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ABSTRACT
Why do wealthy people purchase citizenship in peripheral countries? This article investigates the demand for citizenship by investment programmes, which enable naturalisation based on a donation or financial investment. Extending research on long-distance naturalisation among the middle class and on residence by investment programmes, I examine the motives of the wealthy using citizenship by investment options. Based on over one hundred interviews with rich naturalisers and intermediaries in the citizenship industry, I find that mobility, both in the present and as a future hedge, is a strong driver, followed by business advantages. Often it is privileges in third countries – not the place granting the citizenship – that are sought. In contrast to middle-class strategic naturalisers, quality of life, education options, and job prospects were not important, though navigating geopolitical barriers and risks were. Many naturalisers were not compensating for the failures of their citizenship at birth, but manoeuvering within a world of state competition. Finally, some individuals inverted the citizenship hierarchy and downgraded from ‘first tier’ memberships when, after years of living abroad, their nationality became a liability. The conclusion elaborates on the duplex structure of intra-state and inter-state inequality that channels demand, and the implications for citizenship more broadly.
Disclosure statement
No potential conflict of interest was reported by the author(s).
Notes
1 This article employs a strict definition of citizenship by investment programs and thus takes the revamping of channels in Saint Kitts, Dominica, and Cyprus as the start date of their formal programs (see Surak 2020 on the definition of formal programs and Surak 2019 their evolution).
2 ‘Third country’ refers to a state that is neither an individual's main country of citizenship nor the country whereshe naturalizes through citizenship by investment.
3 As such, Bulgaria’s investment residence program does not operate as an independent citizenship by investment program (cf. European Commission Citation2019) since applicants move first through residence, held for at least one year, and then submit a separate qualifying investment to apply through an additional channel for citizenship, which typically takes two to three years to obtain. This stands in contrast to the Maltese and Cypriot regulations, which grant residence as a procedural matter within the process of applying for investor citizenship.
4 ‘High net worth individual’ is a term in the wealth management industry to classify the rich. Typically the ‘mass affluent’ are individuals with $100,000 to $1 million in liquid assets; ‘high net worth individuals’ hold $1 million to $30 million in liquid assets; and ‘ultra high net worth individuals’ occupy the space above them.
5 The Mexican case Harpaz examines concerns not naturalization but strategic birth. Balta and Altan-Olcay (Citation2016) find motives similar to those of other strategic naturalizers in their study of Turkish parents utilizing birth options in the US to secure citizenship for their children.
6 The figures for Dominica are an estimate based on the name recorded in the National Gazette. This undercounts, for example, individuals with an Arabic name who are US citizens. It also undercounts the number of participants. Government officials involved with the program estimate that it processes 1500–2000 applications per year, yet the Gazette lists only several hundred names. Separate figures for Americans naturalizing in Saint Lucia are not available.
7 Currently the minimum income threshold in such cases is just over $100,000.
8 Citizenship by investment programs do offer one workaround to CRS because signatory countries exchange information only with foreign countries. As such, if an individual with Dominican citizenship opens a bank account in Dominica, there is no reporting, even if she also has citizenship and is a tax resident elsewhere. Reportedly, the most common way to avoid CRS is simply to open an American bank account, as the United States has not signed the agreement.
9 Absent systematic study of the economic impact of citizenship by investment programs on specific subpopulations, it is impossible to fully assess the results for inequality. In the issuing countries, the programs can constitute a substantial portion of the GDP, and in several countries the receipts fund development projects and social welfare programs. In the countries of origin, the number of naturalizers is negligible, as is the amount of money they funnel out to pay for the options (Surak Citation2020).