The 2019 CBI Index: Citizenship by investment - past, present, and future

This year marks the 35th anniversary of citizenship by investment – a concept that was pioneered by the newly-independent St Kitts and Nevis and that became an essential feature of its nation-building process. Indeed, standing apart from all other countries, St Kitts and Nevis adopted a broad view of citizenship, entitling a person to “be registered as a citizen […] if the Cabinet is satisfied that such person has invested substantially in St Christopher and Nevis.”

This notion was included, a year later, in Austria’s 1985 Nationality Act, and was subsequently incorporated in the legislation of a number of countries, ultimately providing the necessary legal basis for citizenship by investment programmes seeking to improve the socio-economic landscape of the nations that implemented them.

Today, citizenship by investment is top-of-mind with respect to the Caribbean, where Antigua and Barbuda, Dominica, Grenada, St Kitts and Nevis, and St Lucia each boast active programmes with dedicated ‘Citizenship by Investment Units’ or ‘Committees.’ 

It is here that the greatest strides have been made towards intergovernmental cooperation and data sharing, particularly with respect to assessing applicants and their source of funds.

In Europe, Bulgaria, Cyprus, and Malta have clear citizenship by investment schemes, while Austria offers a more ambiguous economic route to second citizenship. In January 2019, Bulgaria’s Ministry of Justice announced the Government’s intent to end the nation’s programme, noting that only 50 investors had obtained Bulgarian citizenship and that “real foreign investment and economic development ha[d] not been achieved.” Nonetheless, to date, the Bulgaria Citizenship by Investment Programme remains accessible to investors. 

Cyprus also saw key changes in May 2019, with the introduction of steeper investment requirements and new suitability criteria for applicants. Notably, applicants must now demonstrate they have a valid visa to the Schengen Area and declare any previous failed attempt at obtaining citizenship of an EU member state.

In the Balkans, Montenegro aimed to have a fully functioning programme by October 2018, but instead has yet to process any applications. Moldova was quicker, first announcing its intention to establish a citizenship by investment programme in 2017 and launching it in November 2018. The Moldova Programme, however, was criticised for lack of transparency and improper checks on applicant integrity. In July, with only two applications successfully completed, the Moldovan Parliament voted to place a moratorium on receiving further applications in expectation of the Programme’s abolition.

The Middle East has also provided a noteworthy platform for the citizenship by investment experiment. Turkey, which first unveiled its Programme in 2017, changed it dramatically in September 2018 by reducing minimum investment requirements by half. The result was more than 200 applications in the following five weeks, and 981 approved citizenships by the end of June 2019.

Uptake of Turkish citizenship was perhaps what prompted Egypt’s Parliament, on 7 July 2019, to amend its nationality laws. The amendments entitle applicants to citizenship upon the purchase of public or private property, the creation of an investment project, or the making of a cash deposit. They also envision the establishment of a dedicated ‘Unit’ and a specific timeframe for the processing of applications.

Island-nation Vanuatu, the only provider of citizenship by investment in Oceania, has been unveiling – and terminating – citizenship programmes for years. Two citizenship programmes now coexist in the nation: the Vanuatu Contribution Programme (VCP) and the Development Support Programme (DSP). Until recently, only the former could grant full citizenship rights to applicants, while the latter was limited to offering honorary citizenship with no voting privileges or the right to take part in local politics. 

This changed with the Citizenship (Amendment) Act (No. 34 of 2018), which became effective in January 2019 and established the DSP as a citizenship programme. New regulations dating to April 2019 then harmonised the investment thresholds between the two programmes, making the DSP just as financially attractive as the VCP. The move was welcomed by local agents, who were restricted to marketing the DSP rather than the VCP, whose sole authorised agent is based in Hong Kong.

The changes of this past year once again underline that the citizenship by investment industry is one that is constantly in flux. Whilst interest from applicants is expected to continue in its upward trend, Montenegro’s teething problems, the short-lived Moldovan anomaly, Vanuatu’s many citizenship by investment formulas, and variations in investment thresholds, show that this is not an industry to enter lightly. 2019 and 2020 will be a vital time for new entrants to iron out wrinkles and get their programmes off the ground. 

At the other end of the scale, the Caribbean will likely maintain its dominance, using its lengthy experience to provide certainty and, where necessary, refine processes. 

Changing demand in the Middle East may occur, as Egypt seeks to compete with Turkey and Jordan. 

Finally, we will be monitoring Vanuatu, to see whether it can achieve the interest it seeks with its newly-enlivened DSP.