Warum Es Legitim Ist, Bürgerrechte Als Anerkennung Für Investitionen Zu Verleihen

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Why It Is Legitimate to Give Citizenship as a Recognition of Investment 

Civil rights are granted by various states in recognition of investment. That is not disreputable, but welcome in terms of a balanced migration policy.

In the title of his article It is illegitimate to sell citizenship to the rich (NZZ 23. 2. 19, print edition), Prof. Daniel Thürer already uses a rather misleading cliché: civil rights cannot be sold. On the other hand, civil rights can be granted by autonomous states for various reasons, and increasingly, states are making use of transparent investment migration programs to attract affluent, skilled, and worthy individuals. This not only provides investors with an obvious benefit in terms of greater mobility and personal security, but also offers enormous benefits for states seeking to attract necessary foreign investment. Both sides of the equation are increasingly important in a volatile, globalized world.

Theory of genuine links

With regard to naturalization, the theory that a candidate citizen must have “genuine links” to their adopted country goes back to the Nottebohm decision of the International Court of Justice of 1955. However, this decision has been controversial since the beginning, and at no time have “genuine links” become established in international law as a rule.

This theory, therefore, has a limited lawful utility — including in the European Court of Justice — and is confined to usage in citizenship claims made by dual citizens. In reality, globalization has made “genuine links” an almost completely redundant consideration, because states increasingly bestow citizenship to people with no “links”, for example only because of the citizenship status of a distant relative.

In contemporary international law, it is undisputed that states are free to determine precisely who can become a citizen or who can be granted residence rights, according to whatever criteria they deem to be important. Every country has the right to decide this for itself — even within the European Union.

Careful examination

Without doubt, for investment migration to be successful, the credibility and financial performance of applicants must be critically interrogated. Naturally, there will be unsavory characters who attempt to apply for such programs, and this is precisely why strict due diligence is a sine qua non of the industry. With this understood, is it not sensible to welcome well-educated entrepreneurs and investors to countries that can benefit from their capital, networks, and expertise? If there is a case for further scrutiny in the citizenship acquisition space, is it not the case that this should pertain to the many more people burdening social institutions through other more common forms of naturalization? Why should states not wish to grant simplified residence rights to those who make significant contributions to the community, especially when those individuals are significantly better vetted than other citizenship candidates? Is not a migration policy that is more balanced in this sense, not to be welcomed?

Transparent residence and citizenship programs, where applicants are properly scrutinized, allow for inbound foreign investment that does not increase the debt or tax burden of the host nation. This capital can be used directly to support important infrastructure projects, social development programs, and other forms of domestic growth. This ability to increase the ‘sovereign equity’ of a state by expanding the number of citizens actively contributing to its assets, reduces inequality within and between nations. Improved sovereign equity strengthens national economic growth without incurring increased government debt. By this mechanism, the growing imbalances inherent in traditional government debt financing are effectively cushioned by the settlement or naturalization of high-net-worth investors. This is as relevant for rich developed countries as it is for countries that are not.

In 2009, for example, Malta's economy was as badly hit as the economies of the rest of Europe. A few years after the introduction of Malta’s 2014 Individual Investor citizenship-by-investment program, however, it now has one of the highest growth rates in the EU. Malta is currently the most economically successful EU state in almost every respect — and has a budget surplus for the first time in decades. To date, Malta has earned nearly EUR 1 billion in direct revenues and investment, with another EUR 1 billion in the pipeline. Such achievements are unthinkable with traditional forms of economic development, and are testament to the transformative powers of residence- and citizenship-by-investment.