CBI: Price based global standards for migration, no longer limited nor marginal

Global markets for membership entitlements are experiencing exceptional growth, with Citizenship by Investment (‘CBI’) as direct admissions absent meaningful (or any) naturalization requirements being the sole driver of entire countries and perhaps, to some extent, regions.¹ CBI market logic is extending into wider circles and areas, especially in times of the pandemic, with entirely new segments of purchasers and industry participants arising: For example, those that did not previously consider either global mobility may now physically consider the strategic relocations aspects of CBI subject to better healthcare and crisis or other disaster response. In other words, post-Corona lockdowns, some small island havens may be in need to prepare for a possible and sudden influx of those who may have only purchased for global mobility, now, with travel shutdowns, seeking relative safety instead, taking up the actual territorial part of the bargain.2 CBI programs are also needed to step into the place of entire sectors such as tourism, such as in Vanuatu or St. Kitts.3
In the past, especially from a political science perspective, CBI is has been linked to the commodification of citizenship, as well as been seen as mechanisms for exclusion and elitism.4
With the benefit of hindsight (but also as I anticipated in 2018),5 the general consensus for political- as well as legal scholars was based on at least partially-flawed assumptions – It had long been agreed that CBI programs apply only to a small minority of the ultra-rich and in limited political-geographical circumstances:6 CBI programs were called ‘invisible to the existing citizenry’ (Peter Spiro, 2014), ‘remarkably limited’, (Kristin Surak 2016), ‘too tiny a scheme’, run only ‘by the smallest of nations to have any real relevance for the institute of citizenship as such’, including only a ‘very small, negligible fraction of migrants’, and being applicable only to ‘high’- or ‘ultra-high’- net worth individuals: (Joppke 2016). In other words, CBI programmes were commonly viewed as legal isolates, run by the tiniest of nations, mostly island states, and include only a very small, negligible fraction of extremely wealthy migrants. The programmes were thus said to have no real relevance for the institute of citizenship. Jo Shaw argued that the ‘[e]ffects [of the Maltese provisions] will be marginal in terms of numbers [with] little impact on other European Union (‘EU’) member states.’ Dimitry Kochenov stated that ‘[t]he scale of [Maltese CBI] sales will remain small.’ Madeleine Sumption also questioned the actual economic benefits of CBI elite programmes for larger states. In terms of absolute numbers, Christian Kalin saw for 2016 that CBI made for a mere ‘0.01% of all citizenship applications.’
However, there no longer is anything marginal about CBI, at least, not vis-à-vis CBI states running the programs. It may no longer be far-fetched to claim that no country has remained unaffected by RCBI in one way or another, at least, indirectly through admitting into their polity CBI travellers, recognising CBI passports. States heavily depending on RCBI may no longer be able to readily withdraw. The theory and legal mechanisms of CBI are innately able to creating profound ripple effects where further extended beyond elite programmes and small territories. Both the number of CBI citizens and the number of CBI states have grown virtually overnight, especially with –but not merely because of- the emergence of COVID19.
The previous consensus may be nothing short of erroneous and needs to be corrected. With the programs becoming more popular and an intensifying view on citizenship from an individual (human) rights perspective, a right to participate in the passport bargains appears to emerge. The middle class is now becoming addressed, and focus will be on wider circles extending from (ultra-) high net worth individuals. The programs are indeed expanding to a broader clientele with relatively lower prices (such as in the case of Vanuatu and some of the Caribbean places responding to market requests at the lower end of the scale and in price competition on the global market for membership). While CBI is not directly possible absent residency of at least 5 years, Panama has its own manifold array of inclusive RBI programs. These specifically include ‘middle income options’ for citizens from a list of ‘friendly nations.’7 Panama then is an example for RBI programs becoming versatile, evolving and growing more inclusive, allowing a broader clientele to engage with RCBI. It indicates a perhaps likely future development of RCBI programs for the industry, providing hope for upward global mobility for a broader spectrum of passport purchasers.
In view of the existing and growing global market for citizenship, the utilizing of CBI mechanisms for mass migration is at the door-step. Nations such as Australia have only very recently considered the option to shift their entire visa system to a form of CBI, based on recommendations finding their roots in the ideas of Gary Becker, suggesting somewhat reasonable standard fees chargeable for all admissions.8
Generally, governmental- or private loans or even crowdfunding may, today, lead to easier access to the purchase of passports in a growing trend of the market’s flexibilization.
The programs also are facing conceptual expansion: For example, Vanuatu now opens its commercial CBI, specifically addressing ‘the stateless of the world’.9
With CBI, the indeterminacies and randomness of citizenship are limited to the factor of price. While still a significant hurdle for most, price based migrations may arguably face changes in supply and demand of membership entitlements, catering to the new global market for mid-level and even lower fee admissions (that in turn could be coupled with certain obligations or be partially skilled based). Where in a wider reading CBI one-off payments be interpreted as ‘fees’, the European Convention on Nationality is of interest as it refers to the requirement that nationality related applications are to be processed within a reasonable time and that fees should themselves also be ‘reasonable’, see its Artt. 10-13. 10 What is ‘reasonable’ will then depend on the circumstances, in CBI’s case, being at least co-determined by supra-national factors such as economic drivers and market demand.
In any case, a limited view on CBI is no longer tenable.

