Valuable commodity- Dominican passports
Valuable commodity- Dominican passports

For most, a passport denotes citizenship, belonging, certain rights, and residence.

For others, especially the world's wealthy, obtaining a 'stronger' additional passport than the one provided by their country of birth has given rise to an international industry supporting their legal sale. Up to now this has been with the consent of governments around the world that have schemes of their own.

This may be coming to an end.

In recent weeks sanctions resulting from the war in Ukraine, have merged with longer-term concerns about the possible use of such programmes to facilitate organised crime, visa-free movement, and influence.

As a consequence, both the EU and the US are considering legislation which if introduced will penalise Antigua, Dominica, Grenada, St Kitts, and St Lucia if they do not end their Citizenship by Investment (CBI) schemes. Brexit Britain too, having ended its 'golden passport' programme, is conducting a due diligence exercise into the region's CBI programmes.

In the US, a bipartisan 'No Travel for Traffickers Act' was introduced into the US Congress on March 3. If passed it will revoke any country's eligibility for the US Visa Waiver Programme if they offer citizenship by investment schemes. It would also direct the US Administration to cooperate with the UK and with the EU to end Schengen area visa-free travel to Europe for all citizens from countries selling passports.

Those who tabled the bill express concern about accountability, the way CBI schemes may be administered, and in particular their use by Russians. They are also highly critical of the linked practice of offering what they describe as "phony" investments "such as real estate".

On March 9 the European Parliament passed a strongly worded resolution largely critical of Europe's own citizenship and residency programmes. Its text contained robust language unfavourable to third countries selling citizenship and indicated concern about agents. It was highly critical of schemes with low or no residence requirements and weak security checks, that were sold "with the express purpose of facilitating visa-free travel to the Union".

The declaration proposes that the European Commission and Council now develop a proposal for a regulation, introduce other legislative measures if needed, and instruct both bodies to bring "as much pressure as possible" to ensure that third countries that benefit from visa-free travel "abolish their CBI schemes".

How the European Council and Commission decide to act on the recommendations relating to third countries remains to be seen, but the more general language coming from European Commissioners and many member states in relation to the EU's own citizenship programmes does not bode well.

Unsurprisingly, the five OECS governments which depend for significant amounts of their recurrent and investment revenues from CBI programmes have hit back.

Antigua's Prime Minister, Gaston Browne, has said that any loss of access to the EU's Schengen Area would "clearly undermine" the value of CBI programmes. He also indicated that the position taken by both US and EU legislators would create significant economic problems for the Caribbean's CBI countries. In Antigua's case, he said, such programmes accounted for 10-15% of government revenue, a figure rising to 50% elsewhere in the OECS.

Apparently acknowledging that citizenship by investment may have a shelf life, the Antigua Cabinet is reportedly now proposing the creation of a regional or sub-regional regulatory body for OECS citizenship programmes; a regional response to both the US and EU; addressing concerns about compliance and security issues; placing greater emphasis on existing residency investment programmes; and developing an enhanced long-term 'digital nomad' residential scheme.

However, how much notice of lobbying the US or EU will take is unclear, not least because other Caribbean governments publicly or in private object to the idea of selling citizenship, and in some cases have previously been made aware by external agencies of the broader regional security implications.

Speaking recently with characteristic directness, St Vincent's Prime Minister, Ralph Gonsalves, said that the legislative moves in the US and EU confirmed his administration's long-held principled position that sovereignty can never be for sale. Observing that the sub-regions CBI programmes are not sustainable, he said the danger is that if Caribbean nations selling citizenship do not end their programmes by 2025, all Caribbean passport holders from nations with such programmes may find they require a visa to travel to Europe.

If as seems likely the US and EU threat is real, the Caribbean's CBI nations will have to find ways to offset rapidly a potentially significant fall in annual revenue. Although it is not easy to determine how much is at stake - different governments have different reporting methods - a recent East Caribbean Central Bank report indicated that OECS nations received in 2019 some EC$542.9mn (US$184.7mn) from citizenship programmes, noting that Dominica, St Kitts, and more recently Grenada, were significant beneficiaries.

Faced with a world rapidly dividing and adapting to new norms, this would seem to be the moment when CBI nations agree to end the sale of passports and either update or design well-regulated internationally acceptable residency by investment programmes. Such an approach might sit alongside enhanced longer-term CARICOM-compatible 'digital nomad' schemes, offering domestically developed private sector-led facilitation packages involving health care, property rental, education, and routes to philanthropy.

While unlikely to compensate rapidly for the sums citizenship schemes presently generate, such an approach could enable OECS nations to create fresh revenue streams, create a new high-end long-stay market, and find creative ways to attract high net-worth individuals and young professionals able to boost skills deficits.

While many of the roughly 35,000 Caribbean citizenships that academics say have been purchased to date have been for quite legitimate reasons, international concern will not go away about the opaqueness of the identities of those including family members who have in effect become CARICOM citizens with freedom to travel visa-free to many international destinations.

What is clear is that the wide-ranging sanctions on individuals in Russia and Belarus, endorsed by some CARICOM governments and the Dominican Republic, will now drive wider and more serious security-related questions: not just about who has been sold a passport without any residency requirement, but in relation to other offshore arrangements lacking transparency.

(David Jessop is a consultant to the Caribbean Council)