A Political Economy of Investor Migration: Facilitated Residence and Citizenship for Investors in an Era of Restricted Mobility

A POLITICAL ECONOMY OF INVESTOR MIGRATION: Facilitated Residence and Citizenship for Investors in an Era of Restricted Mobility

A thesis submitted in partial fulfillment of the requirements for the Degree of Master of International Business at Tufts University’s Fletcher School of Law and Diplomacy.

Claudia Cruz Leo April 18, 2018 Faculty Reader: Professor Katrina Burgess

Table of Contents I.

ABSTRACT

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II.

ACKNOWLEDGEMENTS

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III.

INTRODUCTION: TWO TALES OF MIGRATION

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THE PLIGHT OF THE POOR THE RIGHTS OF THE RICH ONLY THE RICH GET A GOLDEN TICKET IV.

THE INVESTOR MIGRATION INDUSTRY

4 6 8 11

HISTORY, TRENDS, AND KEY ACTORS TYPES OF INVESTOR MIGRATION PROGRAMS

11 17

V.

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ASSESSING THE IMPLICATIONS OF INVESTOR MIGRATION PROGRAMS

ECONOMIC IMPACT NATIONAL SECURITY AND CORRUPTION DISTORTION OF HOUSING MARKETS COMMODIFICATION OF CITIZENSHIP

18 21 27 30

VI.

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WHEN GOVERNMENTS ARE IN THE MARKET FOR CITIZENSHIP

CITIZENSHIP IN THE GULF AND THE BIDOON THE INTERNATIONAL PASSPORT PARTNERSHIP: UAE-KUWAIT-COMOROS IMPLICATIONS FOR MIGRATION MANAGEMENT

39 41 44

VII.

CONCLUSION

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VIII. APPENDICES

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APPENDIX 1: VISA DENIED AND THE CITIZENSHOP BR 1 – VISA DENIED NELE VOS – THE CITIZENSHOP

47 47 49

IX.

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REFERENCES

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I.

Abstract While refugees and migrants find their access to global mobility increasingly restricted, governments around the world – from the Caribbean to Western Europe – are making it easier for wealthy investor migrants to purchase residency and citizenship outright, and thereby move more freely than most. This paper seeks to examine the investor migration industry, both its facilitation in the development of government residency- and citizenship-by-investment programs and in the attainment of residency and citizenship by investors; it further seeks to understand the industry’s implications on various countries’ economies, national security, and polities. It further seeks to highlight a darker reality: how the sale of citizenship is being co-opted by governments to deprive entire communities of their rights. This analysis sheds light on the dangers of unchecked investor migration programs and our deviating conceptualizations of citizenship. Drawing mainly from news reports, industry websites, and scholarly literature, this paper makes a case for the urgent reevaluation of investor migration programs in light of the inequality in mobility it exacerbates.



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II.

Acknowledgements First and foremost, I must express my deepest gratitude to my faculty reader, Professor Katrina Burgess, for her support as I developed the idea for this thesis and brought it to fruition. Her careful readings and guiding suggestions on multiple drafts have ensured that I will look back on this text in future years with pride. It has been a joy and a privilege to work with her. Second, I would like to extend my gratitude to the scholars and experts on this topic who directed me to key texts in this body of literature and shared their not-yet-published texts with me, notably Dr. Julia Morris and Dr. Yossi Harpaz. In addition, Matt Nippert of the NZ Herald and Ana Henriques of Público were kind enough to respond to the cold emails of a student far, far away and were a great help in answering further questions I was left with upon reading their respective reports. Atossa Araxia Abrahamian’s extensive, investigative report on the sale of Comorian citizenship to the UAE and Kuwait was particularly instrumental in shaping the thoughts I expand upon in this paper, taking my thinking on the investor migration and international migration industry to new heights. She also graciously corresponded with me through tweets and emails as I prepared this paper. For their attention, I am grateful. I wish to also thank Professor Mona El Khoury for allowing me to sit in on her course, Mediterranean Crossings: Colonial and Postcolonial Migrations and Identities, which further strengthened my resolve to write this thesis and enriched my knowledge of issues of migration and identity through critical analyses of art, film, and French literature on these subjects. Lastly, I owe my husband, Filipe Calvão, an enormous debt for being my confidant as I pursued my studies and wrote this thesis, as well as a thesis past for which I never fully acknowledged his help. I thank him, most of all, for his love and unwavering support. I dedicate this to him and to my family for being there for me every step of the way.



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III.

Introduction: Two Tales of Migration The Plight of the Poor On April 15, 2012, on the eve of his eldest son’s eleventh birthday, Hashem Al-Souki

comes home to his family in a small town just outside of Damascus, Syria, after a day’s work. Hashem is a 37 year old government employee who runs the computer department at the regional water service. He would not describe himself as being “particularly political.” Yet, he is a Sunni in a country run by Alawites, a Shia spin-off sect (Kingsley 2015a).1 Twenty odd men show up at his door that evening and take him and various other men who live on his street. First, in a network of underground cells and later at the aviation intelligence agency’s headquarters, Hashem and the others are dragged daily into torture rooms, where their genitals are electrocuted and they are hung from their wrists for hours on end. After months of torture, they are driven one day to Damascus and left out in the street. It is the festival of Eid al-Adha but there is little to celebrate. When Hashem makes his way home, he finds that two of his wife’s brothers had been shot while he was in captivity. Eventually it becomes clear that he and his family will not find safety, especially after their home is destroyed, so they head to Egypt. However, without savings or a home to sell, Hashem’s wife must sell her jewelry to pay for a bus to Jordan and a boat from there to Egypt. Almost three years exactly after Hashem was first taken away and tortured, he sets out to make the journey from Egypt to Europe, leaving his family behind. He pays a smuggler $2,000 and is packed like a sardine into a wooden dinghy off of the Egyptian coast. After a grueling sixday journey, Hashem and the others arrive at the Sicilian coast, where they board a bus to Milan’s central train station. Hashem dreams of reaching Germany, where immigration policies 1

The following description is based on an investigative report that Patrick Kingsley published with the Guardian (2015a). He shadowed Hashem through his entire journey to Europe.



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are more generous and family reunification is more expeditious, or Sweden, where the Syrian refugees who make it there are allowed to stay indefinitely. Presented with three travel options, one no better than the rest, Hashem opts for going by train through France and onwards to Sweden, where his brother-in-law lives. He wires him roughly €500 to make the journey. From Nice to Paris to Frankfurt to Hamburg to Flensburg to Fredericia, Hashem rides the train, swallowing his anxiety and hiding in bathrooms when police officers stop to check documents. He passes for a local with copies of Le Monde, Süddeutsche Zeitung, Ud & Se, and Politiken in hand. Ten days after beginning his journey off the coast of Egypt, Hashem arrives in Sweden. He calls his wife and boards a final train to Stockholm, where he meets his brother-in-law. Six months later, Hashem is still awaiting his asylum decision. The attitude towards Syrians has taken a sour turn in Sweden, with the political parties deciding “to stop giving permanent asylum to Syrians, with the exception of those who come as a family” (Kingsley 2015b). His brother-in-law, a doctor who had arrived just one year earlier, houses Hashem for a night and puts him on a train to Gävle the following morning, where Hashem must report himself to the Swedish migration agency, the Migrationsverket. To Hashem’s surprise he is welcomed and “feels like a government is treating him as a human.” He and 70 more foreigners are sent to the remote town of Skinnskatteberg and housed in an old hotel. Meanwhile, Hashem’s wife is left to fend for herself and for her children, working as an Arabic teacher, for a measly wage that is not enough to cover living expenses, and enduring xenophobic attacks from locals in Egypt. Hashem is scheduled to have an asylum interview in August. Until then Hashem is idle. His interview day arrives and, with the help of an interpreter, Hashem is asked a series of “methodical questions” about his origins and his story. Hashem describes the interviewer’s questions as “firm but respectful” (Ibid). In October, Hashem checks the migration agency’s



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online portal and finds that they have made a decision concerning his case. He wonders if he will be given temporary or permanent residency, or any residency at all. He hopes for permanent residency status because only then will he be able to bring his family along with him. He is asked to report to the Migrationsverket on November 10, 2015. Arriving early, he is one of the first in the queue. When the agency opens its doors, Hashem grabs a ticket and meets a woman behind a counter who hands him an envelope. He opens the envelope and finds a card inside. It says “Permanent uppehällstillständ,” permanent residency (Ibid). The Rights of the Rich In 2017, the people of New Zealand, a small yet affluent nation of less than five million inhabitants, were up in arms when they learned that German-born, naturalized American citizen and PayPal co-founder, Peter Thiel, a billionaire, had been granted New Zealand citizenship six years earlier.2 The news came to light after Thiel purchased a $13.5 million lake-front farming block on Lake Wanaka (Nippert 2017d), and the public learned that he did not need to follow foreign buyers rules because he is, in fact, a citizen of New Zealand (Kimmorley 2018).3 In his citizenship application Thiel claimed that “I have found no other country that aligns more with my view of the future than New Zealand” (Nippert 2017a). He also said he “intend[ed] to devote a significant amount of [his] time and resources to the people and businesses of New Zealand,” yet he spent less than two weeks in New Zealand before submitting his application for citizenship (Streitfeld and Williams 2017). Normally, citizenship applicants in New Zealand must remain for at least 1,350 days in country in the five years leading up to 2

The backlash was so significant that some believe it may have contributed to the opposition party’s victory in the 2017 election. The New Zealand Labour Party planned to ban foreign buyers from buying properties in the country. With foreign money pouring in through real estate purchases, the housing market got out of control. A shortage in homes has ensued while housing prices in Auckland doubled in the past nine years. Less New Zealanders own a home today than in 1951 (Roy 2017b). 3 America’s wealthy are buying property in New Zealand to have a place “to flee in the event of a global catastrophe.” Thiel has even built a panic room in his Queenstown property (Kimmorley 2018).



