The Golden Passport - Kristin Surak
A discussion with Dr. Kristin Surak on The Rasheed Griffith Show
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Show Notes
Citizenship by Investment or CBI programs tend to get a bad rap due to the misconceptions surrounding how they work and how they came to be. Dr Kristin Surak shares some valuable insights on the origins of "passports for sale" and goes into more depth on the true meaning of citizenship through the eyes of the people and the state.
Several islands in the Caribbean offer prominent CBI opportunities. It is estimated that more than 40% of Dominica's government revenue is derived from their own CBI program, financing wide-scale infrastructure projects across the island, such as additions to their green energy generation and a new international airport. To truly understand the lucrative nature of CBIs, we'll explore the historical context behind their inception, the motivations behind those who invest in these programs, the suppliers involved, and the complexities of successfully executing such a multifaceted process.
A passport may not necessarily mean citizenship. Dr. Surak posits that to grasp the motivations behind CBIs, a better understanding of modern state and personhood concepts is required - what exactly does a foreign passport offer, and how does it differ from the perks of naturalization?
The history of CBI programs also sheds light on the driving factors behind their persistence. For example, Hong Kong's handover to China fueled much of the initial success of many CBI programs in the Caribbean and Canada. A passport can be an assurance or fail-safe against government-induced insecurity, evident by the number of Hong Kongers who took up the offer.
But are these programs also a backdoor for unsavory individuals to bypass global restrictions? Not necessarily. The screening process for many of these programs is vigorous, even more so than Visa approval from countries like the USA. Bad apples are not unheard of, but this is not an indictment on the industry as a whole.
These programs are the lifeblood of several smaller economies and are a legitimate source of revenue for vulnerable small island states. The question should not be if CBIs are harmful because they aren't, but how best they could be utilized to enable development in the countries that rely on them.
Links and Recommendations
The Golden Passport: Global Mobility for Millionaires by Kristin Surak
Citizenship and Residence Sales: Rethinking the Boundaries of Belonging by Dimitry Kochenov and Kristin Surak
Ius Doni: The Acquisition of Citizenship by Investment by Christian H. Kälin
Citizenship by Investment in the Caribbean with Tianyu Fang on the Rasheed Griffith Show (Spotify)
Full Transcript
This transcript was automatically generated by AI and lightly edited by our team. We don’t catch every error, so if you spot one, send us a message/email via shem@cpsi.org.
Rasheed: So I want to start by saying thank you so much, Dr. Surak, for joining us on the podcast today. I'm very excited to discuss your book, "The Golden Passport". I am also joined here today by Tianyu Fang, a fellow of the CPSI.
Kristin: Thanks so much for having me here. It's a real pleasure to join.
Rasheed: Tianyu, it's good to have you back on the podcast.
Tianyu: Thanks Rasheed, it's great to be back again.
Rasheed: I want to start with a quote by Dr. Ralph Gonzalves, who is the Prime Minister of St. Vincent and The Grenadines. He said in 2018 about the topic of CBI. He said, "It is not a commodity for sale, and the passport is the outward sign of the inward grace of citizenship, and that too is not for sale". Dr. Surak, why do some Countries decide to sell citizenship?
Kristin: To give a little background in terms of what I'll speak from, it's important to remember that in asking a general question like that, there's quite a few countries with programs that are doing, say, more than just, you know, a handful of applications every year.
There are about 10 countries in the world. To ask why also means generalizing even beyond the Caribbean to look at why a slightly wider range of countries might go for these options for this as an option. And usually driven by economic need or economic desires. And it's seen most dramatically, perhaps, in the Caribbean, because these are, of course, micro-states.
And it doesn't take a lot in terms of revenue to move the dial quite significantly at a national level. At the same time, there was a lot packed into that quote, which I unfortunately didn't hear all of because I have a slightly dodgy internet connection even here in London. But it seemed to be also getting at that notion of the sacredness of citizenship.
This is also an important historical development as well, and there are a couple of things that need to be unwrapped there to understand the dynamics, at least from what I do, which is a social science point of view. So one is that citizenship is not the same as a passport. Most people, the vast majority of people, People in the world are citizens of the country, it's usually the place where they were born, but the vast majority of people in the world don't have passports. I say that I'm also a U.S. citizen, and even still, it's still a majority of Americans who don't own a passport, but they're still a citizen. And actually, you can have a passport from a country even if you're not a citizen.
