rich an Op­por­tu­nity to Ac­quire a New Na­tion­al­ity

The Star (St. Lucia) - - INTERNATIONAL - Cit­i­zen­ship. re­jected. coun­tries. in­vest­ment im­mi­gra­tion NZ$10mil­lion (US$6.9mil­lion).

It’s the must-have ac­ces­sory for every self-re­spect­ing 21stcen­tury oli­garch, and a good many mere mul­ti­mil­lion­aires: a sec­ond—and some­times a third or even a fourth—pass­port. Is­rael, which helped Rus­sian bil­lion­aire Ro­man Abramovich out of a spot of bother this year by grant­ing him cit­i­zen­ship af­ter de­lays in re­new­ing his ex­pired UK visa, of­fers free na­tion­al­ity to any Jewish per­son wish­ing to move there. But there are as many as two dozen other coun­tries, in­clud­ing sev­eral in the EU, where some­one with the fi­nan­cial re­sources of the Chelsea foot­ball club owner could ac­quire a new na­tion­al­ity for a price: the global mar­ket in cit­i­zen­ship-by-in­vest­ment pro­grammes—or CIPs as they are com­monly known—is boom­ing.

The schemes’ specifics— and costs, rang­ing from as lit­tle as US$100,000 to as much as US$2.5 mil­lion—may vary, but not the prin­ci­ple: in essence, wealthy peo­ple in­vest money in prop­erty or busi­nesses, buy gov­ern­ment bonds or sim­ply do­nate cash di­rectly, in ex­change for cit­i­zen­ship and a pass­port. Some do not of­fer cit­i­zen­ship for sale out­right, but run schemes usu­ally known as “golden visas” that re­ward in­vestors with res­i­dence per­mits that can even­tu­ally lead—typ­i­cally af­ter a pe­riod of five years—to

The pro­grammes are not new, but are grow­ing ex­po­nen­tially, driven by wealthy pri­vate in­vestors from emerg­ing mar­ket economies in­clud­ing China, Rus­sia, In­dia, Viet­nam, Mex­ico and Brazil, as well as the Mid­dle East and more re­cently Turkey. The first launched in 1984, a year af­ter young, cash­strapped St Kitts and Ne­vis won in­de­pen­dence from the UK. Slow to take off, it ac­cel­er­ated fast af­ter 2009 when pass­porthold­ers from the Car­ib­bean is­land na­tion were granted visa-free travel to the 26-na­tion Schen­gen zone.

For poorer coun­tries, such schemes can be a boon, lift­ing them out of debt and even be­com­ing their big­gest ex­port: the In­ter­na­tional Mon­e­tary Fund reck­ons St Kitts and Ne­vis earned 14 per cent of its GDP from its CIP in 2014, and other es­ti­mates put the fig­ure as high as 30 per cent of state rev­enue. Wealth­ier coun­tries such as Canada, the UK and New Zealand have also seen the po­ten­tial of CIPs (the US EB-5 pro­gramme is worth about US$4 bil­lion a year to the econ­omy) but sell their schemes more around the at­trac­tions of a sta­ble econ­omy and safe in­vest­ment en­vi­ron­ment than on free­dom of move­ment.

Ex­perts from the many com­pa­nies, such as Hen­ley and Part­ners, CS Global and Apex, now spe­cial­is­ing in CIPs and ad­ver­tis­ing their ser­vices on­line and in in-flight mag­a­zines, say that un­like Abramovich, rel­a­tively few of their clients buy cit­i­zen­ship to move im­me­di­ately to the coun­try con­cerned. For most, the ac­qui­si­tion rep­re­sents an in­sur­ance pol­icy: with na­tion­al­ism, pro­tec­tion­ism, iso­la­tion­ism and fears of fi­nan­cial in­sta­bil­ity on the rise around the world, the state of the in­dus­try serves as an ef­fec­tive barom­e­ter of global po­lit­i­cal and eco­nomic uncer­tainty. But CIPs are not with­out their crit­ics.