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submitting their citizenship requests (Roy 2017a). Just before making his submission, in October 2010, Thiel invested $4 million in New Zealand’s largest online accounting company, Xero, joining its advisory board (Nippert 2017a). That same year, in December, he submitted his application for citizenship (Ibid). Nathan Guy, New Zealand’s Minister of International Affairs at the time, signed off on Thiel’s citizenship application in June 2011. By August that year, Thiel was taking his citizenship oath in California, where a special ceremony was held for him at the New Zealand consulate in Santa Monica (Nippert 2017a; Streitfeld and Williams 2017). Thiel made it clear in his application that he never intended to live in the country (Nippert 2017b). When first asked about the approval of Thiel’s citizenship application, former Minister Guy claimed he did not remember the application (Nippert 2017c). He later defended his decision on the basis that Thiel was “worthy of being a fantastic New Zealand citizen” due to his “good character and the contribution that he was going to make to New Zealand” (Streitfeld and Williams 2017). He went on to say, “He is a fine individual, good character, he has invested a lot in New Zealand, he’s got great reach into the US…” (Roy 2017a). It was later found that Guy used the “exceptional circumstances” clause within New Zealand’s Citizenship Act to grant Thiel citizenship (Nippert 2017a; Nippert 2017c). Contrary to the expectations set forth in his application, where he claimed that he would “promot[e] New Zealand internationally,” Thiel never divulged his citizenship status (Roy 2017a). He did, however, make use of his newfound status to profit from New Zealand. Nine months after taking his citizenship oath, Thiel’s Valar Ventures entered into a partnership with the Government of New Zealand’s Venture Investment Fund (NZVIF) – an initiative that allegedly figured into the government’s “comprehensive business growth agenda.” The deal left taxpayers exposed if the fund’s investments failed but included a clause that would allow Thiel



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to buy out the fund for a “nominal price” (Nippert 2017b). After contributing $6.8 million, Thiel exercised the buyout clause and walked away with $30 million in profit while the NZVIF received just $10.2 million despite having originally contributed $9 million (Ibid). In essence, Thiel’s Valar Ventures “reap[ed] massive profits at the taxpayers’ expense.” The people of New Zealand offered Thiel a “loan at less-than-market rates” (Nippert 2017d).4 To complicate matters, it seems that Peter Thiel’s big data company, Palantir Technologies, has had commercial ties to New Zealand’s Security Intelligence Service, Defence Force, and the Government Communications and Security Bureau for years, which some speculate may have played a role in granting him citizenship (Nippert 2017c; Nippert 2017d). This leads us to wonder: what role did Thiel’s affluence and business savviness play into him obtaining New Zealand citizenship? More broadly, how does Thiel’s path to citizenship illuminate similar processes of citizenship acquired through investments taking place all over the world? Only the Rich Get a Golden Ticket The two vignettes presented above have not been chosen arbitrarily. They underscore the disparities that exist in different people’s ability to move freely around the world and enjoy the rights that come with lawful residency and citizenship. Those like Peter Thiel, affluent and wellconnected, have the world at their fingertips and often bend citizenship rules in their favor. By contrast, others like Hashem Al-Souki, who have the great misfortune of hailing from an unstable place, must put their lives at risk and persist in the face of extreme adversity to find safety and a new place to call a home. The likes of Thiel are welcomed with open arms into a 4

The government defended the buyback option blunder by reminding critics that the clause was developed under Labour leadership. In addition, rather than generating a strong return, it was allegedly inserted to increase privatesector investment and “develop market activity.” However, the government stated that it would not be using the clause in the future (Nippert 2017b).



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new society; the Al-Soukis of the world are turned away or monitored with suspicion. While the media obsesses over forced migrants, the so-called ‘boat people’, and the alleged ‘migrant crises’ that have cropped up in recent years, investor migrants go almost completely unnoticed and are afforded the convenience of fast-tracked service and complete anonymity. Yet, for the millions of others on the move5, the situation is completely different. They face “significant, sometimes insurmountable, obstacles to lawful entry into the promised lands of immigration” (Shachar 2014b: 114). In fact, even Hashem’s story is a best-case scenario – his did not end in death and misfortune as the stories of many forced migrants do. After nearly two years of living – and waiting – in Sweden, Hashem was ultimately reunited with his family (Kingsley 2017). This thesis examines the conditions and consequences of what are benignly referred to as investor migration programs, or programs that provide investors with a residency visa or outright citizenship.6 Numerous countries around the world have launched programs that make it possible for wealthy investors to acquire citizenship through such programs. While the programs vary by country, they share a set of common features: they often minimize or completely waive residency requirements, involve minimal vetting of investors’ source of funds and turning a deaf ear to any ongoing criminal proceedings against an applicant in a foreign country, and they are carried out expeditiously, in contrast to standard asylum procedures and processing times. In contrast to investor migrants, asylum seekers are told to patiently wait their turn. It is within this context of restricted migration for most that facilitated migration for the few seems all the more absurd and unjust. If we think about the regulation of migration flows as 5

The UN Refugee Agency estimates that 65.5 million people were forcibly displaced as of 2016 (Edwards 2017). Although not stated explicitly, residency by investment programs more often than not provide a path to citizenship, in that residents can apply for citizenship after a minimum amount of years, so they are in effect citizenship by investment programs with a longer timeline. However, the programs are also referred to as: citizenship-byinvestment (CBI) programs or CIPs, residency-by-investment (RBI) programs, golden visa programs, cash-forpassport programs, and economic citizenship or economic residency programs. 6



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an industry, I suggest that governmental migration agencies’ preferential treatment of the highend of the migration market, composed of ultra-high net worth individuals, has grown exponentially over the last few years. As government programs have cropped up to offer investors facilitated routes to residency and citizenship, an entire support industry has also flourished in its stead. This has led to a watershed transformation of migration flows and the political economy of hosting policies, namely by publicly underserving the low-end of the market, comprised mainly of forced migrants, while encouraging routes to citizenship through monetary investment at the high-end, if we conceptualize global migration as a market. This is apparent not just in how migration policies have evolved over time but in the rhetoric used to describe the two groups, which paints the former as worthy of residency or citizenship and the latter as less deserving by virtue of their economic status; one brings positive transformation, the other only tries to extract benefits from the host country. This reduces far more complex migration dynamics to a dichotomy underpinning the liberal order in developing economies, with governments pushing for an economic rationale for migration that has damaging effects upon the democratic rights to citizenship and mobility. The opening section of this paper begins by providing an overview of the investor migration industry – its history, the types of programs and support services that have cropped up to bolster it, and the array of institutions and actors that encompass it. Next, it examines the social, political, and economic implications of investor migration programs. The paper concludes by looking beyond the investor migration industry by considering what happens when citizenship can be purchased by governments, rather than individuals, for the purposes of exclusion, rather than inclusion. It concludes with a discussion on how regimes that allow for citizenship to be purchased compound the overwhelming precarity forced migrants and the stateless already face



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today. The impacts of these recent transformations have been explored in the literature, yet this study seeks to contribute to the existing literature by expanding on the more unexplored aspects of the debate and bringing all the various elements in conversation with one another.

IV.

The Investor Migration Industry History, Trends, and Key Actors The investor migration industry has grown into a booming trade since its inception thirty-

four odd years ago. It all began when the small, dual-island nation of St. Kitts and Nevis passed a law in 1984 allowing foreigners to obtain citizenship if they “made a substantial investment in the state,” were “of good character,” and were “not a threat to the country” (GIIC 2018a). A substantial investment, at the time, did not have to be made with financial capital; human capital, such as business expertise, sufficed. Canada’s immigrant investor program, launched in 1986, is considered the “first true residence by investment program” and the world’s leader for most of the 1980s and 1990s.7 The United States (US) did not lag far behind, establishing its own program for immigrant investors, the EB-5 visa, in 1990. The United Kingdom (UK) followed suit in 1994 with its Tier 1 visa. Those two decades also saw citizenship-by-investment programs emerge in other small Caribbean island nations.8 From the late 1990s to the mid-2000s, Canada’s program declined in popularity while the US and UK’s programs gained prominence. More recently, various European Union (EU) Member States have launched their own residency- and citizenship-by-investment programs (Ibid). Roughly half of the EU’s Members States have 7

Canada’s investor migration program was discontinued in March 2014. The government was concerned that “the immigrants it admitted provided few economic benefits and had poor economic outcomes in the country after they arrived.” However, the government of Québec has maintained its own program (Sumption and Hooper 2014: 3; 13). 8 Anthony Van Fossen (2007) writes on passports of convenience (POCs) in what he terms Pacific Island Tax Havens, e.g. Tonga, Samoa, the Marshall Islands, Vanuatu and Nauru. At the time of writing, although the sale of citizenship took place it was not carried out through a formal government program. Today, Vanuatu’s program has been formalized. See: https://best-citizenships.com/countries.htm



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investor migration programs today (Sumption and Hooper 2014: 1; Gold and El-Ashram 2015: 49). Although the programs of EU Member States require higher investments9, European residency is a huge pull factor, as it provides unrestricted travel within the Schengen area; European citizenship provides the right to work within the entire EU. Their programs are, however, in competition with one another (GIIC 2018a). A race to the bottom is being spurred as the competition among Western, Caribbean, and Asian programs10 intensifies (Thomas-Johnson 2017). The actual worth of the investment migration market is hard to determine but different media outlets estimate it is in the billions.11 Nuri Katz, founder of international financial advisory firm Apex Capital Partners, “estimates that roughly 5,000 people each year acquire citizenship abroad through CIPs,” or citizenship-by-investment programs (Springer 2018). Katz himself holds American-Israeli-Canadian-Kittitian-Antiguan passports (Ibid). Today, the Chinese are increasing the demand for investor migration programs. A Bain & Company and China Merchants Bank study found that “there are more than one million high-net-worth individuals […] in China,” with high net worth defined as having more than $1.6 million in investible assets (GIIC 2018b). Apart from Chinese investors, the industry is seeing sizeable demand from the

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For instance, Dominica and St. Lucia both offer citizenship for a mere $100,000 investment. At the opposite end of the spectrum, Singapore offers permanent residence for a SG$2.5 million investment. In Europe, the rates and rights afforded vary considerably. The cheapest investment option is in Latvia where an investment of $80,000 in business or $250,000 in real estate will secure permanent residence. The French offer the most expensive option, requiring a €10 million investment in industrial or commercial assets. See https://best-citizenships.com/countries.htm and http://business-investor-immigration.com/france/ 10 Hong Kong and Singapore’s residency-by-investment programs have been popular for years but new entrants such as Malaysia’s My Second Home (MM2H) program, which offer permanent residence for a fraction of the price, are growing in popularity. See http://nomadcapitalist.com/2013/11/11/easy-permanent-residence-in-asia-malaysiainvestor-visa-program/ As of January 2017, Malaysia had approved 32,000 applications since the program’s inception in 2002 (Taylor 2017). 11 Business Insider describes it as “the multi-billion dollar investment migration industry” (Moshinsky 2017), while Fortune give us a more specific estimate, calling it “The $2 Billion Dollar Market for Passports, based on an estimate given by Henley & Partners in 2014 that “the global rich spent an estimated $2 billion acquiring nationalities” (Mansharamani 2016). See also Myers (2016).