So a lot of people who have diplomatic passports all around the world are not citizens of the countries for which they're holding that diplomatic passport. But in thinking about that notion of the sacredness of citizenship, it’s coming up very importantly in the quote, that kind of gets to something that, at least in social science, we think about ourselves as being members of a country, but in social science, we learned to use the term nation-state to capture that contemporary form of political membership and political unit, and that has two components.
One is the state, which is the government, the laws, the jurisdictions, and all of that. And the other side of that is the nation, a notion of the people. In contemporary times, states rule in the name of the nation. And that nation side of things is where you can get a lot of that kind of identity side.
The emotional side can be very big in that as well. Nonetheless, Citizenship, at base, in its most fundamental form in the contemporary world, is a legal status that connects a person to a state in the first place. For example, I could self-identify as, say, speaking perfectly fluent French, maybe have lived there for a long time, and even potentially have French ancestry.
But if I show up to the border, up at the border, without a French passport, the country doesn't have to let me in. Just because I think, feel, or identify as French doesn't make me a citizen of that country. Nonetheless, it's still the rise of these very strong feelings of national belonging that feeds into that kind of sacralization of citizenship as well.
So I think in terms of unpacking what he was describing, there's a lot there and there's a lot that people feel and strike a chord, but it's also used to break apart those parts and think about what is each doing.
Rasheed: I think from that description, I'm wondering actually, how did you come to approach this particular topic, especially given your earlier work in your term nation work, especially in Japan and so on.
How did you transition from there to here?
Kristin: I suppose the thing that connects most of my research is that fun topic. So I started training in sociology, working on Japan and working on a rather obscure ritual, the Japanese tea ceremony. So I would present my work as a sociological analysis and everybody thought I was an anthropologist.
And so then I started working on international migration because I had taken a lot of courses in that too. And I was looking at East Asia, so Japan and then expanding out to South Korea and Taiwan, looking at temporary labor migration programs, so-called guest work programs, where countries bring in workers, usually very low paid, for a temporary amount of time, but they're supposed to go home at the end.
There are a lot of barriers thrown up to these people becoming citizens, even though they're in a country contributing and giving their labor. They often don't have the option to naturalize. At about the same time, Malta started its citizenship by investment program. This was all over the news.
And I thought, Oh, this is the exact opposite. Rather than low-paid people who go to a country, and work for a long time, but have a hard time becoming citizens, these are wealthy people buying citizenship in countries they've never been to. And I thought, wow, this is mind-blowing. And so I started unpacking this world.
I thought it would be just a small addendum to a bigger study on guest work programs. I started unpacking the world and I realized there was so much more going on. And what I found was important in trying to understand that. So for me as a social scientist, I start not from the position of judging, is this right or is this wrong?
I start from the position of, okay, this is a thing out there in the world. Let's look at it and try to understand what's going on with it and see what that tells us about what's going on in the world more broadly. And I found it to be a really interesting place to start thinking about global inequalities, power politics, the way extraterritorial reach of states, things we often usually don't think about but are thrown into highlighted form in this world.
So an example of that might be, that we often think of citizenship as about the rights we get in the country, how you connect the citizen to the state. But with citizenship by investment, a lot of the real value that a lot of people are looking for, and there's a lot of reasons, but to put it in cut and dry terms, it's not about the right citizenship gets you within a country, but it's about the rights that citizenship gets you outside of the country in third countries. This means on the one hand that if you're living a globalized life or doing a lot of international travel, this sort of thing can have a real impact in terms of what you can and can't do.
But it also means that powerful third countries or powerful international organizations can control the value of another country's citizenship, and even tell that country whom they should and shouldn't naturalize. So it becomes a really interesting way to look at different sorts of inequality, different sorts of power dynamics, and how globalization works.
Rasheed: So let's dive a bit deeper into this power dynamic aspect of it. What can you Tell us about the specific origins of, let's say the St. Kitts or Dominica CBI industry? And why does it seem that there are so many Canadians involved in the startup of these industries?
Kristin: I must admit, that was a surprise when I started doing fieldwork in this area. I would go to different global hubs, and try to find people who'd been in the industry for a very long time to understand its transformation.
And then I'd be like, Oh, it's another Canadian. Oh, it's another Canadian. And they're all from Montreal. That's one of the interesting developments I found coming out of Canada, it's not a citizenship by investment, but a residence by investment program that developed out of an older standing, actually a business investor visa from the 1970s.
