With Brian Greco
With an eye to the changing world order, Brian Greco explores how individuals can get and keep global access.
Last week has been called one of the “roughest weeks in investment migration history” as programs such as Portugal’s Golden Visa and Ireland’s Immigrant Investor program round the corner to closure. The decimation of recent mainstays in the Golden Visa space and the bleak landscape of product in the overall market prompts serious existential questions about the future of investment migration.
In today’s article, I wanted to zoom back up to a 30,000-foot view and ask: Why is residency and citizenship by investment (RCBI) worth dealing with in the first place? What is the reason why countries ought to use it as policy? And why do attitudes about it help explain why some countries stay poor, and others get rich by attracting investors seeking mobility?
Citizenship by investment is not a new concept. The first programs were introduced in the early 1980s, with the first program being Saint Kitts and Nevis in 1984. Small islands understood the need to bring in funds in exchange for something that was becoming increasingly valuable: better travel and tax planning.
Earlier too, various schemes and incentives have been attracting foreign investment and talent into regions such as the Tiger Economies of Asia as early as the 60s and 70s or in the 90s across emerging post-Soviet economies of the Baltics.
Every country in the world has its strengths, and some seem to have more than others. Nevertheless, there are also case studies across all regions of the world that, despite their strengths, continue to fail to deliver prosperity to their nation (think: natural resource curse).
There is also an inspiring number of countries with relatively “little” to offer who seem to succeed and emerge from hardship anyway: Rwanda, Singapore, Panama, Cayman Islands.
What matters is policy—and priorities
I have so much respect for the Caribbean Five. Not because I think those countries or even those passports are the most attractive to investors, by far. In fact, I think they are actually quite impractical on several different fronts.
Yet I will never speak ill of any Caribbean program because, despite their imperfections and risks, these small island countries have made something of themselves in a big way for global investors because they prioritize the efficient, scaled, legal processing of citizenship by investment.
It’s a great example of Global South small-government nimbleness and rejecting a “fear of the outsider” that inspires me. Island-nation pride is met with sophisticated global Commonwealth-inspired legal pathways to citizenship to result in prosperity.
The Caribbean Five prove that it does not matter how many natural resources you have and it does not matter how disaster-prone your country is. Likewise, it does not matter how many visa-free countries a passport has. A country’s citizenship or residency forms part of a growing global asset class.
Speaking of global, it’s time for a new definition of citizenship that is truly global
Capital is global in the 21st century and is seeking jurisdictions that are seeking it. Foreign money always seeks places where it is more advantageous to earn, store, or spend it.
China has re-opened after years of lockdown. Russia has been outflowing capital in search of mobility nonstop for a year. Americans are more disgruntled than ever. Indians, Bangladeshis, Vietnamese, etc., are getting richer than ever.
Some might ask: Why would a country without inbound economic immigration in a traditional labor-market sense (often “weaker passports”) need to care about this? Well, perhaps they do not have any inbound immigration as such because there is no good path presented to do so!
Moreover, big money is found today in knowledge and information economies. Immigration is not about labor markets and body counts anymore. It is about knowledge, skills, and competitive technologies. So, I wonder, why do so few immigration policies reflect this?
A country’s citizenship and passport can be valuable for many reasons, and it should not be up to a small elite to decide which of those motivations are worth serving
Maybe it is precisely the fact a country is off the radar and private that attracts one investor. Maybe it’s that it offers better access for doing business regionally, for another. Or maybe it’s a combination of factors that makes the passport a force with which to be reckoned.
Countries with large inbound economic immigration, such as the US, UK, Australia, Canada, and many parts of Europe and even Latin America (such as Argentina or Brazil, historically), are very familiar with the complex but necessary process of modernizing a concept of citizenship and the surrounding discussions of multiracialism, pluralism, and belonging that support this process.
Keeping citizenship tied to ethnicity, racial makeup, or historical birthright is sadly still the norm in East Asia, the Middle East, and most of sub-Saharan Africa. The first countries in these regions to truly invest in granting full citizenship rights to well-selected foreigners will win handsomely.
The outlying case of the Turkish CIP—and the success that backs it up
Turkey is the closest example of a major non-Western country that created a citizenship program that astounded from the outset of its proper price adjustment. While the immediate future of the Turkish CIP and economy are in question, after living here for years, I can confidently say Turkey is among the most pro-foreigner countries in the world, whose unique geopolitical placement makes it misunderstood but poised to thrive in the long-term.
Turkish citizenship is clearly a desirable asset of the new global rich, making it a more “global citizenship.” You can look like anything, come from anywhere, and be ready to contribute—and become Turkish. You cannot look like anything and be Vietnamese (yet!).
Turkey’s low-barrier, high-value CIP combined with its distinctly stalwart acceptance of dual citizenship makes its citizenship one of the few truly “gettable” and “worth-keeping” passports in the world. Could the same be said about other economies and populations of its size? Not many!
