Magdalena Zabrocka,
University of Aberdeen
What are CBI Schemes?
Citizenship can be argued to be a ‘necessary evil’ in the legal world where its discriminatory roots, troubled history and inequality of access are undeniable, however, scholars have not yet been able to provide a robust alternative proposal, addressing all the legal and socio-political implications of such an order shift. Citizenship by Investment (CBI) schemes, offered by selected Member States to High-Net-Worth Individuals for a pre-determined amount of money has been the subject of heated debate while, due to numerous identified risks, vulnerabilities, as well as a variety of controversies, several steps have so far been taken at EU level to tackle CBI.[i] The subject of investment migration has proven especially problematic in light of the EU legal order and the derivative character of EU citizenship.
Inherent Risks of Selling Citizenship and Internal Developments at EU Level
Citizenship by investment schemes offer citizenship to third country nationals in exchange for a pre-determined amount while allowing the applicant to circumvent ordinary immigration procedure and strict naturalisation rules, given that CBI often require little to no evidence of physical residence in a country concerned.[ii] The commonly identified risks include criminal activities, corruption, fraud, tax evasion, financing of terrorist groups and others.[iii] Various scandals and allegations have been identified, only further proving the inherent risks that investment schemes carry.[iv]
In the case of the EU, by obtaining nationality of a Member State (MS), individuals get access into the EU as a whole, and through the enabled ‘backdoor’ of some of the States, gain access to more desirable destinations within the Union. In its report,[v] the Commission observed that such schemes are often carefully designed and deliberately advertised to third country nationals as a way of obtaining EU citizenship and getting Schengen mobility as well as all the other rights attached.
Reproductive Rights, Investment Migration and Inequality
Mobility, tax incentives and preferential tax regimes, visa-free access to a number of states, especially the Schengen Area, business reasons, as well as often money laundering and tax or criminal prosecution evasion, are often the main reasons behind applicants’ interest in investment migration programmes.[vi] It is interesting, however, to observe a new development in terms of motors behind one applying for foreign citizenship under investment schemes, mainly CBI, however also for residency, under the RBI (residence by investment) schemes. With the rise of populist and conservative governments across the globe, as well as a push towards State power and against supranational and international regimes (see Poland, Hungary, the US, the UK, etc.), people seem to be looking for a way out of oppressive jurisdictions, and a way into ones where their fundamental rights and dignity remain protected.
It has been observed that since the SCOTUS Abortion Decision, some applicants have turned strongly towards other jurisdictions, while advisors and providers for the investment scheme in the US have been showered with a wave of migration inquiries.[vii] US citizens are rightfully worried that the country is moving back in time, taking away basic rights of vulnerable groups, and ask the question of ‘what is next?’.
While Kochenov in his ‘passport apartheid’ submissions argues that as much as citizenship is ‘an instrument of political empowerment and positive identity building’, it is also a ‘calculated tool to tame populations, local and foreign, into complacency and to uphold the status quo over local and global injustice’.[viii] He agrees with the term used by Shachar, ‘birthright lottery’,[ix] where the object of the lottery is the status, you receive ‘a ticket to live that can place you in first class, business or economy light – or indeed, outside of the plane’.[x] Kochenov correctly observes that citizenship has traditionally been, and tends to remain so in many places de facto status for men only.
Nowadays, the status, in theory, is available to everybody. It is undeniable, however, that it does indeed create two classes of citizens; those who enjoy their freedom, bodily integrity, dignity, and access to fundamental rights, and those who are degraded to secondary nationals, deprived of their voice and free will to decide on their own body and fate. Such seems very visible when looking at the position of women and access to their reproductive rights in chosen jurisdictions. The current sentence in some States in the US for abortion is longer than for rape itself. Furthermore, in some States, such as Tennessee, even relatives of a rapist can sue a woman for having the procedure.[xi] Derivative concerns could be echoed with regard to the fact that inmates do not enjoy their electoral rights. Thus, while the right to carry a concealed gun seems to be more of a constitutional right and value than women’s freedom of choice and bodily integrity, one could wonder about the meaning of citizenship and what it entails for different nationals within a country’s borders. For some it may mean protection, belonging, and identity, for others it may mean violation of their fundamental rights, discrimination, and a prison sentence.
