Selling passports is lucrative for government. It would seem to be illegal but it isn’t. Rich people have always been able to buy protection for themselves, and that includes the protection that passports offer. If you have a passport of one country, it is difficult for an entity of another country to come after you.
Hiding in embassies is one version of this political protection that has become popular in recent times. However, this has proved to be substituting one prison for another, albeit a more comfortable one.
Islands in the Caribbean have been selling citizenships for many years, as a way of attracting investment and adding to their coffers. Citizenship comes with a passport, and thus it provides some protection for those seeking to escape prosecution and taxes.
Recently, as a result hard economic times, exacerbated by the COVID19 pandemic, more and more small countries have seen this practice of selling citizenship as a way of subsidizing their economies.
Good for them, you may say. That shows ingenuity, entrepreneurial prowess and clever thinking. However, this latest rash of such entrepreneurial nations includes Cyprus, and that has produced some unexpected consequences that aren’t so benign and laudatory. Cyprus is part of the European Union and that means, if you have a Cypriot/European Union passport you have free access to live anywhere inside the European Union.
Cyprus charges $2.6 million for citizenship and Malta charges $1 million – a profitable business. Cyprus made $8.3 billion from their scheme over the past seven years.
Authorities, in general, have tended to keep a benign eye on people they want who have absconded to another jurisdiction, if those people are confined to a small lump of rock. The thinking has been that they would leave at some point and they could be picked up then – cheaper and easier than chasing them through foreign governments. However, if “wanted” people can disappear anywhere in Europe, that is another matter altogether. Suddenly, what had become an almost acceptable fact-of-life, isn’t funny anymore. How do you find someone, somewhere in twenty-seven countries?
The larger European countries may try to correct this anomaly but some of them use the loophole themselves, so they may not be so keen to change things. Spain allows descendants of Sephardic Jews who were kicked out of the country in the fifteenth century to claim current Spanish Citizenship – descendants of Muslims, who were kicked out at the same time have no such luck. There is also the problem of Irish who have emigrated abroad. The estimate of people living in Britain who would be eligible for Irish citizenship is six million and, with Brexit separating the U.K. from Europe, that is a potentially huge problem, should they all decide to claim their birth-right. There are many more examples including government using the system for political ends.
The problem is far bigger than a few crooks moving to small islands! Selling passports is lucrative for many small countries.