By EUDO CITIZENSHIP expert Oxana Shevel

On 3 February 2012 the Ukrainian Cabinet of Ministers submitted legislative amendments to the national parliament which, if approved by the legislature, will introduce monetary fines for possession of multiple citizenships and will otherwise make Ukraine’s opposition to dual/multiple citizenship more stringent. Amendments to Article 197 of the Ukrainian Code on Administrative Violations will make ordinary citizens of Ukraine who obtained foreign citizenship and failed to inform Ukrainian authorities of this fact within six months subject to a fine 10 to 30 times the amount of tax-free minimum earnings. For the same offence, state officials will be subject to a fine 30 to 50 times the amount of tax-free minimum earnings.

Proposed amendments also tighten the requirement to relinquish prior citizenship upon acquisition of Ukrainian citizenship. In particular, high cost of foreign citizenship renunciation will no longer be a legally acceptable reason not to renounce foreign citizenship (proposed amendment to Article 1 of the citizenship law). Under the current law, if the cost of foreign citizenship renunciation exceeds one half of the amount of minimum wage in Ukraine at the time the Ukrainian citizenship was acquired, the affected person does not need to produce documentary proof of relinquishing prior citizenship. Additionally, the proposed amendments state that foreigners who acquire Ukrainian citizenship will have three months to return their foreign passports to the authorities of the country of prior citizenship, and within another month thereafter must show to the Ukrainian authorities a documentary proof that the passport was returned (proposed amendments to Article 8 of the citizenship law). Current citizenship law states that the passport must be returned, but neither requires any proof to this effect nor sets a deadline. If the passport was not returned and proof was not submitted within the stipulated deadline, Ukrainian citizenship will be withdrawn (proposed amendments to Articles 8 and 9 of the citizenship law). The anti-dual/multiple citizenship bend of the proposed amendments is also evident in the proposed change to Article 2 of the citizenship law that defines the principles of Ukrainian legislation on the issue of citizenship. In particular, “avoidance of multiple citizenship” is added to the list of principles underlying Ukrainian citizenship legislation.

At the same time, the government draft slightly softened but simultaneously formalised the language requirement (proposed amendments to Article 9 of the citizenship law). The amendments exempt persons who reached retirement age from fulfilling the knowledge of the state language requirement contained in the citizenship law. The amendments at the same time stipulate that the necessary level of language knowledge, language instructions, the procedure for determining sufficient competency in state language, and documentary proof of such a competency are to be determined by the Cabinet of Ministers. The law currently in force states only that applicants for Ukrainian citizenship need to “know the state language or understand it to the extent sufficient for communication,” without specifying how the level of one’s linguistic competence is to be ascertained or documented.

News article on the topic: “Fines for dual citizenship are planned” Ukrainska Pravda, 3 February 2012 (in Ukrainian).

Draft amendments and supporting documents submitted by the Cabinet of Ministers to the Ukrainian parliament: Draft law No. 9728-1 from 1 February 2012 “On introducing changes to certain legislative acts of Ukraine on citizenship” (in Ukrainian).

In December 2011 the Norwegian majority government delivered a law proposition on revisions and changes to the Norwegian Citizenship Law. The background of the proposition is an aim of the government to clarify the language of certain paragraphs, streamline certain conditions for attaining nationality, and harmonize the language of the Citizenship Law with the recent revision of the Foreigner Law on access and residence for non-citizens. The government did not propose any changes to the main principles of the Citizenship Law such as citizenship acquisition through ius sanguinis, prohibition of dual nationality, and a residence requirement of seven years.

Concretely the proposition aims, for instance, to clarify which identity papers are required for naturalisation applications; to streamline time of suspension for applicants with a criminal record (all prison penalty to be fully served); to allow applications also from persons who have not had residence permits exceeding one year; to make it easier to reapply for citizenship for previous citizens below the age of majority; to open the law for naturalisation of children under the age of two with no residence requirements (in cases where one parent is a Norwegian citizen); to treat applicants who applied as minors as that and not as adults if they turn 18 during the processing of the application; and to replace the formula that naturalisation can be denied in cases involving the ‘security of the realm’ with a reference to ‘basic national interests’.

