Does COVID-19 herald a boon for golden passport schemes in Europe?

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The COVID-19 pandemic has remade the rules of international mobility. During the initial stage of the pandemic, in an attempt to stave off a health crisis that threatened to put further pressure on already strained systems, states allowed only their own citizens and residents to cross their borders. Such a strong emphasis on the citizenship or residence status that a person happens to have has prompted those with deep pockets to turn to so-called golden passport and visa schemes. These are offered by governments to foreign nationals who want a quick path to citizenship or residency in exchange for substantial investments in government bonds, national development funds, shares in existing companies and real estate.

One prominent example is Google co-founder Larry Page, who in August 2021 was reported to have acquired residency in New Zealand by investing $7 million in the country. The announcement – which revealed that Page arrived in New Zealand in January 2021, a month before his residency application was approved – invited questions about how he managed to enter a country that has been adamant about closing its borders to non-residents throughout the pandemic.

The nature of golden passport and visa programmes, which often require mere days to fulfil the residency requirement, has made it easy for these schemes to be depicted as pay-for-play deals that commercialise and cheapen citizenship. In the EU, where a passport from a member state enables one to live and work in any other EU country, these privileges have much wider ramifications. A few months into the pandemic, European Commissioner for Justice Didier Reynders criticised the schemes offered by Bulgaria, Cyprus and Malta and warned that the COVID-19 crisis “must not be used as a reason to operate risky EU citizenship schemes.” In July 2020 the European Parliament adopted a resolution renewing its earlier calls on EU member states to render all investor citizenship and residence programmes obsolete as soon as possible.

These calls have gone unheeded. In October 2020, an Al Jazeera documentary exposed how Cyprus’s programme has turned a blind eye on would-be investors with criminal records. It showed the dark underbelly of putting a price on citizenship or residence status – which in Cyprus starts at €2 million or €300,000, respectively. A week later, the EU Commission launched infringement proceedings against Cyprus and Malta.

High costs, low accountability

This strong reaction from the EU, however, is even delayed. Investor citizenship and residence programmes, after all, are far from a recent development. After the 2008 global financial crisis, several EU member states launched their golden passport and visa schemes to attract investment into industries that had been ravaged by the crash. In countries where the property markets were the most heavily affected, governments have encouraged investors to channel their funds toward real estate. The link to the global financial crisis can be very explicit: for example, the preamble to the law that created Spain’s investor residence programme frames the scheme in the context of the crisis.

The investment requirements stipulated by states do not, of course, include the fees paid to intermediaries such as real estate and law firms, which prop up what has become a lucrative industry and make the cost of acquiring citizenship or residency even steeper. Cyprus, for example, has firms specialising in building properties that meet the investment threshold for its golden passport scheme. Relative to GDP, the success of smaller EU member states’ programmes is striking: a 2018 Transparency International report estimated that Cyprus and Malta have earned €4.8 billion and €718 million, respectively, since they launched their investor citizenship schemes.

Despite the economic rationale for these schemes, there is little evidence that countries offering investor citizenship and residence programmes have attempted to assess whether these are beneficial to their citizens. Where information is available, the figures paint an unflattering picture. Hungary’s investor residence programme, which was terminated in March 2017 due to corruption issues, was reported by Transparency International Hungary to have led to at least a €90 million loss for the state budget. To obtain a Hungarian residence permit, an investor had to subscribe to a government settlement bond package worth €300,000. The companies selling these bonds, however, subscribed to them at a discount and transferred only €271,000 to the Hungarian state for each sale. Moreover, after five years, the government refunded the entire sum of €300,000 to the company. Since most of these companies were registered in offshore tax havens and unlikely to pay taxes in Hungary, this resulted in manifold losses for the state.

The dominance of real estate investments in these programmes has also inflated property prices and pushed out residents from their own cities. This issue was noticeable enough in Malta that the International Monetary Fund called for a policy to curb potential shocks from the increased demand for housing resulting from the popularity of its investor citizenship programme.

The combination of high application success rates and lax due diligence requirements has also been a cause for concern. The Al Jazeera documentary showed that Cyprus only superficially, if at all, investigated visa applicants’ sources of funds, making intermediaries such as banks vulnerable to complicity in money laundering. Reports about the Operation Car Wash corruption investigation, a years-long probe that started in Brazil and expanded into a sprawling investigation in several Latin American countries, and corruption allegations against Russian and Ukrainian elites, have shown that many of the executives involved acquired their EU citizenship or residency through the programs of Portugal and Cyprus.

What’s next?

Far from being an equaliser, the pandemic has magnified the inequality inherent in global relations. While the murky nature of investor citizenship and residence programmes makes it difficult to gauge the extent of the sale of EU passports and residence cards since the pandemic started, the continued operation of these schemes by Cyprus and Malta despite their official suspension seems to indicate strong demand. The Cyprus programme is still processing applications, while Malta replaced one terminated programme with a new scheme at the end of 2020. As the post-COVID period wears on, these ‘golden’ programmes may prove to be less constrained by EU censure than even the EU expected. What is more, their entrenchment highlights a broader conundrum for the international order: that perfectly legal practices can easily cover up criminal activity and encourage bad governance.


Anna Patricia Valerio is a Policy Leader Fellow at the School of Transnational Governance.

A visual summary of a discussion the author moderated on this topic, held 21 January 2022, is available here.