The ultimate score for rich people? “Golden” passports.
After the nadir of Covid travel restrictions, summer travel season is in full swing. Air travel is projected to exceed pre-pandemic levels, according to the Transportation Security Administration. People are dusting off their passports, or waiting weeks to get them renewed, and applying for the visas they need for their destinations. International vacations take planning, even more so now. While the world has mostly opened back up since lockdowns, most nations have strict limits on how long noncitizens can visit.
How easily you can move around the world, and how long you get to stay in your tropical destination of choice, depends entirely on your passport. That’s a more fraught geopolitical issue than you might realize — and citizens of rich Western nations usually come out on top.
The ultrarich are collecting not one, but sometimes two or three passports and multiple citizenships, and all the privileges they confer. These passports, often issued by nations particularly welcoming of cash, can be a kind of collector’s item, a status symbol luxury good to show off at bougie soirees. It also cracks open the door to a possible escape, should things go south for the holder in their personal life or in their country of origin.
All it requires is money — anywhere from $100,000 on the low end to more than $1 million on the high end, invested in property or a public good — plus background checks and a short wait for approval. Called “golden” passports, they don’t even actually require the wealthy to reside in the places where they hold citizenship.
Ex-Google CEO Eric Schmidt applied for Cyprus’s citizenship-by-investment program a few years ago, allowing him to travel to the European Union amid Covid lockdowns. Harlan Crow, the billionaire GOP donor with a habit of showering Supreme Court Justice Clarence Thomas with expensive, undisclosed gifts, procured citizenship to the Caribbean island of Saint Kitts and Nevis in 2012. A heap of Russian oligarchs have purchased passports, often to Cyprus, though many have been revoked since the outbreak of the Ukraine-Russia war. Applicants invest money in the nation’s real estate industry, or a government program, philanthropy, or some other sector, in exchange for the government’s consideration of whether their significant contribution to the nation’s economy merits citizenship, not to mention a new passport.
Sometimes, wealthy people of some renown don’t even have to apply through a formal program: Snapchat founder Evan Spiegel gained French citizenship in 2018 for an exceptional contribution to the nation (it’s unclear what exactly that contribution was). Venture capitalist Peter Thiel was granted New Zealand citizenship in 2011 under similar “exceptional circumstances,” because of “his skills as an entrepreneur and his philanthropy,” according to government documents. Citizenship granted to individuals for extraordinary achievement or contribution to a country, or to a specific field, is doled out at the government’s discretion — a nation can give citizenship to anyone it wants, after all — but they are often handed out to celebrities or professional athletes. Established citizenship-by-investment programs, on the other hand, lay out a clear blueprint for how to become a citizen of a nation despite having no prior ties.
“The gold standard is to try to have unfettered access to the EU and Schengen countries,” says Michael Kosnitzky, a family office attorney at Pillsbury Winthrop Shaw Pittman who has helped many of his high-net-worth clients obtain second, and even third, citizenships.
To the wealthy, that unfettered access is well worth the money. They don’t have to plan their escapes; golden passports allow them to jet around the world at the drop of a hat, and to be treated as citizens, not just visitors. Some might want unrestricted entry into a country because they intend to live there, or have family there. For others, there’s another kind of freedom — an escape route from criminal allegations and prosecution. Citizenship by investment offers the wealthy a wide range of movement — and potential legal protections — that the rest of us don’t have. For nations that are developing or rebounding from Covid, such programs are an easy way to boost government coffers.
How it works
About 22 countries have a legal provision in place that would allow citizenship by investment, according to Kristin Surak, a political sociologist at the London School of Economics, whose forthcoming book The Golden Passport: Global Mobility for Millionaires covers eight years’ worth of research across more than a dozen countries. “Even Russia has one,” says Surak.
The basic idea is that a person who makes a significant investment in a nation can earn the privilege of citizenship, and pay-to-play citizenship is a game that a growing number of wealthy Americans are getting in on. The US has no policy limiting dual citizenships — as long as the other country allows it, an American can theoretically hold as many passports as they want.
Within the countries willing to offer dual citizenship by investment, just a handful dominate the market, often the programs that would grant freer movement around Europe. Malta, a picturesque archipelago off the coast of Italy, has long been the crowd favorite, but it’s one of the most expensive, requiring investments, charitable donations, and property purchases totaling well over 1 million euros. Cyprus was also once high on the list, but its citizenship-by-investment program was shut down after an Al Jazeera investigation revealed that it had given passports to criminals.
“I still like Malta, but there are other countries now — Slovenia, Slovakia, Hungary, and my personal favorite, Austria,” said Kosnitzky. Unlike many similar programs, Austria’s doesn’t specify an amount of investment; applicants simply can make significant contributions to charity or research and obtain citizenship.
Turkey is hot right now; its CBI program grew due to increasing unrest in the Middle East and Russia. “It’s only $250,000,” says Surak. “Turkey is still naturalizing Russians, so now there’s huge Russian demand.”
These unusual pathways to citizenship are fairly recent, popping up in the 2000s, according to Surak. Often, golden passports are a family affair that includes spouses and children. Annually, says Surak, about 50,000 people (including family members of applicants) are approved for citizenship through investment programs. (A similar phenomenon, known as “golden visas,” allows people long-term residency by investment but not citizenship.)
One of the hallmarks of an attractive citizenship-by-investment program is that it requires little to no physical presence. Good CBI programs are also fairly speedy — getting a Maltese passport can take 12 to 18 months, which is practically a blink of an eye, considering the typical protracted process of naturalization. The US naturalization process takes 18 to 24 months, but the prerequisite is permanent residency for five years.