The proposition was debated in the Standing Committee on Municipalities and Public Service and passed through without revisions. The majority of the committee especially cited the revisions to rules on acquisition of citizenship for children as important for Norwegian citizenship politics; granting children born and belonging in Norway citizenship is, according to the committee, important both for the children and Norwegian society.

The proposition is scheduled for debate in the Storting Plenary on March 19, 2012.

Just the other day I was watching the hit musical ‘Mamma Mia’, and I was reminded of the lines of one of the leading songs ‘Money, money, money… always sunny, in the rich men’s world’. The song itself refers the lavish lifestyle that money can provide one with. Yet, literally, money can take a rich man to a sunnier place. The Caribbean islands of Saint Christopher and Nevis. Or Dominica. Or the brand new South-east European state of Montenegro. And no, I am not referring to holidays.

What, then?

Citizenship.

In fact, a number of countries facilitate the naturalisation of wealthy individuals who invest in their economy. This practice is called ‘investor citizenship’, ‘citizenship by investment’, or ‘economic citizenship’. Investor citizenship can be obtained either at the authorities’ discretion, or through specific programs which lay out in detail the amount of the investment and other criteria for naturalisation. In addition, citizenship by investment can be acquired with or without residence. The former is a common practice, adopted by a number of countries worldwide including the United Kingdom, the United States, Canada, Belgium, Australia, and Singapore. These countries assume that the investment will yield significant economic benefits to their country, while also creating strong links between the individual seeking to be naturalised and the state through mandatory residence. In other countries, the investment may confer citizenship upon an individual regardless of other naturalisation criteria. Although many countries have given the state authorities the discretion to naturalise individuals on grounds of cultural, economic, or other achievements, only two countries have developed detailed investor citizenship programs: the Commonwealth of Dominica and Saint Kitts and Nevis. In Europe, Austria and Montenegro, also implement investor citizenship programs, but these are loosely regulated and thus more reliant on the discretionary power of the state. Since states often do not wish to reveal the names of those who became their citizens through investment, these programs have raised numerous contentious questions, including tax evasion, extradition, and/or corruption

Countries sometimes require the investor to live there…

Contrary to ordinary naturalisation, citizenship by investment may or may not require the applicant to reside in the country prior to naturalisation. Obligatory residence is beneficial for the country because the investor pays taxes, and also helps to improve the state’s economy by creating additional jobs, or increasing the consumption of goods. Therefore, in countries where the investor is required to reside prior to naturalisation, the money merely facilitates the fulfilment of one of the conditions for the acquisition of citizenship. The applicant needs to undergo the standard (or slightly facilitated) naturalisation procedure, which includes criteria such as the knowledge of the language and customs of the country. Countries with restrictive dual citizenship regimes (e.g. Austria, Montenegro and Singapore), require the applicant to relinquish their citizenship of origin in order to be naturalised.
A number of countries in the world (including Canada, Belgium, and the United States) offer premier residence based on investment. Premier residence means that the investment gives the person the right to reside in the territory of the state where he or she invests. Different countries require different amounts of investment, while some also have rules on what investment should be made and what its effect on the economy should be. Panama, Canada and Switzerland require the investor to create several jobs for the nationals of those countries in order to obtain permanent residence status. Other countries require a certain amount of tax revenue from the investment as a condition for premier residence. The United States, the United Kingdom, Panama, and Hong Kong target the investment towards specific industries, while Canada also requires the investment to be maintained for 5 years. Notably, Austria, which runs a separate citizenship-by-investment program, also has a premier residence program. The difference is that the former is based on a multimillion investment and the discretionary decision of the Austrian authorities to grant citizenship irrespective of other criteria, while the latter requires the investor (who invests a lower amount of funds) to reside in Austria for a specified number of years.

