Sunday, April 03, 2016

What Borders?

Wealthy people are buying passports from other countries. A growing number of countries offer individuals passports in return for investment, and the wealthy have been taking advantage in increasing numbers. In 2014, the global rich spent an estimated $2 billion acquiring nationalities.

The Caribbean is the global capital of “citizenship-by-investment” programs. A passport from Dominica can be had in return for a $100,000 investment. A $400,000 real estate investment or a $250,000 donation to a development fund will get you citizenship in St. Kitts and Nevis. Similar sums are required for a passport from Antigua and Barbuda, plus five days of residency over the first five years of citizenship. In 2015, Caribbean nations effectively sold an estimated 2,000 passports through citizenship-by-investment programs, up 100% over the past five years.

By selling passports, St. Kitts and Nevis slashed its “debt from 164 per cent of GDP in 2010 to 104 per cent of GDP at the end of 2013.” By 2014, passports were the country’s biggest export, money associated with the passport business accounted for at least 25% of GDP, and the development it spurred on the islands led to what some were calling a real estate bubble. Russian and Chinese “investors” buy roughly 50% of the passports sold by St. Kitts and Nevis.

Cyprus offers citizenship in return for a minimum €2.5 million real estate investment.

Not all countries sell citizenship outright. Some, including the United States and the United Kingdom, offer residency—and a path to citizenship—to wealthy investors. In the U.S., for example, aspiring citizens that invest $500,000 and create 10 jobs can apply for an EB-5 visa. 80% of American EB-5 visas go to Chinese nationals. The UK requires an investment of at least £2 million. Both countries expect investors to spend roughly half the year in residence for several years before applying for citizenship. And almost all economic citizenship programs have fees that are paid directly to governments in addition to the required investment.

A second passport is more than a means of escape and a hedge against uncertainty. It can enhance the mobility of the rich. Passports from Iran, Iraq, and Pakistan, for example, will get you into fewer than 40 countries visa-free (just behind North Korea), while a passport from St. Kitts and Nevis will get you into 131. The very best passports, including those from the U.S., UK, and Canada, will get you into 170 or more.

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