El Salvador’s $1 Million Citizenship Program: Over-Priced, Unclear Structure

Greco’s Geopolitics
With Brian Greco

With an eye to the changing world order, Brian Greco explores how individuals can get and keep global access.

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The market has been waiting for a new citizenship-by-investment program for years now. I am constantly rattling on about the need for a new product that offers what clients want and fills the enormous vacuum of demand in the RCBI industry. 

Programs are closing left and right, global surveillance and regulations are getting tighter, and the world is not becoming more stable. Demand for second citizenship grows every day, yet supply is getting scarcer, especially for any quality travel documents that can be obtained directly by investment without any wait for naturalization. 

The obvious choice of region waiting to bestow us a proper program is Latin America.  

1. The passports are of relatively high quality, by and large providing access to the ever-desired Schengen Area, usually also Russia, and sometimes China and other visa-free gems across Eurasia. Even the US, in Chile’s case. 

2. The destinations are desirable for many people—whether to live in full-time, invest in, or, as many consider, establish a geopolitical safe haven or ideal Plan B or C.

3. Many Latin American economies need incentives to attract investment or improve their economies and foreign exchange reserves, and CBI can do just that. 

Consider El Salvador: The small central American country that has been making waves since the inauguration of President Nayib Bukele in 2019. Through a combination of sweeping reforms, crime crackdowns, and media stunts (often via Twitter/X), Bukele has attempted to reimagine the reputation of his country and court investment. 

This week, years after first flagging its intentions to open a program, the country finally announced its what it’s calling the El Salvador Freedom Visa.

Early reports about the program offered few details, but here are the salient characteristics according to the country’s Migration Authority website:

[On what the program is:] “El Salvador extends an exclusive invitation of residency to 1,000 individuals who aspire to make a difference in the world. Successful applicants are eligible for a fast-track Salvadoran passport, becoming an integral part of this transformative journey.” 

[On who is eligible:] “The eligibility criteria for participating are primarily designed for high-net-worth individuals or investors interested in contributing to building Bitcoin Country. Potential applicants would need to meet the financial threshold specified by the government, set at $1 million in Bitcoin or USDt. Successful applicants are eligible for a Salvadoran passport.” 

[On how long it is “valid”:] “The Freedom Residency Visa program in El Salvador is designed as a long-term residency and citizenship initiative, similar to the concept of a Golden Visa program in other countries. Eligible candidates will be able to obtain citizenship.” 

[On how long it takes:] “While the initial application is swift, the processing duration allows for meticulous assessment, ensuring that all necessary steps are followed before the exclusive Freedom Visa is granted and the path to citizenship is opened.” 

[On the application fees:] “Begin your journey to Salvadoran citizenship by initiating the application process with a $999 USD non-refundable deposit in Bitcoin or USDt. Upon acceptance, the deposit will be credited to the $1 million USD in Bitcoin or USDt investment to secure the Freedom Visa and then citizenship.” 

I have taken the liberty to quote it directly because, were I to summarize it in other words, one of the first problems I’m about to discuss below would already become apparent. I’ll let you digest that for a second first. 

Recently I wrote about Indonesia’s shoddy attempt to launch a Golden Visa with similarly undesirable conditions, and I hate to always be the bearer of bad news, but this one misses the mark as well — and it might be even worse. Here are three reasons why. 

1. The program is wildly overpriced

First off, the elephant in the room: The US$ 1 million price tag. This price level appears not to take existing market conditions into account.

The market for direct-to-citizenship programs is essentially divided in three: 

1. Caribbean island CIPs (Carib-5), which start from US$100-150,000. These programs’ main value propositions are clear pricing, fast turnaround, and Schengen Access (for now). 

2. The Turkish CIP—woefully misunderstood—starts from US$400,000 (and is potentially going up to US$600,000 soon). This program’s main value propositions were open-market real estate, absence of sanctions, and “real country” status. We could also potentially include Egypt’s US$ 300,000 new open-market real estate option in this category.

3. Higher-end European programs, of which Malta is now the only one left at EUR 700,000 and up since the CIPs of Bulgaria and Cyprus closed.