In 1986, it was more formalized into a passive residence by investment, the so-called “Golden Visa Program”. At a time when Hong Kong, it became clear Hong Kong was going back to a then much more communist China, people in Hong Kong were very worried and looking for exit options. And for various reasons, Vancouver became a big spot area of choice.
It transformed the city of Vancouver to have a lot of people from Hong Kong looking at that as an exit option or a place to put their kids in schools or that sort of thing. And so, but what happened in the case of Canada, because it's a federated system, Quebec gets a lot of its say in terms of front-line migration policy decisions. And so while Canada had a federal immigrant investor program that was a golden visa program, Quebec had the same thing but made it faster. The processing that made a positive decision, if it was going to move in the direction of a positive decision, became clearer, and faster.
And that made it into a quote-unquote product that was easier to market, quote-unquote, for actors working in that industry. A lot of people, rather than having their clients do the Federal Immigrant Investor Program, found that, hey, Quebec is just faster, easier, you can move more people through, you can get your fee much more quickly. And so they learned this trade.
They would go to global hubs, and develop the client base. And what happened was that I think it was in 2012, that Canada decided to close this option. In a country as big as Canada, the investment isn't going to move the dial that much. There were a lot of issues in terms of program structure that meant that not all the money was coming in and developing the economy in a very productive way.
So they shut down the program. Quebec left its option open for about another five years or so. Then it froze the program. Now it's retooling it. But that meant that a lot of these Canadians began to look for other options to keep their clients happy and to put them on something else. And about the same time, there was a big expansion of Caribbean citizenship by investment programs.
About 2013, we saw Antigua pass a law and probably open its program. I think St. Lucia passed a law, although it didn't open its program until 2016. Dominica's program and St. Kitts' program were much more longstanding but began to reformulate those because they were beginning to get, or had already gotten, visa-free access to the Schengen area in Europe, which made it a much more desirable, quote-unquote, product for people as well.
So several different factors go in to explain why, weirdly, there are so many French Canadians.
Tianyu: I have one question that I want to interject. You mentioned that the exodus from Hong Kong in the 80s, eventually in 1997, was a major part of Canada's program. But in 1984, when St. Kitts launched its first nationality law, I think it's the first piece of legislation after it became independent, sort of Hong Kong was the the topic that everybody was talking about, that there were fears within the country in St. Kitts about how immigrants from Hong Kong would suddenly move to St. Kitts enabled by that nationality law. Can you talk a little bit about Hong Kong, China, Taiwan origin?
Kristin: In terms of St. Kitts or just the citizenship by investment field in general?
Tianyu: Yeah, the citizenship by investment field in general.
Kristin: If one looks historically, in terms of conceptualizations of citizenship, even in ancient Greece and ancient Rome, there were possibilities in cases of people, in effect, getting citizenship in exchange for recognition of financial contributions to a state or city-state. Of course, what citizenship meant back then is very different from what citizenship means today.
Even in the 20th century, Liechtenstein, for example, the mid 20th century, it was a carryover from feudal times but it had a citizenship by investment option. But that's a little bit different from this kind of lively feel that we have today. And so looking at the emergence of that field, and I should also add here, of course, any state can issue citizenship, any sovereign can issue citizenship to whomever it wants and do that just in recognition of an economic contribution.
And we're seeing that in a lot of cases of American tech billionaires going out, talking to a government, and picking up citizenship. I think the most recent one was one of the founders of Microsoft recently got citizenship in Albania through that mechanism. But there's Peter Thiel who got citizenship in New Zealand that way.
Evan Spiegel of Snapchat got citizenship in France that way. So that can happen too, but that's a little bit different from these formalized programs where you go to the government website. There's a list of things you do. You tick the right boxes and put in the money. And you're in. And so the reason why I traced the origins of this world back to the 1980s, is because when it became clear in 1984 that the Brits were going to allow not just the new territories, but Hong Kong on the proper to go back to China, that was a real reason for concern within China.
And similarly within Taiwan at the time, it was under authoritarian rule. It didn't democratize really until the 1990s, but people were still beginning to make money and looking to simply have an insurance policy or to hedge their bets. Then, especially in Hong Kong, it wasn't just citizenship by investment.
It was kind of like anything. It would be residence by investment. It would be buying a passport from an embassy official. It was a Wild West world of anything goes and see what you can get and get it now, ask questions later scene. And of course, St. Kitts was operating in that scene by the 1990s.
