Books in Dialogue: GLOBALCIT Review Symposium on Yossi Harpaz, Citizenship 2.0 and Jelena Džankić, The Global Market for Investor Citizenship


Jelena Džankić, European University Institute

When I first learnt of the sale of passports back in 2010, never had I thought that within a decade this surreptitious and – at the time – odd practice would turn into a global market in which states would openly sell their passports and residence cards to the world’s wealthiest. The case that drew my attention to the practice that soon would mushroom around the globe was the grant of the passport of my native Montenegro to the former Prime Minister of Thailand Thaksin Shinawatra in exchange for a multimillion investment in the country’s tourism industry. After being ousted from power by a coup in 2006, Shinawatra has been on the run, avoiding the two-year prison sentence for corruption and abuse of power in his country (MacDonald 2010). The purchased passport provided a safe haven for the Montenegrin ‘citizen 2.0’ (Harpaz 2019), who thus avoided extradition to Thai authorities. This particular naturalisation took place through an exceptional route reserved for those with (a promise of) outstanding achievement in fields considered to be a ‘national interest’. Yet already in 2011, Montenegro adopted a plan to open up a programme for the sale of passports, based on legally defined investment amounts rather than the state’s discretion. The project was halted following the European Union’s (EU) Member States’ objections and revived only in 2019.

The Montenegrin case pushed me to ‘follow the yellow brick trail’ of money and citizenship. I came to know about the case of Austria, where the law permits facilitated or immediate naturalisation on the basis of economic or commercial contribution. Between 2009 and 2012, this European Union (EU) country was troubled by the ‘Part-of-the-Game’ affair, in which the ‘part of the game’ entailed a politician’s promise of an Austrian passport to a wealthy Russian in exchange of a donation to the party coffers. After Austria, I learned that the remote islands of Saint Kitts and Nevis and the Commonwealth of Dominica have been running structured programmes since 1984 and 1993, respectively. A real estate purchase or a donation to a state-run fund would entitle an investor to become a citizen of a tiny Caribbean nation. And unlike the sale of passports practiced under the table by consular staff of a few Pacific states in the 1990s, purchasing passports of Saint Kitts and Nevis and the Commonwealth of Dominica has been legal and tightly regulated.

Discoveries I was making about how different places enabled the wealthy to become their citizens through ius pecuniae (law of money) led me to understand that – in a number of countries – private companies acted as intermediaries between applicants and governments and took care of a lion’s share of marketing. Over the years, the role of such firms increased tremendously, from passive service providers and advertisers to active lobbyists with governments. In most cases, investor programmes managed by such intermediaries attracted more interest.

I was already deep into the topic when Malta launched the first draft of its Individual Investor Programme (IIP) in October 2013, sparking fierce reactions across the EU whose Member States and institutions objected to the sale of Union citizenship. A similar practice had already existed in Cyprus, and as an increasing number of EU countries became affected by economic recession they resorted to the exchange between money and membership. While only Bulgaria, Cyprus and Malta have ‘proper’ passport-for-sale programmes, a number of EU Member States run investor residence schemes. Studying them, also as an expert for the European Commission and consultant for Milieu Ltd.,[1] became a fascinating research journey, of which The Global Market for Investor Citizenship – as the only book on the sale of legal statuses based on independent[2] social science research – is the most comprehensive output.

Why is this topic relevant?

A lot of people have asked me why the sale of passports is a relevant topic to study, when there are so few beneficiaries of these programmes compared to millions who obtain citizenship through ancestry, remedial rights, or kinship. My reply would be that investor citizenship is an extreme case in the system of citizenship acquisition, and as such it is a stress-test to a number of theories and concepts in political science and litmus paper for anomalies in practicing good governance. More simply, the sale of passports (1) raises crucial questions of how citizenship is constituted and what value it has for individuals and states; (2) highlights the tension between mobility and migration in the globalizing world; (3) allows us to question the role financial assets can play in the context of global justice and equality; and (4) reveals institutional strengths and weaknesses in different domains.   

First, the fact that some people may buy a passport or a residence card, while millions of people around the world are stateless, at risk of statelessness, or with a precarious status, makes us wonder how states ‘create’ their citizenry. Over the past few decades, naturalisation requirements for resident migrants have toughened by the introduction of language tests, civic tests and/or greater income thresholds (Goodman 2011; Kostakopoulou 2010; Stadlmair 2018; Vink and de Groot 2010). At the same time, there is an increase in policies for facilitating naturalisation of non-resident populations, be it on the basis of investment or presumed bloodlines or cultural heritage. Both of these groups would fall under what Harpaz (2019) would define as ‘strategic citizens’, who will probably never relocate to their new state but rather use the passport instrumentally. Yet what is citizenship becoming, if states are becoming increasingly demanding towards resident migrants seeking to naturalise, and at the same time increasingly inclined to easily hand out passports on the basis of blood and money to so-called ‘long-distance citizens’?

