- Joined
- Feb 26, 2019
- Messages
- 12,449
- Points
- 113
The American Elite Are Planning Their Escape — And It Starts With Paying For Passports
Hundreds of Americans are willing to fork over six figures for citizenship in nations where they may have never set foot (just in case).By Molly Redden
Mar 19, 2023, 08:00 AM EDT
Hundreds of Americans are willing to fork over six figures for citizenship in nations where they may have never set foot (just in case).
Of all the promotional emails I’ve received, the one that I got in February from St. Kitts and Nevis is probably the strangest. For a limited time only, it said, this small island nation in the Caribbean could offer me citizenship at a $25,000 discount.
Why I wound up getting an email like this is a minor mystery. I cover wealth, and I find the logistics of being rich extremely amusing. But being able to drop $125,000 on a second passport — which was the sale price — and laughing about it are not the same.
More likely than not, the sender was trying to tap the hottest new market for secondary citizenship: the United States. Henley & Partners, the world’s premier passport brokering company, said that in 2022, more Americans inquired about citizenship by investment — programs that allow people to pay for citizenship instead of gaining it by demonstrating their ties to a country — than in any previous year. Americans were also the leading nationality for submitting applications.
“Americans for the first time ever are becoming the number-one investors in these programs,” said Ezzedeen Soleiman, a managing partner at Latitude, a competitor to Henley & Partners.
The world’s citizenship-by-investment programs receive about 20,000 applications annually, but until recently, comparatively few applicants were American. The vast majority come from countries where there are limited job opportunities or a limited ability to travel without a visa — China, Russia, India, the Middle East and other parts of the Global South.
U.S. passports, by contrast, can open almost any door.
“There’s a citizenship hierarchy out there, in that a lot of the people with privileged passports don’t even realize it,” said Kristin Surak, an associate professor at the London School of Economics and Political Science who studies the citizenship industry.
“You’re getting more and more ‘Armageddon Americans’: Either [President Joe] Biden ‘the communist’ is going to take over America, or the fascists are going to take over.”
- Kristin Surak, an associate professor at the London School of Economics
Then the Covid-19 pandemic arrived, and they realized it. Dozens of countries banned travelers from the U.S. as the nation suffered one of the world’s worst outbreaks. President Donald Trump brought political polarization to a dangerous brink and whipped up a violent riot at the U.S. Capitol.
Inequality skyrocketed, and so did a palpable resentment of the rich. It was the first time many American elites could picture, with a certain clarity, a future in which the U.S. could be an unpredictable place for them. Just as saliently, it was the first time a lot of them couldn’t vacation wherever they wanted.
“Very wealthy people, they’re very, very risk-averse,” Surak said. “They’re kind of paranoid. They have a lot of money, and they’ll do a lot to keep it safe — a second citizenship, a third citizenship, a backup Plan B, a backup Plan C, a backup Plan D. … You’re getting more and more ‘Armageddon Americans’: Either [President Joe] Biden ‘the communist’ is going to take over America, or the fascists are going to take over.”
Suddenly, hundreds of Americans are willing to pay six figures for nominal membership in a nation where they may have never set foot — just in case. At the same time, events like the war in Ukraine and strict COVID-19 lockdowns in China have made it more complicated for the citizenship industry to work with some of its traditional clientele. Companies are eager to cultivate American interest.
Judi Galst, a senior client adviser with Henley & Partners who is based in New York, said most of her American clients are not making an explicit escape plan so much as they are trying to quiet an unsettled voice in the back of their head. For now, it’s about freedom and flexibility, and never losing access to world travel again. It’s about passing on another asset to their children. Some of them were planning to invest in international property anyway — so why not get secondary citizenship as part of the bargain?
I was curious to see the process close-up. A Henley spokesperson gamely connected me to Galst for a mock interview.
Most well-to-do applicants turn to Henley & Partners to handle the application process for them. The concept of citizenship as a commodity, rather than a chance fact of birth, is fairly new and was pioneered by Christian Kälin, Henley’s former chair. Kälin designed St. Kitts and Nevis’ program in 2006, with a fee taken in exchange for every successful application. From there, it was no trouble for Henley to corner the market on wealthy applicants and recruit several more nations, such as Malta, to start Henley-designed, fee-for-citizenship programs of their own.
Emails leaked to the press in 2017 suggested but did not prove that Kälin also sought to influence the politics of countries where Henley has lucrative contracts, a charge he and the company have forcefully denied.
