Many countries in the European Union allow individuals to purchase citizenship. Jelena Dzankic explores the reasons why citizenship has become a commodity and discusses the implications of this trend. She argues that such ‘investor citizenship’ is unfair and discriminates against those who gain citizenship by more traditional means

Dzankic, Jelena

LSE Research Online

blogs.lse.ac.uk http://blogs.lse.ac.uk/europpblog/2012/05/08/citizenship-for-sale/Many countries in the European Union allow individuals topurchase citizenship. Such ‘investor citizenship’ is unfair anddiscriminatory.May 8 2012Many countries in the European Union allow individuals to purchase citizenship. JelenaDzankic explores the reasons why citizenship has become a commodity and discusses theimplications of this trend. She argues that such ‘investor citizenship’ is unfair anddiscriminates against those who gain citizenship by more traditional means.Some states decide to naturalise people who donate money to them, or invest in them, whilewaiving some or all of the naturalisation conditions, such as residence, language and culturetests, etc.  This practice is commonly referred to as ‘investor citizenship’, and exists – in oneform or another – in many countries worldwide, including the majority of the European Union’sMember States. According to Henley and Partner, investor citizenship can be obtained through:1)     Premier residence, whereby investors are granted the right to reside in the state on grounds ofinvestment;2)     Detailed investor citizenship programs, which outline the amount and type of investment required fornaturalisation (only applicable for Saint Christopher & Nevis and the Commonwealth of Dominica);3)     Facilitated naturalisation on grounds of investment, whereby the state authorities have the discretion tooffer citizenship to individuals whose financial contribution is in the special interest of the state (manyEuropean states adopt this approach, including Austria which also runs a premier residence program).Despite the obvious economic benefits from investment for any country, naturalisation based merely on aneconomic contribution reduces citizenship to a commodity. There have been several objections to investorcitizenship; genuine ties cannot be upheld through this type of naturalisation; that it violates the sphereboundary of money; and that the equality principle is disrupted not only before but also after the naturalisationof investors. However, the degree of commentators’ objections often differs, depending on the type of investorcitizenship program.The first issue that emerges from naturalising investors is the tension between ‘national interest’ and ‘genuineties’, which was the reason why Ireland discontinued its investor citizenship program in 2001. In this context,facilitating access to citizenship to investors while retaining other criteria (premier residence programs) is theleast contentious. In countries such as Austria, Canada, United Kingdom, Panama, Hong Kong and UnitedStates, the investment is not granted as grounds for citizenship. It merely facilitates the residence criterion fornaturalisation, and applicants are required to undergo an ordinary naturalisation procedure. Hence thesecountries emphasise the establishment of a genuine link between the applicant and the country. The tensionbetween ‘national interest’ and ‘genuine ties’ in countries that waive the ordinary naturalisation requirements ismuch more complex: While neither of the two Caribbean islands implementing detailed investor citizenshipprograms nor other countries that have provisions for discretionary naturalisation on grounds of investmentuphold the ‘genuine ties’ requirement, the former have a clearly stipulated ‘national interest’ in the context ofinvestment. Hence, the tensions arising from these types of detailed investor citizenship programs are lowerthan those that allow for discretionary facilitated naturalisation on grounds of investment.The second problem of investor citizenship is the tension between the benefits of membership and thesphere boundary of money. Citizenship should not be granted on grounds of wealth and social class and thusreduced to a commodity that could be bought and sold. Countries that have general provisions for assistednaturalisation on the grounds of exceptional contributions to the state, equalise the monetary contribution withreputational gains. This is manifested in the majority of citizenship laws, where the same legal provision isused to naturalise talented artists, world-class