But that’s not always the case

Most of the countries in the world have provisions that facilitate naturalisation for foreign nationals, on grounds of their exceptional contribution to the country’s society, economy, sports, or culture. This type of naturalisation is included in citizenship laws and exercised at the discretion of the state. If the state decides to naturalise a foreign individual on grounds of its national interest, it usually waives other naturalisation criteria, including residence, knowledge of the country’s language, culture, etc. In addition, the person is not required to give up their citizenship of origin.  In principle, the state seeks to reward those individuals who have de facto made a significant contribution to it. However,  this type of facilitated naturalisation is rarely used because the applicant’s achievements should indeed be ‘exceptional’ to enable him or her to become a citizen of a given country.

So, where exactly can money buy citizenship?

In the Caribbean islands of Saint Kitts and Nevis and Dominica, but also in European states such as Austria and Montenegro.
    Saint Kitts and Nevis, a federation of two islands in the West Indies, runs the oldest program for granting citizenship on grounds of investment. The program was established in 1984. The islands’ weak economy was the main rationale for establishing investor citizenship, which can be obtained either  the real-estate option or the Sugar Industry Diversification Foundation (SIDF) option. The real estate option means that the applicants have to purchase real estate in Saint Kitts and Nevis, for a minimum of 350,000.00 USD. The real estate needs to be selected from a list of pre-approved property, it may not be resold until five years after purchase, and it does not qualify subsequent buyers for citizenship. This prevents the abuse of the property for naturalisation purposes. The second investor citizenship option - SIDF – was introduced in 2006, as a consequence of the closure of Saint Kitts and Nevis’s sugar industry the previous year. SIDF is a charity which helps the transition of sugar workers to other industries. This option qualifies the applicant(s) for naturalisation after a lump sum donation that ranges from 200,000 to 400,000 USD, depending on the number of applicants.
    The second oldest investor citizenship program was established in the Commonwealth of Dominica in 1993. The amount of investment ranges from 75,000 to 100,000 USD. Dominica does not have specific programs targeted by this investment. Rather, the government has discretionary powers in allocating the funds to public projects (e.g. schools, hospitals etc.) or to private sector projects dealing with agriculture, tourism or information technology. While such a policy allows Dominica to tackle immediate economic concerns such as poor agricultural performance in a given year, it lacks the consistency of a long-term program aimed at economic recovery.
Investor citizenship programs in Europe are far more discretionary than those in the Caribbean islands. Some regulation of the nature and amount of investment exists, but the programs are not as openly enshrined in laws as in the West Indies. At present, Austria and Montenegro offer citizenship to investors through vaguely defined programs. Interestingly, the citizenship regimes of both Austria and Montenegro are rather restrictive. Both countries pose high residence requirements (10 years); neither allows dual citizenship in cases of ordinary naturalisation. In cases of investor citizenship, not only are the language and other requirements waived, but also the residence criterion and the obligation of the investor to relinquish his or her other passport.
Pursuant to article 10(6) of the Constitution of Austria, an individual may be granted admission into Austrian citizenship at the discretion of authorities, whereby the common good, public interest and public wealth are taken into account, along with an overall assessment of the applicant’s character. The applicant needs to prove exceptional achievements in the special interests of Austria. However, there is no derived legislation regulating the exact amount or type of investment, and other criteria, as is the case in the Caribbean islands.
The second European (yet non-EU) country that grants investor citizenship is Montenegro. Article 12 of the 2008 Montenegrin Citizenship Act regulates admission to Montenegrin citizenship on grounds of scientific, economic, cultural, economic, sporting, national or other reasons. The final decision to grant the Montenegrin citizenship by investment is a discretionary power of the authorities. In June 2010, the government of Montenegro adopted a decision which laid out in more detail the conditions for the acquisition of citizenship on grounds of scientific, cultural, economic, or sporting interest to Montenegro. It also established ‘citizenship-by-investment’, available to individuals who have invested in Montenegro’s economy, or donated funds to Montenegro. Following the scrutiny of an independent consultancy agency and a recommendation from the Ministry of Finance, individuals who invest €500,000 in Montenegro will qualify for ‘citizenship-by-investment’. The Montenegrin investor program has been criticised by a member of the German coalition government – Christian Social Union – which also pointed to the possibility of reintroduction of visas for the tiny Balkan state should it continue its program. This led to Montenegro’s investor citizenship program being put on hold, as some subsidiary legislation has been forwarded to the relevant EU institutions for their scrutiny.

