What is a ‘golden passport’ – and why the EU wants a ban

  • Sanctions against Russian oligarchs have led to a crackdown on “golden passport” systems.
  • The programs grant citizenship to foreign investors who buy expensive real estate or other assets in the country.
  • Russian nationals account for around half of the golden passport applications approved in the EU.

For many Russian oligarchs, the most powerful asset money can buy isn’t a superyacht or private jet, it’s a passport.

“Golden passports”, officially known as citizenship-by-investment (CBI) programs, allow wealthy foreigners to obtain citizenship or residency in exchange for investing a certain amount of money in a country.

More than a dozen countries, including the United States, offer immigrant investor programs. The EB-5 program provides green cards to foreigners who invest a minimum of $1.8 million in the United States and create 10 full-time permanent jobs for American workers.

Thousands of so-called golden passports have gone to Russia’s elite in recent years, including well-known oligarchs like Roman Abramovich, who acquired Portuguese citizenship last year.

The European Parliament estimates that Russian nationals make up around half of the golden passport applications approved in the EU. Now officials fear the programs have opened a backdoor into the union, creating “several serious security risks” amid Russia’s invasion of Ukraine.

Government officials see golden passports as ‘weak point in EU armour’

Houses and cars are seen in Eaton Square in Belgravia, London, March 8, 2018.

Houses and cars are seen in Eaton Square in Belgravia, London, March 8, 2018.

Tolga Akmen/AFP/Getty Images

Until February, the UK offered permanent residency visas to foreigners who invested at least $2.6 million in the country.

Since its introduction in 2008, many Russians have purchased multimillion-dollar homes to qualify for the program. Eaton Square in London, an exclusive garden estate, has since earned the nickname “Red Square” because many of its residents are Russian billionaires.

Most often, these sumptuous residences are empty. The real benefit of a UK visa – and any EU-linked passport – is the ability to travel and settle freely throughout the Union. This, in turn, exposes member states to the risk of money laundering and corruption, officials say.

“They are a weak link in getting admitted to the EU,” Peter Spiro, Charles Weiner Professor of International Law at Temple University and a leading expert on dual citizenship, told Insider. “The fear is that unsavory and possibly criminal individuals will obtain EU passports, which then entitle them to mobility and settlement rights.”

For the very wealthy – especially citizens of countries at war or hit by sanctions – collecting extra passports is “a kind of insurance”, he added.

Together, individuals from China and Russia account for 75% of all residency-by-investment (RBI) approvals, followed by the Middle East and North Africa, according to a study by the European Parliament.

Russia and China “have experienced substantial growth in private wealth and inequality over the past three decades, coupled with uncertain authoritarian rule and limited travel opportunities, which help drive demand,” the report said. .

Since Russia’s invasion of Ukraine, the UK, Malta, Bulgaria, Portugal, Greece and the Czech Republic have all banned or suspended the granting of golden visas to Russian nationals. Now the European Parliament wants to pass a total ban of the programs entirely.

“It is time that we close this door, so that Russian oligarchs and others with dirty money stay away,” EU rapporteur Sophia in ‘t Veld (Renew, NL) commented in March. . “Member state governments have refused to tackle the issue, saying it is not a European matter. Given what is happening now, they can no longer dodge this issue.”

Programs are ‘free money’ for struggling economies – but they’re not always sustainable

Waterfront Main Basseterre Colony on the Caribbean Island of St Kitts

Waterfront Basseterre on St. Kitts, a Caribbean island.

Andrew Woodley/Education Images/Universal Images Group via Getty Images

The investment requirements of golden passport programs funnel “free money” to host countries, which is particularly attractive to countries with struggling economies.

In Turkey, wealthy Russians are buying up to four apartments at a time in order to qualify for citizenship, Gül Gül, CEO of Istanbul-based real estate firm Golden Sign, told Insider earlier this month.

“Every investment is the cornerstone of the Turkish economy,” she said, adding that Russians accounted for 70% of her company’s sales last month.

However, foreigners who buy expensive real estate (with no intention of living there) can drive up the local cost of living, Spiro said. Inflation in Turkey hit a 20-year high of 61.14% in April, according to the Turkish Statistical Institute.

“In places where real estate is needed, or the primary channel for investment, that tends to inflate local real estate markets,” Spiro said. “There’s this question of whether they’re getting addicted to passport sales the way some developing countries are getting addicted to natural resources.”

But despite long-term economic concerns and Russia’s invasion of Ukraine, Spiro told Insider that golden passports “clearly remain here in one form or another” – even if they are eventually banned in the country. EU.

Leave a Reply

Your email address will not be published.