Now, El Salvador’s passport is by no means weak—it has many sweet spots, including:

1. Visa-free access to the Schengen Area (European Union) 
2. Visa-free access to more difficult-to-reach Ireland, Japan, and the UAE
3. Visa-free access to Russia, which will be of increasing use due to the new “Iron Curtain”
4. Visa-free access to common crowd favorites like Hong Kong, Singapore, and Turkey 
5. Visa-free access to nearly all of Latin America itself 

But given market conditions, the case for El Salvador as individually more compelling than other passports on offer remains weak. Bureaucrats who design programs often come up with arbitrary numbers (usually on the high side) because they are woefully uninformed about the nature of citizenship as a commodity in the new world system subject to market conditions. 

These out-of-touch decisions are sometimes due to nationalistic sentiment or symbolic PR goalposts that drive governments to highball their expectations, thinking higher prices will attract only “higher-quality” candidates and result in more overall investment achieved. At other times, such decisions stem from hopes that HNWIs will choose the country regardless of the other available options as if the wealthy did not want value for their money like everyone else.

EC Holding’s Philippe May summarized this sentiment succinctly in a recent tweet:

I m afraid El Salvador’s new residency-cum-citizenship is way overpriced.

Initially, some enthusiastic crypto whales will take it, and also a few nationals of blacklisted countries like Iran and Russia who have no choice.

But soon the demand will dry up. @imidaily https://t.co/w0XvCsC0xR

— Hon. Philippe A. May 梅正熙 Филипп А. Маи (@phmay_sg) December 9, 2023

May further points out that this pricing was clearly done without consultation from seasoned professionals who understand client needs and work with this industry daily:

“It is obvious that some bureaucrats in El Salvador have created this program without any proper advice from senior RCBI professionals. The result will be a certain buzz among the crypto community in the beginning and a long agony without many takers afterward. Pity!”

As I have pointed out before, the purpose of citizenship by investment is to attract money that would have not otherwise come to your economy, not simply to motivate investors who have already bought into your country for other reasons.

For example, El Salvador’s Bitcoin usage will alone attract a certain number of crypto enthusiasts who are price-agnostic. But does that make it an effective offering?

“How many of those [crypto enthusiasts] will finally pay US$1 million remains to be seen,” comments May. “I have no doubt that, initially, some crypto whales and applicants with no choice will go for this. Maybe a few hundred hardcore EL Salvador fans and Bitcoin enthusiasts. But, later, it gets very hard at this price.” 

The reality is that since there are so few products on the market and so little available to key source market nationalities like Russia and Iran, this program may still sell. But it will sell despite its pricing rather than because of it. 

Finally, we can analyze the program from an opportunity cost angle. One could get several residences, Caribbean citizenship, and Turkish citizenship and still have money to spare rather than invest a million for Salvadoran citizenship:

Want an example to see just HOW out of touch this is?

For a 500.000€ bank deposit (less w/ the right connects), you can get residence in MONACO 🇲🇨

0% tax, one of the safest & richest countries on earth, prime Mediterranean location

Or go double for El Salvador 🇸🇻

u choose https://t.co/WiSsK8LpZy pic.twitter.com/bg6ZYb0a87

— BowTiedGlobe | Your Freedom Dealer (@BowTiedGlobe) December 8, 2023

Many countries with highly desirable citizenships, such as those in Europe or even increasingly in the Gulf, are open to providing case-dependent naturalization for sums in the USD million and up range. Austria and the UAE are prominent examples.

While these programs lack the “add to cart” element of true citizenship by investment (and are not, in fact, CIPs at all since they are not commodified or clearly marketed with one price and set of requirements), the same result could be achieved in a far more private setting and in a more respected jurisdiction. 

Those with a million to spare might consider going from country to country and arranging ad-hoc citizenship by exception through extraordinary investments, done fully legally but in an unpublished way. This non-standardized solution is available in a majority of countries already.

2. The program is unclearly structured 

Say an investor is okay with the price and wants the product. Now, what exactly is it that happens when they are ready with money in hand? The program structure was not clear from the initial announcements, and we only know the specifics thanks to IMI community members’ direct outreach to program authorities:

Hey El Salvador, is your program a CITIZENSHIP by investment program? @nayibbukele @Tether_to @Excellion

Or a RESIDENCE by investment program?

The difference is enormous from the market perspective.

If it's a RESIDENCY by investment program, these are the points potential… pic.twitter.com/AWIwjYuOAs

— Parviz پرویز Malakouti-Fitzgerald (@ParvizMalakouti) December 10, 2023

Official program account @AdoptingES replied: 

“Thank you for your interest in the Freedom Visa. 

