The Second Passport Edition

Atossa Araxia Abrahamian (AAA) is a longtime friend and WITI contributor. In addition to holding Swiss, Canadian, and Iranian passports, she also wrote an incredibly interesting book about the global passport trade and the state of modern citizenship. Her writing has appeared in The New York Times, New York Magazine, and the London Review of Books. Her previous piece was the excellent Arctic Edition (a WITI first!). With her permission, we are reprinting an edited piece from her excellent Substack, Terra Nullius. Go sign up. - Colin (CJN)

In response to Russia’s invasion of Ukraine, the European Parliament has reinvigorated its years-long attempt to stop EU member states from selling their citizenship and residence rights to wealthy foreigners—this time, to Russians in particular.

Whether they will be able to do this would depend on how financial institutions respond to the sanctions, and whether they treat their dual national clients “as” sanctioned Russians or “as” ordinary people with different citizenship (particularly if the person is, say, Maltese and banking in Malta as a local, with all of a local’s rights). The Russians under sanction are named, and rather well-known people, so it seems hard to get around, but reports like the revelatory Suisse Secrets leak suggest that money is more important to some bankers than even war crimes, so there’s at least a precedent for being skeptical.

Rich Russians (and non-Russians) have long-established lots of ways to have access to their money wherever they go. They already have second and third citizenships. They have already diversified their assets by buying real estate and artworks and cars and boats; often, they’ve even moved their families abroad for good measure. Maybe they hold crypto!

Why is this interesting?

There is nonetheless a clear symbolic and punitive aspect to the anti-second-passport move: everybody knows that a Russian passport is not a particularly great passport to have if you’re a member of the jet-set and want to travel the world visa-free, so a superrich Russian is more likely to try to obtain a second or third citizenship than, say, a millionaire from France or Sweden. Again, it’s probably a good thing to make these peoples’ lives less comfortable, even in the abstract. I support it.

Cutting off the chance to buy a passport in the EU won’t change things much for existing economic citizens. It also won’t prevent other countries that sell citizenship, like St. Kitts or Vanuatu or Antigua, from scooping up what’s left of the Russian market, and doing it real fast. And it won’t cripple the industry behind the sale of citizenship, either. My hunch is that tons of wealthy and wealthy-ish people from states around and close to Russia will be looking to buy another citizenship because they’re so freaked out by what happened in Ukraine, and they want a plan B before it’s too late.

What about the countries doing the selling? The nature of these “citizenship by investment” programs (and their close cousin, residence by investment) is that they come and go and come again. For a while, in the early-to-mid 2010s, Cyprus was the go-to place for Russians; the country gained a reputation for doing everything short of stapling a passport to a millionaire's bank statement once they showed they'd invested more than EUR 2.2 million. Cyprus raised billions through the passport scheme, and subsequent leaks revealed that the majority of applicants between 2017 and 2019 came from China, Russia, and Ukraine.

Anyway, Cyprus was apparently unwilling or unable to keep things clean. They even naturalized 1MDB’s Jho Low. You don’t need fancy due diligence software to figure out he’s up to no good, just Instagram! I imagine their laxity was the result of incompetence, laziness, bribery, and probably some cost-benefit math, but the result is that they ended up shutting down the scheme last year and are no longer in the business.

Still, to my knowledge, Cyprus did not rescind the majority of the passports it issued during the boom years. Why? Because revoking citizenship is really, really, really dicey. It’s literally what the Nazis did to Jews. It’s what Theresa May, in her capacity as Home Secretary, was reamed for wanting to do to ISIS members by the same good liberals who are now agitating for quite the same thing in the Russian context. It’s what Trump tried to do to, er, Miami grandmothers?

Revoking citizenship gets even more complicated when it’s obtained more “legitimately” (whatever that means) than by investing money, which happens too, and which the EU can’t stop. Roman Abramovich is apparently Sephardic enough for Portugal’s inquisition reparations passport. He is also Israeli, because of the country’s right of return law. Is it kosher to take those passports away, even though Abramovich is one of the biggest baddies in Putin’s orbit? Talk about a can of worms! So why should taking away any other passport without due process be OK? Given that a lot of people in the world, particularly those from the upper classes, have avenues of this sort available to them in some form, it’s pretty futile to tell them they can’t buy a Maltese passport anymore. Wealth finds a way.

This is all to say that preventing Russian oligarchs from obtaining second or third passports is a largely ineffective way to hold them accountable or make them uncomfortable and that it could have much broader and unwanted implications for the rest of us down the line. It won’t spell the end of citizenship-by-investment. It may even have the opposite effect.

I want to emphasize again that I think it’s a good thing to make the lives of Putin supporters harder, and I totally understand why European lawmakers would choose to pursue this avenue at this time. It’s politics, and the moment they’ve been waiting for. But take it from someone who’s spent way too much time thinking and reporting on and talking about passport-related politics: this is far too little, far too late. (AAA)

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Thanks for reading,

Noah (NRB) & Colin (CJN) & Atossa (AA

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