As of mid-2013, Cyprus and Antigua and Barbuda are set to join a small but growing list of states that offer naturalized citizenship to aliens on the basis of significant investment in their respective economies. Granting citizenship by investment may appeal to policymakers, particularly in states experiencing financial turmoil, as a means to attract much-needed foreign investment. This paper seeks to critique citizenship by investment policies through the prism of institutional corruption, adopting and applying institutional corruption concepts developed in other fields to this new field of analysis. This paper argues that citizenship by investment policies amount to institutional corruption because they threaten to destroy the value of national citizenship and corrode public trust in citizenship in a way that naturalization on other bases does not. ... granting citizenship by investment is institutionally corrupt because it undermines public trust in citizenship and corrodes its inherent value. While conferring citizenship by investment may bring significant economic benefits to the granting state that trickle down to its existing citizens, it nonetheless amounts to “perfect–” or “imperfect value denigration.” The act of exchanging a higher-value good (citizenship) for a lower value good (money) destroys the value of citizenship and corrodes public trust in that institution in a way that naturalization on other bases does not. It is accordingly an instance of institutional corruption that policymakers should take care to avoid.Johnston argues that
As citizenship marks the formal boundary between those inside and those outside a polity, public trust in citizenship can refer to both citizens’ and outsiders’ trust in the institution. It is difficult to assess citizens’ trust in their own national citizenship, given there is no readily accessible measure by which to gauge the esteem in which citizens of a state hold their citizenship. It is perhaps easier to test international public trust in a given citizenship. A useful, though by no means definitive, measure of this is states’ willingness to grant citizens of another given state visa-free access to their territory. When a state decides to admit a citizen of another state into its territory without a visa, it is arguably signaling that it trusts the integrity of that state’s passport and does not consider its citizens to pose any generalized threat. The willingness to exempt certain national passport holders from the rigors of a visa approval process is therefore a useful proxy for public trust in the national citizenship that passport represents.'The pros and cons of ius pecuniae: investor citizenship in comparative perspective' (EUI Working Paper RSCAS 2012/14) [PDF] by Jelena Dzankic looks
at the economic inclusivity of citizenship regulation and draw parallels between different countries offering naturalisation to investors. The underpinning question of the paper is whether investor citizenship has a merely economic dimension in terms of attracting foreign capital, and whether and when there is also a normative argument for making naturalisation easier for investors. By answering this question, the paper highlights the tension in understanding the logic behind investor citizenship programs. That is, in deciding to naturalise investors, states can either maximize economic utility and grant citizenship to investors by waiving all other naturalisation requirements, or uphold genuine ties with the polity as the core of citizenship by retaining them.
Citizenship denotes the relationship between the individual and the state, including the rights and duties stemming from an individual’s membership in the polity. Citizenship, as such, is a relationship of reciprocity (Held 1991: 20), which has both a political and a normative dimension. The political dimension of citizenship is intimately related to participation, through which individual members of the community exercise their will. The political aspect of citizenship has implications for the nature of the relationship between the individual and the state, as it also entails the individual’s loyalty to the state and his or her identification with the polity. In cases of individuals born into a polity, this loyalty is assumed and exercised through the duties of citizenship (e.g. law abidance, taxation, military duty). Yet, citizenship is exclusionary for those aspiring to become citizens of a polity. This means that gaining membership to a polity entails fulfilling a set of conditions, which are aimed at proving an individual’s commitment to the state he or she aspires to be admitted into. These conditions stem from the normative facet of citizenship and are encapsulated in nationality laws. Naturalisation, or the admission of individuals into the polity, is a prerogative of the state. According to Spiro (2007: 34), naturalisation, albeit used only in exceptional circumstances, has existed in Ancient Rome, whereby citizenship could ‘be conferred on an individual for great acts in the service to the community’. Nowadays, naturalisation conditions are far more regulated, and seek to ensure the establishment of genuine ties between the individual and the polity. They often entail the individual’s physical link with the state (residence), his or her knowledge of the socio-cultural norms of the polity (language and culture tests), moral standing (proof of non-conviction), and financial sustainability (proof of income).
Yet, citizenship by investment can be obtained with or without residence. The investment may grant the individual the right to reside in another state and acquire citizenship subject to residence and other criteria, or it may result in the outright conferral of citizenship. 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 offer premier residence1 to investors, with the assumption 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 many cases the residence requirement is the same as for ordinary naturalisation, but some countries may act on a case-to-case basis and reduce the residence requirement for investors (e.g., Austria, Belgium). By contrast, in some 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: Commonwealth of Dominica and St. Kitts and Nevis. In Europe, Austria and Montenegro also implement investor citizenship programs, but these are loosely regulated and thus more reliant on discretionary power of the state authorities. In none of these countries are prospective applicants bound by residence. Such a conferral of citizenship is based on the assumption that the investment in itself is a sufficient proof of an individual’s commitment to the new polity. Given the degree of discretion that governments have in deciding upon naturalisation on these grounds, citizenship by investment programs have raised numerous contentious questions, including those related to tax evasion, extradition, and corruption.