The Bulgarian Citizenship by Investments Program (CIP) is about to remain the only one in the EU!

Cyprus closes its CBI program from November 1st. Malta’s is under investigation. All this at a time when Covid-19 spurred interest in investment migration worldwide.

The scandal with the Cypriot Citizenship by Investments Program

The drop that spilled over the glass and led to the closure of the Cypriot program turned out to be a documentary on Al Jazeera TV. This film highlighted some of the well-known problems associated with investment migration schemes.

In the documentary, a fictitious Chinese businessman, convicted to seven years in jail for money-laundering in his country, wanted to buy Cypriot citizenship by investment. According to the rules of this type of programs in the EU, convicts in their countries cannot apply for citizenship by investments… The main question to be answered is: is this an accidental case for CBI programs or is it a “chronic disease”? Because there is corruption in every business and rotten apples are not a priority of only one country or another, of one or another program. But some values are indisputable and cannot be compromised. Like protecting the national security of each country and the EU as a whole.

As a result of the revelations made in the documentary on Al Jazeera, Cyprus has suspended its “golden passport” scheme from November 1st.

The position of Brussels

Following the outbreak of the scandal, the European Commission has ordered a formal investigation into the Cyprus program.  The Maltese program is also under investigation. This case confronts some truly fundamental principles of the EU. Like the right of each Member State to determine who can be its national. And the fight against corrupt practices and schemes that could threaten the security of the EU and its citizens.

The passport of each EU Member State guarantees its holder the right to travel and work freely ANYWHERE within the Union. As well as the opportunity for visa-free travel to most countries around the world. That is why the EU passport is such a “valuable commodity”. That is why Brussels is particularly sensitive on the subject. And the measures that have been taken recently in connection with these programs are draconian.

The CIP defenders

According to the defenders of the Citizenship by Investments (CBI) Programs, such cases with criminals seeking to acquire citizenship are an exception. Most of the clients of the CBI programs are absolutely decent. Moreover, according to the data of the national statistical institutes, those who obtained citizenship through the Citizenship by Investments Programs become much more straight taxpayers of the respective countries than the local ones, whose citizenship is by birth. The logic for this is simple. When you have invested so much money in one country, it is perfectly normal to want to keep your investment. No one is investing 1 million euros in local businesses or government securities with the intention of losing them due to some violation of the law. That’s why cases like the one with the alleged Chinese businessman from the Al Jazeera documentary are really an exception.

After Covid-19: The Unexpected Industry Boom!

You would probably assume that travel restrictions imposed around the world due to the Covid-19 pandemic will lead to an outflow of those wishing to take advantage of the Citizenship by Investments programs. But that’s not really the case. Fear of Covid-19 spurred interest in investment migration. According to Christian Nesheim, editor of Investment Migration Insider, a trade journal, the industry is currently thriving. Yes, there was an outflow at the beginning of the pandemic, as with all other businesses. But then investment migration orders have increased significantly. People living in countries with a high incidence of the virus have begun looking for opportunities to move to a safer place. In a country not so badly affected by the pandemic. Or a country with a better health care system.

The other type of client of the Citizenship by Investments programs are currently people who traveled a lot before the pandemic. But now, due to the restrictions imposed, they do not have this opportunity. That is why they are looking for dual citizenship and a passport, which will allow them greater freedom of movement. For example, the Bulgarian passport allows for Visa-free travel to 169 countries around the world. And complete freedom of movement and work within the EU.

Industry Trends

More than 100 countries around the world support Citizenship by Investments programs. Among them are some of the richest countries, such as the USA, UK, Australia and New Zealand. Only Austria, Bulgaria and Malta(?) remained in the European Union.

The first such program was launched in 1984 in tiny St Kitts and Nevis. In order to acquire citizenship on the island, foreigners had to make a “substantial” investment.

The investment is different for each country. Malta demands a “donation” of € 650,000 to a government fund, € 150,000 invested in government bonds and a property purchase or long-term lease. For Bulgaria, for example, these amounts are much lower.

China and Hong Kong

The choice of Al Jazeera journalists for the Chinese candidate for this type of citizenship is not accidental. China is the largest market for CBI programs. Until recently, the US was the preferred destination for the Chinese. But the waiting-list for Chinese applicants to America’s “EB-5” long-term visa program is 10-15 years. And the rules are tightening for them even more. As we know, Mr Trump is not a fan of immigration. Even less to China. That is why the EU is a good second choice.

The Chinese, and in particular the people of Hong Kong, seek a second citizenship most often for good European education, investment or political reasons. The latter applies in full force to Hong Kong. The deteriorating political climate in the country, especially after the imposition in June of a draconian national-security law, has led to a real boom in applications for second citizenship.

However, the logical choice for Hongkongers – UK citizenship (until 1997 Hong Kong was a British colony) – turned out to be not such an achievable goal at all. Thus, some surprising favorites, like Bulgaria and Malta, emerged on the citizenship market in HK.

The other factor that led to this global boom in the industry during the Covid-19 pandemic were countries like Russia and India. The main reasons Russians and Indians seek dual citizenship are socio-economic and political.

Around the world

In the Middle East, Turkey is the big favorite. Turkey’s citizenship by investment program granted 4,000 passports between March and May.

In Britain, interest in second passports or residences has been increasing ever since the country voted for Brexit in 2016. In US Donald Trump had a similar effect. In both countries, the pandemic has accelerated the trend. 239% is the increase in applications for dual citizenship in the first 9 months of 2020 in US, compared to the first 9 months of 2019.

How important can be Citizenship by Investments programs to the governments that support them? In Dominica the citizenship by investment program was forecast by the government to make up more than 50% of recurrent government revenue. And 25% of GDP for 2020! The global economic crisis following the pandemic is already underway. The “fresh” money that the CIP brings to the budget could help a lot in economic recovery in countries that have similar programs.

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