“We were really at the forefront of creating this industry,” Galst said. “We provide a comprehensive A-to-Z solution to make it as easy as possible to get to your desired outcome.”
My meeting with Galst was held over Zoom, but I tried to place her in familiar surroundings nevertheless. I took my Le Labo dupe and my husband’s copy of “Heat 2” off the shelf behind me and replaced them with the kind of books a rich person would lie about having read. I chose a plain outfit that I hoped would scan as old money and telegraph that I had nothing to prove, rather than nothing to wear. Galst was aware that I was a journalist and not actually planning to spend hundreds of thousands of dollars on secondary citizenship, but in the spirit of my character’s flexible concept of membership in a nation, I was prepared to embrace a fiction.
I spun out a story based on how Galst described some of her typical clients. “You’re happy being in the U.S., but you also have been impacted by recent political events,” she said, repeating my story back to me. “And it’s made you start to think about having a Plan B. Should things deteriorate at some point, you want to feel that you have guaranteed ability to go to another location. Correct?”
One of the first things I learned was that hundreds of thousands of dollars would not be nearly enough to get Malta passports. I had introduced myself as a U.S. citizen married to another U.S. citizen, and I upgraded my real dog to a fake human child. Malta would charge a nonrefundable 750,000 euro fee for my application alone, Galst said, plus an additional 50,000 euros each for my spouse and dog-née-child. Henley would tack on its own fees, starting at 95,000 euros, to handle my application. In dollars, all this would cost a minimum of $1 million.
Not only that, but I was obligated to make a 10,000 euro donation to a Maltese cultural organization, and either purchase Maltese real estate worth at least 700,000 euros or take out a five-year lease for at least 16,000 euros annually. I wouldn’t have to live there, but neither could I rent it out.
“OK so I can’t, like, Airbnb it?” I asked. (The apartment that tech billionaire Peter Thiel rented while reportedly pursing Maltese citizenship ended up on the website.)
“Correct,” Galst said.
There were upsides. Modeling myself off of Galst’s real clients, I was seeking somewhere with a standard of living similar to that of the U.S. With a 14-to-16-month processing time, Malta offered the fastest path to European Union citizenship — which would allow me to live in any EU member state — and required no fluency in a second language. Malta would conduct strict due diligence on me from afar, and I would need to show up in person on just a few occasions: once to do biometrics, other times to collect my residency card and take a citizenship oath.
“The U.S. is going to be our home forever, but if something happens…”
I wouldn’t have to live in Malta if I didn’t want to, and most successful applicants don’t. Those leaked emails revealed that in addition to flattering high net worth clients, some Henley employees are glorified supers, tasked with checking in on new citizens’ empty apartments and reporting problems to landlords.
“Bathroom leak is sorted,” read one exchange between a Maltese landlord and a Henley employee. “The usual problem when not used.”
Malta was not my only option, Galst said. The Caribbean nations of St. Kitts and Nevis — whose sale lasts through June — St. Lucia, Dominica, and Antigua and Barbuda all offered citizenship in exchange for donations or business investments as low as $100,000. Their applications process within a matter of months.
Portugal ran an extremely popular residency program at the peak of the pandemic, but it proved too popular and is about to wind down. At the height of travel restrictions on Americans, Galst said, some clients sought a backup to their backup and got a Caribbean passport to use while waiting for their Portuguese residency to come through.
Soleiman, whom Latitude tapped to expand interest in the citizenship industry in the U.S. and North America, has been cultivating a West Coast clientele: celebrities, old families, but chiefly rich people in tech.
“People are starting to realize that this isn’t the America they grew up in. It’s becoming much more hostile,” he said. And the wealthy resent your resentment. “I wouldn’t say people are scared of being attacked. But there are different policy changes that are alienating some types of people,” he said.
Some of Soleiman’s clients are experiencing California’s weather extremes and worrying how the U.S. will respond to climate change, after seeing how badly it handled the pandemic. Their thinking, Soleiman said, goes something like this: “The U.S. is going to be our home forever, but if something happens…”
One drawback Galst flagged is that some countries, such as Malta and Montenegro (whose program ended last year), publicly list the names of new citizens.
Browsing them, I saw an exclusive slice of the U.S. economy. There was Rich Barton, the CEO of real estate platform Zillow, with his wife and kids. There was also Nathan Gettings, a co-founder of Palantir, Thiel’s data surveillance company, and Affirm, the pay-in-four online lender. (A Zillow spokesperson declined my interview request on the Barton’s behalf, and Gettings did not respond.)
