Citizenship for the rich: Demand rises for ‘golden passports’

The European Commission on Thursday took Malta to the European Union’s highest court over its “golden passport” scheme that allows wealthy investors to buy Maltese – and therefore EU – citizenship, without having to live in the country. 

Despite repeated calls to end the scheme, Malta has raised €1.1 billion since 2013 through offering passports in exchange for investments, with most investors coming from the Gulf, Asia and Russia. 

Under pressure from the EU, Cyprus and Bulgaria have recently stopped offering similar schemes. Yet the only concession Malta has made is to suspend the scheme for Russian and Belarusian citizens following the Russian invasion of Ukraine.  

While Malta is under pressure to ban investment citizenship, multiple countries around the world welcome the practice.  

“The [2008] global financial crisis also put pressure on governments to find ways to bring foreign investment into their economies, and this is seen as a relatively costless way of doing so,” says Lior Erez, departmental lecturer in theory of politics at Oxford University, UK. “Especially if it involves no actual migration.” 

Yet the EU views things differently, citing “ethical, legal and economic” concerns as well as “several serious security risks”, if the scheme continues. 

“By offering citizenship in exchange for pre-determined payments or investments, without a genuine link with the Member State concerned, Malta breaches EU law,” tweeted EU Justice Affairs Commissioner Didier Reynders on Thursday. “European Union values are not for sale.” 

A security risk? 

There are no precise figures for how many individuals around the world make citizenship investments ­– or buy passports – each year. Data is often amalgamated with those making migration investments ­­(hefty payments in exchange for residence visas). 

Estimates put the combined annual figure in the tens of thousands, with the number of citizenship investors as the smaller part because the process is more expensive.

“The numbers of people doing it are very marginal,” says Ayse Guveli, professor of sociology at the University of Essex, UK, “but they are extremely important because they are so rich. The aim [with golden passports] is to open up routes for them to invest in new countries.”

In Cyprus, 1,400 approved applicants poured €2.15 million into the country between 2017 and 2019. 

Of these, 30 had been granted to people under criminal investigation and 40 to people holding political or state positions which meant they were considered a serious risk for bribery or money laundering under EU guidelines, an Al Jazeera investigation found. 

These cases pose a troubling security risk, as once citizenship is granted it is difficult to remove.

Finding ‘a workaround to the system’

Yet of the total successful applicants in Cyprus, five percent were thought to be potentially questionable.

For the vast majority, reasons for applying for foreign citizenship are “pretty mundane” says Dr Kristin Surak, associate professor of political sociology at London School of Economics, UK. “The number one reason is travel.” 

A wealthy businessman from the global south is likely to find it easier to attend meetings around the world if travelling with a widely accepted EU passport, for example.  

The same is true for foreign nationals – often from the global south ­– living in countries where their passports restrict them from getting mortgages or opening bank accounts, Surak says. “And they’re doctors or professionals so they have the money to find a workaround to the system.” 

Then, there are the super-wealthy who want to ensure emergency travel is possible. “You might get people in Hong Kong who are very worried about government crackdown,” Surak says. “Or very wealthy Americans who were used to going whatever they wanted around the world, then once Covid-19 hit they suddenly couldn’t travel.” 

Demand for second passports among wealthy Americans increased by 300 percent between 2019 and 2021, Latitude, a company that guides individuals through the application process, reported.  

In many countries, the pandemic had driven unprecedented global demand for investment citizenship and migration. An estimated 110,000 high-net worth individuals bought the right to live abroad in 2019. In 2023, this figure is expected to reach 125,000, and could grow larger. 

In China, the country with the second highest number of billionaires in the world, Covid lockdowns are ongoing and quarantine restrictions before and after travel are still in place. 

“But once those Covid restrictions lift people are expecting demand from China to go through the roof,” Surak says. “People living there do not want to be locked down again.” 

‘Relatively democratic’ 

Currently the greatest demand for foreign citizenship and or residency among wealthy citizens comes from Russia. Some 15,000 Russians are expected to purchase the right to live abroad in 2022, plus spouses and family members who would be granted associated rights. 

Following sanction measures, EU countries are not allowed to grant citizenship or residence rights to Russians. Yet there are many more options available outside of Europe. 

Turkey is proving popular “for Russians, also rich Ukrainians and very many people from Arabic and Middle East Eastern countries like Saudi Arabia, Bahrain, Egypt, Syria and Iran”, says Guveli. 

One reason for this is Turkey’s location. Guveli adds, “it has a mixture of Western, Eastern and Islamic lifestyles, and nice weather. It’s relatively democratic. It’s relatively easy to live there, compared to its neighbours”. 

The application criteria are also relatively undemanding. To acquire full Turkish citizenship for an applicant and family members, investors must make a minimum contribution to the country of $400,000, such as buying a house of equivalent value. Approximately 120 days later, they can expect to be the owner of a Turkish passport.  

The arrangement also benefits the country’s leadership. In exchange for granting access to a small number of foreign nationals, “it gives the government money to invest in infrastructure and if Erdogan wants to win the elections next year he really needs [to do that]”, says Guveli.  

‘Skills and economic activity’ 

If courts find that Malta’s golden passport scheme does contravene EU law, it is unlikely that wealthy foreign nationals will be shunned from the country altogether. 

As an alternative to golden passports, Portugal and Greece both offer highly popular residence permits, at a price. 

For €200,000, non-Europeans can buy the right to live, work and study in Portugal and have visa-free travel in the Schengen area for up to five years, as long as they spend five days of each year in the country.  

After five years, residents have the right to apply for Portuguese citizenship.  

With almost €6.5 billion invested in Portugal via residence visas since 2012, a similar scheme could be of interest in Malta. 

If not, the super wealthy will easily find other pathways to citizenship and residence investments elsewhere. 

Generally, this elite group is welcome around the world because they are always able to pay the right price. “They have money and education,” says Guveli. “So they are seen as are self-sufficient group who bring skills and economic activity, rather than problems.”