IMGW.News has met with Kristin Surak, an Associate Professor of Political Sociology who has spent almost ten years researching Investment Migration. Her studies and publications, particularly the book, ‘The Golden Passport,’ are helping many better understand the field and its economic impact worldwide.
Kristin Surak’s research on elite mobility, international migration, nationalism, and politics has been translated into multiple languages. Her book, ‘The Golden Passport,’ is the first comprehensive on-the-ground investigation of the global market for citizenship. It takes readers from the intricacies of the application process to the geopolitical dynamics that underpin the citizenship industry.
The following is the interview with Kristin Surak, which was led by the IMGW.News Lead and Editor, Ray de Bono.
1. I’m not a fan of the term ‘Golden Passport’. Investment Migration, as a field, is potentially a force for good in a globalised economy; however, while your book provides an empirical, objective analysis of the sector, its title may sound rather sensational – don’t you think?
To be honest, it wasn’t my choice of a book title. It was actually the publishers who came up with it. What’s important for me as an analyst is that, obviously, people are not merely getting passports; they’re getting citizenship. And that shift, I think, is quite significant. It’s not just an identity document, a travel document. It’s about the legal status of citizenship, connecting a person to a state.
However, in the field, everybody talks about golden passports, which is a name that it’s become known by. So, I simply use the standard moniker, while also flagging that passports are different to citizenship.
2. Would the term ‘Investment Migration’ better capture this field?
That’s a term that I often use. As a social scientist, what I do is set up a definition of ‘investment migration’ – namely, what counts as a CBI program and what counts as an RBI program – and then I look at the real world and analyse the cases that fit that definition. And sometimes I look at why some cases don’t fit.
For example, does the case of Tonga selling Protected Persons Passports in the late twentieth century count as CBI? In my books, it doesn’t, but it’s also interesting to look at what makes that different to, say, the program in Turkey today.
3a. Your book discusses the motivations of individuals seeking citizenship through investment. Could you elaborate on these motivations, particularly in regions like the Middle East and Asia? On the same note, what would trigger a US or Israeli citizen to consider a Maltese or St Kitts passport?
When I conducted interviews for my book, four main reasons came up in the conversations I had with investor citizens and intermediaries who interact with investor citizens.
The first driving motive was ‘present mobility’ – easier visa-free access – which, for many people living global lives does become a big issue.
The second main reason was ‘future mobility’. Citizenship in this sense is a ‘Plan B’, an insurance policy; it’s used for risk hedging. You don’t know what’s coming down the road. You want to keep your options open.
Then there were some people who gave lifestyle reasons, such as ‘doing it for the kids’. They wanted to make sure that the next generation had their options open, and that their lives are better than what their parents had to deal with.
The fourth one was business opportunities, which could have to do with things like being able to make certain sorts of investments in countries, being able to make use of FDI provisions or import tax provisions, and that sort of thing.
3b. Where is demand coming from and what are new trends?
The key areas of demand are China, the Middle East, and the post-Soviet space, with rising demand from US citizens.
For US citizens in particular, demand has increased due to a number of factors. Important are the repercussions of COVID-19. Suddenly US citizens were not able to travel as easily as they could before. And some did not trust the government’s response to the pandemic.
Importantly, too, there is increasing mistrust about where the electoral cycle is taking the country next, no matter where one stands on the political spectrum.
Since the US has the largest number of millionaires in the world and the largest number of billionaires in the world, the potential demand pool is huge. Plus the cost of CBI… this is very small change for people with these wealth brackets.
The wealthiest look at Malta. There has been an increase in US citizens who have made a lot of money in tech and want to have the EU continue to be open to them.
And there are some looking at Caribbean options. I think part of that is geographic – they are looking at options that are in the neighborhood. It’s not too far away.
3c. Would you consider the current political situation in the US as a factor?
Absolutely. Some of these investors are very pro-Republican and very anti-Democrat, or very pro-Democrat and very anti-Republican, or just have serious doubts about the government in general.
The hyper-politicisation of US elections over the past few cycles has definitely increased the number of US citizens who are considering these options.
4. What role do geopolitical considerations play in shaping citizenship by investment programs?
I’ve always found the geopolitics side quite interesting because when people think about citizenship, they often see it as the bond between a person and their country. And they think about the benefits that citizenship brings people within countries.
But within this world of citizenship by investment, a lot of the value of citizenship depends on what citizenship gets you outside that country, globally. Much of that is secured through bilateral treaties signed with other countries. That means that external powers such as influential countries or organisations can have a significant influence over the value of another country’s citizenship.