Dominica was as well. And there were a lot of other countries that I lay out in the book or embassy officials that you could get stuff off of. The Pacific Islands are doing this too. But what I found in looking at that world was that there was a lot of gray area. There was a lot of dodgy stuff going on.
One arm of the government might be doing citizenship in another branch of the government, like the Department of Interior that does immigration applications, might not even know about it. And sometimes the money might not be going to the government, but to an escrow account in a foreign country or being controlled by service providers.
And sometimes a government, new government would come in and just cancel all the passports and say, this is completely illegitimate. And it was a really unstable, gray market and pretty dodgy scene then. And I think the journalist Oliver Bullough has done a lot of work on the St. Kitts offering in the 1980s, and 1990s in his book 'Moneyland'. He's done a lot of good investigative work on, wow, some kind of eyebrow-raising things going on at the time. But that demand was important kind of coming out of East Asia in terms of service providers, knowing that people were looking for options and that they could make a lot of money helping them to connect to whether it's residents or citizenship or whatever abroad.
Rasheed: In regards to let’s say, the modern market contrasting the nineties and eighties, there is also a common stereotype that people would acquire Caribbean citizenship, in particular, for some kind of tax evasion reason. Of course, anyone who knows about taxation policy knows that's not a very good reason to buy a second citizenship because you can't move your money that easily.
So, besides that stereotype, what are the concrete reasons why people want to acquire a second citizenship, and particularly a second passport?
Kristin: Yeah, that's a great question. And you're right in a sense, tax is complicated. It's not that tax is completely irrelevant, because if you're buying a property, there could be property taxes on it and things like that.
But there are also so many different types of tax. I think with U. S. citizens, there's a complexity of having to pay taxes wherever you are in the world. Tax is very often based on physical presence. How banks determine your tax residence is often through documents. It's just, it's complicated, as you say. But in talking to people who are doing these programs and to the service providers who see a lot of people coming through and to get a lot of diversity in terms of what motives are I found that number one, it's mobility. And the number one within that is mobility in the present. So visa-free access, improving one's visa-free access is huge. A typical case would be, for example, there was, I think, a Pakistani college graduate high-end engineer who was pretty high up in a. company working in Dubai.
So he's making pretty good money and he has to travel quite a lot in the region. And he doesn't have an issue getting visas. It's just that it's a hassle because he only gets single-entry visas and it takes six weeks to apply for one. So if his boss says you need to be in Paris to negotiate this contract in three days, he can't do it.
And so that sort of thing, mobility in the present is a big one. It's also mobility in the future. So a sort of insurance policy. And you see that a lot of people from authoritarian regimes or even living in a place like Dubai where traditionally you can't retire there. You just don't know what the future holds.
And if you're from Afghanistan, Syria, Iraq, China, or Vietnam, you don't know what the government will do next. And ironically, this is increasingly true of U.S. citizens as well. So there's been a huge increase in. U.S. citizens looking at these options because they don't trust the government, whether they're pro-Trump or anti-Biden and pro-Trump, or whether they think the U. S. did a terrible job with COVID-19, or whether they think it did a great job, but oh my God, they suddenly can't travel to Europe, and so they want to keep that option open. There have been a lot of U.S. citizens, I've been surprised, over the past five years, huge increase in demand from U.S. citizens. The third reason is usually business, or usually lifestyle opportunities.
And that's thinking more broadly about children's education, and children's travel possibilities as well. But a lot of wealthy people are focused on their kids, ironically, I would get that a lot. And I also found cases where it would be only the kids naturalizing that the parents weren't doing it for themselves.
And then finally, there's business stuff. And there might be a little bit of tax like one case that would come up would be that Turkish citizens don't have to pay import taxes to the EU. Turkey, by the way, is the number one program in the world right now. It's doing probably half of all approvals globally.
So the Caribbean traditionally has been very important, but a lot of the overall scene right now is determined by Turkey. But you can become a Turkish citizen and that will lower your import taxes if, for example, you've got an import business into Europe. So there are some things like that which are desirable as well.
But as you say, that final thing of tax, if it were a silver bullet for tax evasion, you would have people in high-tax countries like the EU or like European countries or the U. S. going for this in droves. But the fact of the matter is very wealthy people in those sorts of places can structure themselves. So they lower their taxes enormously in the first place. So that's much less of a motive.