Malta, for ex­am­ple, has come un­der sus­tained fire from Brus­sels and other EU cap­i­tals for its pro­gramme, run by Hen­ley and Part­ners, which ac­cord­ing to the IMF saw more than 800 wealthy in­di­vid­u­als gain cit­i­zen­ship in the three years fol­low­ing its launch in 2014. Crit­ics said the scheme was un­der­min­ing the con­cept of EU cit­i­zen­ship, pos­ing po­ten­tial ma­jor se­cu­rity risks, and pro­vid­ing a pos­si­ble route for wealthy in­di­vid­u­als—for ex­am­ple from Rus­sia—with opaque in­come streams to dodge sanc­tions in their own coun­tries.

Sev­eral other CIPs have come un­der in­ves­ti­ga­tion for fraud, while equal­ity cam­paign­ers in­creas­ingly ar­gue the moral case that it is sim­ply wrong to grant au­to­matic cit­i­zen­ship to ul­tra-high net worth in­di­vid­u­als when the less priv­i­leged must wait their turn—and, in many cases, be

The best-known and cheapest CIP schemes are in the Car­ib­bean, where the warm cli­mate, low in­vest­ment re­quire­ments and un­de­mand­ing res­i­dency obli­ga­tions have long proved pop­u­lar. Five coun­tries cur­rently of­fer CIPs, of­ten giv­ing visa-free travel to the EU, and have re­cently cut their prices to at­tract in­vestors as they seek funds to help them re­build af­ter last year’s hur­ri­canes. In St Kitts and Ne­vis a pass­port can now be had for a US$150,000 do­na­tion to the hur­ri­cane relief fund, while An­tigua, Bar­buda and Grenada have cut their fees to US$100,000, the same level as St Lu­cia and Do­minica.

Al­most half of the EU’s mem­ber states of­fer some kind of in­vest­ment res­i­dency or cit­i­zen­ship pro­gramme lead­ing to a highly prized EU pass­port, which typ­i­cally al­lows visa-free travel to be­tween 150 and 170

Malta’s cit­i­zen­ship-for-sale scheme re­quires a £675,000 (US$787,695) do­na­tion to the na­tional de­vel­op­ment fund and a £350,000 prop­erty pur­chase. In Cyprus the cost is a £2mil­lion in­vest­ment in real es­tate, stocks, gov­ern­ment bonds or Cypriot busi­nesses (although the num­ber of new pass­ports is to be capped at 700 a year fol­low­ing crit­i­cism). In Bul­garia, £500,000 gets you res­i­dency, and about £1mil­lion over two years plus a year’s res­i­dency gets you fast-track cit­i­zen­ship. In­vestors can get res­i­dency rights lead­ing longer term to cit­i­zen­ship—usu­ally af­ter five years, and sub­ject to pass­ing rel­e­vant lan­guage and other tests—for £65,000 in Latvia (eq­ui­ties), £250,000 in Greece (prop­erty), £350,000 or £500,000 (prop­erty or a small busi­ness in­vest­ment fund), or £500,000 in Spain (prop­erty, and you have to wait 10 years to ap­ply for cit­i­zen­ship).

Thai­land of­fers sev­eral “elite res­i­dency” pack­ages cost­ing US$3,000-$4,000 a year for up to 20 years’ res­i­dency, some in­clud­ing health check­ups, spa treat­ments and VIP han­dling from gov­ern­ment agen­cies. The EB-5 US visa, par­tic­u­larly pop­u­lar with Chi­nese in­vestors, costs be­tween US$500,000 and $1mil­lion depend­ing on the type of in­vest­ment and gives green card res­i­dency that can even­tu­ally lead to a pass­port. Canada closed its CA$800,000 (US$616,880) fed­eral pro­gramme in 2014 but now has a sim­i­lar res­i­dency scheme, cost­ing just over CA$1mil­lion, for “in­no­va­tive start-ups”, as well as re­gional schemes in, for ex­am­ple, Que­bec. Aus­tralia re­quires an in­vest­ment of A$1.5mil­lion (US$1.1mil­lion) and a net worth of A$2.5mil­lion for res­i­dency that could, even­tu­ally, lead to cit­i­zen­ship, and New Zealand— pop­u­lar with Sil­i­con Val­ley types—an in­vest­ment of up to

---South China Morn­ing Post

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