Dec 19 (Reuters) - Last month, Antigua and Barbuda announced
it would offer wealthy foreigners citizenship in exchange for a
substantial financial investment starting in 2013. For as little
as $250,000 plus fees for processing and due diligence, foreign
investors will be able to become Antiguan citizens with full
rights to vote, start businesses, and eventually even run for
Equally important for the Chinese, Russians, or Middle
Easterners who may be attracted by such a deal is the ability to
travel freely to 140 countries that have no visa restrictions
for citizens of these tiny Caribbean islands.
Call it citizenship tourism, passport peddling, or the
latest frontier of global capitalism: In the wake of the 2008
financial crisis, cash-for-citizenship programs and investor
visas have become an appealing gambit for strapped economies.
The Bulgarian Parliament is reviewing a law passed in
November but vetoed by the president that would allow foreigners
who invest at least $650,000 in local businesses to become
citizens. Neighboring Macedonia announced a similar intention to
local newspapers just weeks later.
Also in November, Australia said it would unveil its own
investor program in the coming months, with the aim of
attracting Indian capital, Reuters reported.
And debt-stricken Spain recently announced plans to offer
permanent residency to investors who buy real estate worth
160,000 euros, or about $200,000.
"There's a certain trendiness in this," said Muzaffar
Chishti, the director of the Migration Policy Institute in New
York. "Countries don't want to miss out. It's the flavor of the
month in the immigration debate, but flavor of the month doesn't
build long-term economies."
Eric Major, chief executive of Henley & Partners, a firm
that helps rich people relocate and advises countries on their
immigrant investor programs, disagrees. Well-managed citizenship
programs "ought to be a win-win for the investors and
governments alike," he said.
"There's the initial payment, but also a secondary and
tertiary effect that these individuals bring by virtue of their
consumption and the ties and the roots they establish."
Four countries currently allow citizenship by investment:
Antigua and Barbuda, St. Kitts and Nevis, the Commonwealth of
Dominica and, in a more limited capacity, Austria. At least 20
other countries, including Canada, the U.S., and Ireland, offer
foreigners residency status and, if they meet the normal
requirements, eventual citizenship, in return for a substantial
payment or local investment, sometimes tied to job creation.
Over the years, however, such programs have raised some red
flags within the diplomatic community. For example, the
Commonwealth of Dominica's 20-year-old program is known for its
lax background checks (and low prices: Passports cost just
In a 2006 diplomatic cable obtained via Wikileaks, a U.S.
consular officer in Bridgetown, Barbados, noted that Dominican
authorities had "taken criticism in the past for failing to
adequately screen those to whom it grants economic citizenship,
which is often sought by individuals attempting to avoid
financial obligations or even criminal charges."
Canada has deported several Chinese who entered the country
on Dominican passports and overstayed their tourist visas. Among
them was Hany Zeng, who spent 10 years on China's Most Wanted
list for alleged stock fraud. He was sent back to China.
Grenada shut down its passports-for-cash scheme shortly
after 9/11. Ireland scrapped its passport-for-investment program
in 1998, in part because it was regarded by the media and some
members of Parliament as unfair, and now offers only residence
permits. And Montenegro ran a short-lived scheme that ended in
2010 when it was revealed that ousted Thai Prime Minister
Thaksin Shinawatra, whose government was criticized for human
rights violations and corruption, was among its beneficiaries.
Antigua and Barbuda says it will take due diligence
seriously. Investors "must have an impeccable record," said
Fitzmaurice Christian, the chairman of the new program.
Eric Major explains that Antigua will also bar Iranian,
Syrian and North Korean citizens, in part because trade
sanctions make financial transactions difficult, but also to
remain in the good graces of the international community.
Christian expects his country will be naturalizing around
450 new Antiguans per year by 2016. Aspiring citizens can
qualify by making a $250,000 cash contribution to the country's
National Development Fund, buying real estate worth $400,000 or
investing $1,250,000 in a local business. There's also a 35-day
per year residence requirement.
The $185 million Antigua hopes to make over the next three
years in citizenship fees will be a substantial boon to a
country of barely 90,000 people with a GDP of $1.1 billion.
The model for the Antigua program is St. Kitts and Nevis,
where some 300 people apply to become citizens each year. The
processing fees raised by the program add up to $22 million a
year, according to the St. Kitts government, and in 2010, the
total contributions from new citizens reached almost $58
million. This revenue sustains the island's Sugar Industry
Diversification Fund, which was set up to benefit the island's
former sugar industry workers and now finances development,
education and the arts.
"Citizenship by investment is by far the most important
economic development in that country," said Major. "In Caribbean
terms, St. Kitts is the happening place right now, and that's
why Antigua looks forward to emulating their success."
Christian says he's received encouraging signs that his
program will succeed as well: A hotel developer has approached
him, and investors and relocation agents have been calling from
all around the world.
Major says his clients typically look at five factors:
security, quality of life, a better education for their
children, increased mobility and sometimes tax breaks.
Antigua, St. Kitts and Dominica tout low or no income,
wealth and death taxes for anyone who makes the islands their
primary residence. As with most countries, citizens are not
taxed on income earned abroad.
"It used to be that people wanted to escape the physical
threats of wars, but now it's more of an economic incentive,"
said Bob Bauman, a consultant who runs The Sovereign Society, a
newsletter and international relocation service. "It's mostly
people with economic standing compared to their countrymen who
want to secure and increase that status abroad."
But well-heeled newcomers aren't always welcome. Dominica's
opposition party has always been staunchly opposed to the
citizenship program, and criticism is popping up in the local
blogs and newspapers in St. Kitts and Antigua as well.
One newcomer in particular, Allen Stanford, saddled Antigua
with a reputation it will need to overcome as a tax and
regulatory haven. Stanford is the American financier who was
convicted last summer of running a massive Ponzi scheme out of
his Antiguan bank.
Major said the Stanford debacle will help the island stay
diligent. "They're looking to not make those mistakes again," he
"We do not want to be a part of any tax evasion scheme,"
Christian said. "It's all about looking for creative investment
opportunities that will help the development of the country -
and doing it in a very cautious way."
(Editing by Lee Aitken and Prudence Crowther)