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Middle East, Russia and Russian satellite countries.12 Partaking in an investor migration program is seen as a way for investors to “diversify their assets,” a notion that has been driving up demand for wealthy investors from Africa, South Asia, Southeast Asia, and Latin America (Ibid). Others are motivated by the prospect of “visa-free travel and international mobility” (Ibid) for themselves and their families. Some want “better schooling and public services for their families” (Moshinksy 2017). A second passport is also viewed not just as a “type of ‘insurance policy’” (Mansharamani 2016) but as a status symbol by some, not unlike buying an expensive car. “It is generally something that they [investors] start thinking about when they reach a net worth of a million or two” (Springer 2018). For a growing number, it also is seen as offering more privacy when investing and can be a “first step in renouncing… US citizenship” which comes with many fiscal strings attached. “You must have a new passport in hand before you dump your blue travel document” (Reeves 2016). The industry tends to thrive during times of political uncertainty or outright unrest, as wealthy individuals “see[k] political stability” (GIIC 2018a). Christian Henrik Nesheim, founder and editor of Investment Migration Insider13, likened the investment migration industry to an “anti-fragile” institution, following the thoughts of Nassim Nicholas Taleb’s Antifragile: Things That Gain From Disorder (2012). An anti-fragile institution is one that is “improved by exposure to such conditions and needs adversity to thrive” [emphasis in the original] (Nesheim 2017a). Nesheim went on to say “the scale and scope of our activity grow in tandem with global crisis.” Wars, financial crises, revolutions, natural disasters, nuclear plant leaks or hyperinflation – these are all events that promote further growth in the investment migration industry (Ibid). Taking 12

Investors with passports that offer them little mobility are among the bulk of those seeking second passports. However, there is a growing trend of Korean, Japanese, and US nationals seeks second passports in “more taxefficient jurisdictions” (Taylor 2017). 13 Investment Migration Insider is an English-Mandarin online news publication that markets itself as the “leading source of intelligence for the Citizenship and Residence by Investment Industry.” See https://imidaily.com/about/



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into consideration the various present-day conflicts, civil wars, and general unrest worldwide, it should not come as a surprise that investor migration-focused firms grew from a handful one decade ago to more than 400 today (Ibid). Among those who are part of this parallel support industry are various advisory actors who provide “personalized advice on availability and suitability of various programs,” to “legal advisory on tax, immigration, citizenship, real estate and private law” or “representation and consulting with governments” (GIIC 2018a). Although largely unknown, these are the real playmakers of investor migration flows, helping to enact law and helping their clients benefit from loopholes while lobbying for even greater loopholes. And yet, their role is largely unaccounted for and understudied. I will now examine two examples more closely. Perhaps the most prominent private consulting firm in the industry is UK-based Henley & Partners (heretofore Henley). Henley claims to have invented the concept of “residence and citizenship planning” in the 1990s (Henley & Partners 2015).14 Henley serves both sides: at once helping the wealthy to purchase residence and citizenship and countries to sell it. The firm’s governmental clients have included St. Kitts and Nevis, Antigua and Barbuda, and Malta (Abrahamian 2015: 71-72). A key player at Henley is the firm’s chairman, a Swiss man named Christian Kälin. Kälin spotted the market opportunity in the eighties, approached St. Kitts and Nevis with a proposal to help them set up an investor migration program, and helped put the country on the investor migration map. More recently, in Malta, Henley claims to have represented 100 of the 140 applicants approved for citizenship, earning a 4% commission on

14

Residence and citizenship planning is described as “a process of finding solutions to the complex range of considerations involved in moving your residence to another country, or obtaining rights in more than one country” (Regency Elite 2015).



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each citizenship sold (Ibid: 88).15 Henley also reportedly partnered with developers to “sell property, earning commissions for citizenships sold through the real estate option” (Ibid: 79).16 Arton Capital (heretofore Arton), another big player in the industry, directly rivals Henley. Arton is Dubai-based and headed by Armand Arton, a man that holds Armenian-Canadian-DominicanAntiguan-Comorian citizenships (Ibid: 89). Both Henley and Arton also spearhead efforts to disseminate information about the various programs on offer in different countries and to add legitimacy to the industry through conferences and other industry events. For instance, Henley and Arton host annual conferences: the Global Residence and Citizenship Conference, since 2006, and the Global Citizen Forum, respectively. The conferences gather a variety of actors such as heads of state or leaders in key ministries from around the world, legal specialists, and academics to discuss ‘global citizenship’. Arton also maintains a Global Citizen magazine17 and organizes events globally, not unlike Henley. Arton is also one of the cofounders, along with five other citizenship consulting firms, of an allegedly “non-partisan, not-for-profit organization” that “works to protect the reputation of the investor immigration industry,” the Global Investor Immigration Council (GIIC 2018a).18 Henley also started the Investment Migration Council (IMC)19, in response to Arton starting its own “industry group” (Abrahamian 2015: 91). In addition to worldwide industry events, both firms disseminate passport rankings and indices, detailing which countries offer their passport holders visa-free travel to the most 15

When investors contributed instead to Saint Kitts and Nevis’s Sugar Industry Diversification Fund, which they set up to attract foreign direct investment, Henley also earned as much as $20,000 for every individual contribution made to the fund. Because the government was unable to pay for marketing fees, it struck up this deal instead (Abrahamian 2015: 79). 16 Relatedly, attorneys representing EB-5 applicants represent not just the applicants themselves but the projects they would like to invest in – a conflict of interest – and “take undisclosed fees from developers – up to $60,000 per immigrant – to steer clients to particular projects” (Elkind and Jones 2014). 17 See https://www.artoncapital.com/global-citizen-magazine/ 18 See http://www.giic.uk/ 19 See https://investmentmigration.org/



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countries. Each one claims to be the most authoritative source on the subject. For instance, Henley has three instruments its publishes publicly: (1) the Henley Passport Index, which provides a “sophisticated measure of global access,” detailing “travel freedom,” the reasons for the existing travel access and “which additional passports would improve your mobility”;20 (2) the Henley & Partners Visa Restrictions Index21, developed in partnership with the International Air Transport Association (IATA);22 and, (3) the Henley & Partners-Kochenov Quality of Nationality Index, a ranking of nationalities by qualities that facilitate an investor’s development of his “talents and business”.23 Arton maintains the Passport Index24 and the Arton Index.25 On Arton’s website, visitors can also use a “program match feature” to “discover what programs best match your goals” (Carey 2017). These are but two large players in an even larger industry crowded by a multitude of players.26 The industry is currently on a high but worries abound about its possible, and imminent, collapse. At the IMC’s Investment Migration Forum event in 2017, University of Groningen law professor and IMC board chairman Dimitry Kochenov alluded to the fact that the industry could not withstand the backlash that would come if an act of terror were committed by someone benefitting from an investor migration program. “If an act of terror were to be committed by someone in one of these programs then all of the programs would be ended” (Moshinsky 2017). 20

See https://www.henleypassportindex.com//global-ranking For the latest Visa Restrictions Index (2017), see: https://henleyglobal.com/files/download/hvri/HP_Visa_Restrictions_Index_170301.pdf 22 The Visa Restrictions Index shows, for instance, Iranian, Iraqi and Pakistani passports will only allow visa-free travel to less than 30 countries each; a St. Kittitian passport will get you into 136 (Henley & Partners 2017). 23 Named Kochenov after the law professor and citizenship-by-investment enthusiast, Dimitry Kochenov, who is a close friend and ally of Kälin’s. See https://www.nationalityindex.com/ 24 See https://www.passportindex.org/ 25 See https://www.artoncapital.com/tools/arton-index/ 26 “Golden Visas by La Vida (citizenshipbyinvestment.net and goldenvisas.com) partners with local investing and real estate agencies in 40 countries. If you’re interested in exploring citizenship on Malta, the Malta Indefinite Residency Programme site spells out the requirements clearly. Citizenship Advisors (citizenshipadvisors.com) specializes in the Caribbean countries, and connects clients to local real estate brokers. This site is pleasant to scroll through and contains a great deal of information about the five Caribbean nations that have CBI programs” (Carey 2017). 21



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There are some efforts in the investor migration industry to self-regulate, at least on the surface, but these have not yet brought on any meaningful change (Ibid). There seems to be no form of oversight either. The lack of regulation and due diligence caused problems for St. Kitts and Nevis in 2014. That year, the US and Canada started to require nationals of St. Kitts and Nevis to obtain visas to travel to their countries as many Iranians who had acquired St. Kitts and Nevis citizenship were using it to “skirt sanctions” (Masharamani 2016; also, Abrahamian 2015: 88). In response, Saint Kitts “recalled thousands of passports and implemented higher standards” (Masharamani 2016) but the fear remains of a similar backlash. Perhaps Nesheim is not as right he believes about the industry’s anti-fragile nature. Notwithstanding these concerns, firms are thriving and demand for such programs is only set to increase with growing economic, social, and political instability. Types of Investor Migration Programs Investor migration programs vary greatly by country in terms of cost and benefits, although they share some common characteristics which have allowed scholars to group them for analytical purposes. Veteto (2014) divides the programs into three categories: direct citizenship by investment, residency programs, and golden visa programs. In Veteto’s view, direct citizenship programs provide full citizenship. The difference between residency and golden visa programs is the idea that the former never includes a path to citizenship, whereas the latter is more likely to. Veteto aptly refers to golden visa programs as “direct citizenship by investment with a trial period” (Ibid). Dzankic also refers to discretionary naturalization in her paper (2014), which would be more akin to the program that allowed Peter Thiel to obtain fast-track citizenship status. For the purposes of this paper, I will refer mostly to Veteto’s denomination of the program types. However, I suggest that the lines between residency and golden visa



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programs are increasingly blurred as many residency programs also allow for the possibility of obtaining citizenship after some time. Another useful framework for thinking about investor migration programs was put forth by Sumption and Hooper (2014), of the Migration Policy Institute (MPI). They conducted a comprehensive study of investor migration programs around the world, finding that investor migration programs generally fall within one of two overarching categories. The first are programs which require an investment in the private sector, either a business – with the aim of creating more jobs – or in real estate. The second type of program involves the investor transacting with the money by exchanging a sum of cash, “in the form of nonrefundable fee or low-interest loan” or the purchase of a government bond, for residency or citizenship, although oftentimes these programs guarantee the latter (Sumption and Hooper 2014: 1). A useful framework to help us think through the arguments for and against such programs entails distinguishing between each individual program according to the type of monetary investment required and to where the money flows. Where the money flows is particularly relevant for the economic argument buttressing these programs, to which I now turn.