Rasheed: So I want to now ask about, the supply side. We discussed the demand side on the supply side. Now, of course, these are the intermediaries between the government and the client. And these are people that do the work when it comes to the industry.
I'm curious how the intermediaries market to their clients. If you have two Caribbean countries that have similar visa access, and similar prices, how is the distinction made to the client for them to decide where they want to go? Granted, I will assume they're quite indifferent to the particular country.
Kristin: That's a great question. As you rightly say, many people looking at these options probably never knew the different Caribbean countries were countries in the first place until they started looking into them, but what often happens- so it depends on the type of service product the person's working with.
So a very above-the-board service provider will just lay out all the options and oftentimes clients will have done a little bit of research themselves and come in with a couple of ideas and they'll look at what's out there and what fits their profile best. However, this is also a very big industry and there's a lot of money to be made through commissions via these programs.
Some service providers might be a kind of a tie-up with say a real estate developer in a particular country, or they might know that a particular country offers a bonus. Not for every application they bring in, but for every approved application. You know, if the person is good, you know, they're not incentivizing people bringing in bad, bad eggs or whatever, bad apples, that they might push the client towards that option because they'll be making a bit more of a profit off of it.
So that can happen too, as one might be able to find in any kind of business environment, to be honest.
Rasheed: Okay, so just to dive a bit deeper on that, the intermediaries, do they typically work with all options or several options, or do they have some that specialize in, say, "hey, we only work with St. Lucia, we only work with St. Kitts or Turkey, and so on. Is it a large base?"
Kristin: It's all of the above. So if we think globally about the industry, it is massive. In China alone, and it's a little bit complicated to count, there are thousands of companies that will offer these sorts of options, or at least one, on their menu.
You can get some big global firms with footprints in two dozen countries that work with these programs. And then you can get just one person who feeds an applicant into a much larger firm as well. So there is a pretty diverse ecosystem in terms of what that side of the service providers looks like.
You could find a company that will know how to do an application itself for one country, but they may not know what the other countries are looking for. And that can be a real challenge in general because you've got a person with paperwork in a particular language from a particular country that looks in a particular way.
And the bureaucrats in other countries around the world have to be able to assess that. And so what the intermediary does in many cases is effectively broadly define translating paperwork from one country into something that bureaucrats in another country can assess. So some might know how to do the Caribbean countries, but not know how to do Turkey.
And then they get a client who wants to do Turkey. So they'll pass that client to someone else and get a commission referral fee for doing that et cetera. So yeah, everything above is out there.
Rasheed: Does the due diligence work when it comes to the client assessment? So obviously any Caribbean in this case the CBI units are very small, and the people there obviously can't know about every country, every detail, every passport signed. So of course they outsource due diligence to third parties. How do the third parties go about doing due diligence, and then how does the Caribbean government ensure that it was done correctly?
Kristin: Yeah, that's something I found quite interesting when I was getting into this field was this intersection or the interface between the public sector and the private sector. And of course in migration, in policy implementation, you get this all over the place. Even the U.S. for example, uses airlines to help screen people before they enter the U.S. So there's a lot. In terms of migration screening, and there's a lot of private sector, public sector interfacing in different ways in different parts of the world. What's interesting, of course, in the case of the Caribbean is that these are very small countries with limited infrastructural capacity, simply because they're so small.
And that question of due diligence is really important for programs. And that's something that's changed a lot over the years, even in the times since I've been watching them in 2015, it's gotten a lot stronger as places realize there's a lot at stake here and letting through the wrong people can have very negative impacts.
So, for example, Turkey, it's a really big country. It's been doing its due diligence and that's all. So it just uses the screening that it uses for any kind of regular citizenship or immigration applicant. The Caribbean has gone to a more rigorous standard in which some of them asked the service providers to supply their background checks on the client in the first place.
And then the countries charge an extra fee and they hire international due diligence companies that specialize in this. And most of them are doing due diligence for big banks. And so doing background checks for these programs isn't their bread and butter. This is a good thing because it means that they don't want to risk their reputation by letting the wrong people through and then what they do is they'll have a network of individuals on the ground in every country in the world and have that network then do what's called "boots on the ground background check", on the individual.
So they'll check the files, check police reports. Sometimes it's challenging if names are similar. Sometimes it's hard to know with court cases. Sometimes if a country has a corrupt court system, having a court case against you is not necessarily a bad thing. If you're fighting Putin's Russia, it's probably pretty easy to get a court case against you, but it's not necessarily that you're a quote-unquote baddie.