Contrary to the perpetual obsession with the Schengen Area (see: “What’s So Great About the Schengen Area?”), the Turkish passport has visa-free access to more than 120 countries and enjoys welcome reception in many harder-to-access areas such as North Africa, West Africa, and all around the Middle East and East Asia, as well as nearly 100% of Latin America (very underrated quality of the passport).
Citizenship policies are downstream from cultural attitudes
Turkey has always been a global melting pot. Its 85-million strong population makes an uptick of 85,000 new global investor citizens (were there to be that many one day) not even a 0.1% change in population. That “blending” reason alone is not to say there won’t be detractors, but the country was a proper clearing for a CIP, yet so few have learned from its example.
FDI incentives formed the basis of why successful economies are valuable today. Countries like Singapore became valuable because of becoming indispensable to the cream of the crop in Asia and now the wider world.
Investors want access. Travelers want options. Residents want security. Citizenship in 2023 and onward needs to be about what it really is: A right to certain forms of access and the rights and responsibilities that surround it through following a set of clearly prescribed pathways.
Tourism is not just a side note anymore; it is the basis of all global movement
People are global also, not just capital. They vote with their feet. Maybe they travel full-time or live between different cultures. Maybe they want to have a backup plan or a backup to the backup. There is an entirely new class of people who have become what I call “global misfits” and this group grew exponentially post-covid.
Many of us reading may fit into that category: We are not tourists, but we are not full-time residents either. We might not be interested in competing against locals for jobs, but we are also not without desire or ability to do business or pay into the local economy.
Okay, so let’s imagine a “global misfit” gets a Dominica passport. Where are these people supposed to go? They need to live somewhere(s)! Now, where do they go live? Hopefully, not just Dubai, Portugal, or Thailand, please. There’s more to the world than that. I’d love to see more “live-in” countries offer attractive pathways to citizenship yet keep physical presence for purposes of naturalization optional or minimal.
I see this phenomenon living in Istanbul, which attracts the full spectrum of global misfits. Notably Iranians, Russians, Afghans, Libyans, Iraqis, and many other groups discarded by the “international community”. Property prices in the sales, rental, and hotel markets have all gone up enormously, even in dollar-adjusted terms.
Much to my chagrin, many of my favorite cities (Bishkek, Belgrade, Istanbul) have seen this same trend because – imagine that – they are the ones who welcomed the massive outflow of capital from Russia and the Middle East, and even China and India that has been occurring over the past few years. I’ll never fault them for that!
RCBI’s raison d’être should not be EU lobbying—it should be FDI attraction
The trend towards the closure of European programs in the West shows a consistent trend towards a Middle Ages-esque contraction of European societies away from the outside world, likely further increasing Europe’s risks towards economic irrelevance and replacement on the world scene. I believe these countries have become too “open-minded” for their own good, and they have forgotten what made their economies competitive in the first place: attracting talent and investment and promoting a good lifestyle.
I’ll say it louder for those in the back: The European Union does not understand that CBI is not a threat and is not interested in seeing any evidence to the contrary. Obsession with Europe is decimating necessary innovation in this industry and taking up valuable airtime. I wonder: At what point will this dysfunctional, abusive relationship with a partner who has ever-changing demands and bullies smaller nations like Vanuatu using strange colonial narratives and arbitrary austerity measures finally end?
RCBI is the carrot countries can use to bring talent to their shores. I have written before that citizenship by investment is the win-win-win of globalization. Yet, so few countries pick up the hundred-dollar bill lying on the floor in front of them.
Instead, many of them make baseless claims about border security through “backdoors” (while millions pour over borders with a front door barely guarded). They blame the rich for the housing market heating up instead of increasing new housing supply and using CBI to stimulate the construction sector (as Turkey did). They make stereotypical arguments about the loss of some precious identity while welcoming tourists left and right who leave far less benefit and create a more transitory environment than well-selected migrants (who become part of your country, rather than being “foreigners,” by the way).
Moreover, regardless of your view of the shape of the modern world, citizenship by investment can play a uniquely powerful role in emancipating former colonies. So many refuse to see this power and cannot think beyond the European Union.
To those who say it’s what client demand points to, I say: Demand is created, not latent. Demand is the responsibility of the sellers of products to the buyers of those products. Clients often do not know they want something until it is presented to them with an appealing welcome, or even presented to them as available at all.
Bottom line: There is more than enough to go around
The pie is big enough for everyone. In fact, the pie gets bigger with CBI. Won’t local industries be more likely to succeed when they know their market is seen as valuable by global investors and their citizenship adds confidence? Won’t educational institutions, new brands, and better healthcare services be incentivized to enter these markets when the demand for their services follows? There is never a case in which increasing overall prosperity is bad in the long term for everyone.
We in the industry know none of the baseless claims are grounds for closure. The reality on the ground with our clients and their contributions and due diligence shows otherwise. To promote innovation in this market, it is crucial to understand existing best practices of what works and what does not to create prosperity.
While RCBI is not the only tool in the FDI attraction toolbox, I know no more powerful tool to rapidly transform any economy and bring that prosperity.