V.

Assessing the Implications of Investor Migration Programs Economic Impact Investor migration programs are often touted by their proponents as a win-win

arrangement: investors gain new residency or citizenship rights while the “destination countries gain revenues or job-creating investments” (Sumption and Hooper 2014: 1). For example, the US’s EB-5 visa, which allows investors to gain permanent residence if they can prove to have created ten new jobs with their investment, was cited as being able to generate thousands of jobs



18

per year if used to its full potential (U.S. Cong. Sen. Comm. on the Judiciary 2011). Foreign investment is seen as not only a source for job creation but as critical to sustaining key industries and boosting the US economy (Kendall 2013). Senator Chuck Schumer, a Democrat representing New York, and others have claimed the program “has delivered billions of dollars into the American economy” (Nixon 2016).27 But federal auditors have found that in many cases, those numbers are “not valid and reliable” (Ibid). A congressional committee met in 2016 to discuss the merits of the EB-5 program, asking “Is the investor visa program an underperforming asset?” Bob Goodlatte, a congressional representative from Virginia, recalled that the minimum investment amount had not been adjusted for inflation over the 25 years of the program, calling for the amount to be adjusted accordingly. He also alerted the committee to the fact that most investors were opting for using targeted employment areas (TEAs) to invest less, $500,000 instead of $1 million. To do this, excessive “gerrymandering” had taken place, “involv[ing] the deliberate drawing of TEAs to include prosperous areas that should not be subject to the reduced capital requirements” (U.S. Cong. Sen. Comm. on the Judiciary 2016: 2). Moreover, jobs were being attributed to foreign investors when in fact they were more likely to have been created by US money (Ibid: 3).

28

Sumption and Hooper also note that “the economic contribution of

27

Different studies cite diverging figures for the exact contribution. An industry-funded study found that “spending ‘associated with’ EB-5 investors in 2012 contributed $3.4 million to the U.S. economy and ‘supported’ 42,000 jobs” (Elkind and Jones 2014). Another source claims that the EB-5 program has “raised more than $15.5 billion in investment, creating more than 80,000 jobs since its inception in 1990” (Scannell 2016). 28 A year prior to the congressional committee hearing, a US Government Accountability Office study found that USCIS’s methodology for reporting program outcomes and overall economic benefits was neither valid nor reliable (2015). For one, USCIS was being “exceedingly generous in its employment tally” (Elkind and Jones 2014). Similarly, the Department of Homeland Security inspector general claimed in a December 2013 report that “the government ‘cannot demonstrate that the program is improving the U.S. economy and creating jobs for U.S. citizens.” The Brookings-Rockefeller project on state and Metropolitan Innovation “concluded that ‘knowledge of the program’s true economic impact is elusive at best’” in a February 2014 paper (Elkind and Jones 2014).



19

investors admitted in larger countries such as the United States or the United Kingdom is modest” (2014: 1).29 Yet, such programs can help smaller countries raise substantial sums. In St. Kitts and Nevis, so-called “passport money” (Abrahamian 2015: 80) grew from roughly 1% of the island’s GDP in 2006 to 25% by 2014, which is to say one quarter of all wealth generated in the small Caribbean country. It allegedly “helped cut the national debt to 68% of GDP, from 159% in 2010 (Andrus 2017).30 Similarly, Cyprus’s program is said to “bring in €4 billion annually, or roughly 25% of the country’s GDP” (Moshinsky 2017) and Malta’s GDP experienced a 3.8% increase when it launched its own citizenship-by-investment program (EB5Investors.com 2017). Sumption and Hooper note that “[o]nly programs that require a direct cash payment to the government or an investment in a national development fund can say to have a clear economic benefit” (2014: 2). These authors found that private sector investments were the toughest to track. They make it difficult to control “where and how money is invested and whether investments actually create the expected number of jobs.” In some cases, investors can even withdraw their investments once their applications for permanent residency or citizenship are approved (Sumption and Hooper 2014: 1). In addition, the purchase of government bonds “is thought to provide little economic benefit,” yet countries like the UK and Australia grant citizenship to investors who choose to invest in these instruments. The same can be said for programs focused on real estate purchases. Even with direct cash payments or investments in development funds, the economic benefit is “contingent upon the adequate spending of funds” (Ibid). 29

EB-5 visa holders’ contributions comprise only “a sliver at best of the $150 billion to $200 billion that investors pour into this country” (The Times Editorial Board 2015). 30 Mansharamani cites the program as having helped the country “decrease its debt from 164 percent of GDP to 104 percent of GDP” between 2010 and 2013 (2016).



20

Emily C. Kendall believes “the benefits of the[se] program[s] far outweigh the harm” (2013). Yet, investor migration programs can also have serious negative economic consequences. Judith Gold and Ahmed El-Ashram of the International Finance Corporation (IFC) examine at great length the significant macroeconomic effects that these programs can have on a country (2015). They stress the importance of sound program design and adequate management of inflows. Saving is particularly important in improving a country’s fiscal performance. St. Kitts and Nevis’s program revenues helped “boos[t] the overall fiscal balance to more than 12 percent of GDP in 2013, one of the highest in the world” (Ibid: 50). Among other risks, countries could “become overly dependent on the capital inflows from these programmes” (Myers 2016), especially if they yield to pressures to increase government spending, which in turn could result in “sharp fiscal adjustments or an acute increase in debt” when flows diminish (Ibid: 50). This latter discussion should give governments some pause. The economic benefits that citizenship and residence planning firms or lobbyists with wealthy investors in their pocket tout to make sure they get their cut may be short-lived or not significant at all. Even when they are significant they may create an overdependence that will only make countries more vulnerable to capital flight and exogenous shocks. Not to mention, they set the stage for savvy individuals to game the system. To this I now turn. National Security and Corruption National security concerns are center stage in investor migration program discussions. Compared to other migrant categories, investor migrants are barely vetted or at least not subjected to the same rigorous vetting. As a result, investor migration programs offer a backdoor for the powerful and corrupt to escape legal proceedings in their home countries and an opportunity for money laundering. The issue was particularly acute in the United Kingdom



21

where a “blind faith period” was the Home Office’s modus operandi between 2008 to 2015 (Pegg 2017). Checks on applicants’ backgrounds and wealth where neither under the purview of the British government nor under that of the applicants’ banks. During this period, the Home Office approved 3,000 individuals to enter the UK through its Tier 1 investor visa scheme without checking to see if they were “’politically exposed persons’ – foreign officials considered at high risk for corruption” (Ibid).31 Other countries also have inadequate vetting procedures. In Cyprus, for example, among those admitted into the country through the investor migration scheme were Russian and Ukrainian oligarchs and elites accused of corruption, such as “a former member of Russia’s parliament, the founders of Ukraine’s largest commercial bank, and a gambling billionaire” (Farolfi et al 2017a). A list of names of those who received citizenship through these means was leaked and included “prominent businesspeople and individuals with considerable political influence.” These issues persist despite recent reforms. Prior to 2013, citizenship was afforded on a discretionary basis in Cyprus – one beneficiary included “an oligarch and art collector who bought a Palm Beach mansion from Donald Trump,” as well as “a Syrian businessman with close links to the country’s president” and described in a US diplomatic cable as “a ‘poster boy for corruption’.” A cousin of Bashar al-Assad, Rami Makhlouf, was also granted citizenship in 2010, although the US had sanctioned him over corruption allegations (Ibid). It is clear that Cyprus undertakes very little due diligence on its applicants, to the detriment of its country’s safety and, by extension, the entirety of the EU, to which they give full access when they grant Cypriot citizenship.

31

A Kazakh man, whose father had been accused of a “multi-billion dollar fraud” was granted an investor visa even though he had informed the Home Office that the cash to invest “had been provided to him by his father” (Farolfi et al 2017b).



22

Aside from the dubious and often criminal source of investor fortunes, politicians have also been found to be implicated in the corrupt issuance of visas to investors. Maltese politicians, for example, were allegedly involved in a passport “kickback scheme” (Farolfi et al 2017b). The UK government was allegedly upset when Malta introduced its own program, claiming “unchecked immigration” as the reason. However, Meltzer (2013) believes it had something to do with the increased competition the Malta program would bring – which provided access the same features the UK program offered at a discounted price. In Portugal, the police implicated eleven individuals, civil servants and golden visa holders alike, in the corrupt issuance of golden visas as part of Operation Labyrinth.32 One of the suspects of the investigation is former immigration minister (Farolfi et al 2017b), Miguel Macedo. Macedo resigned a few days after being named a suspect (Louro and Henriques 2017). The Portuguese program has attracted mostly the ultra-rich Chinese but also Brazilian executives and Angolan politicians accused in their home countries of corruption and other charges (Pegg et al 2017). Executives from Brazil, suspect of the criminal investigation called Operation Car Wash33, allegedly “purchased” access into Europe through Portugal’s golden visa program (Costa 2017). Chinese citizens benefitting from these programs are not without fault as transferring more than 50,000 euros outside China in a single year is deemed illegal by the country’s authorities (Pegg et al. 2017). According to a new report by the Global Anti-Corruption Consortium, investor migration schemes promote further corruption and criminality, even within government administrations – of which Portugal’s program is a prime example (Siza 2018). 32

Operation Labyrinth (Operação Labirinto in Portuguese) is an ongoing investigation into a scheme that implicated high-ranking Portuguese public officials for expediting golden visas in exchange for political and other favors (Henriques 2018). For more information see Procuradoria-Geral da República (2015). 33 Operation Car Wash (Operação Lava Jato in Portuguese) is the largest corruption and money laundering investigation undertaken in Brazil to date. The investigation began in 2014 by looking into four criminal organizations led by black market money dealers (doleiros). A corrupt scheme involving Petrobras was later uncovered. They found that government officials were being paid rents (propinas) ranging from 1 to 5% for every million-dollar contract they officials approved (Ministério Público Federal).



