[dropcap]C[/dropcap]itizenship by Investment Programmes (CIPs) have been an ongoing topic of coverage for the STAR. Previously we’ve looked at the history of citizenship, and some of the foundational issues CIPs raise when it comes to defining who a citizen is, and what it means for a nation that indulges in the trade.
Now it’s a good time to focus on the CIP industry itself. What issues are often overlooked in the CIP debate? And what reforms could be done to enhance public confidence in the industry? Let’s look now.
CIPs AROUND THE WORLD
It’s not news that CIPs are a controversial topic in the Caribbean. While the CIP debate is surely most vivid here, it’s one part of a global debate surrounding accreditation of citizenship rights to emigrants.
For the world’s wealthiest, global travel and long residencies in multiple countries is common. This was rarer a century ago where travel was not as rapid, and business not as globalised.
And the capacity for powerful sectors of the global economy to converge – with Silicon Valley in the United States and the City of London in the Brexit debate being key examples – provides an avenue for certain professionals to access the benefits of citizenship easier than others.
And just as the Trump White House has been subject to controversy in recent times surrounding how the First Lady Melania Trump (originally from Slovenia) obtained her citizenship on the so-called ‘Einstein Visa’, so too have other nations like Bolivia with Julian Assange, and Russia with Edward Snowden (not officially a citizen but a long term resident with a path to it) used citizenship as a vehicle for governments to thumb their nose at rivals in the global arena.
Citizenship has even been used a vehicle to promote civil freedoms via individuals. As Italy has been joined by France, Canada, the Ukraine (pre-Russia annexation) and numerous cities in granting honorary citizenship to the Dali Llamas, much to the chagrin of the CPC in Beijing.
Illustrating these episodes do not seek to excuse all controversy surrounding the CIP industry, but instead to affirm the road that provides a path from emigrant to citizen has always been a little muddied, and the traditionally conservative approach to what defines citizenships is currently being tested. Global trends notwithstanding, our region does retain some unique issues in this sphere.
THE RACE TO THE BOTTOM
A particular danger in the CIP industry presently is the ‘race to the bottom’ being seen among many regional nations. Each seeking to offer the lowest price to their respective CIP. This approach can have a knock-on effect as it can not only drive a ‘rush’ on one nation, but uncertainty surrounding how long a particular nation will have the cheapest CIP programme. This grows the temptation of those in the sector to cut corners and rush applications.
Whatever one’s view surrounding the merits of a particular CIP, all can agree if such a programme is to exist, it’s best ran with stability. The risk of regional competition – usually a welcome aspect of Caribbean business! – increases risk of abuse in CIPs considerably. That’s why calls for CIPs to be overseen by a non-governmental group such as a citizen’s panel surely have credence.
The determination of CIPs’ fees, processes, and even applications themselves could be done via a government’s terms of reference, but still with enough scope for administrators to issue the parameters, instead of elected politicians. Such a reform would free a Caribbean nation from race to bottom rushes.
EXTENSION OF CITIZENSHIP PROCESSING
Another potential reform is the extension of a CIP timeline. Once made a citizen, a court of law won’t distinguish between a native born citizen, and an emigrant granted citizenship.
Usually this a good thing, as citizens should be treated equally under the law.
But the danger lies in an individual who’d otherwise be rejected on a regular citizenship application quickly becoming a sizeable problem for a nation if granted citizenship rapidly via a CIP program.
Advocates for the CIP programs may well say this is a small risk as an applicant would need to make a sizeable investment in the nation, and so be weary of risking their investment. But when nations like Dominica allow for citizenship to be purchased for US$ 100,000 and it to be granted in as little as 5 months, a multi-millionaire (or billionaire) could easily regard $100,000 as small change and have a sizeable war chest of spare capital to drive economic upheaval.
Such an event may sound unlikely. But in a world where ‘boots on the ground’ and aircraft carriers are fast yielding to stealth and cyber attacks on a nation’s vital infrastructure, economic power must be regarded as a weapon of war. Just as temporary visas and permanent residency designations exist, the creation of a ‘probationary’ citizenship is a potential change in this sector.
PRICE RISES
The justification for a CIP doesn’t have to be a separate debate to the justification for a secure CIP industry. If the latter is done well, it will win over many in the Caribbean family who have concerns.
Just the same, citizens of a Caribbean nation with a CIP are justified to expect such an initiative is one that is truly mutually beneficial.
$100,000 or $200,000 is cheap to a High-Net-Worth Individual (HNWI) and ultimately risks the value of the passport in the long term. This attitude is irreconcilable with members of the Caribbean family who cherish their citizenship, and their nation’s identities. Raising the price of CIP is an obvious reform in this area.
Ultimately, a nation like Dominica with an annual GDP of US$ 525.4 million, even if a CIP proves popular and wins 500 new citizens every year, that will still not crest 10% of the annual GDP. The same dynamic applies to other nations, although a passport in St Kitts and Nevis has proven most costly at $250,000, with an annual GDP of
US$ 916.9 million, a moderately successful CIP program will not pave the streets of Basseterre in gold anytime soon.
LOCAL AND GLOBAL
Tighter CIPs will not only grow confidence in the Caribbean locally but also globally. The revelations of the Paradise and Panama Papers are not directly connected to CIPs but they do speak to a broader trend of frustration among voters globally who see a class of HNWI engaging in tax minimisation, and often able to do so anonymously behind the protection of shell companies.
Just as CIPs are legal, so too is tax minimisation in many nations, and there’s no suggestion anyone who has engaged in it has broken the law. But in an era where the global headwinds are turning sharply against citizens who would seek to use an overseas domicile as an avenue to avoid the obligations of a regular citizen in their primary nation, a freewheeling CIP goes against the values of many in the Caribbean family, and around the world.
Ultimately, the sustainability of CIPs will depend upon the support of sovereign voting citizens in Caribbean nations. Elected governments that aspire to retain CIPs and remain in office would do well to recognise the momentum for reform. Addressing the existing issues may not sustain CIPs forever, but would help address the concerns of citizens (however they acquired the title) who seek to see their county and its citizenship fairly valued and protected.