sportspeople, and investors. In addition, countries thatimplement investor citizenship programs and also offer a degree of discretion to their authorities open up thescope for bribery, as has recently happened in Austria and Montenegro.The affair in Austria involved a Carinthian Freedom Party (FPK) politician Uwe Scheuch, who allegedlypromised to facilitate the granting of Austrian citizenship to a Russian investor in return for a €5 millioninvestment in Carinthia and a 5 to 10 per cent donation of this amount to the FPK. Following a court case, theaffair resulted in a prison sentence of 18 months for Scheuch (12 months suspended), but he has recentlybeen acquitted on procedural grounds. A similar controversy also occurred in Montenegro in the first half of2009. The former Prime Minister of Thailand, Taksin Shinawatra, convicted of corruption, receivedMontenegrin citizenship. As a result of the public pressures surrounding the Shinawatra case, theMontenegrin government adopted detailed guidelines on the amount and type of investment required fornaturalisation in June 2010. The Montenegrin investor citizenship program has, however, been put on holddue to criticism from the EU, as described in detail in my RSCAS/EUDO paper and in a CITSEE story.The third contentious aspect of investor citizenship is related to the principle of equality of membership. In thisrespect, investor citizenship programs may represent a breach of the equality principle both between theprospective applicants (before naturalisation) and between the naturalised investors and ordinary citizens(after naturalisation). The breach of the equality principle is the lowest in countries that naturalise investorsthrough premier residence programs because there individuals are subject to ordinary naturalisation criteriaand required to relinquish their citizenship of origin. The states that facilitate the naturalisation of investorsthrough the discretion of authorities challenge the equality principle on both counts, provided that they forbiddual nationality for ordinary citizens.Austria is an interesting state in this respect because it runs a premier residence program, and also allowsfacilitated naturalisation on grounds of investment. So, if a person wishes to invest ‘only’ 100,000 Euros inAustria, he or she will be bound to reside in the country for ten years before becoming an Austrian citizen(note: the residence requirement may be shortened on a number of grounds, but that varies on a case-to-case basis), and to comply with other naturalisation conditions. That person will also be asked to relinquishhis or her citizenship of origin, and thus the principle of equality will be only minimally disrupted. However, if aperson intends to make a multi-million investment in Austria, he or she may be granted citizenship byinvestment, while not having to reside in the country, know its language or culture. The same person will notbe asked to give up his or her citizenship of origin. This is a major source of inequality, because Austriaoperates a strict single citizenship policy and thus other nationals of this country are not allowed to holdanother passport.Please read our comments policy before commenting.Note:  This article gives the views of the author, and not the position of EUROPP – European Politics andPolicy, nor of the London School of Economics.Shortened URL for this post: http://bit.ly/IULC77_________________________________________About the AuthorJelena Dzankic – European University InstituteJelena Dzankic holds a PhD from the Faculty of Politics, Psychology and Social Sciences(PPSIS) at the University of Cambridge (New Hall College). Her academic interests fall withinthe fields of transition of SEE countries, Europeanization, politics of identity and citizenship.Prior to joining the European University Institute, Jelena was part of the CITSEE team at theUniversity of Edinburgh. She has published several articles on the politics of the Balkanregion, and since 2009 she has been the country expert on Montenegro at the EuropeanUnion Democracy Observatory (EUDO) on Citizenship at the Robert Schuman Centre forAdvanced Studies.Related posts:1. One-dimensional austerity programs to deal with “guilty” countries are endangering the Euro and theEuropean Union.2. An independent Scotland would face little European opposition to membership of the European Union.3. By building up the private sector and free market economies, the European Bank for Reconstructionand Development will help to foster democracy in the Arab Spring countries.