And so they use those companies to do the reports in many cases. Of course, there can be ways in which that can go wrong too. It could be that a government gets a due diligence report from one of these companies that says this person shouldn't go through, but the government decides to approve the person anyway based on whatever information that they're getting or whatever decisions they're making, or whatever is going on in the background. Then there can be a lot of issues around that.
And it could also be that a government decides to use a small focused due diligence company that's only doing that country's CBI program, in which case it's easier to say, "Okay, let this person give us a good report and we'll make it worth your while". So there are ways in which the system can go wrong as well, but I think what's been important, particularly in the Caribbean is that the countries have been doing stronger due diligence and background checks in terms of the fundamental systems, stronger ones than most countries do just in general for a naturalization application.
Tianyu: One question I have is sort of about these broader, more all-encompassing marketing firms that are behind those citizenship-by-investment programs. So I'm thinking about places like CS Global. How do they get partners? What role do they play in this process, uh, in terms of both marketing these programs to agents in other countries and also sort of screening applicants if any?
Kristin: Yeah, in terms of marketing, it is really important. So I think CS Global still has the contracts from three countries in the Caribbean to play a formal marketing role in these programs. And for that, they get paid a proportion of, you know, usually it's the donations going into the government for doing that kind of work. And of course, you know, one can ask questions, is it worth it? Or even how that money gets distributed in the end is another important question I think to ask of those sorts of forms of commissions. But Henley and Partners traditionally have had those sorts of contracts, but it lost them mainly, I can't remember what year, it's been a while now though, and has been doing those sorts of things.
In terms of due diligence now, though, I haven't heard of any of those companies that are focused on, in a sense, marketing or doing applications. There can be a conflict of interest if they're both processing the applications and doing the background checks on them. And that has happened historically, but it's no longer what's going on.
During the time I was doing my research, I didn't come across cases of that. That division of labor has been pretty securely separated is what I got on the ground. Now, that said, my research was on the global industry and this is massive. And we're talking about probably 50, 000 people getting citizenship through these programs each year.
That's not to say that you can't get some cases of this stuff that slide through anyway, basically through grease palms or whatever. But in general, that system has shifted and the due diligence is pretty solid in terms of that, those potential conflicts of interest now. You know, it could always be that I missed something and that there's stuff going behind going on under a table that I wasn't invited to join and go, you know, look at who knows?
But, yeah, I think that that's in terms of the transformations over time. I think that's been a very important one.
Rasheed: So in the Caribbean programs and. Similar dynamics in previously Malta, and Turkey, as you mentioned, why is it that there are so many Chinese applicants, and then at the same time Middle Eastern applicants as well?
Now, in terms of Chinese people, there's the, I guess the obvious reason, they want some counterbalance to CCP policies if it ever goes a bit haywire, that's my assumption. And also the idea that there's a trope in the Caribbean when it comes to discussing the CBI with China. It's that U. S. diplomats are fearing the influence of Chinese people in Caribbean politics and policy. Of course, that probably isn't going to be a problem, and you can probably explain why.
Kristin: Yeah so traditionally in the Caribbean, yeah, a lot of demand has been China and Middle East. Part of the reason for China was historically from the 80s and 90s, it's been a real center for this.
And then in 2001, when China joined the WTO, it made it much easier for all Chinese citizens to get passports. And that also was the emergence of a huge migration industry within China that was pretty well protected. So people know about the options, they're advertised. Of course, China doesn't allow dual citizenship. However, I was struck when I was doing fieldwork in China that still in public venues you can see people doing citizenship by investment programs, even though they're not allowed to have dual citizenship, technically. And of course, China has 20 percent of the world's population and a huge proportion of new wealth. Those are a couple of reasons why there are so many Chinese in the first place.
Of course, as you say, there have been a lot of concerns about sort of China versus the U. S. in treating the Caribbean as their different backyards. If I remember correctly, the CARICOM states have, what, 15 votes in the UN to the extent that the UN matters and these sorts of things, although big countries like the U. S. tend to just do whatever they want anyway. So, I think with a place like China in terms of the Chinese government, again, it's not a lot of money in a small island country. It doesn't take a lot to move the needle for a small island country. And if you get that as yet another ally for something like that, it's not that much.