23

Even the US, with its stringent vetting system for refugees and other migrants, has an investor migration program that is fraught with loopholes for the wealthy and corrupt to exploit. For instance, Donald Trump’s son-in-law Jared Kushner was found to have been “offering visas to Chinese investors” who invest into one of Donald Trump’s company’s “construction projects” (Farolfi et al 2017b). What Kushner did with the Chinese is, in fact, part of a larger trend.34 As Elkind and Jones (2014) vividly illustrate, the EB-5 visa program “has become a magnet for amateurs, pipe-dreamers, and charlatans, who see it as an easy way to score funding for ventures that banks would never touch.” Elkind and Jones show us how an Indian-American man conjured an elaborate scheme to commit EB-5 visa fraud in Chicago.35 The EB-5 program is overseen by the United States Citizenship and Immigration Services (USCIS), which is “illequipped to review business plans, job-creation studies, and securities offerings” (Elkind and Jones 2014), all of which fall outside its area of expertise focused on carrying out visa processing and immigrant background checks. EB-5 investments typically do not undergo any checks by the US Securities and Exchange Commission (SEC) as they are made through “unregistered securities offerings.” Using regional centers to fundraise, “private, profit-making operations that pool EB-5 money for development projects,” entrepreneurs in the US can recruit foreign capital

34

The “Invest in America Summit,” an annual event held in March in Shanghai, is fully focused on the EB-5 visa. At the 2014 event, there were more than 60 exhibitors, among them the country’s biggest developers, such as Stephen Ross, who wanted $800 million to fund Hudson Yards, a $20 billion project on the West Side of Manhattan (Elkind and Jones 2014). One thousand two hundred Chinese “millionaires” reportedly received green cards through the scheme (Semuels 2015). 35 Anshoo Sethi, under the premise of building the “World’s First Zero Carbon Platinum LEED-certified and 100% Allergen Free convention center and hotel complex” for $913 million near Chicago’s O’Hare airport, coaxed roughly 300 Chinese investors out of $147 million. The project was to create 8,495 jobs. The deal Chinese investors had entered into involved investing in the venture in exchange for green cards. Neither Anshoo Sethi nor his father, Ravinder Sethi, who were the deal’s principals had the experience they claimed in real estate and hotel development. The project crumbled beneath Anshoo’s feet as he failed to obtain the necessary building permits, franchise agreements, and public funding he intended to cover the rest of the development’s expenses. After a year of court proceedings, a settlement was reached in March 2014, and Anshoo Sethi had to return the $147 million to the Chinese investors. He was fined $3.9 million and had to pay $11.5 million in administrative fees. He cannot partake in an association that sells securities for 20 years yet he never had to admit wrongdoing (Elkind and Jones 2014).



24

from abroad at discounted rates, and help a wealthy investor gain US residency in return.36 More significant still: “Like banks and Wall Street firms, regional centers sell securities and handle millions. Yet there are no rules on who can own or run a center, and no audit requirements. A regional center doesn’t have to report publicly on its performance, identify its principals, or disclose any financial, legal, or regulatory problems they have encountered” (Elkind and Jones 2014). Even getting approval to set up a regional center in an appropriate targeted employment area (TEA) requires some scheming on the part of investors. The district must be rural or have a jobless rate that is 150% the national average to be approved by USCIS. Yet after years of pressure from lobbyists and investor-migrant industry representatives, USCIS indiscriminately approves state applications for TEA (Ibid). Thus, elegant hotels and affluent residential developments, from Marina del Rey, California to New York City, sit on TEAs (U.S. Cong. Sen. Comm. on the Judiciary 2016: 2-3).37 Not only were several individuals found to have used the EB-5 program to launder money and enter the US (Nixon 2016) but, through regional centers, investors can even withdraw their funds once they receive permanent residence status (The Times Editorial Board 2015). An internal review by the fraud detection office at USCIS found numerous fraudulent documents when it conducted a random sampling of pending visa applications. Officials at the agency said they did not have the authority to shut down a regional center that has received money from foreign investors solely because of possible criminal or national security concerns (Nixon 2016). Among the intelligence and law enforcement community, many are concerned that “foreign government agents might be trying to infiltrate the program to conduct economic espionage or gain access to technology that is banned from export”. A Department of Homeland Security investigation carried out in 2013 found that an 36

In 2007, there were a dozen regional centers in the US. As of 2016, there were more than 500 (Rapoza 2016). The United States Government Accountability Office (2015) conducted a study in 2015 on the immigration investor program to understand the fraud and national security risks posed by the program in the years 2012-2015. 37



25

individual involved in the EB-5 program had ties to Iranian intelligence. He was later arrested for exporting electronics to Iran (Ibid). While little has been done in the US to remedy these issues, a Member of the European Parliament representing Portugal, Ana Gomes, set out to conduct a study of all investor migrant programs within the EU, which is forthcoming. Gomes has also inquired into the schemes, concerned that they can be “used by corrupt kleptocrats, criminal organizations and terrorists to find a refuge in the EU and launder profits from criminal activities.” She is proposing an amendment to the relevant EU Directive that would establish diligence obligations related to not only the suitability of applicants but the origin of the funds they intend to invest (Reis 2017). Gomes’s efforts have been met with resistance. In 2014, the European Commission was up in arms about Malta’s investor migration program and decided to host a debate on the matter. Representatives of Malta arrived at the January meeting with Kälin and Kochenov in tow. Kochenov argued that “the supranational body had no basis from which to regulate the naturalization policies of sovereign states” (Abrahamian 2015: 87) and not much has happened since. Although the UK, Cyprus, Malta, Portugal, the US and other countries with investor migration programs claim to have the necessary checks and balances in place to ensure that national security is maintained, the number of unlawful individuals being admitted through these investor migration programs tells a different story. There is an egregious lack of oversight; loopholes and legal vacuums that benefit those with political connections or the wealthy-enough to acquire them; lack of regulatory structures capable of vetting this class of wealthy investors; and government-sponsored schemes of deception, fraud, and money laundering. Without sufficient checks on applicants and safeguards on process, countries offer corrupt individuals and



26

criminals “a ‘get-out-of-jail free card’” (Farolfi et al 2017a). The general disregard for this critique also erodes these countries’ own legitimacy, particularly in light of their treatment of other migrant groups. Let us now turn to the effect investor migration programs have on local real estate markets in the countries that offer residency or citizenship in exchange for real estate investments. Distortion of Housing Markets Although less explored in the investor migration literature or in the media, property market fluctuations tend to be the most dramatic in “cities most exposed to the global economy,” of which immigration is an important determinant (Ley and Tutchener 2001). Gold and ElAshram (2015) note the “negative repercussions” of “a large and too rapid influx of investment in the real estate sector,” with “rising wages” and “ballooning asset prices” among the main issues. In addition, such influxes can lead to a “rapid expansion in construction,” which can “undermine the tourism sector” by “erod[ing] the quality of new properties” constructed or “repurposed” for tourist accommodations. Real estate inflows are also “volatile and particularly vulnerable to sudden stops, exacerbating small countries’ macroeconomic vulnerabilities” (Gold and El-Ashram 2015: 50). Canada’s real estate market offers a clear illustration of these issues. For example, Ley and Tutchener (2001) studied the effects of immigration on housing prices in the largest cities in Canada. They found that price inflation in Vancouver, where there was a “disproportionately high share of economic migrants” in the late 80s and early 90s38, can be attributed to this influx and the real estate purchases made by them at the time. The influx also coincided with the introduction of Canada’s new investor migration program. When Ley and Tutchener

published

their

study,

ownership

rates

among

recent

immigrants

was

38

Canada admitted 57,000 immigrants through its investor migration scheme between 1986 and 1996. Half of these immigrants were from Hong Kong (GIIC 2018a).



27

“disproportionately higher in Vancouver than elsewhere in Canada” (2001: 203-204, 213-214).39 The subsequent downturn in the market in the late 90s coincided with the “return of migrants to Hong Kong in light of easier than expected transition to Chinese sovereignty in 1997” as well as “the repatriation of Asian capital accompanying the financial crisis that began later that year” (Ibid: 214). The phenomenon we saw play out in Canada in the 1980s is now being felt by locals in countries like Portugal and Cyprus. The Portuguese government does not impose any restrictions on foreign property purchases and such purchases in the real estate market involve “generally low” transaction costs (Delmendo 2018). As part of the golden visa program, applicants can obtain Portuguese residency by three means, one of which involves investing in real estate valued at a minimum of €350,000, for homes older than 30 years, or a minimum of €500,000 for all other homes – a bargain price considering what investors receive in return and what similar programs cost them elsewhere in the world. Unsurprisingly, Portugal has experienced a housing boom in recent years.40 In 2015 and 2016 alone, housing prices have increased by 15% (Idealista 2017). Rental prices have experienced a similar trend: in the first six months of 2016, rental prices rose as much as 10% (Martins Santos 2017). Although increases in housing prices can be attributed to Portuguese nationals choosing to invest in homes “as an alternative to the low interest rates offered by banks,” foreign investment in real estate is undoubtedly responsible for

39

The wealth of business migrants coming into Vancouver during the period 1990-1996, as measured from declarations of personal assets to immigration officers, was roughly $20 billion (Ley 1999, as cited in Ley and Tutchener 2001). 40 Portugal also offers investors the opportunity to obtain “special tax rates and exemptions applicable to individuals for a period of 10 years” through its non-habitual residents (NHR) taxation regime. The regime also allows for exemption of foreign-sourced and pension income (Castro Silva and Cassiano 2013).



28

the dramatic hikes in housing prices the country has seen in recent years (Idealista 2017) – in 2017, 25% of the homes sold in Portugal were purchased by foreigners (Pinheiro 2018).41 It is not the purchases alone which are overstimulating the market but rather the values at which they are acquired. In Portugal, out of 5,717 applications to the golden visa program made between October 2012 and January 2018, 5,397 were filed for real estate investments (94.4%). The rest were granted for a transfer of capital greater than €1 million (311 applications or 5.4%) and for the creation of 10 jobs (9 applications or 0.15%) (Siza 2018). For instance, in Cyprus, according to a partner at Cypriot law firm G. Georgalla & Associates, Chinese real estate agents looking to purchase homes for their clients often ask “developers to increase the value of the property” to reach the minimum value required to obtain the investor migrant visa (De La Cruz 2017). As De La Cruz points out (2017) “golden visa seekers have stoked meteoric capital gains.” Values in urban centers in Portugal have shot up while Cyprus’s luxury beachfront properties have seen an appreciation of 30% in the years 2014-2016 (De La Cruz 2017). Wealthy foreign investors have no problem finding properties to purchase and meet the minimum requirements to obtain residency or citizenship, to the detriment of local prospective home buyers who struggle to find homes they can afford. According to Liana Toumazou, country manager for Cyprus and Greece at the Royal Institution of Chartered Surveyors (RICS), an organization that appraises and determines property values, “[n]ot all locals can afford this type of property. Not before the crisis, not now, not after” (De La Cruz 2017). The same is true for the average person in Portugal, with a median salary of less than 1,000 euros per month.42 What is 41