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Many countries in the European Union allow individuals to purchase citizenship: such ‘investor citizenship’ is unfair and discriminatory

Edinburgh Research Explorer

     Edinburgh Research Explorer                                      Many Countries in the European Union Allow Individuals toPurchase Citizenship. Such ‘Investor Citizenship’ is Unfair andDiscriminatoryCitation for published version:Dzankic, J, Many Countries in the European Union Allow Individuals to Purchase Citizenship. Such ‘InvestorCitizenship’ is Unfair and Discriminatory, 2012, Web publication/site, LSE EUROPP Blog.Link:Link to publication record in Edinburgh Research ExplorerDocument Version:Publisher's PDF, also known as Version of recordPublisher Rights Statement:© Dzankic, J. (Author). (2012). Many Countries in the European Union Allow Individuals to Purchase Citizenship.Such ‘Investor Citizenship’ is Unfair and Discriminatory. LSE EUROPP Blog.General rightsCopyright for the publications made accessible via the Edinburgh Research Explorer is retained by the author(s)and / or other copyright owners and it is a condition of accessing these publications that users recognise andabide by the legal requirements associated with these rights.Take down policyThe University of Edinburgh has made every reasonable effort to ensure that Edinburgh Research Explorercontent complies with UK legislation. If you believe that the public display of this file breaches copyright pleasecontact openaccess@ed.ac.uk providing details, and we will remove access to the work immediately andinvestigate your claim.Download date: 05. Apr. 2019 Many countries in the European Union allow individuals topurchase citizenship. Jelena Dzankic explores the reasonswhy citizenship has become a commodity and discusses theimplications of this trend. She argues that such ‘investorcitizenship’ is unfair and discriminates against those who gaincitizenship by more traditional means.Some states decide to naturalise people who donate money to them, orinvest in them, while waiving some or all of the naturalisation conditions, suchas residence, language and culture tests, etc.  This practice is commonlyreferred to as ‘investor citizenship’, and exists – in one form or another – inmany countries worldwide, including the majority of the European Union’sMember States. According to Henley and Partner, investor citizenship can beobtained through:1)     Premier residence, whereby investors are granted the right to reside inthe state on grounds of investment;2)     Detailed investor citizenship programs, which outline the amount andtype of investment required for naturalisation (only applicable for SaintChristopher & Nevis and the Commonwealth of Dominica);3)     Facilitated naturalisation on grounds of investment, whereby the stateLatest LSE CommentNewtrends inweaponsproductionin EastCentralEuropereflectmajorchangesin theglobalarmsindustryFebruary 19th, 2015What canthe leftlearn fromFriedrichHayek?February 19th, 2015Thedemise ofsymmetrybetween‘sisterparties’hasEUROPP – Many countries in the European Union allow individuals t... http://blogs.lse.ac.uk/europpblog/2012/05/08/citizenship-for-sale/1 of 8 19/02/2015 16:43authorities have the discretion to offer citizenship to individuals whosefinancial contribution is in the special interest of the state (many Europeanstates adopt this approach, including Austria which also runs a premierresidence program).Despite the obvious economic benefits from investment for any country,naturalisation based merely on an economic contribution reduces citizenshipto a commodity. There have been several objections to investor citizenship;genuine ties cannot be upheld through this type of naturalisation; that itviolates the sphere boundary of money; and that the equality principle isdisrupted not only before but also after the naturalisation of investors.However, the degree of commentators’ objections often differs, depending onthe type of investor citizenship program.The first issue that emerges from naturalising investors is the tensionbetween ‘national interest’ and ‘genuine ties’, which was the reason whyIreland discontinued its investor citizenship program in 2001. In this context,facilitating access to citizenship to investors while retaining other criteria(premier residence programs) is the least contentious. In countries such asAustria, Canada, United Kingdom, Panama, Hong Kong and United States,the investment is not granted as grounds for citizenship. It merely facilitatesthe residence criterion for naturalisation, and applicants are required toundergo an ordinary naturalisation procedure. Hence these countriesemphasise the establishment of a genuine link between the applicant and thecountry. The tension between ‘national interest’ and ‘genuine ties’ in countriesthat waive the ordinary naturalisation requirements is much more complex:While neither of the two Caribbean islands implementing detailed investorcitizenship programs nor other countries that have provisions for discretionarynaturalisation on grounds of investment uphold the ‘genuine ties’ requirement,the former have a