Reproductive rights are also heavily restricted in some EU MS, such as Poland, however, those who enjoy EU citizenship may move freely within the EU and migrate to other States. Third-country nationals, however, do not enjoy such a privilege, and those who can afford it, may turn to investment migration as a fast-track and easy route to access jurisdictions, and rights, that they otherwise would have no access to. Ironically, however, investment migration itself is a problematic development in terms of nationality laws as it further increases the scope of existing inequalities of access to citizenship and desirable destinations.
The issue of inequality of access and further commodification of citizenship is indeed exemplified by the practice of selling it through citizenship by investment schemes by selected countries for a pre-determined amount of money. A passive investment is often made as a donation to the State’s authorities who, while pledging strict security and background checks, due to corruption, enable individuals with shady backgrounds and questionable sources of funds to slip through the country’s gates into the EU.[xii] Such individuals, who often are wealthy men with criminal connections, as shown by numerous leaks and scandals, circumvent the burdensome ordinary immigration and naturalisation procedures which most individuals must overcome before having citizenship status conferred.[xiii] Scholars rightfully argue that such schemes accentuate the already existing inequalities and further commodify citizenship to nothing more but tradeable goods where your ‘worth’ is defined through your investment, no matter the criminal track record.[xiv]
CBI can further be seen as problematic when employing the meritocracy theory as one governing most of the States’ current immigration policies and nationality laws.[xv] In terms of citizenship as a gendered concept, it is interesting to observe how investment schemes have been strategically used as a tool of power and mobility by fleeing Russians during the Ukraine-Russia conflict, attempting to avoid prosecution. Such cases are not isolated, and it seems to be a widely spread practice for corrupt politics and criminals to buy new passports and change their identities soon after arrival to escape liability.[xvi]
Concluding Remarks
Thus, a question may be posed of whether investment schemes are a tool enabling mobility and freedom via desirable citizenships and access to preferable destinations, or a problematic occurrence further exemplifying the worrying trends of commodifying citizenship as nothing more but tradeable goods on the capitalist market. CBI is highly likely to have detrimental effects on fundamental rights. How would the commodification of citizenship affect the most vulnerable groups and underprivileged individuals, and how will the new legal order look, and who would enjoy access to the most privileged countries and VIP societies? The discriminatory aspect of providing a privileged, fast-track route for chosen candidates when others have to undergo burdensome immigration procedures, is undeniable. The schemes strengthen the already visible distinction between ‘wanted’ and ‘unwanted’ immigrants, as well as creating first and second-class citizens by capitalising on the accentuation of existing inequalities. Thus, the paradox question is posed: can such occurrence ever be argued to, in any form, advance equality of access?[xvii]
The commodification as well as corroding effects of linking citizenship and residence to monetary value carry certain inequalities of access, but also codify the gendered aspects and inherent tensions of the concept of citizenship as one’s defining status of belonging. Scherrer argues the corroding effects of selling citizenship and residence and explains that the schemes undermine the principle of sincere cooperation, carry discriminatory features, cause erosion of trust in the institutions, and deform the perception of citizenship, among others.[xviii] Additionally, Shachar correctly points out the dangers of linking citizenship to monetary value,[xix] while Bauböck claims that selling citizenship corrupts democracy.[xx]
Overall, when assessing the investment migration crisis, especially within the EU, given the unique character of its legal order, there seems to be a considerable divergence of perspectives and arguments. On one hand, the schemes enable access to desirable destinations for third-country nationals by circumventing burdensome immigration procedures and, in some cases, systemic austerity towards ‘undesirable’ migrants. The schemes further enable vulnerable individuals, such as women, to migrate to jurisdictions in the hope of having their fundamental rights and freedoms reinstated. On the other hand, applicants in such schemes are a ‘privileged’ group in their own right, composed of mainly men with enough funds to sponsor their fast and easy way in, usually for reasons other than access to their rights or mobility. As shown by numerous scandals, controversies, and reports, the schemes carry inherent risks, and it is nearly impossible to mitigate them to a satisfactory extent.