Second, the practice of investor citizenship often misconstrues the role of citizenship in the context of mobility and migration. One line of work conflates the sale of passports with investment migration (Erez 2019; Kudryashova 2020), which in my view is inaccurate. While in some (rare) cases of residence by investment programmes, the new status holder relocates to a destination country (Surak 2020), most beneficiaries of investor citizenship remain ‘long-distance citizens’. They use their newly acquired passport either for enhanced visa-free travel, as risk insurance or to signal status, rather than to migrate. Hence gaining insights in investor citizenship helps us not only to understand conceptual questions surrounding membership but also to unpack tensions in the migration-mobility nexus and to re-examine our thinking about structural factors that enable short or long-term human movement across geographical spaces.

Third, the topic of investor citizenship pushes us to question the balance between personal assets and public goods in ensuring equality and re-distributive justice. Structural inequalities of income, mobility and opportunity in the global race for wealth are the core enabling factors for both states and individuals to take part in the global market for investor citizenship. States capitalize on their ability to turn a public good into a marketable item, with the main cost being the printing of a travel document. Individuals capitalize on the possibility to strategically acquire (or buy) passports in order to access what Harpaz (2019) would call a ‘higher tier’ and thus wealthier country. While this is seemingly a ‘win-win’ scenario for both states and individuals, a deeper insight in investor citizenship indicates that the riches of ‘lower tier’ countries are transferred to those that are already more prosperous. The sale of passports also brings further advantages to those from ‘lower tier’ countries who are already better off than most others in their communities. Hence the question of what effects does investor citizenship have need not be merely seen in pragmatic terms of enhancing the opportunities of a single individual or a state. Rather, it raises major ethical questions particularly as regards to its impact on global equality and redistributive justice.

Fourth, at the moment of writing, each and every investor citizenship program has come the cost of corruption, conflict of interest, or undue influence. The examples of Austria and Montenegro from the beginning of this text are not isolated cases. In 2014, the Portuguese minister of interior resigned over allegations of corruption in the country’s ‘golden visa’ scheme. In 2018 and 2019, St Kitts and Nevis and the Commonwealth of Dominica experienced large scale protests and political instability over how their investor citizenship programmes were handled. In Cyprus and Malta, there have been numerous allegations of corruption, mishandling of public procurement to benefit some private agents, and tax evasion (European Commission 2019; European Parliament 2018; Transparency International 2019). Two former presidents of the Comoros are under arrest for mishandling the mass sale of passport to the Bidoons from the United Arab Emirates and Kuwait. All of these cases reveal how susceptible institutions are to corruption.

What’s in the book?

The book is organised in such a manner as to provide a normative analysis, as well as conceptual and analytical tools for understanding the historical roots and contemporary practice of the sale of citizenship. It covers four thematic aspects of the practice of facilitating wealth-based migration at a global level.

First, the book systematically explores the transformation of the ways in which money and property have been engrained in the concept of citizenship. Chapter 2 looks at the centrality of money and property in the regulation and practices of citizenship since ancient times. It traces the historical role of citizenship in drawing boundaries between different groups of and explores instances when possessions could be exchanged for money. In addition to helping us understand how historical instances of the sale of citizenship, such as the much-cited St Paul anecdote, could actually happen, the chapter puts in the limelight the concepts of ‘equality’ and ‘merit’. These issues are then picked up in Chapter 3, which discusses normative approaches to the global market for citizenship. Importantly, in this chapter, I opted not to present a single-sided argument as to why the sale of passports would be either morally reprehensible or defensible. Rather, I highlighted how the different conceptions of citizenship influence ethical stances towards ius pecuniae.

Second, The Global Market for Investor Citizenship provides a rich empirical study of policies that states adopt in the global race for wealth. The empirical study is based on a typology that I had developed in my earlier work (Džankić 2012; 2015; 2018), which can be used for classifying and studying investor citizenship and residence programmes. The typology differentiates between fully discretionary naturalisation based on national interest, policies that fully or partly waive other regular naturalisation criteria (e.g. Antigua and Barbuda, Cyprus, Commonwealth of Dominica, Malta, St Kitts and Nevis), and those that facilitate naturalisation for investors by offering them a ‘path to citizenship’ (e.g. the UK, the US, Canada, Belgium, Australia, Singapore). This classification has then enabled me to do a comparative analysis, which highlights the distinct features of the plethora of ius pecuniae policies around the world in Chapter 4, and in the EU countries in Chapter 6.

