COVID-19 Travel Bans Are Boost For 'Golden Passport' Market
The super rich are buying residency papers and passports from places like Cyprus and Vanuatu to be able to travel — despite quarantines — for health reasons, business or pleasure.
After tax havens, coronavirus havens. Since the beginning of stay-at-home orders, millionaires and billionaires around the world have been buying residence permits and passports at high prices to escape the COVID-19 pandemic or their country's failing health infrastructure.
Konstantin Kaminsky, associate director of Astons, which offers citizenship "solutions' from London, says his phone has been ringing non-stop for the past four months: "The wealthy in poor countries have found themselves stuck at home in the midst of an epidemic, even though they are used to seeking treatment abroad."
Others were not reassured by the health response in their countries. "Some American clients have told us that they don't want to be in the United States when the next outbreak occurs," said Paddy Blewer, a spokesperson for Henley & Partners. It's not so much the suspension of commercial flights that is a problem but the closure of borders to foreign nationals due to quarantine orders. In these circumstances, a private jet is of no help. Certain travel documents must be purchased, a plan B reserved for the wealthiest.
In the citizenship market, passports exist for all client profiles. Rankings measure their "power," i.e. the number of countries they're allowed to visit without a visa. During the epidemic, the position of the U.S. — whose citizens can no longer travel to Europe — plummeted, while that of Australia, relatively unaffected by the pandemic, rose.
The Vanuatu passport offers one of the best values for money. Delivered by the postal services in just one month for around $152,590, it is one of the least expensive and quickest to obtain.
Such a passport alternative makes it easier for American business professionals to travel to China at a time when relations between the two countries are steadily deteriorating, and it saves time for rich citizens of poor countries by avoiding lengthy visa application procedures. The problem is that it does not allow a person to reside in a country for more than six months, a major drawback when trying to escape the coronavirus epidemic.
Residence permits are therefore the most popular, especially those sold by Cyprus. (Malta's quotas have already been reached.) The Mediterranean island is not far from the Middle East, where many potential customers live, and out of a population of 1.2 million, only 1,000 people have tested postive for COVID-19. Hospitals have never been overcrowded.
Every new crisis offers a business opportunity.
The residence permit, which can be converted into a European passport after just a few months, is exchanged for an approximately 2 million-euro investment in real estate. "During the quarantine, our consultants in Cyprus would take our clients, who were stranded abroad, on smartphone tours of luxury villas," says citizenship consultant Kaminsky.
Photo: Henry Thong
In the "citizenship through investment" industry, every new crisis offers a business opportunity. "With the COVID-19 pandemic and the economic downturn in Lebanon, the demands have multiplied," acknowledges Tarek Kaoukji, founding president of Sununu Advisors. "Families who had been thinking for a long time about acquiring another nationality have finally made up their minds."
Clients want to be discreet at a time when economic patriotism is celebrated in many countries in the midst of a health crisis. In Jordan, Kuwait and elsewhere, Sununu Advisors are in contact with potential clients through partnerships with banks. Small committee meetings are organized, during which diplomats come to praise the merits of their country. The agency then puts its clients in contact with lawyers from each host country, who are "often former diplomats or civil servants."
Citizenship is acquired like risk insurance: better to have one in case of a problem. "Those who buy citizenship are often risk professionals," said Paddy Blewer, a spokesman for Henley & Partners. "But the pandemic has only increased the value of a second passport." In many cases, clients who purchase a passport will not live in the country in question, industry professionals say.
"Second citizenship is more than a lifestyle. It is the guarantee of being able to make choices to protect the safety of yourself and your family. Having independence from political, economic, social and environmental factors in your home country allows you to have options available to you whenever you might need them." This is a selling point that the Netherlands has taken up, offering a "golden visa" for an investment of around $1,467,000 in a start-up company, with the possibility of becoming a citizen after five years.
"A war about to break out? An unstable political situation? Radical economic reform? Thanks to the residence permit, you can go to the airport with your family and live in your second home with peace of mind," praises Orange Visas, the partner agency of the Dutch immigration services. And it doesn't matter if some countries, such as India, prohibit their citizens from having dual nationality. "They usually leave their passport in a third country, at their lawyer's office in Dubai, for example, and pick it up or have it delivered on the way," says one expert on the subject.
The Caribbean islands, faced with falling tourism revenues due to quarantine, have lowered the price of their passports and are trying to attract "citizenship investors' by other means.
Strangled by debt, the island of Saint Lucia recently issued zero interest rate bonds, but with a passport offered. If the subscriber agrees to invest $250,000 for at least six years, Saint Lucia even offers a second nationality to the person of his or her choice. Abandoned by tourists, the island of Barbados is trying to attract teleworkers who are stuck at home. It offers a one-year visa to those earning more than $50,000 a year.
At the beginning of 2018, the Organization for Economic Co-operation and Development (OECD) warned about the "golden passport" and visa system. It was concerned about the practice of evading controls on the automatic exchange of data, a mechanism put in place by states to combat fraud. With a second passport, it is in fact possible to avoid checks on the amounts held by a foreigner. In 2014, the U.S. had also asked the island of Saint Kitts and Nevis, accused of having given a passport to an Iranian seeking to escape U.S. sanctions, to tighten the conditions for issuing it.