Author: Michael B. Krakat, a lecturer and coordinator for comparative Public law at the University of the South Pacific at Vanuatu and Fiji campuses. Michael is also a researcher at Bond University (Queensland) and Solicitor at the Queensland Supreme- and the High Court of Australia. He also is an academic member of the IMC.
[1] See Christian Henrik Nesheim, ’10 Biggest Investment Migration Programs Raised a Collective US$10 Billion Last Year’ (2020) August 31st, Investment Migration Insider, available at https://www.imidaily.com/intelligence/10-biggest-investment-migration-programs-raised-a-collective-us10-billion-last-year/>

[2] Michael B. Krakat, ‘What If, When Borders Reopen, CBI Citizens Actually Move to Their COVID-Free Island Havens?’ (2020) September 23rd, Investment Migration Insider, available at <https://www.imidaily.com/industry-trends/what-if-when-borders-reopen-cbi-citizens-actually-move-to-their-covid-free-island-havens/>.

[3] See Christian Henrik Nesheim, ‘CBI to Be “Main Driver” of Saint Kitts GDP in 2020: Investment Migration People in The News This Week’ (2020) August 12th, Investment Migration Insider, available at <https://www.imidaily.com/im-people-in-the-news/cbi-to-be-main-driver-of-saint-kitts-gdp-in-2020-investment-migration-people-in-the-news-this-week/>.

[4] Generally, for citizenship for sale, but limited to a political science perspective, in Ayelet Shachar, ‘Citizenship for Sale?’ 794-810, in: Ayelet Shachar, Rainer Bauböck, Irene Bloemraad, and Maarten Vink (eds.) The Oxford Handbook of Citizenship (Oxford University Press, 2017).

[5] See below in Fn.6 at 163.

[6] See all references in Michael B. Krakat, ‘Genuine Links Beyond State and Market Control: The Sale of Citizenship by Investment in International and Supranational Legal Perspective’ (2018) 30 (1) Article 9, Bond Law Review, at 163-4.

[7] See at Investment Migration Insider, available at https://www.imidaily.com/panama-residence-programs-overview/; also see Investment Migration Council, Panama, available at <https://investmentmigration.org/map_maps/panama/>.

[8] To overcome the maze of immigration law and policy, Becker argues for a ‘fair and equal’ market-based approach to immigration, the outright sale of the right to become a citizen (the right to reside and then to become a citizen) for a set fee equal to all of about U.S.$50,000, amounting to a U.S.$50 Billion revenue generation per 1 Million migrants per year, coupled with a repayable loan scheme for those without economic means, including humanitarian migrants, with similar suggestions including the auctioning off of citizenship. Illegal Migrants able to ‘surface’ (as well as refugees) may perhaps benefit from this system. They would be able to ‘buy their way into legal status,’ by way of a governmental loan scheme. Such approach was recently discussed, but not adopted by Australia’s Productivity Commission in September 2016. Becker, a Nobel laureate, generally argued that this market-based immigration system proposal would attract skilled, productive, entrepreneurial people, disproportionately young, most likely to become positive contributors to the economy: Gary Stanley Becker, A radical proposal to improve immigration policy (1987) Mimeo; Ibid., ‘Why not let immigrants pay for speedy entry?, at 58, in: Gary S. Becker & G. Nashat-Becker (eds.) The economics of life (1987) McGraw-Hill; Ibid., The Challenge of Immigration – A Radical Solution (2011), The Institute of Economic Affairs ; Ibid., ‘An Open Door for Immigrants – the Auction’ (1992) October 14, The Wall Street Journal; Ibid. & Edward P. Lazear, ‘A market solution to immigration reform – Commentary (2013 March 1), The Wall Street Journal; Ibid., The economics of life: from baseball to affirmative action to immigration, how real world issues affect our everyday life (1997) McGraw-Hill; Ibid., ‘The Age of human capital’, http://www.hoover.org/sites/default/files/uploads/documents/0817928928_3.pdf (accessed 25.10.2016); Ibid., Human capital : A theoretical and empirical analysis, with special reference to education (1964) Nat. Bureau of Economic Research; Patricia Houlihan, ‘Citizenship for sale? The University of Chicago Nobel laureate Gary Becker proposes putting a price tag on immigration’, (2008) Feature, University of Chicago, http://www.uchicago.edu/features/20080707_becker/; Becker’s thoughts find approval and support by Richard K. Vedder, ‘Immigration Reform, a modest proposal’, 145, in: Benjamin Powell (ed.), The economics of immigration, (2015) Oxford University Press; Shaheen Borna & James N. Stearns, ‘The Ethics and Efficacy of Selling national Citizenship’ (2002) 37, Journal of Business Ethics, 193; further see: Julian Lincoln Simon, The economic consequences of immigration (2nd ed. 1999) University of Michigan Press, see ie. at 357; O.B. Bodvasson & H. van den Berg, The economics of immigration: Theory & Policy (2013), Springer; Hein de Haas, ‘Migration and Development: A theoretical perspective (2007) 29, Center on Migration Citizenship and Development (COMCAD) Working Paper No. 29; also see the ‘Becker-Posner-Blog’ (last updated 2006), at: http://www.becker-posner-blog.com/2006/05/immigration-policy-once-again-becker.html.

[9] Christian Henrik Nesheim, ‘Vanuatu to Offer Citizenship by Investment to Stateless People – Local Agent Gets Exclusive Deal’ (2020) September 11th, Investment Migration Insider, available at <https://www.imidaily.com/asia-pacific/vanuatu-to-offer-citizenship-by-investment-to-stateless-people-local-agent-gets-exclusive-deal/>.

[10] European Convention on Nationality E.T.S. No. 166, signed in Strasbourg on 6 November 1997.