Some of the modern “passports for sale” programs were established decades ago — Saint Kitts started its program in 1984, says Surak, right after independence from Britain. In the aftermath of decolonization, these small nations were often cash-strapped. “Some of them have populations of 100,000,” Surak says. “It’s really hard to run a full country of 100,000 people, especially when you have to import everything and you don’t have a lot of natural resources.” The early programs were less stable than the CBI schemes seen today; governments could simply cancel the passports they had given out. From the mid-2000s onward, according to Surak, private firms began pitching governments to create more permanent, stable programs that ensured not just passports but citizenship.
For some nations, money from citizenship investments make up a hefty bulk of their economy: In the lush Caribbean nation of Saint Kitts, Surak’s research has found, CBI makes up over 40 percent of its GDP. Covid, which hit the tourism industry hard, has only exacerbated these nations’ pursuit of investment.
Once a person becomes a citizen, it’s hard to get kicked out, Surak says. That’s why golden passports are attractive for rich people who are looking for possible exits in case their current homes become politically unstable (or unfriendly toward the rich), or if they fear that legal action might be taken against them. An extra citizenship can be a layer of protection. It’s also why some critics, including the European Commission, have been vehemently opposed to golden passports. Critics argue that the risk of providing a place of escape, a hidey hole, to criminals is just too high.
Why rich people — and, increasingly, rich Americans — want more passports
Maybe the question of why golden passports are alluring to the wealthy (and to everyone else) is a no-brainer — it provides greater mobility. Beneath this broad umbrella there are distinct motivations at play, complicating the debate around whether citizenship should be “for sale.”
For some clients, Kosnitzky said, the decision to obtain another passport is informed by a history of family members who were victims of pogroms and genocide. “They want to have flexibility, to not be limited by a US passport,” says Kosnitzky, if they someday face a repressive government.
“They may want to expatriate at some point in the future,” says Kosnitzky, “or they want to maintain flexibility for future generations to do so.” Some may want to expatriate, pay a US exit tax, and then be able to pay a much lower income tax rate in another country where they are a resident, or potentially avoid US estate taxes.
Others may want to avoid “a further demonization of the ultra-wealthy,” Kosnitzky continues. For example: wealth taxes, which have increasing bipartisan support in the US.
A lot of the growing American interest in multiple citizenships is “just paranoia,” says Surak. “It’s just hedging against hedging against hedging.”
But even without political or financial motives, second citizenships are attractive. US passport holders can travel to 185 countries visa-free, according to Henley & Partners’ current passport ranking. That’s nothing to sniff at, but a Singaporean citizen can enter 194 nations without needing a visa.
Malta’s program has a higher minimum investment amount than others because it unlocks most of Europe. Without an EU passport, Americans are limited to 90-day visits to the EU over a six-month period. The pandemic lockdowns only heightened the value of multiple passports among those who can afford it; a US passport is powerful, but not powerful enough to evade Covid travel restrictions.
Tarnished gold?
The European Commission is stridently opposed to such programs, arguing that they are a security risk to the EU because they allow in anyone with enough money, even if they have no “genuine link” to EU nations. Last March, after Russia’s invasion of Ukraine, the commission urged European nations to stop selling citizenship to investors, particularly to Russian applicants. In September 2022, it referred Malta to the EU’s Court of Justice under the argument that its program was not compatible with member states’ principle of “sincere cooperation.” A judgment has not been made, but the EU’s calls are being heard. Bulgaria ended its investor citizenship program last spring; earlier this year, Ireland and Portugal announced they would be scrapping their popular golden visa programs.
Other nations have also expressed concerns over investor passports and visas. “In the US, Canada [and] Australia, the key concerns are tax evasion, corruption, avoidance of extradition, and security matters,” Jelena Džankić, a professor at the European University Institute and an expert in citizenship and migration, told Vox in an email. “In the EU, we can see these concerns, too, and on top of them — money laundering and undue political influence.”
There’s a seedy underbelly to the enterprise; Kosnitzky notes that wealthy Americans who pursue Caribbean passports, for example, may be doing so because they fear their US passports could be revoked — whether it’s because they owe a serious amount in taxes or are guilty of a crime.
A 2020 leak of government documents also revealed that top Cypriot politicians had helped criminals, including people convicted of fraud and money laundering, buy citizenship to the island nation. The leak led to the shuttering of Cyprus’s CBI program. In 2018, journalist Daphne Caruana Galizia was killed while investigating possible corruption in Malta’s golden passport program. Prime Minister Joseph Muscat stepped down in the fallout of her death. Beyond allegations that some of these programs allow criminals and corrupt individuals to obtain the rights and privileges of citizenship, the sale of passports and visas can have other undesirable consequences: In Portugal, golden visas contributed to the unaffordable rise of real estate prices.
Now the industry is moving toward the Middle East, Džankić says. “Egypt has had this scheme since 2020, but recently relaxed the conditions for obtaining citizenship; Jordan has been running a CBI since 2018. Saudi Arabia, Qatar, Bahrain all run recent residency-by-investment schemes,” she says.
Surak acknowledges that golden passports are a highly politicized issue — but contends that many of the smallest nations offering citizenship by investment are doing so because they really need the money.
The very fact that being a rich citizen of a certain country means someone can have far greater freedom of movement than a poorer citizen of another nation is because our geopolitical environment has advantaged mostly wealthy white nations. In other words, says Surak, “Check your passport privilege.”
Source: Vox.com