Not all that smooth…

The European countries’ great margin of discretion allows them to naturalise investors whose economic contribution perhaps exceeds the benefits the state would have from either a targeted investment or a donation to the state. However, this can led to controversy, as has been the case in both Austria and Montenegro.
The affair in Austria involved a Carinthian Freedom Party (FPK) politician Uwe Scheuch, who allegedly promised to facilitate the granting of Austrian citizenship to a Russian investor in return for a five million Euros investment in Carinthia and a 5 to 10 per cent donation of this amount to the FPK. This case sparked a parliamentary inquiry by the Green Party in January 2010 about facilitated naturalisation in the country. In response to questions about why the ‘guidelines’ were kept secret from the public and why the policy of investor citizenship has not been adopted in the form of a legal text, the Ministry of Interior noted that the federal government requires the ministries to issue recommendations on individual cases. In order to reach such decisions, the different ministries have developed their own internal ‘criteria’, which are not binding, but help to assess each individual case objectively and ensure continuity in decision-making. Following a court case, the affair resulted in a prison sentence of 18 months for Scheuch (12 months suspended). The case is currently under appeal before a higher court, and the decision is expected this year.
The affair in Montenegro also involved the granting of citizenship on grounds of investment through discretionary power. In the first half of 2009, the Montenegrin press revealed that Taksin Shinawatra— the former Prime Minister of Thailand who has been convicted of corruption —received a Montenegrin passport (and thus Montenegrin citizenship) on the basis of his planned investment in Montenegrin tourism. Despite repeated attempts by civil society organisations, the Ministry of Interior refused to reveal the details of this issue, referring to the Law on the Protection of Personal Data. Eventually, the Montenegrin authorities revealed that Shinawatra was naturalised on grounds of his multi-million investment in Montenegrin tourism. Apart from generating allegations of corruption, the Shinawatra affair actually pushed the Montenegrin government to adopt the rules for investment-based naturalisation. Due to negative reactions in the EU these rules are yet to be implemented, which still leaves the discretion in the hands of the Montenegrin authorities.

Citizenship as just another commodity?

Investor citizenship is an issue that can help us to understand the rights and duties of citizenship in the era of globalisation. While states seek individuals that will maximize their wealth, investors aspire to membership in those states whose domestic policies best matches their preferences (e.g. low taxes, welfare provisions, etc.). Simplified in this way, the practice of investor citizenship appears to yield benefits for both states and individuals. However, it raises two important moral questions. Should citizenship be a commodity that can be exchanged for money, instead of a status reflecting genuine ties? Should different criteria for naturalisation be applied to wealthy investors, which would then get preferential treatment on grounds of class rather than merit? What kind of citizen buys citizenship? And conversely, what kind of state sells its citizenship?
Moreover, the discretion in the granting of investor citizenship has caused political controversies in a number of countries. Corruption and secret deals, which have manifestly happened in cases of investor citizenship, also imply that political power and influence can be exchanged for money. This fact, however, does not imply that naturalising the investor will affect political power by virtue of a single individual’s participation in the polity’s operation. Rather, the marginal influence of a single vote at the elections will be outweighed by the much stronger concern about the corruption of those who have had the discretionary power to decide on the admission of such an individual.

    Hence, a lot of questions and controversies surround investment-based naturalisation schemes. Ius pecuniae – the right of money - remains a delicate and contested aspect of contemporary citizenship.

 

This text was first published on citsee.eu.

 

On the same subject, you can read this article in Reuters.