There were several stupendously wealthy Wall Street guys, including a Lehman Brothers veteran who went on to found and lose a bunch of money at a hedge fund — who says there are no American second acts? — a Google executive and his former Google executive wife, and the CEO of a car insurance company. Searching their names online often turned up the trappings of conspicuous wealth. One had previously owned a $600,000 vintage Ferrari. Another endowed a scholarship at his son’s Ivy League college.
“People have the sports car, the luxury watches and bags. ... But now the most exclusive item is getting a second passport.”
- Ezzedeen Soleiman, a managing partner at Latitude
Based on Henley’s leaked files, I could also see that John Mackey, the former CEO of supermarket chain Whole Foods, had started the process of getting citizenship in St. Kitts and Nevis by making a luxury real estate investment. It was not clear if he had obtained citizenship, and neither he nor his wife responded to a request for comment.
Other Americans on these lists seemed wealthy but not extraordinarily so. Montenegro recently conferred citizenship on a normal-seeming dentist from San Bernardino, California, and a married couple working at a varicose vein removal center, whose banner ads are still following me around the internet.
This mix came as a surprise. I had expected to find the names of people who are private-jet rich, but not this many people who are merely private-road rich. Soleiman had an explanation: Secondary citizenship is not only a logistical resource but also a luxury item undergoing the normal luxury item life cycle. First it’s aspirational, then it’s attainable.
“It started with the billionaires,” he said, before it trickled down to centimillionaires and decamillionaires. Thiel famously received an exception to New Zealand’s strict citizenship rules after making a $1 million donation to a national charity.
“People have the sports car, the luxury watches and bags. … But now the most exclusive item is getting a second passport,” Soleiman said.
The names of Americans who successfully applied for Maltese citizenship during 2022′s bonanza won’t be public for several more years, so I reached out to some who were naturalized in 2020 and 2021. Everyone who agreed to talk to me did so on the condition of anonymity, having grasped the bad optics of being very rich and appearing to have a backup plan.
“I have nothing to hide. I just don’t want it public,” said one, who obtained Maltese citizenship with her husband, a high-profile former CEO. Another said having dual citizenship could be a “bad look,” given that his company does substantial business with the U.S. government.
Each said that having a second passport wasn’t actually about a backup plan — they all applied several years before the pandemic — but about giving themselves and their children options.
“It just looked like something really fun to do. And why wouldn’t we give our kids the option to live and work in Europe if we could?” said one. “The flexibility it offers is fabulous.”
Another was shopping for a European vacation home anyway when he learned that in some countries, a large real estate purchase is part of the citizenship application process.
“At that time, Trump had just been elected, [and] people were wondering where the country was going, myself included,” he said. “But that wasn’t why we did it. … Things are not great in this country, of course, but they’re not crumbling.”
Soleiman said he has clients on the extreme end of disaster planning, for whom dropping more than $1 million on backup citizenship is just step one. Step two is buying a significant amount of land, enough to support crops and control their own water source. “They go, ‘Why not just have my own little piece of land in this world?’” he said, putting a cheery spin on what sounded a lot like apocalypse planning.
Galst has clients on the other end of the spectrum, for whom secondary citizenship is a major financial investment, she said. Many are retirees or parents looking for affordable college options.
One had a child with expensive medical needs. The client, a doctor, has firsthand experience with the disastrous U.S. health care system and was planning to move somewhere that offers cheap or free care.
On a basic level, these upper-middle-class “strategic relocators,” as they are sometimes called, are reacting to the same set of facts as the 1%: the tattered state of the U.S. safety net, and a fear that the country’s deepening dysfunction, which less privileged Americans have borne for decades, might come to disrupt their lives as well. The difference is, they have a Plan B.
I wondered about this when speaking to Surak, the LSE associate professor. What happens to a fraying country when its most privileged citizens start crafting a backup plan?
“I don’t have a good answer for that,” she said. But in this context, loosening ties to one country, Surak agreed, doesn’t usually mean strengthening ties to another.
“With citizenship by investment, nobody ends up identifying with that second country, really. It’s not so much ‘membership’ in a nation — which opens up interesting questions about, what’s the difference between the two?”
Source:https://www.huffpost.com/entry/backup-passports-secondary-citizenship_n_6414a627e4b0fef15243ec07