The housing boom has also been aided by Portugal’s rise as a tourist destination, particularly in urban centers like Lisbon and Porto and vacation getaway destinations like the Algarve region in the southern part of the country. 42 PORDATA. “Salário médio mensal dos trabalhadores por conta de outrem: remuneração base e ganho.” See: https://www.pordata.pt/Portugal/Sal%c3%a1rio+m%c3%a9dio+mensal+dos+trabalhadores+por+conta+de+outrem+ remunera%c3%a7%c3%a3o+base+e+ganho-857-6931



29

essentially happening is that a “passport [housing] bubble” is forming in Portugal, as it has in Saint Kitts and Nevis. “Cheap property developments… are over-valued, because the minimum investment for a foreign national to qualify as a Kittitian citizen is $400,000” (Abrahamian 2015: 82). Other Caribbean island nations who have opened up to Middle Eastern investors “are now fuelling a property bonanza that has been dubbed ‘Dubai in the Caribbean’” (Thomas-Johnson 2017). To conclude, just as individuals seek dual nationality to ensure their own global upward mobility (Harpaz 2018), the “transnational wealth elite” use global cities, such as New York and London, and tourist capitals, such as Lisbon and others, as a “safe deposit box” for their wealth by purchasing property in these key cities (Fernandez et al 2016). This has deep implications for the communities they penetrate, such as a loss of sense of community and economic opportunities as well as an exacerbation of existing affordable housing issues, with the “less fortunate classes” being “priced out” of the housing market (Ibid: 2444-2448, 2454-2456). Real estate investments should not be a zero-sum game. Wealthy investors stand to gain from ease of access to local housing markets, unfettered from strict regulations or limits, while local residents are being pushed out to the peripheries of urban centers. These investments can be turned into a vehicle of speculation. More importantly, these investments accrue few benefits to host societies, whereas investor migrants benefit from residency status and fixed capital. Governments seem to disregard the plight of its citizenry – or of those less well-off seeking to obtain similar residency status – by putting a price tag on citizenship. It is to this dimension that I now turn. Commodification of Citizenship One of the most important arguments against investor migration programs, particularly those that confer citizenship to successful applicants, purports that governments have effectively



30

turned citizenship into a commodity by putting a price on it. Ayelet Shachar is a leading scholar in this school of thought. She makes her point by strategically using the term “cash-for-passport programs” to describe these programs. Shachar sees the “marketization of citizenship” as not only an act of commoditization but also a “hollowing out” of the “‘status, rights and identity’ components of membership” that are normally associated with citizenship (2017: 4). Shachar aptly points out that investor migration programs are causing us to “significantly reshap[e] our understanding of membership and its shifting boundaries” (Shachar 2014b: 116).43 Seeking to answer the question “Should Citizenship be for Sale?”, scholars Shachar and Rainer Bauböck organized a special issue with the collaboration of over ten academics under the auspices of the European University Institute (Shachar and Bauböck 2014). This working paper provided a platform to discuss a variety of viewpoints on the issue of the sale of citizenship, which will be examined here in more detail. Although the special issue used Malta’s highly criticized citizenship-by-investment program as the starting point for discussion oriented toward the Member States of the European Union, these key findings are useful in thinking about citizenship-by-investment programs generally. If we think of these authors’ contributions as lying on a spectrum, with Shachar’s opposition on one end, and Kochenov’s championing of the cause on the other, we can begin to map the other authors’ arguments. Closer to Shachar’s end of the spectrum are Roxana Barbelescu, Paulina Ochoa, David Owen, and Bauböck, all of whom explore investor migration programs from a lens of inequality. Barbelescu agrees that investor programs are transforming how we view citizenship and signals a break from the privileging of cultural and social ties. Yet, for her, the problem is not that citizenship is for sale: “the problem is global inequality.” She 43

For one, “membership has become multifaceted, in that people consider themselves members of several different communities – local, national, and supranational” (Shachar 2014b: 115).



31

views investor migration programs as simply building upon “pre-existing large disparities in the world” where not just investors but high-skilled migrants and expats have more “global mobility corridors” than the rest (Barbelescu 2014: 15-16). Ochoa echoes Barbelescu’s take that investor migration programs “undermine political equality.” Interestingly, she highlights the similarities between investor migrants and regular economic migrants, pointing to how both seek to serve their own individual interests. She concludes by emphasizing that physical presence should be non-negotiable in investor migration program requirements, forcing investors to “partake[e] and buil[d] democratic institutions on the basis of principles of equality and solidarity” (Ochoa 2014: 23-24). Similarly, Owen believes investor migration programs “support the emergence of a transnational class and status stratification in which mobility rights become radically unequally distributed” and “are not compatible with the democratic legitimacy of states or of the EU” (Owen 2014: 31-32). Bauböck speaks of the duality of citizenship – its “external face,” which demands recognition by other countries, and its “internal face,” which “speaks to citizens as members of a democratic community.” He fears that by allowing citizenship-by-investment schemes to proliferate, states are setting a dangerous precedent for treating people of different social classes unequally (Bauböck 2014: 19-21). Moreover, Chris Armstrong challenges us to think about a series of reasons why we might want to restrict the sale of citizenship, although he believes it should not always be restricted. He believes that investor migration programs are not the only citizenship practices that “both feed off, and make it harder to tackle, underlying global inequalities” (Armstrong 2014: 13-14). Moving toward the center of the spectrum we find Hannes Swoboda’s thoughts on how investor migration programs affect the EU as an institution. He argues that “the very idea of the European Union as a community of values is put into question by these trends” (Swoboda 2014:



32

35-36). Moreover, Jo Shaw urges the European Parliament to “take a careful look at the issues that the Maltese case raises” and debates “the relation between national and EU citizenship” (Shaw 2014: 33-34). Vesco Paskalev is also square in the middle, precisely because he offers a different take on the matter, proposing that governments start “a race to the top” by granting citizenship to “prominent civil rights activists,” and “open mobility corridors for the righteous” (Peskalev 2014: 25-26).44 Further away from Shachar and her allies are scholars like Peter Spiro, who argues that investor migration programs are “symptoms,” not causes, of citizenship being removed from its “former pedestal” (2014: 9-10). However, this argument is outdated, as he cites two aspects of the programs in support of his argument that no longer hold true: the first, that the number of investors that would benefit from these programs would remain low and therefore inconsequential, yet we have seen a boom in this industry; second, that investors would remain non-residents, although we know now that many programs today offer some pathway to residency and later citizenship. Conversely, Raul Magni Berton believes that while investor migration programs reveal that the acquisition of citizenship is unfair, investors can acquire “a moral claim to become citizen” by investing in a country (2014: 11-12). Finally, Dimitry Kochenov is on the opposite side of the spectrum altogether. Kochenov does not address the arguments put forth by his colleagues and instead simply reminds readers that Malta has the legal right to grant citizenship to whomever it chooses (2014: 27-29). As someone who finds Shachar’s camp to have the most compelling argument, it is no surprise that I consider Jelena Dzankic’s contribution in a separate publication particularly relevant, as it historicizes preferential paths toward citizenship. Dzankic begins by pointing out 44

Paskalev’s suggestion is not unlike what Armand Arton of Armand Capital claimed to want to do with his own citizenship and residence planning service firm – for every one passport sold to an investor, one passport should be “donate[d] to a stateless person” (Abrahamian 2015: 91).



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that “the very idea of setting a price tag on membership in a community is intuitively disquieting” (Dzankic 2014: 388), at least in today’s world. However, Dzankic reminds us that in ancient Greece and Rome45, under the feudal systems that followed, and even with the development of modern nation states, an individual’s property and financial resources were intrinsically tied to his membership rights. It is with the advent of the modern human rights system that citizenship became associated with “internal equality and with the idea of a ‘right to have rights’,” as mentioned by the philosopher Hannah Arendt (Ibid 2014: 389-390). Pecuniary criterion, “such as the possession of a steady income or property” was and still is a prerequisite for naturalization in many countries and signals an individual’s capacity to provide for herself and not become an undue burden on the state. However, in Dzankic’s view, investor migration programs allow states to determine who is deserving of admission by merely assessing the depth of their pockets (Ibid 2014: 390-391). Dzankic also brings to light the arguments of various key scholars in this body of literature. From Bauböck’s “citizen stakeholder,” which describes “a person who has a fundamental interest in membership in a particular polity, as opposed to economic or other benefits for which membership may be instrumental” to Rubio Marin’s idea that “membership and the full enjoyment of rights should be limited to those who are both resident in and social members of a community” (Dzankic 2014: 392), Dzankic points out that within these frameworks, investors cannot be considered a part of the polities to which they seek access by simply making a financial contribution because they lack “stakes in and links to a community” (Ibid), echoing Ochoa’s arguments specifically. Yet, she also reminds us that, as Michael Walzer pointed out, “states act as ‘clubs’,” “includ[ing] or exlud[ing] prospective members according to 45

In ancient Rome, the Peregrines bribed Roman authorities to obtain citizenship (Dzankic 2014), not unlike how the merchants, traders and pirates, “wealthy commoners” purchased honors in medieval England (Tanasoca 2016).



