Golden Passports and Global Mobility: A conversation with Dr. Kristin Surak
MSc International Development and Humanitarian Emergencies student, Kubilay Ogutcu interviews Dr. Kristin Surak about her upcoming book The Golden Passport: Global Mobility for Millionaires which looks at the rising popularity in citizenship by investment programs.
Citizenship by investment programs, also known as “golden passport” schemes provide citizenships that grant cross-border mobility. In recent years, with the COVID-19 pandemic and the rise of authoritarian regimes, having a golden passport has become more attractive than ever. In this interview, Dr. Kristin Surak answers questions like why do wealthy people across the world continue to drive the demand for these citizenships? And why do some two dozen countries supply the market with their citizenship?
In her upcoming book The Golden Passport: Global Mobility for Millionaires, which will be released in September 2023, Dr. Surak looks into citizenship by investment programs that feed on global inequalities of citizenship.
What inspired you to examine golden passports and the citizenship market?
I’ve been working for many years on guest work programs, which allow people to enter a country as temporary workers, often low-paid, but then countries throw up many barriers that keep them from becoming citizens, creating questions of inclusion and exclusion.
While I was working on that topic, Malta started selling its citizenship. I was intrigued by it as it was the total opposite of what I was looking at. Rather than people going to a country to work temporarily for low wages, it was rich people buying citizenship in countries that they’d never been to.
When Malta first announced its program in 2013, media coverage was one-sided, condemning Malta, and stating that the program was only for criminals and tax evaders. When I started my research, however, I had the chance to attend a professional conference on citizenship by investment, which revealed to me that there was much more going on. There is a huge industry around the sale of citizenship with service providers, involving lawyers, accountants, wealth managers, due diligence companies, real estate companies, bureaucrats, and so on. Ultimately, I was interested in how this global market operates. What does it mean in terms of supply, for the countries selling it? What about demand and why do people want to buy it? And how do intermediaries connect the two sides and make the market?
Which countries have citizenship by investment schemes?
Traditionally it is former British colonies that are microstates, namely countries with populations of less than 1 million. The other characteristic is that they usually have an offshore sector and industry in wealth management with connections to wealthy people. Nevertheless, in the past 7 years, bigger countries have gotten on board with places like Turkey, Russia, Jordan, and Egypt offering programs. Over 22 countries have legal provisions enabling citizenship by investment, but the market is dominated by only nine programs.
What drives the demand for golden passports? Is it really shady mafia bosses or tax avoiders who want to acquire a golden passport?
The first thing that drives the demand is easier cross-border mobility. If you’re not a citizen of a wealthy country, chances are you don’t have very good travel access to a lot of places and have to spend a lot of time applying for visas. However, many Caribbean countries have visa-free access to the EU, which means if you naturalize, you can have easier access there – and to many other places as well.
Another driver is the desire for a plan B or an insurance policy. Wealthy people are risk-averse and don’t like uncertainties. If you are a businessperson making money under an authoritarian government, you don’t always know what the government is going to do next. As such, demand has traditionally been from China and Russia, and other authoritarian regimes in the Middle East and elsewhere.
Another reason can be lifestyle choices. If you’re a citizen of Malta, for example, you have EU citizenship and can live anywhere you want in the EU with full rights. If you want to put your children in private schools in France or Switzerland, you can easily do it – and go live with or visit them too.
The fourth reason is wealth structuring and business opportunities. It can be easier and cheaper to import goods into Europe or elsewhere depending on your citizenship.
Why is the Turkish passport, which is relatively weaker than other golden passports, so attractive right now?
Since 2018 Turkey has become half of the global market. There are a couple of reasons for this.
First, even if the Turkish passport is comparatively weak, it is still a lot better than Syrian, Iraqi, Afghani, and Iranian documents. Traditionally these four countries are the top groups going for its citizenship by investment program. On top of it, Turkey already hosts many people from these countries who have left their place of birth due to instability and conflict.
Second is the price point. Initially, the price point was around a million USD, which was expensive. For a million EUR, you could become a citizen of Malta and become an EU citizen. In 2017 when they dropped the price to 250,000 USD in real estate. You could buy a house in Istanbul and become a Turkish citizen. Now the price has risen to 400,000 USD. Nevertheless, for an Iraqi businessperson, it is still a no-brainer.
Third, even though Turkish documents are weaker than some other passports, they do have some benefits. It is easier and less risky to apply for a UK or US visa with a Turkish passport than an Iranian passport. Washington and London will still know your place of birth when vetting, but they put up fewer barriers for approval. Turkish citizens also get certain tax breaks if they’re importing goods into Europe. Another benefit is that Turkey has an E2 visa agreement with the US. If you are a citizen of Turkey and you capitalize a business in the US for around 200,000 USD, you can apply for a US residence permit.
Lastly, demand is huge because Turkish citizenship has a straightforward application. The Turkish government does not hire external due diligence firms to check the applications, and instead, just apply the government’s own standard vetting and screening procedures used for other naturalization streams.
In your talk during the LSE festival, your statement “Being a foreigner at home can grant you more rights” stuck with me. What do you mean by that? And what are some of these rights?
We usually think foreigners have fewer rights than citizens, but this is not always the case, especially under authoritarian regimes. If you are a Vietnamese citizen, for example, who has been successful in business you don’t know if the government will try to seize your assets or money. However, if you are a foreigner, you can attempt to claim access to international arbitration and move your case outside the domestic court system, which might be corrupt.
Occasionally, too, some countries have foreign schools that offer great education opportunities but place quotas on domestic students. Some parents try to game the system and get citizenship for their kids so that they can access these schools.
In the same panel, you mentioned that US citizens realized that they cannot travel to Europe when they want to because of COVID-19 restrictions. Can you talk a bit more about that and its implications for the near future?
Traditionally, it was people with “bad passports” living in authoritarian countries who were interested in these schemes. COVID-19 led to an explosion of US citizens looking at these options. During the pandemic, suddenly people with really privileged passports who never had to think about visas before couldn’t go to a lot of places, especially to Europe. Since the pandemic, US citizens have begun to look into these programs in big numbers. As I mentioned, wealthy people are risk hedgers, they want to have all the doors open to them all the time.
Looking forward, do you think we will see more golden passport schemes? And do you think the demand for them will continue to grow?
We will definitely see more countries starting their own schemes, especially in the Global South. It can be a huge revenue stream for small countries that have few resources. In some Caribbean microstates, citizenship by investment constitutes as much as 30% to 50% of GDP, making the programs extremely important economic resources for development.
Demand will also continue to grow. As long as there is a global hierarchy between citizenships, there is going to be demand. In essence, this is an issue of capitalism, which needs nation-states in order to operate. States are necessary because they back up legal jurisdictions and laws protecting ownership and private property. And states get their power from bounding, claiming, and limiting populations. As long as the intertwined relationship between capitalism and nation-states persists, we will see the demand for golden passports grow.
Kubilay Ogutcu is a postgrad student at LSE studying International Development and Humanitarian Emergencies. After completing his undergraduate degree at McGill University and Sciences Po Paris, he worked at the UN and in philanthropy in Canada. He is interested in Turkish politics, humanitarianism, and social change.
This first appeared on the LSE's International Development blog.
The views expressed in this post are those of the author and do not reflect those of the International Development LSE blog or the London School of Economics and Political Science.
Photo by nappy