More by this author
M Zabrocka, ‘The Sale of EU Citizenship and the ‘Law’ Behind It’ (forthcoming June 2023) in Statelessness & Citizenship Review journal
2nd Postgraduate Law Conference of the Centre for Private International Law – University of Aberdeen
Magdalena is a member of the research Centre for Private International Law (CPIL) at the University of Aberdeen which is organising its 2nd Postgraduate Law Conference in Autumn 2023. One of the thematic panels will be ‘The Notions of Citizenship in a Globalised World’ and it invites various contributions from all postgraduate researchers and those within a year from obtaining their PhD title. For more details in due course, make sure to monitor the designated page of the CPIL.
About the author
Magdalena is a doctoral researcher and a faculty member at the School of Law, University of Aberdeen. Her core research focus concerns citizenship by investment (CBI) in the EU. Magdalena’s broader areas of expertise include EU law and international human rights while she has also worked extensively within UK public law.
Magdalena’s most recent research related to SLAPPs and continued after her co-authorship of a study commissioned by the European Parliament Committee on Legal Affairs (JURI) on ‘The Use of SLAPPs to Silence Journalists, NGOs and Civil Society’. Magdalena is a member of the Anti-SLAPP Hub and she recently participated in the expert seminar on legal and economic threats to the safety of journalists organised by the (OHCHR). She is a visiting lecturer at the Faculty of Law and Administration, University of Gdańsk with her most recent guest seminar devoted to human rights dimensions of SLAPPs.
References
[i] Transparency International, ‘European Getaway: Inside the Murky World of Golden Visas’ (2018) <http://transparency.eu/wp-content/uploads/2018/10/REPORT-European-Getaway-Inside-the-Murky-World-of-Golden-Visas_web.pdf> accessed 2 August 2020; Meenakshi Fernandes and others, ‘Avenues for EU action on citizenship and residence by investment schemes’ (2021) <https://www.europarl.europa.eu/RegData/etudes/STUD/2021/694217/EPRS_STU(2021)694217_EN.pdf> accessed 23 February 2023. The Maltese CBI case is now further in the CJEU.
[ii] David Pegg and others, ‘Revealed: residency loophole in Malta’s cash-for-passports scheme’ (2021) <https://www.theguardian.com/world/2021/apr/22/revealed-residency-loophole-in-malta-cash-for-passports-scheme> accessed 24 September 2021.
[iii] Madeleine Sumption and others, ‘Selling Visas and Citizenship: Policy Questions from the Global Boom in Investor Immigration’ MPI (2014) <https://www.migrationpolicy.org/research/selling-visas-and-citizenship-policy-questions-global-boom-investor-immigration> accessed 23 July 2020; OECD, ‘Corruption Risks Associated with Citizen- and Resident-by-Investment Schemes’ (2019) <http://www.oecd.org/corruption/integrity-forum/oecd-corruption-risks-of-citizen-and-resident-by-investment-schemes-scoping-note-2019.pdf> accessed 2 August 2020.
[iv] Amandine Scherrer and others, ‘Citizenship by Investment (CBI) and Residency by Investment (RBI) schemes in the EU: State of play, issues and impacts’ (2018) <https://www.europarl.europa.eu/RegData/etudes/STUD/2018/627128/EPRS_STU%282018%29627128_EN.pdf> accessed 2 July 2020; Andres Knobel and others, ‘Citizenship and Residency by Investment Schemes: Potential to avoid the Common Reporting Standard for Automatic Exchange of Information’ (2018) <https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3144444> accessed 14 September 2020.
[v] Report from the Commission to the European Parliament, the Council, the European Economic and Social Committee and the Committee of the Regions: Investor Citizenship and Residence Schemes in the European Union (23 January 2019) COM (2019) 12 / SWD (2019) 5 final.
[vi] Report from the Commission to the European Parliament, the Council, the European Economic and Social Committee and the Committee of the Regions: Investor Citizenship and Residence Schemes in the European Union (23 January 2019) COM (2019) 12 / SWD (2019) 5 final.
[vii] Christian Henrik Nesheim, ‘SCOTUS Abortion Decision Drives Gush of US-Based Investment Migration Inquiries’ (2022) <https://www.imidaily.com/north-america/scotus-abortion-decision-drives-gush-of-us-based-investment-migration-inquiries/> accessed 2 July 2022.
[viii] Kochenov D, Citizenship (MIT Press 2019).