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their interest” (Ibid). Canadian philosopher Joseph Carens believed that in instating uneven criteria to membership “states act as enterprises rather than as public communities,” overstepping the boundary between public and private when they are allegedly “bound to treat individuals equally.” Still, a common argument prevails that states are to treat individuals as equals if they are “already their members” and not those who are applying for membership (Ibid: 393). However, “[e]xchanging a higher-value good (citizenship) for a lower value good (money) destroys the value of citizenship and corrodes public trust in that institution in a way that naturalization on other bases does not” (Ibid: 401), facilitating naturalization on “financial grounds disrupts the equality principle” (Ibid). Here her argument aligns with Swoboda’s argument discussed above. Thus, Dzankic believes we “intuitively red-flag” investor migration programs because “we consider them a potential threat to democracy, a challenge to equality and a mechanism of commodifying citizenship” (Ibid: 402). Investor migration programs make citizenship fundamentally more unjust, causing us to revert back to a time when “membership and rights were related to property and thus generated an unequal treatment of individuals by the state” (Ibid). These programs are especially jarring because we view contemporary citizenship as creating “a community of equals” (Ibid). Dzankic’s point is echoed in Shachar and Bauböck’s joint contribution to the working paper discussed earlier: citizenship by investment programs “contribute to […] the emergence of new forms of inequality and stratification” (Ibid: 4). While governments make it easier for wealthy investors to obtain “easy-pass citizenship” they also “make membership more restrictive and difficult to achieve for others” (Ibid). Shachar closes by asking a series of critical questions worthy of further consideration: what is citizenship and what does it include? Is it “merely about rights, or also responsibilities?” To whom is a justification owed, if any, when EU Member States commodify their citizenship? What laws could and



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should apply to both loss and acquisition of citizenship? Coming out of the year of the EU citizen, Shachar asks us to “think critically about the law as we know it, while imaging the law as it could be” (Ibid: 37). In light of this analysis, Kälin and Kochenov’s fundamental belief that investor migration programs give individuals the much-needed right to choose their nationality does not hold sway. To Kochenov, the programs “mean one thing: freedom.” They afford a broader “horizon of opportunities” and a greater ability to “control our future,” one we can “actively build” rather than “relying on pure chance of the ‘birth-right lottery’ which citizenship otherwise is.” Kochenov returns to the lottery analogy by explaining that “Some win in lotteries and others lose,” making options to obtain citizenship and residence critical in today’s world (EB5Investors.com 2017). Likewise, Kälin believes that the “traditional ways of allocating citizenship to individuals – by birth [jus solis] or through blood [jus sanguinis] – are fundamentally arbitrary.” In his view, “investment-based citizenship may actually be more fair [sic], because it makes more sense than randomly assigning privileged status by chance” (Abrahamian 2015: 84-85). Surely these programs provide more freedom to the wealthy but they simultaneously disenfranchise the poor who are not only excluded from these programs but who are underserved by government migration agencies who make investor migrants their priority. Professor George DeMartino of the University of Denver pointed to the problems with investor migration programs in an interview for CNN. Investor migration programs “threaten to diminish political fraternity by affording special privileges to the already privileged,” by “permit[ting] those with the least need to migrate and achieve citizenship in a new country the greatest opportunity to do so.” At the same time, “those far more desperate to migrate, such as those facing dire economic circumstances at home, are fully excluded from the benefits of these



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programs. The programs are not the cause of this inequality, but they amplify it” (Springer 2018).46 Shachar has a darker prediction: “Were citizenship allocation to become reliant on a price mechanism alone,” it could “over time lead to a dystopian world in which anyone included in the pool of members might have to pay to retain their membership status or risk being priced out” (Shachar 2017). The way Kochenov describes how governments compete in the investor migration industry illustrates not just how much of a priority these programs have become but also how governments are increasingly conducting the once political project of migration management as a business. Is Shachar’s prediction so farfetched after all? Kochenov points to how countries “offer citizenship alongside residence-by-investment,” diversified products in business-speak which allow them to “tap into different groups of potential clients” (EB5Investors.com Staff 2017). He also notes how new countries, seeing the success of the Caribbean nations with residency- and citizenship-by-investment programs, are starting to “enter the market,” which is fueling a race to the bottom as countries’ struggle to “retain their market share” (Ibid; also, Taylor 2017). He goes on to say that when visa requirements are reintroduced by countries wary of passport holders of countries with popular but less reputable investor migration programs, the sudden change affects natives of the country. Worse yet, for Kochenov, they negatively affect investors as they “lose the value for money” (Ibid). Kochenov believes countries will continue to “reinvent[t] and adjust[t] their requirements and options to stay competitive and provide applicants with benefits that optimize their global presence” (Ibid). 46

Abrahamian hit the nail on the head when she talked about the transactional nature of investor migration. “Citizenship, in these cases, functions more as a Global Entry pass or an American Express card than a way of meaningfully identifying one’s place in the world” (2015: 74). Italian street artist B31 exposes this very contradiction whereby migrants from the global South are increasingly shut out by being denied visas while natives of the global North, often Visa credit card holders, can travel wherever they please in his series of posters on billboards in 2015. Similarly, visual artist Nele Vos explores the commodification of citizenship through an interactive installation called the Citizenshop (see Appendix 1).



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While some governments work to optimize their global presence, others are twisting the premise of the investor migration industry – the commoditization of citizenship – and using it to serve more malicious purposes, to which I now turn.

VI.

When Governments Are in the Market for Citizenship Shachar asked, “But what happens when the logic of capital and markets infiltrates this

classic statist expression of sovereignty?” (Shachar 2014a: 5) as if looking to a phenomenon we would observe future and should prepare for, yet the future has arrived. The underlying question this paper has been gesturing towards is centered on the adoption of the same market-oriented logic of investor migration programs for individuals by governments. Since 2008, unbeknownst to most, the UAE has spent €200 million or more buying Comorian citizenship for the bidoon47, a stateless population that resides within its borders, at roughly €4,000 per passport for 40,000 individuals. The exact number of bidoon residing in Emirati territory is unknown but estimates place the population somewhere between 20,000 and 100,000 individuals (Abrahamian 2018). Kuwait adopted a similar policy in 2014 (Bellamy 2016).48 Atossa Araxia Abrahamian has reported on this phenomenon at great length (2015; 2018). Abrahamian recognizes the capitalist logic to the UAE and Kuwait’s programs: “If citizenship can be freely bought and sold, why shouldn’t governments buy them for stateless people?” (2015: 75). 47

Bidoon is Arabic for “without” (Abrahamian 2018), and is a shorthand for the phrase “bid[oo]n jinsiya” or “without nationality” (Taylor 2016). 48 Shachar took the hypothetical view in 2014. However, in 2017, she acknowledges the Kuwait ordeal: “In another recent twist, international human rights bodies, such as the United Nations Human Rights Committees, may take a stance against government-imposed purchase of citizenship in a third country. Such a scenario may occur when officials in a given country, call it Wealthiana, go on a shopping spree to ‘relocate’ to another country the membership claims of unwanted ethnic minority populations, potentially against their will and without their knowledge. The idea that one country will buy citizenship from another country to disenfranchise some of its longterm residents and avoid granting them citizenship may sound more fitting for a dystopian novel than for twentyfirst century citizenship law, but precisely such a narrative emerged when Kuwait purchased Comoros citizenship for its bidoon population. The UN Human Rights Committee commented on the practice in its 2016 report on Kuwait, holding explicitly that the country should ‘set aside plans to offer “Bidoon” the “economic citizenship” of another country’” (Shachar 2017).



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However, the purpose of the purchases is not altruistic and the bidoon are not necessarily jumping at the opportunity to obtain Comorian citizenship. A blogger-activist named Ahmad Abdul Khaleq, a member of the bidoon community, was handed a Comorian passport on May 21, 2012 and was baffled to find that it had not been issued by the Emirates (Abrahamian 2015: 51). He was detained the following day, on May 22, 2012. Khaleq was kept in jail for two months and although he was not charged with anything, some police officers commented to him that he was arrested because he was “one of the activists who talked about the rights of the stateless people in the UAE” (El Gamal 2012). He was told to “choose between indefinite detention at a prison in Abu Dhabi or exile in one of a list of countries including Thailand” (Ibid). Khaleq opted to go to Thailand (Ibid), and was later able to settle in Canada (Taylor 2016). However, hundreds of thousands of other bidoon, vulnerable to deportation, remain in the UAE, Kuwait, and other Gulf countries. Khaled’s case is an example of how the UAE, Kuwait, and others, are using citizenship as a political and “legal tool” (Hall and Peel 2012), denying citizenship and in some cases revoking it where it sees fit.49 Before going further into the deal that turned the bidoon’s world even more upside-down, let us first examine the root of the problem – why the bidoon lack citizenship to begin with. Citizenship in the Gulf and The Bidoon Khaleq, and many other bidoon like him, grew up in the UAE and “felt local.” His own family had emigrated there in the 1940s and 1950s from the unstable region of Balochistan in Pakistan (Abrahamian 2015: 51). Other bidoon trace their origins to nomadic Bedouin tribes that were native to and once moved freely through the region (El Gamal 2012). The United Arab

49

In 2005, Qatar revoked the citizenship of as many as 6,000 people (Hall and Peel 2012). In 2014, Kuwait also revoked the citizenship of key figures of the opposition media (Kholaif 2014).



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Emirates only emerged as a nation-state in 197150 so Khaleq’s family’s arrival actually “predates the existence of the United Arab Emirates” (Abrahamian 2015: 51). However, when the UAE came to be, nationality was not a concept that many knew or understood. “[T]hey didn’t, couldn’t, or weren’t called upon to register” (Abrahamian 2015: 53). Khaleq’s father, who worked for the Ministry of the Interior at the time, “failed to obtain and renew the necessary paperwork to formally become a citizen” after the country’s founding (Ibid). As the country became richer, having the paperwork to prove one’s affiliation became critical in accessing government services (Ibid), and its rulers became more protective of who could access the perks that come with full citizenship. Citizens of the UAE benefit from an annual stipend of $55,000 per year as well as “free land on which to build a house; a no-interest loan to finance it; a marriage bonus of almost $20,000; subsidized utilities; and […] free healthcare and education” (Abrahamian 2015: 58). It is no wonder that the government does not want to allow more into the fold. Only 15% of the population claims UAE citizenship (Abrahamian 2015: 57). The bidoon native to other countries in the region have suffered through similar developments. In Kuwait, they were treated as citizens until 1985, when they were suddenly classified as “foreigners living in Kuwait illegally” (Abrahamian 2015: 58). This administrative change coincided with the plummeting prices of oil in 1984 and 1985 (Ibid). With the First Gulf War in 1990, the bidoon began to be viewed with suspicion by the states in the region, particularly Kuwait. They were accused of defecting although it is estimated that “one-third of fatalities on the Kuwaiti side were bidoon” [emphasis in the original] (Ibid: 59). Since then they have been viewed suspiciously (Motaparthy 2011). Even before the First Gulf War, the Iranian 50

That year, Abu Dhabi, Ajman, Dubai, Fujairah, Sharjah and Umm al-Quwain, six semi-autonomous emirates, decided to come together after declaring independence from the British. Ras al-Khaimah, another emirate, joined in 1972. Bahrain and Qatar declined to join the union after having been invited (Abrahamian 2015: 52).