clearly stipulated ‘national interest’ in the context ofinvestment. Hence, the tensions arising from these types of detailed investorcitizenship programs are lower than those that allow for discretionaryfacilitated naturalisation on grounds of investment.The second problem of investor citizenship is the tension between thebenefits of membership and the sphere boundary of money. Citizenshipshould not be granted on grounds of wealth and social class and thusreduced to a commodity that could be bought and sold. Countries that havegeneral provisions for assisted naturalisation on the grounds of exceptionalcontributions to the state, equalise the monetary contribution with reputationalgains. This is manifested in the majority of citizenship laws, where the samelegal provision is used to naturalise talented artists, world-class sportspeople,and investors. In addition, countries that implement investor citizenshipopened up a newchapter in BelgianpoliticsFebruary 18th, 2015  EUROPP – Many countries in the European Union allow individuals t... http://blogs.lse.ac.uk/europpblog/2012/05/08/citizenship-for-sale/2 of 8 19/02/2015 16:43programs and also offer a degree of discretion to their authorities open up thescope for bribery, as has recently happened in Austria and Montenegro.The affair in Austria involved a Carinthian Freedom Party (FPK) politicianUwe Scheuch, who allegedly promised to facilitate the granting of Austriancitizenship to a Russian investor in return for a €5 million investment inCarinthia and a 5 to 10 per cent donation of this amount to the FPK.Following a court case, the affair resulted in a prison sentence of 18 monthsfor Scheuch (12 months suspended), but he has recently been acquitted onprocedural grounds. A similar controversy also occurred in Montenegro in thefirst half of 2009. The former Prime Minister of Thailand, Taksin Shinawatra,convicted of corruption, received Montenegrin citizenship. As a result of thepublic pressures surrounding the Shinawatra case, the Montenegringovernment adopted detailed guidelines on the amount and type ofinvestment required for naturalisation in June 2010. The Montenegrin investorcitizenship program has, however, been put on hold due to criticism from theEU, as described in detail in my RSCAS/EUDO paper and in a CITSEE story.The third contentious aspect of investor citizenship is related to the principleof equality of membership. In this respect, investor citizenship programs mayrepresent a breach of the equality principle both between the prospectiveapplicants (before naturalisation) and between the naturalised investors andordinary citizens (after naturalisation). The breach of the equality principle isthe lowest in countries that naturalise investors through premier residenceprograms because there individuals are subject to ordinary naturalisationcriteria and required to relinquish their citizenship of origin. The states thatfacilitate the naturalisation of investors through the discretion of authoritieschallenge the equality principle on both counts, provided that they forbid dualnationality for ordinary citizens.Austria is an interesting state in this respect because it runs a premierresidence program, and also allows facilitated naturalisation on grounds ofinvestment. So, if a person wishes to invest ‘only’ 100,000 Euros in Austria,he or she will be bound to reside in the country for ten years before becomingan Austrian citizen (note: the residence requirement may be shortened on anumber of grounds, but that varies on a case-to-case basis), and to complywith other naturalisation conditions. That person will also be asked torelinquish his or her citizenship of origin, and thus the principle of equality willbe only minimally disrupted. However, if a person intends to make a multi-million investment in Austria, he or she may be granted citizenship byinvestment, while not having to reside in the country, know its language orculture. The same person will not be asked to give up his or her citizenship oforigin. This is a major source of inequality, because Austria operates a strictElectoral turnout for young people peaks immediately after their enfranchisement then falls sharply bit.ly/1nkIossLSE EUROPP blog @LSEEuroppblogGreece offers concessions to win euro zone loan extension, Germany objects: reut.rs/1AWMpNM pic.twitter.com/4c2Smmjs6jRetweeted by LSE EUROPPblogReuters TopNews        @ReutersExpandArms firms in Central/Eastern Europe are playing a growing role in the global arms industry bit.ly/17Z9owo pic.twitter.com/bX9P3zI5kvLSE EUROPP blog @LSEEuroppblogExpand52m2h2hTweets FollowTweet to @LSEEuroppblogEUROPP – Many countries in the European Union allow individuals t... http://blogs.lse.ac.uk/europpblog/2012/05/08/citizenship-for-sale/3 of 8 19/02/2015 16:43Tweet 9 62Likeisingle citizenship policy and thus other nationals of this country are notallowed to hold another passport.Please read our comments policy before commenting.Note:  This article gives the views of the author, and not the position ofEUROPP – European Politics and Policy, nor of the London School ofEconomics.Shortened URL for this post: http://bit.ly/IULC77_________________________________________About