[ix] Rainer Bauböck, ‘Boundaries and Birthright: Bosniak’s and Shachar’s Critiques of Liberal Citizenship’ (2011) 9(1) DENATURALIZING CITIZENSHIP: A SYMPOSIUM ON LINDA BOSNIAK’S The Citizen and the Alien AND AYELET SHACHAR’S The Birthright Lottery.
[x] Kochenov D, Citizenship (MIT Press 2019).
[xi] Maya Yang, ‘Abortion ban modelled on Texas law advances in Tennessee’ (2022) <https://www.theguardian.com/world/2022/mar/21/abortion-ban-texas-advances-tennessee> accessed 1 July 2022.
[xii] Transparency International, ‘European Getaway: Inside the Murky World of Golden Visas’ (2018) <http://transparency.eu/wp-content/uploads/2018/10/REPORT-European-Getaway-Inside-the-Murky-World-of-Golden-Visas_web.pdf> accessed 2 August 2020; Sergio Carrera, ‘How much does EU citizenship cost? The Maltese citizenship-for-sale affair: A breakthrough for sincere cooperation in citizenship of the union?’ (2014) 64 Liberty and Security in Europe 1; David Pegg and others, ‘Revealed: residency loophole in Malta’s cash-for-passports scheme’ (2021) <https://www.theguardian.com/world/2021/apr/22/revealed-residency-loophole-in-malta-cash-for-passports-scheme> accessed 24 September 2021; Report from the Commission to the European Parliament, the Council, the European Economic and Social Committee and the Committee of the Regions: Investor Citizenship and Residence Schemes in the European Union (23 January 2019) COM (2019) 12 / SWD (2019) 5 final; OECD, ‘Corruption Risks Associated with Citizen- and Resident-by-Investment Schemes’ (2019) <http://www.oecd.org/corruption/integrity-forum/oecd-corruption-risks-of-citizen-and-resident-by-investment-schemes-scoping-note-2019.pdf> accessed 2 August 2020.
[xiii] ibid.
[xiv] Eugéne Buttigieg and others, ‘EUDO Ctitzenship Observatory: Country Report on Citizenship Law: Malta’ (2015) <https://cadmus.eui.eu/bitstream/handle/1814/34482/EUDO_CIT_2015_05-Malta.pdf> accessed 2 July 2020; Amandine Scherrer and others, ‘Citizenship by Investment (CBI) and Residency by Investment (RBI) schemes in the EU: State of play, issues and impacts’ (2018) <https://www.europarl.europa.eu/RegData/etudes/STUD/2018/627128/EPRS_STU%282018%29627128_EN.pdf> accessed 2 July 2020.
[xv] See for example Odile Amman, ‘Passports for Sale: How (Un)Meritocratic Are Citizenship by Investment Programmes?’ (2020) 22(3) European Journal of Migration and Law 309.
[xvi] David Pegg and others, ‘Revealed: residency loophole in Malta’s cash-for-passports scheme’ (2021) <https://www.theguardian.com/world/2021/apr/22/revealed-residency-loophole-in-malta-cash-for-passports-scheme> accessed 24 September 2021; OECD, ‘Corruption Risks Associated with Citizen- and Resident-by-Investment Schemes’ (2019) <http://www.oecd.org/corruption/integrity-forum/oecd-corruption-risks-of-citizen-and-resident-by-investment-schemes-scoping-note-2019.pdf> accessed 2 August 2020.
[xvii] See for example some of the work on Professor Dimitry Kochenov on the matter of investment migration and access to citizenship in his extensive contributions to the debate.
[xviii] Amandine Scherrer and others, ‘Citizenship by Investment (CBI) and Residency by Investment (RBI) schemes in the EU: State of play, issues and impacts’ (2018) <https://www.europarl.europa.eu/RegData/etudes/STUD/2018/627128/EPRS_STU%282018%29627128_EN.pdf> accessed 2 July 2020.
[xix] Ayelet Shachar, ‘Dangerous Liaisons: Money and Citizenship’ in Rainer Bauböck (ed) Debating Transformations of National Citizenship (IMISCOE 2018).
[xx] Rainer Bauböck, ‘What is wrong with selling citizenship? It corrupts the democracy!’ in Rainer Bauböck (ed) Debating Transformations of National Citizenship (IMISCOE 2018).
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