The European Community met the five CIP countries of the Caribbean this past week. While nothing official has come out of that meeting yet, lots of rumors are swirling about the results of that event. One of the most talked about rumors is a request by the EU that all the CIP countries increase the prices of their programs.
Additionally, there is talk of the issue of financing investor immigrants and that the practice should be discontinued. In the following paragraphs, I would like to explain why I think that the Eurocrats concentrating on the above matters are picking at straws and again forcing the small islands of the Caribbean to make moves against their best interests. I hate to use the word, but as a citizen and resident of the Caribbean, I think this all smells of continued colonialism.
The EU only has a problem with financing investor migrants when it’s in the Caribbean
To begin with, because it is material to the subject matter, I want to share how it was that I entered the investment migration business. I was a young man in 1991 living in Moscow when the Mayor of my hometown, Montreal, came on a trip to the Russian capital with a delegation of business people from Canada.
As I was probably the only person from Montreal in Russia at the time, Mayor Dore invited me to join the delegation for the duration of their trip. During the activities, the Mayor of Montreal introduced me to the Vice President of the National Bank of Canada. The National Bank, at the time, had a division that provided financing for foreigners who wanted to immigrate to Canada through the federal Investor Immigration program. Mayor Dore wanted me to work with the Montreal-based National Bank to sell the financing option to the newly wealthy Russians interested in immigrating to Canada, and that is what got me into the business way back in 1991.
I say all this to show you that the idea and the practice of financing for investor immigrants has been common practice since Canada started the investor program way back in the 1980s. All sorts of Canadian financial intermediaries financed a vast majority of investor immigrants to Canada. These financial intermediaries borrowed from Canadian banks and lent to foreigners brought to them by international marketing agents (IMAs).
So, if the investment that was supposed to be made was, say, $400,000 (the going rate for many years) in government bonds, clients would generally pay $120,000 in financing costs, which would be the cost of the program as far as they were concerned. Not $400,000, but $120,000.
Interestingly, the financial intermediaries managing the financing of the investments were able to pay huge commissions to the IMAs. There was a point, long ago, when the commissions reached as much as six figures. Everybody made money on this: the government, the agents, and the financial intermediaries.
Note that neither the government of Canada, the US, nor the EU had any problem with the Canadian investor immigration financing scheme. They never said the interest was too high and that too many applicants were getting through because of the low price of the Canadian program.
They never said that the financial intermediaries should stop financing immigrants or that the Canadian government should crack down on such schemes, it was all done out in the open with the blessing and the encouragement of the Canadian government.
They wanted more investors, and the way to get them was to make the program cheaper through financing.
They don’t actually care about the price but about making Caribbean CIPs unattractive
All of the above brings me to the point regarding price. Eurocrats’ supposed insistence on the Caribbean raising prices is actually a shocking attempt to usurp sovereignty from the Caribbean – and for misguided reasons at that.
The European Parliament has made it clear numerous times that they are morally opposed to awarding citizenship in exchange for investment. It is not the price but the very concept that they are against.
That is why they took Malta to court. That is why they insisted that the Montenegro program be closed, and that is why they will not allow other EU-candidate countries to have a CIP.
However, now turning around and telling the Caribbean that the prices of their CIPs are too low, i.e., not telling them they should not have CIPs but that they should charge more, simply shows a total lack of understanding of the whole concept of the CIP. Or even worse, it stinks of unfair competition.
The Eurocrats’ assumption that if someone can pay more money for something, they are a better person, more trustworthy, or the “right type of investor” is simply misguided. There are wonderful people who can only afford to pay $100,000, and there potentially are bad people who can afford to pay $200,000.
The Eurocrats should focus on the due diligence procedures performed by the CIU because that, and not the price, will determine what kind of people get citizenship. But the idea that you get worse customers when prices are lower and better ones when they are high is ugly and wrong, and the Eurocrats should be ashamed if they are insisting on any type of minimum price for the CIP.
Moreover, insisting on raising prices would serve to lower the competitive position the Caribbean CIPs have vis-à-vis the European golden visas. By insisting on price parity with the European RBI schemes, it is clear that the Eurocrats are thinking simply of how to protect their countries’ interests and keep more investors investing in Europe rather than the Caribbean.
It’s shocking that the Eurocrats would use their hefty leverage just to protect their RBI programs, but clearly, this seems to be what is happening.
Finally, this meddling in the Caribbean CIPs makes me wonder how much the EU thinks is the correct amount of citizenships that should be sold. Do they think they will protect their security and other interests if only ten citizenships are sold, or a hundred, or a thousand? Do they think that if a thousand citizenships are sold, the risk to Europe is acceptable, while if 1,100 are sold, then the risk is too high?
Europe should be thinking of one thing and one thing only, and that is how they can assist in improving the Caribbean’s already incredibly robust due diligence system. If they were playing fair, the EU would provide whatever expertise and resources to the Caribbean to make the CIP due diligence even better than it is today.
Getting involved in the whole pricing issue is merely a very transparent and unseemly attempt to, once more, close down another Caribbean industry that is of critical importance to the economies of these countries. It is not the first time that Europe has cut off the economic legs of the Caribbean countries, and I suspect it will not be the last.
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Nuri Katz has opened and run a wide range of companies throughout his career but is perhaps best known today for founding Apex Capital Partners, a leading service provider in the investment migration market.