• This is citizenship by donation ($1M) for you and your family. 
• There is no residency requirement. 
• The naturalization process is within three months.
• Donation can be paid in BTC.”

While encouraging, a few tweets are not enough for many industry experts to feel confident offering this to their clients, let alone parting with one’s earnings. El Salvador has not proven to be reliable and stalwart with what it says will be policy, and sadly, this opportunity to capture immediate momentum through structuring a desirable new citizenship program has already been lost since no one knows precisely what to expect. 

Keep in mind that El Salvador has been mulling over and talking about opening a CIP for several years now:

• In 2021, all the hype was over Bitcoin becoming legal tender and El Salvador offering “permanent residency” in exchange for BTC 3. 
• In 2022, Bukele also promoted a citizenship by investment concept via unclear social media decrees.  

I even spoke with one of their investment promotion teams, trying to encourage them to learn from their five successful neighbors in the Caribbean who have been raking in hundreds of millions of dollars yearly for having clearly-priced and clearly-timed products ready. 

Yet here we are, figuring out the path to naturalization to the tune of US$1 million via social media inquiries. I think El Salvador can do better than that with an official program unit that clearly describes what naturalization requirements we can expect for this sum. 

We need to know what the legislative basis of this program is and exactly what individuals can expect when they decide to make an investment in exchange for citizenship. 

3. The long-term quality of Salvadoran nationality is questionable

It is clear that El Salvador is taking great strides to reform itself and become a more developed country in creative ways, and that is laudable. In today’s media age, a leader cannot change a small country’s perception quickly without a strong handle on new media PR optics that give people a sense that “things are changing.”  

Bukele sent shockwaves through the world of central banks when he made El Salvador the first country to make bitcoin legal tender in 2021. The country that once had the world’s highest murder rate now has the highest incarceration rate. Dramatic high-production videos show swaths of men, presumably associated with gangs, taken off the streets and locked up as Bukele attempts to show the world that El Salvador is “handling crime”.

Most people, if asked, might agree that getting violent gangs off the streets is good. But at what price? What does this mean for due process? Do the ends justify the means? 

As one writer put it, “Once leaders get a taste of the kind of power Bukele is using, they tend not to give it up, and it tends to produce – at a minimum – bad decisions over time.”

I am not moved by the optics of “policing as TV show”. I remain concerned about their record of abuse by security forces, lack of judicial independence, and concerns over government accountability. The Economist said recently that “Nayib Bukele shows how to dismantle a democracy and stay popular.” 

Some might point out that RCBI is not always about being a perfectly stable country, which also makes sense for those using this as a Plan B or pure passport play. A passport can simply be a document to associate oneself with a government for the purposes of mobility or investment. 

So what about the economic outlook? 

Let’s make one thing clear: El Salvador will never be “Singapore”. Singapore got rich and successful not just because of authoritarian rule. It also became rich and successful because of its institutions. A unique mix of Confucian work ethic and family values combined with a legacy of British Common Law met in a perfect storm moment of burgeoning Asian globalization.

Singapore went to extraordinary lengths to establish social institutions that stamped out corruption and carved out a respectable society. As the father of Singapore, Lee Kuan Yew, once said, “We made this country from nothing, from mud flats. It was man, human skill, and human effort, which made this possible. You came, you worked — for yourselves, yes. But in the process, your forefathers and my forefathers who came here: we built this civilization.” 

Even Dubai had an advantage by being a relatively traditional society with almost no culture of systemic crime. The Gulf merely placed on top of that canvas a series of state-run corporations and surveillance capitalism mechanisms that allowed it to become a hub for capital during the rise of Middle Eastern globalization.  

As a student of development, I am keen on watching out for the results. You cannot make institutions overnight. There is no “new Singapore” but I hope that El Salvador can find balance in reforming its society while leaving room for freedoms that these “Freedom Visa” investors would expect long-term in their relationship to their new citizenship-granting state. 

El Salvador’s CBI program can have a future if it takes expert advice

I have been harsh in assessing El Salvador’s citizenship by investment proposition for three reasons: Cost, structure, and long-term outlook. But there is hope.

If El Salvador manages to enlist the help of industry analysts (my line is open, and so is that of many colleagues) and client-service professionals who would be driving this FDI, and they make serious reforms in the way they promote this opportunity, they can see themselves zoom right to first place in a highly desirable and not-terribly-competitive marketplace of citizenship.