So we do see geopolitics impacting both supply and demand. Affecting supply can be big superpowers pressuring countries that have these as options. And other sorts of shifts can affect demand, whether it’s Russia invading Ukraine, or COVID-19 which had a big impact on people’s calculations.
These uncertainties and changes in power relations greatly affect the way the market works.
5. Could you discuss notable differences between citizenship by investment programs in relatively wealthy countries versus those in less developed ones?
In terms of the programs that are operating today, Malta would be considered one of the wealthiest. Then, you get a lot of middle-income countries such as the Caribbean and Turkey.
Jordan ‘does numbers’, but it doesn’t do nearly the sorts of numbers you would find in places in the Caribbean and Turkey. Egypt does some numbers, but less than others.
What one finds more than the wealth of the country is that the size of the economy matters. So if it’s a very sizable economy like Turkey’s, the overall impact in terms of what it does for the country is very hard to see in the macro numbers. You’ll see local-level effects, especially at the neighbourhood level, regarding particular real estate investments.
But for a very small country, like a microstate with a population of less than a million, you do see very significant macroeconomic effects at the level of GDP, which is quite remarkable.
5b. Do you see Soft Power playing any role when someone decides which Investment Migration program to pursue?
I haven’t seen much discussion about soft power. It hasn’t much emerged. People who are looking at options ask: “What am I going to get for this?”
When people are deciding among those options, they’re being quite instrumental in terms of what’s available, what they can afford, what’s going to be the easiest in terms of the application process, rather than soft power dynamics per se.
Q5b) So, for example, when considering alternative Investment Migration Programs, wouldn’t people check about personal freedoms, human development index, gay rights, freedom of expression, and democratic realities in these countries? Do these qualities play any role when people decide, for example, whether a Russian person moves to Malta rather than Turkey?
People are looking at what citizenship gets them outside of that country. It’s more about the question of ‘Where can I go?’ or ‘What are my options?’ For instance, it’s a very narrow set of possibilities for Russian citizens at the moment.
6. How do you see the future of citizenship by investment evolving, especially with the emergence of new players like Egypt, Jordan or Turkey?
I’ve been struck the slowdown in new programs. There was a big wave of new programs that came up between 2013 and 2019. But over the past four years, no new countries have come on board. There definitely has been a slowdown since COVID.
The European Commission and European Parliament have been quite vocal against the programs and they have been successful in shutting down programs in Montenegro and Moldova.
Outside of that, places in Africa, Southeast Asia, Latin America where there has been some movement toward opening a new program, countries still haven’t gotten on board. And there are a lot of reasons for that, so it’s hard to say what the future looks like.
6b. Assuming the European Union gets its way with limiting Investment Migration programs and fiscal advantages, particularly those offered by some EU states and others (particularly smaller nations), how do you see these faring as a result?
This is an interesting question. What does it take to run a microstate when you have a very, very small population, especially if you’re in an island and you end up having to import everything?
In terms of the economics of running a microstate, it’s an incredibly fascinating challenge that they all have to deal with. And you see very often that they try to carve out niches of one sort or another in order to get by.
7. Your research discusses the returns from citizenship by investment, particularly in less developed countries. Some see CBI contributing well over 5% of their GDPs (some Pacific island states soaring well over 20%). Do you consider this a sustainable trend for such economies? Is there empirical evidence to suggest that CBI programs leave tangible, long-term benefits for the countries offering them?
It all comes down to how they are designed. There are ways to organise a program that are better than others and that can facilitate economic development more effectively than other sorts of program designs.
I think there it’s very important to learn from past mistakes – different things that different programs have done over time that haven’t worked – to understand what needs to be done to make sure that as much of the investment as possible is used to develop the economy in a positive way.
If one reads, for example, the reports from the IMF, they are very concerned about sudden stop effects and what happens if this revenue stream dries up.
A country can decide to have a program or not, but if it’s going to have a program, it really should design it so that it can do the most it can to develop the economy for the good of everybody within the country. For example, a government might require each applicant to contribute a certain amount of money to fund specific public programs. These kinds of things are very much needed.
Governments can also channel the investment into particular areas, which can be a geographic area or an industry or business area that the government wants to develop.
There have been cases where countries have used investment migration to develop social welfare programs. So, it really comes down to how well the government structures the programs in terms of what they can do. If the money is being abused, then it’s a problem because it would be a futile exercise.
8. You mentioned the complexities of citizenship by investment beyond economic considerations. Could you delve into some of these complexities, especially concerning social and political dynamics?
I went to six different countries with programs while researching the book, and I found that there was a huge range of opinions about the programs, depending on the country and the particular situation.