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revolution of 1979 and the Iran-Iraq war of the 1980s helped to increase the “insecurities and xenophobic tendencies in the Kuwaiti ruling family” (Alqadi 2015). The government does not recognize statelessness as a legitimate status and continues to claim that the bidoon are “actually nationals of other countries and they therefore do not have legitimate claims to Kuwaiti nationality” (Motaparthy 2011). and they have been disenfranchised in the Gulf countries for years.51 With the Comoros, however, they have no genuine ties: historic, cultural, or other. In addition to the arrangement to obtain passports, the UAE also helps Comorian officials “summon and document the bidoon,” pressuring them by refusing to grant driver’s licenses and threatening to block their children’s enrollment in school (Abrahamian 2018). As Abrahamian aptly states, the investor migration industry supporting the citizenship market analyzed thus far has “paved the way for the Comorian scenario by turning passports into something that can be bought like any other commodity” (2018). The UAE is perfectly capable of providing the bidoon with nationality and, by extension, civil and political rights but it “chooses not to.” Instead, the bidoon-turned-Comorian-citizens are classified as foreign nationals within the UAE (Abrahamian 2018). For the bidoon in Kuwait, obtaining Comorian citizenship would entail becoming “migrant workers… subject to deportation if they commit crimes or other violations punishable by deportation under Kuwaiti law” (Fanack.com 2014). The International Passport Partnership: UAE-Kuwait-Comoros The idea to exchange Comorian passports for the bidoon had been in the works since 1997, under then-Comorian president Mohamed Taki Abdoulkarim (Abrahamian 2015: 40). At the time, the Comoro Islands were struggling under a mound of debt (Abrahamian 2016: 43). 51

However, as Bellamy points out, within the UAE the bidoon are not the only to be marginalized as “only 15 percent of the population enjoy the privileges of citizens” (Bellamy 2016).



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Unlike the Seychelles and Mauritius, which were able to capitalize on tourism or “become a hub to manage (and sometimes obscure) capital flows to and from the mainland African continent,” the country struggled to obtain its independence from France until 1975. Even today, the French control Mayotte, what would otherwise be the islands’ “richest territory” (Sloan 2015). Suffering more than 20 coup d’états since independence, the country’s path to development has not been the smoothest and, as a result, it has been overwhelmingly reliant on foreign aid (Ibid). Against this backdrop, a man named Bashar Kiwan, a Syrian born, naturalized French businessman based in Kuwait, brokered the deal. He was business associates with Sheikh Sabah Jaber Mubarak al Sabah, the Kuwaiti prime minister’s son (Abrahamian 2015: 27). He used the legitimacy his close ties to Sheikh Sabah gave him to entrench himself among the Comorian business and political elite. He befriended Ahmed Abdallah Mohamed Sambi, who went on to be elected to the presidency in 2006 (Abrahamian 2015: 35-37) and entrenched himself further. Shortly thereafter, he was named honorary consul of Comoros to Kuwait in 2007 (Ibid: 38). “Kiwan was the man for market-based solutions to global problems, delivered with an educated veneer of legitimacy – a Davos man, if you will” (Abrahamian 2015: 40). To obtain parliamentary backing, Kiwan arranged for Comorian parliamentarians to meet Kuwaiti authorities,52 essentially wining and dining them, and even brought in some bidoon to speak to the parliamentarians of their plight (Abrahamian 2015: 45). The goal was to get them to codify the agreement in Comorian law (43). The Comorian authorities were told that their citizenship would only be held by the bidoon temporarily, “that way, they could register their presence and after some time, collect their [Emirati] nationality” – and that the new passport holders would eventually invest in the Comoros (Abrahamian 2015: 47). In addition to 52

The deal was first signed by the UAE but it seems they “wanted to keep the deal under wraps” so Kiwan took the parliamentarians to Kuwait (Abrahamian 2015: 44).



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discussing the deal on the bidoon, the Comorian government was promised “wealth, investment and development,” in the form of various tourism projects (Abrahamian 2015: 45). At the time, the Comoro Islands were struggling under a mound of debt (Abrahamian 2015: 43). At a dinner hosted by Sheikh Sabah, the delegation was given “laptops, watches, and, some say, envelopes of cash” (Ibid: 45). Kiwan’s agreement with the Comoros “gave him the right to play intermediary with all the Gulf countries, not just the UAE” (Abrahamian 2015: 44). The “’economic’ citizenship” that they would be granted would not include the right to vote in local elections or to reside in the Comoros permanently (Abrahamian 2015: 47). While some bidoon may now have Comorian citizenship, essentially solving the issue of stateless for them, many questions remain which Belkis Wille of Human Rights Watch is right to ask: What is, in fact, included in economic citizenship? Will Comorian citizenship be passed on to the children of the bidoon at birth if they are born in the UAE or Kuwait? Will these two governments be able to deport the bidoon to Comoros as “illegal residents”? (Wille 2015). He defrauded the governments of the UAE, Kuwait, and the Comoro Islands. Worse yet, he victimized an entire population for his personal gain. Yet, Bashar Kiwan was not the only bad apple. As with the investor migration programs we discussed in previous sections, these government-led passport-purchase schemes have also engendered corruption – due diligence is scant and government officials have been found by the Comorian government to sell passports on the side. In fact, many new Comorian passport holders have been found to be individuals born in Burma, Bangladesh, Iran and other countries, as well as some Westerners – although the reasons for purchasing citizenship by the latter group remains unclear (Abrahamian 2018).



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Today, passport sales make up a third of Comoros’s annual GDP (Abrahamian 2018).53 Although the deal seems like the quick fix for the Comoros’ economic problems, the country’s dependence on this revenue stream does not bode well for its stability in the future. Apart from the agreement with the Gulf countries, the Comoros are reliant on remittances, only second to Eritrea in Africa, and the export of three crops that “are vulnerable to price fluctuations and natural disasters” (Mansour-Ille 2016). It remains one of the poorest countries in the world despite the deal. The portion of its population living below the national poverty line in 2004 was at 48% (Ibid). Worse yet, although the ability to grant citizenship is often cited as the “last bastion of sovereignty,” the Comoro Islands seems to have given up some of its own sovereignty by yielding to the whims of the Gulf countries (Sloan 2015). Implications for Migration Management The UAE and Kuwait’s exporting of their bidoon ‘problem’ echoes Australia’s “offshoring” of refugees to Nauru and Manus. Just as the Australian government has relieved itself of its migrant-related responsibilities (Abrahamian 2018; see also Morris 2017; Morris 2018), the programs in the Gulf set a “frightening precedent” – countries can now effectively absolve themselves of any legal responsibility by forcing unwanted groups like minorities or the displaced to take a foreign nationality (Abrahamian 2018). Abrahamian sees these practices as becoming “mainstream” (2018). Abrahamian predicts the Rohingya may be forced to take foreign passports as neither Myanmar nor Bangladesh want to welcome them into their societies (Ibid). 53

Not unlike how Kälin recognized an opportunity in the 1980s and approached St. Kitts and Nevis to develop their citizenship-by-investment program, Kiwan noticed a trend among the wealthy in the Gulf, who were seeking second passports. He also knew the importance of a second passport himself: “A second nationality was a possibility not so much to be someone else, but to put a different foot forward when circumstances commanded it. It was a bit like having another face.” (Abrahamian 2015: 41). He also knew that “[p]eople who live under repressive regimes are marginalized from the world, and live with the hope of obtaining a second nationality. The dream is to be American, Australian, Canadian” (Ibid), and then he learned of the bidoon.



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In addition, countries around the world are more amenable to the free movement of capital rather than that of human beings unless, of course, these happen to be humans possessing inordinate amounts of capital. A tax law professor at the University of Southern California, Edward Kleinbard, studies stateless income – money whose origin cannot be pinpointed “thanks to loopholes and creative accounting.” He compares stateless money to stateless people. “Stateless persons wander a hostile globe, looking for asylum. […] By contrast stateless income takes a bearing for any of a number of zero or low-tax jurisdictions, where it finds a ready welcome” (Abrahamian 2015: 56).

VII.

Conclusion In this paper, we have examined the investor migration industry at great lengths, using

the limited information available about this hush-hush industry, with a focus on the social, political, as well as economic effects on countries around the world. There is still much to be learned about how this industry operates, what exactly is the size of the market it serves, and which governments are next in line to introduce their own investor migration program and “enter the market” in the words of Kochenov. I urge further research in this realm to understand the full extent of the industry. We also observed how while the Hashem Al-Soukis of the world, fleeing war and persecution, struggle to obtain asylum and how someone like Ahmad Abdul Khaleq is unable to obtain citizenship from the country where he was born and where his family has resided in for generations. Yet, the red carpet is rolled out for wealthy investors such as Peter Thiel when they submit their applications for residency and citizenship through investment. As investor migration programs become the status quo, those involved in this industry, the likes of Kälin and Kiwan,



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will continue to turn a profit by promoting what is innocuously termed residence and citizenship planning, privileging those who can afford their services at the expense of those who seek mobility with urgency but lack the same resources. As things stand, the governments of the UAE and Kuwait will continue to disenfranchise their stateless and other countries are predicted to join their ranks. Countries who, like the Comoros, lack robust and diversified economies will jump at the opportunity to exchange passports for cash, regardless of the implications on the lives of those affected by these programs. Investor migration programs represent the tip of an iceberg in the contrived world of migration management. The onus is on us, as citizens, to interrogate our leaders on what lies beneath the water’s surface. It is on us to hold our governments accountable and ensure they steer clear of practices we find sinister, practices that are for the benefit of a few rather than the benefit of the masses.



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VIII.

Appendices Appendix 1: Visa Denied and The Citizenshop

BR1 – Visa Denied BR1 understands the contradictory nature of global mobility paradigms. As a European, he “can easily reach many places.” However, those who hail from the southern or eastern side of the Mediterranean basin and Africa are not allowed to move as freely. It is this phenomenon which inspired him to put up a series of billboards in Turin and Paris, “in which migrants hold a Visa credit card.” The project, named “Visa Denied,” depicts a series of men and women holding a Visa credit card. According to BR1, “This paradox compares the borders closure for those who come from poor and socially unstable countries, to the frenetic mobility of rich States residents. As is known, holders of Visa credit card[s] actually know no borders.” The work is also a critique of the high number of visa denials for applicants from countries with the “highest emigration rate[s].” Source: http://www.br1art.com/new-post10



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Nele Vos – The Citizenshop “Citizenshop is an interactive travelling installation that opposes the neoliberal concept of the acquisition of citizenship by investment, as is offered by an increasing number of governments across the world today. Instead, it asserts the multidimensional needs and interpretations of citizenship by the world’s peoples, and instigates a radical humanistic inquiry that seeks to stimulate new questions. The installation interrogates emerging questions surrounding citizenship, such as the economic privatisation of the nation state, the worldwide increase in migration, cross-border interlinked technologies and the disadvantages faced by the majority of people under these new international circumstances.” Source: http://www.citizenshop.org/about-citizenship/

Image 1. Welcome screen at www.citizenshop.org



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Image 2. The Citizenshop is a mock online retail website where visitors can see what citizenship is worth in different countries

Image 3. Passport to the Republic of Nowhere (handed out to all exhibition attendees)



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Image 4-6. Other images from The Citizenshop exhibition



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IX.

References

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