the AuthorJelena Dzankic – European University InstituteJelena Dzankic holds a PhD from the Faculty of Politics,Psychology and Social Sciences (PPSIS) at the University ofCambridge (New Hall College). Her academic interests fallwithin the fields of transition of SEE countries,Europeanization, politics of identity and citizenship. Prior to joining theEuropean University Institute, Jelena was part of the CITSEE team at theUniversity of Edinburgh. She has published several articles on the politics ofthe Balkan region, and since 2009 she has been the country expert onMontenegro at the European Union Democracy Observatory (EUDO) onCitizenship at the Robert Schuman Centre for Advanced Studies.Email ShareThe eurozone’sstruggling economiesare increasingly sellingcitizenship to raisemuch needed capital.London’s Olympicsshow that the linksbetween sports,citizenship, politics,and national identityare as tangible as everImmigrants inSwitzerland are farmore likely to havetheir application forcitizenship rejected ifthe decision is madeusing a referendum.EUROPP -European Politicand Policy at LSE5,703 people like EUROPP -European Politics and Policy at LLikeiClick here for thismonth's upcoming EUrelated eventsAgenda PúblicaBlogActiv.eubloggingportal.euBruegelCarnegie EuropeCEPS CommentariesCharlemagne'sEUROPP – Many countries in the European Union allow individuals t... http://blogs.lse.ac.uk/europpblog/2012/05/08/citizenship-for-sale/4 of 8 19/02/2015 16:43May 8th, 2012 | EU institutions, government and politics andenlargement, Jelena Dzankic, Justice and home affairs (includingimmigration, asylum policies etc) | 3 CommentsPrevious post Next postAlice  May 9, 2012 at 5:10 am - ReplyThe authors position that citizenship should not be sold as acommodity is objectionable on ethical grounds. On the contrary: itshould be sold, but it should be made cheaper. Currently what is offered inAustria is not even close to anything affordable to an average even upper-middle-class income. When someone is selling citizenship, what is actuallybeing sold is a passport: a travel document. Since we are living in a world thatcriminalizes travel easily, there is no question that the practice is unjust,morally wrong, and should be discontinued, but unfortunately it has becomeso deeply ingrained, socially accepted, used to generate enormous profits forinsequrity corporations… and in summary it will evidently take years ofdebate to get rid of. Meanwhile, a fast and straightforward way to buy a traveldocument for oneself would be a welcome solution: not ideal, but along thelines that it would acknowledge the right of persons to buy themselves out ofslavery. Which is better than nothing. Which is better than letting a generationof children grow up in a world where travel is “illegal” for 90% of the world’spopulation, a generation that would take that for granted.Secondly, the title of this article is inaccurate and misleading: “Many countriesin the European Union allow individuals to purchase citizenship.” Really? Theonly EU country (as the author later admits herself) that allows citizenship byinvestment is Austria.Many countries in the European Union allow individuals to purchase citizenship.Such ‘investor citizenship’ is unfair and discriminatory | British Politics and Policyat LSE  May 12, 2012 at 2:30 pm - ReplyNotebookEU Energy PolicyBlogEudo CafeEuro Crisis in thePressEuropean Council onForeign RelationsEuropean PartiesElections andReferendums Network(EPERN)European PublicAffairsEuropedebate.ieFRIDEGlobal EuropeGreece@LSEHertie School ofGovernance blogIdeas on EuropeLost in EUropeLSEE – Research onSouth Eastern EuropePolitics in SpiresPolscieuEUROPP – Many countries in the European Union allow individuals t... http://blogs.lse.ac.uk/europpblog/2012/05/08/citizenship-for-sale/5 of 8 19/02/2015 16:43[...] countries in the European Union allow individuals to purchasecitizenship. Jelena Dzankic explores the reasons why citizenship has becomea commodity and discusses the implications of this [...]STRUGGLING CARIBBEAN ISLANDS SELLING CITIZENSHIP « Repeating IslandsFebruary 14, 2013 at 1:44 pm - Reply[...] http://blogs.lse.ac.uk/europpblog/2012/05/08/citizenship-for-sale orhttp://bit.ly/IULC77 [...] Notify me of follow-up comments by email. Notify me of new posts by email.Social EuropeJournalThe Forum ofEuropean CitizensUCL SSEESResearch BlogSupported by:1,650UniqueVisitorsPowered By EUROPP – Many countries in the European Union allow individuals t... http://blogs.lse.ac.uk/europpblog/2012/05/08/citizenship-for-sale/6 of 8 19/02/2015 16:43Visit our sister blog:LSE USAPP blogStructural Crisis of theModern World-System[Audio]February 16, 2015The Challenge of Big Datafor the Social Sciences[Audio]February 16, 2015Investor Protection in TTIP:fading democracy or newgeneration? [Audio]February 12, 2015Investor Protection in TTIP:fading democracy or newgeneration? 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Many Countries in the European Union Allow Individuals to Purchase Citizenship. Such ‘Investor Citizenship’ is Unfair and Discriminatory

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