Third, the book explores strategies and interests of states, companies and individuals in the global market for citizenship, which mirrors the conspicuous consumption characteristic of the market in luxury goods.  To address the question of who sells, Chapter 5 first looks at the global race for wealth, arguing that global mobility of people and capital offers a structure of opportunity for states to develop policies targeting the affluent individuals. It then explores how private companies engage in standard-setting, how they establish networks of subsidiaries and manage various aspects of investment-based programmes on behalf of states (e.g. due diligence, insurance, criminal record checks). The final sections of the chapter examine the profile of beneficiaries and reflect on the problematic aspects of such a market for citizenship (e.g. corruption, money laundering).

Fourth, the book’s focus on the transformation of citizenship highlights the resilience of sovereignty, a theme that is particularly important for analysing relationships among states in the increasingly globalised world. Chapter 7 opens with a discussion of whether the marketisation of citizenship is an irresistible global trend, or whether it is likely to wither away when faced with rising nationalism and anti-globalist populism. It traces what the trend towards a global market for citizenship can teach us about how policies evolve to meet the growing demands of the ever more interrelated political systems and transnational economies. The chapter concludes the book with a reflection on whether investment-based citizenship echoes just how pliable the state’s conception of membership is in the contemporary world.

Takeaways and future research avenues

In the Conclusions to The Global Market for Investor Citizenship, I list six points that readers could take away from the book, in the hope that each of them will open up an avenue for the future study of citizenship.

First, citizenship is a continuously transforming notion, which structures the different layers of the relationship between individuals and their communities of membership, both internally and externally. Historically, wealth created hierarchies of membership within communities, but nowadays it structures hierarchies of membership at the global level, enabling only the most affluent to choose from different menus of rights that the purchased passports can offer to them. It will be immensely interesting to see how this dynamic will evolve in the years to come.

Second, investor citizenship is a normatively divisive issue, and there are valid arguments supporting claims both that citizenship should be sold and that it should not be sold. Yet one issue that normative theories do not yet fully capture is related to the practice of investor citizenship: from the conception of the most recent programmes to their implementation, we see instances of corruption, not only of individual policymakers but also of electoral and political processes. This raises the question of whether and how would the marriage between investor citizenship and fully democratic institutions actually work. Or, put differently, does the sale of passports corrupt democracy or does democracy need to be corrupt already for this practice to emerge?

Third, states have the prerogative to decide who they want as members, and how. As a result, investor citizenship programmes are not uniform, and lines among different mechanisms used for naturalising investors are sometimes blurred. Could we still identify clusters of countries implementing different programmes and think about what the configurations of these programmes can tell us about the changing nature of citizenship?

Fourth, as with any other structured exchange, the market for investor citizenship has different components, with different roles in the global race for resources. In the second half of 2018, there have been allegations of a great degree of involvement of certain transnational companies involved in the industry in lobbying for the opening of investor citizenship schemes, especially in the cases of Malta and the Caribbean islands (Garside and Osborne 2018). To that end, an important direction to study will be the normative and empirical analysis of the process of franchising of the sale of passports. Can we compare the concessions for investor citizenship to any public service contract? Have these been handled in an open and transparent way?

Fifth, the regulation of membership in multilevel polities is complex, particularly when citizenship of one state confers substantial and significant rights in other countries. Importantly, for scholars of EU integration, it will be relevant to study the effect of ‘spillovers’ of these programmes, especially if there were to be cases related to investor citizenship before the Court of Justice.

Sixth, and last but not least, investor citizenship has been analysed here taking into account the contours that shape the global market for the sale of passports. Global inequalities have been one of the crucial facilitators for sustaining its growth. As a result, not everyone can take part in this market. Admittedly, the ‘demand’ side is perhaps the most interesting yet the least explored aspect of this market. Independent research on the beneficiaries of investor citizenship schemes is certainly a research pathway that would attract many social scientists.

And, finally, what does the future have in store for investor citizenship? There is no straightforward answer to this question, and much of it will depend on how the content and boundaries of citizenship are reconstituted to match the patterns of global mobility, which in the course of 2020 have been disrupted by the COVID-19 pandemic. What I hope to have achieved with The Global Market for Investor Citizenship is to have emphasised the resilience of citizenship, a notion that has been undergoing constant transformation from the times of ancient Greece to this date.

[1] I acted as expert for the European Commission since 2014. In 2017-2019, I took part in a study by Milieu Ltd., which formed the background study for the 2019 European Commission’s report on investor citizenship. Views expressed in my book and my other writings including this text are my own.

[2] Not sponsored or supported by any organisation or institution that would directly or indirectly benefit from the promotion of a particular view on the sale of passports.