Citizenship by Investment: The Real Drivers Behind Applications

 

In recent months, the CRBI industry has been the backdrop for controversy in several cases. In October 2018, Bulgarian officials were found guilty of selling forged documents, allegedly allowing thousands of individuals to buy European passports illegally. In January 2019, under mounting pressure, Bulgaria revoked the citizenship of Russian telecoms millionaire Sergei Adoniev, who had been convicted of fraud in the United States in the 1990s. In March, the European Parliament voted to phase out CRBI programmes.

 

As a due diligence provider for several CRBI programmes globally, S-RM knows first-hand that the recent CRBI headlines paint a skewed picture. This is particularly true for applicants from the Middle East, whose profiles, in fact, closely mirror the wider global political, security and economic trends in the region. The volume of CRBI applications jumped significantly after the 2011 Arab Spring as citizens tried to escape worsening security across the region. From major Iraqi cities, applications now regularly come from engineers and surgeons who are unable to gain secure employment at home after years of conflict and insecurity. Similarly, middle-class Syrians are drawn to CRBI options due to the country’s civil war.

 

While citizens of areas of major civil unrest, not surprisingly, tend to be subject to restricted international movement, business travellers and expats from these regions choose to apply for CRBI programmes in order to gain better employment and education opportunities. A Syrian surgeon living and working in Qatar is ineligible for Qatari citizenship, which is strictly patrilineal, transferred by blood through the male line. However, travelling for business is difficult on a Syrian passport, which grants visa free travel to only 32 destinations, and obtaining a visa can be difficult with many countries cautious that Syrians will then claim refugee status. The surgeon also cannot return to Syria to renew his passport due to safety concerns. The stark differences in opportunity afforded by different passports is illustrated by the Henley Passport Index, a ranking for free movement. In this ranking, Iraq, Syria and Lebanon are placed in 104th, 103rd and 97th place, respectively. This means that Lebanese citizens, for example, can access only 44 out of 195 countries without a pre-arranged visa. Of these, 14 are small island nations — including Niue, the Pitcairn Islands and Tuvalu — not known for their education or business opportunities. A European or Commonwealth affiliated CRBI programme is therefore highly appealing.

 

Statelessness is another reason for CRBI applications. When the UAE was founded in 1971, those who couldn’t prove their presence at unification or lacked the necessary tribal affiliations were not allowed to claim UAE citizenship. NGOs have estimated the number of stateless in the UAE to be between 10,000 and 100,000 people — numbers which persist due to patrilineal citizenship laws assigning statelessness to the children of stateless parents. With the necessary financial backing, many are understandably drawn to apply for CRBI programmes to escape statelessness for themselves and their children.

 

Particularly for Middle East applicants, the coverage of CRBI programmes by newspapers and politicians requires more nuance. Criminals do apply, as do controversial oligarchs. Stringent due diligence investigations are essential to keep out the minority of criminals and other fraudulent applicants. But the very large majority of applicants reviewed by S-RM are professionals and business owners from countries such as Iraq, Syria, Yemen and Lebanon. Most apply not as a cover for illegal activity but because they want better employment and education opportunities. This is a far less headline-grabbing narrative. It is also much more reflective of the motivations of applicants from some of the world’s least secure and most unstable countries.

 

 

Author: Sonia Spencer, Analyst at S-RM