It's like easy, just why not? Hedge your bets almost. So yeah, the stuff that I was working on was not looking at whatever, spying and back channel stuff and all of that. That's not really what I was focused on in terms of my research. Just my research. I wanted to understand how the market works. What are those broad dynamics?
Yeah, so I wasn't necessarily looking at Chinese foreign policy.
Rasheed: What can you tell us about the beneficial impacts that the market has had on the micro-states in the Caribbean, Vanuatu, or even other places? Of course, they will have a more outsized impact on the micro-states in terms of revenue and economic gains.
Kristin: It's tricky to look in detail at what's going on economically because what you want is fine-grained data, and that's hard, if not impossible, to get in a lot of these cases. But even going with the big numbers, it's striking, especially as you're saying in terms of micro-states like Vanuatu and the Caribbean ones, that these can be huge sources of revenue.
So the way a lot of people working in this industry try to do a rough and ready calculation based on the minimum investment amount or donation amount multiplied by the number of approved applications every year to get an idea of how much money is going into a country. And of course, as I was saying before, with the flow of commissions in the investment migration industry and what goes on in terms of building real estate, et cetera, not all of that is going into the country.
However, everyone wants a floor like, what's the lowest amount that's probably going into the country? One can get that from looking at the government budgets because that's money that the government is reporting that it is getting through these programs and then should be redistributing or using for the government's activities.
And that's still pretty significant. It’s more than 5 percent in a lot of places. It's more than 10 percent in a couple of places. And it's almost, I think in Dominica, the government can get more than 50 percent of its revenue from CBI. It gets more in CBI than it does in all taxes put together. So the government wouldn't be able to function without these programs.
Now what happens to that money is another thing. So if the government has used that money to pay off IMF loans and several Caribbean countries have done that. You're not going to see the benefit within the country, but it does improve the macroeconomic health of it. Using it to pay off commissions to big developers or whatever, you're not going to see it in the country and it's also not going to help the country either, but there are some ways in which these programs have. And I think it would be great to do better, more country-level focused studies on where the revenue is going and how that revenue is being used. And I think this is an important area also for people in the countries to be informed about and to use that to make their own decision about whether they support the programs or not.
If the programs are being used to build an economy and people understand that and are happy with the way that their economies are being developed through it, then that can be a positive thing for the programs. If the programs are not being used to develop economies and the money is being funneled off from the side and people are aware of that, then it can also be a useful thing for people to put pressure on their governments to change.
So I think there's a lot more important work that needs to be done around those, precisely those economic questions, and that can feed back to the programs in important ways.
Rasheed: I have a quote from your book that raises a broader conceptual question I want to ask you about. You wrote in your book that, "The economic story of citizenship by investment, if it's straightforward, is one fraught with the realities of capitalism". What do you mean by that?
Kristin: So the social scientist Branko Milanović has a book that came out a couple of years ago called 'Capitalism Alone', basically arguing that we live in a world of global capitalism.
There are very few places in the world now that aren't capitalist, maybe North Korea, but even China. These sorts of nominally socialist or nominally communist countries have pretty much been integrated into a global capitalist system. And so that's how things work today. And at a very macro global level for capitalism.
So one could look at this, oh yeah, then citizenship comes a product and countries just sell it and then wealthy people with the money can buy it. So one can say, oh yeah, isn't that just how capitalism works and all of that? But that's not even surprising. I don't think that's even all that unique to capitalism.
But I think the intertwining with capitalism is even more fundamental in that for capitalism to work, you need to have a rule of law to protect ownership of private property. And differences between jurisdictions are very functional for it too, because those differences between jurisdictions facilitate profit making.
And that means that we're going to continue to be in a world of states under capitalism. States also get a lot of power and get by embracing populations. You can increase your GDP just by having a high birth rate. One of the reasons why China is the second biggest economy in the world is because it has just a huge population.
So states gain power by having big populations, embracing populations, latching on to people, and getting resources from people too. And so that's that other side, the state-to-nation side of it. And that also brings in the citizenship thing. I don't think we're moving to a world where citizenship is going to disappear or wither away.
If anything, it's becoming increasingly attached to our bodies and read off of our bodies rather than our documents. But I think we'll continue to live in a world in which people get assigned to states and states are defining legal jurisdictions. And that's what works for capitalism. There would have to be some fundamental shift, like, I don't know, something like the nuclear bomb option, something that like is a fundamental rupture for that system to change.