In the case of Citizenship by Investment, people are searching for membership in the state, not membership in the nation. So, that identity side is very light.
One of the things that I found interesting is that most of the programs are in countries that have very lively democracies, where there is a change over in political parties pretty regularly. Turkey is the most notable exception, but if you look at the other countries with active programs, there tends to be a turnover in power.
Sometimes, it becomes an election issue; sometimes, it doesn’t. But if it does, the opposition party usually says: “we’re going to shut it down”. However, if they get into power, they pretty much never do, in part because they realize how economically important it can be for these countries. That’s been very true in the Caribbean, but it also holds to some degree in other places too.
8b. I note the distinction you’ve drawn between nation-states and individuals who seek citizenship solely to enjoy the benefits it offers…
In the vast majority of cases, the investment is a one-off transaction.
But you do on occasion get people who buy a house, spend some time there, and create more of a physical presence in or connection to the place as well. Turkey, for example, has more people developing such a footprint.
There can be instances of people shifting into mid-shoring activities and making more use of the financial sector in a country as well.
8c. Italy is also a newcomer in the sector.
Italy has a non-dom tax regime and golden visa program, so it’s not citizenship; it’s residence. But yes, like many of the Mediterranean countries in the European Union, it has a Residence by Investment program.
9. What are some of the criticisms or ethical concerns around citizenship by investment that you encountered during your research?
I’m a sociologist. I’m interested in how the market works. There are a number of academics who are normative political theorists, and they are more interested in the moral question of whether citizenship should be sold or not.
As a sociologist, I’m not trying to impose my own moral stance onto the world; I’m trying to look at how people navigate that space.
For example, there has been a lot of good sociological work on life insurance. If you look at the life insurance market in the US in the 19th century, it was very difficult to get it going in the first place because people would ask: “How can you put a price on life?” But now, life insurance isn’t controversial at all; there’s a very flourishing market around it.
So as a sociologist, I find that intersection between markets and morals quite interesting to study. It’s something I want to research rather than impose my own moral arguments onto.
10. There is a contrast between the affluent people seeking greener pastures via RBI, CBI programs, often arriving in private jets and chauffeured around, and the hundreds of hapless migrants desperately crossing the Mediterranean on rickety boats seeking a future in Europe. How do you perceive the relationship between Citizenship by Investment and broader discussions around global inequality and mobility?
In thinking about these issues, one of the first things to remember is that border or migration control or border control policies are usually incoherent. They’re a patchwork of various policies.
So some people talk see it trade-off between ‘letting the rich in while you keeping the refugees out’, for example. But in practice, there really isn’t a tradeoff.
The country that has the largest number of approvals for citizenship by investment, namely Turkey, is also the number one host of refugees in the world. And it has been paid nine billion euros by the European Union to house now more than three million refugees and keep them from entering the EU. The main point is that all countries screen at the border and in most cases, money matters.
If you look at why there’s demand for CBI, it’s clear that an important driver is the intersection of both inequality between countries and inequality within countries.
Obviously, you have to have substantial liquid assets in order to apply for Citizenship by Investment, or to even be able to think about it. But then there’s also great inequalities between countries in terms of what citizenship gets you in a globalized world and what you can do with it. It’s a sticky status. You don’t leave it behind when you move globally, it follows you.
And the inequality between countries in terms of what citizenship gets you, is very challenging for the globally active elite, especially if they were born lower down on the hierarchy of citizenships.
11. After your extensive research work, which areas of study would you recommend that academia pursue to help develop the sector further in addition to what you’ve done?
To be honest, I don’t know about developing the sector. As a social scientist, I’m interested in understanding how the world works. I’m more interested in observing where the sector goes and following that.
12. I understand that you have no crystal ball, of course, but where do you see the Investment Migration going in the next five to ten years?
I think it will continue to grow. One thing we’ll see is changes to Residence by Investment programs and what they offer at different stages. We’ll probably see more residence-by-investment programs that turn into, effectively, Citizenship-by-investment programs – a two-step process.
Regarding Residence by Investment programs, the rise of golden visas in the Gulf States is a very big, very important trend. Obviously what a golden visa means in this case is something different, because the whole system of migration as well as citizenship in those countries looks very different than what it does in, say, Europe or North America or Latin America. But within that space, golden visa options are now proliferating. The UAE is now the global leader in golden visa issuances.
And so, I think that if one is really thinking globally, that’s where one has to start looking to follow the key trends
Looking back, it’s been fantastically fun research. How often do you get to go to Vanuatu? People always ask, how did you get such a great research project? I just say that it’s been really, really amazing to watch the developments over the past ten years.