Citizenship for sale?

Individual investor programmes in Europe raise huge questions about citizenship and borders in a globalising world

Owen ParkerHenley and Partners – one among many private firms specialising in ‘residency and citizenship planning’ for the world’s wealthy – describes on its website how the Maltese government will grant citizenship within one year to those able to invest €650 000 in the country’s ‘national development and social fund’.  It is explicit that EU citizenship would come with this deal and that such citizenship ‘gives the right of establishment in all 28 EU countries’.  Similar schemes have been launched in Bulgaria, Cyprus, Greece, Portugal and Spain in recent years.

While the particular terms vary, all offer residency – in most cases this amounts to property ownership rather than any significant in-country presence – and some kind of ‘fast’ (or at least preferential) track to (EU) citizenship for wealthy investors.  Promoters of the Cyprus scheme boast that citizenship can be acquired within as little as three months by, among others, those with large deposits in its crisis-hit banks.

Schemes of this sort have been proliferating in the EU in the last few years, but have proved controversial.  The scheme proposed by the Maltese government at the end of 2013 provoked particular criticism from EU institutions. Under the original proposal investors could pay for a Maltese (EU) passport and legally establish themselves anywhere in EU territory without ever setting foot in the country.  In January 2014 MEPs published a critical resolution and Vivienne Reding, the Commissioner for Justice, Fundamental Rights and Citizenship, said in the European Parliament that ‘Member states should only award citizenship to persons where there is a “genuine link” or “genuine connection” to the country in question … Citizenship must not be up for sale!’  While the EU has no clear powers in terms of the granting of citizenship – a matter that is, legally speaking, the sole competence of member-states – the Commission examined a variety of legal bases to challenge Malta’s scheme, including notions of ‘sincere co-operation’ enshrined in the treaties (see Carrera 2014).

In the event, such action was not necessary because Malta introduced reforms stipulating some residency requirements and so satisfied (for Reding at least) the Commission’s ‘genuine link’ requirement.  But what these residency requirements will mean in concrete terms remains vague and the Maltese government has been at pains to emphasise to potential investors that they will not amount to a requirement to live in the country ‘365 days a year’.   Its scheme – now marketed as ‘EU approved’ – remains one of the most attractive (i.e. liberal) in Europe in terms of the conditions attached and is now apparently attracting significant interest from investors.

Schemes of this sort are not entirely new.  They exist in other small island states such as St Kitts and Nevis and Dominica.  They are also not entirely new to the EU: for instance, Ireland formerly permitted the discretionary granting of citizenship to large investors and Austria has long practised something similar.

A large number of other countries (including the UK) run programmes which grant residency conditional on large investments – and therefore a long-term prospect of citizenship – although, unlike many of the new EU schemes, these tend to require genuine residency and some integration.  Canada has run one of the most popular such schemes.  It is notable, however, that from around 2012 – when investor programmes of one sort or another were being launched or liberalised in various EU national contexts – the longstanding Canadian immigrant investor programme came under increasing criticism and it was closed in February 2014.  The two primary reasons cited for this were summed up by the then Canadian Immigration minister Jason Kenney, who in April 2012 noted that the programme ‘undervalues the importance of Canadian Citizenship and fails to ensure that new investors are investing actively in the Canadian economy’.

Geographer David Ley has researched the Canadian scheme for many years – culminating in the publication of his book, Millionaire Migrants – and, among other things, considered the two points highlighted by Kenney.  He notes that while, in accordance with a ‘flat-world’ logic, the government perceived wealthy investors from primarily East Asia to be capable of generating wealth in their adoptive nation, officials were usually incapable of measuring this once they arrived.  In fact, he argues that numerous such migrants were, for a variety of cultural reasons, unable to replicate their business successes, with many living only partially in Canada.

In a number of localities the presence of wealthy migrants also caused an overheating of the housing market and forms of resentment from ‘indigenous’ populations.  The new EU schemes, while differing from the Canadian programme, will not be immune from these issues if they begin to attract significant investors from China, Russia and elsewhere.  Indeed, the effects of such investors are already being felt in London.

More generally, these schemes raise a host of ethical and political questions in relation to the status of citizenship and borders in a globalising world (as a group of scholars recently debated).  They point to a blurring of the social-contractarian logic of a bordered citizenship and the market logic of unbounded (human) capital.  Undoubtedly, it’s an awareness of these various issues and their potential – via ‘free riding’ individual member-state schemes – to impact on the entire EU that has prompted opposition from the actors mentioned above.  Indeed, the invocation of a ‘genuine link’ speaks to the perceived importance of the social contractarian logic of citizenship – in other words a ‘social model’ – for many in the EU.

And yet the EU has in many respects been culpable in creating the very structural conditions which have caused member-states to turn to such schemes.  The controversial limited residency (and integration) rules – the absence of a ‘genuine link’ – are indicative of the desperation of governments hit by strictly enforced austerity measures to compete for short-term capital.  At the same time, the requirement of many schemes to invest large amounts in property reveals a desire to re-inflate dysfunctional property markets.  Along with other policies, such as the privatisation and sale of national assets in Greece (and indeed the withdrawal of social and economic rights from current citizens), such programmes are suggestive not only of the resilience, but the intensification of neoliberalism in parts of crisis Europe.

For EU watchers the Commission’s declaration that ‘citizenship must not be for sale!’ was correctly interpreted as a significant intervention into a sacrosanct area of member-state policy.  But, if the EU, broadly conceived, is serious about making good on such a declaration it must be far more radical and address its own core role in the ongoing commodification of citizenship in Europe.