Rasheed: In your research, when you're talking to people that acquire citizenship and therefore passports from other countries, how common was it for them to use the new passport as an arbitrage device to just get another passport? For example, I checked some data with the Turkey golden visa program and I remember I saw a small slither of applications from Saint Kitts.
I don't think these are Saint Kitts, natural-born citizens. They're probably other people buying Saint Kitts and then going to Turkey to do stuff there. How common has been that in your experience? Or is that just like a little blip on the chart?
Kristin: So first of all, if you've got numbers on Turkey, I want to talk because I'm very interested in getting a good overview of the demographics of who's going to Turkey.
But what you're describing in terms of people getting citizenship in one country and using that to get citizenship or in the way I define it also residents in another country, that's what I've termed in prior work that I've done serial investor migrants. And you do get those. I looked at that, for instance, in the case of the UK, and it did look like in the case of the UK's now canceled Golden Visa program that St. Kitts and Dominica were over-represented, in effect. And yeah, you do get cases like that, and that can be for various reasons. It could potentially be nefarious where people are trying to obscure their backgrounds. That's the go-to explanation a lot of people have. A lot of people assume. But it can also be for legitimate reasons as well.
So it could be that if you're a U. S. citizen and you've decided to expatriate and you become a citizen in a Caribbean country, that's your only citizenship, you know? So that's the only one you have to go with. You've become a national. And I did the interview, I can't remember, um, maybe two Americans who had done that.
So if they get residents in the UK, yeah, they're a Kittitian now. That's all they have. Then another reason people could do it that way is a common case I would come across would be Iranians. When I was doing fieldwork in Dubai, it would be Iranians in Dubai. And a lot of them were people who had left Iran after 1979 and been in Dubai for many years.
But because of U. S. sanctions against Iran, and these were the people who left, it's very hard for them to travel, et cetera. So they'll get citizenship in the Caribbean. But of course now, and I can't remember when The last country that changed it, but it's been a while now in the Caribbean, it still has your place of birth on the passport, so it'll still say wherever you were born on that.
So you're not hiding in that sense, but it could easily be that if you're Iranian or Syrian or Afghani or something like that, you use that passport to apply for something else. If you want to put your kids in private schools in London, you might not use the Saint Kitts passport. Now it's of course up to when, I remember when I was first publishing on that, uh, one of the reviewers of my article said, the UK does look at those things.
I didn't run cases by the home office and see, what they do or not. But if they're looking at that person's passport, they should be seeing that place of birth and be able to check whether the person is lying or not. So I think there are definitely cases of that.
People could be doing it for legitimate reasons. People could be doing it for dodgy reasons. But a lot also has to do with how well countries are screening their applicants rather than catching people who are doing it for potentially dodgy backgrounds let's say.
Rasheed: A technical question. In your description of the passport or should I say citizenship industry, I tend to say passport industry quite quickly, the CBI programs. I wonder how you classify it in terms of why you think about it as a product or as an investment. So many times you mention it as a proportion of GDP, as an export, a good investment, sometimes you use that term also interchangeably.
Do you see this citizenship by investment as an investment into the country or is it as like a good or a product, a consumption good?
Kristin: I see it as a phenomenon out there in the world. When I write about it, I sometimes write product. In a way, because actors are acting around it as a product it's easier to write.
So for me as a social scientist, it's a phenomenon that's out there in the world it's probably more of a process than anything else. But it makes for also very tedious writing if you have all those social scientific caveats in every single sentence. So whether it's an investment or whatever, in terms of just writing a sentence, it depends on what is that angle that I'm focusing on now. But for me, it's something out there in the world that I want to understand. Is it a commodity? I don't know. But if people are acting like it is a commodity, then in that case, as I'm analyzing it, that's what it is. Is it an investment? If people are acting like that, in that case, then I go with that angle.
That's just basically how I work as a social scientist.
Rasheed: I assume you're continuing along this research path in some way. If that's the case, what are you looking to do next on this topic?
Kristin: Right now I'm doing work on digital nomad programs, moving away from citizenship and residence to looking at an even more temporary relationship between states and populations in which they try to latch on to these quote-unquote desirable digital nomads, but only for a temporary amount of time and then let go of them again.
So that's where my research is going to next.
Rasheed: I'm very excited to read that. Oh my goodness. Thank you so much, Dr. Surak, for joining us on the podcast today. This has been a very fun conversation.
Kristin: Thanks so much for having me.