Passports odds & ends

The EU prevails against Malta, and the emergence of a new expatriate class

I got back on the passport beat recently for a story about how Americans have been buying more citizenships and residence permits than any other nationality. This was completely inconceivable a decade ago, when a U.S passport was considered among the safest and best in the world. 

I won’t rehash the whole thing—here’s a gift link for the Atlantic article—but there’s been some big news since it came out: the European Court of Justice ruled that Malta’s “golden passport” sales were illegal. This judgment came as a surprise, as the court’s advocate had previously advised the European Commission last year to back off.

The judgment is both a big deal and a small deal. Small because Malta only sells a few hundred passports a year and is presently the only European country to do so outright. Also small because there are conceivable ways to keep the racket going: from what I understand thus far, the court’s objection hinges on the lack of real-life ties the applicants have to Malta. There’s a clear scenario in which the ultra-rich can still have pathways to obtaining EU passports by investment (as they do in Portugal and other states) while Malta is “brought in line”, as it intends to. The applicants just have to move their asses, not just their assets—which for them is, well, a pain in the ass.

Still, let’s not downplay things. The case is a shock to the industry (I’m hearing reports of some VERY spicy group chats!) and potentially a turning point in the way we collectively think about citizenship moving forward. The past couple of decades have tested the limits of citizenship as an institution: who can have it, for what reason, in what circumstances, and even for how much money. It looked as though passports were taking on features of flags of convenience, but how brazenly they could be commercialized was a point of contention.

Now, it appears the limit, in Europe at least, has been reached. The historian Patrick Weil, who’s been a critic of these programs for over a decade and was consulted for the lawsuit, texted me this morning celebrating the judgment as a victory. He said: “the court declared that certain fundamental right cannot be commercialized. That is remarkable.”

The Commission put out a statement, too. “European citizenship is not for sale,” its spokesperson said. “Investor citizenship schemes breach EU law and as such should be abolished by all member states.” I bet they’re popping the champagne: the EC has wanted this for a very long time!

Zooming out, the case suggests the EU court believes the bloc gets to have some say in the naturalization policies of individual member states, and can mandate a legit “genuine link” to the country like real residency, rather than, say, a golf club membership and an empty rental unit. This is controversial: states don’t like being told what to do (remember Brexit?).

Henley & Partners, a big player in the industry, has put out a note criticizing it as "EU encroachment on national competence” and an attack on the sovereignty of individual states. If Malta can’t choose its citizens, the reasoning goes, is it even a sovereign state?

Interestingly—and paradoxically—if other countries tighten the screws on investor citizenship or do away with it entirely, political commentators will invariably take these moves as a symptom of “de-globalization” and a return to strong national borders et cetera—even though that’s the opposite of the supranational overreach the EU is being accused of. Here, the EU (a broadly “globalizing” entity) is pushing states to get in line with its idea of what European citizenship is, and in doing so, somehow hardening their borders, making them less “global”.

So which is it? Neither? Both? We are faced yet again with the logical conundrum at the heart of state sovereignty, which can take the form of both absolute autarky and an enthusiastic repudiation thereof; joining treaties and leaving them.

I’ve said before that for the purposes of understanding the world, “sovereignty” is not a very useful concept because everyone just takes it to mean what they want, especially these days (I had a brief fantasy of never using the S-word in my last book..) If you truly want to go down this rabbithole, here’s a lecture by Martti Koskenniemi that helped me makes sense of this by framing it as a problem of logic.

After my Atlantic story came out, I heard from a bunch of people sharing more stories of plan B passports and expatriation. I don’t know that their (or their clients’) plans will necessarily be affected by the EU news, unless the Malta judgment is a sign of bigger things to come. I thought they were pretty interesting, so here are some of their observations:

1. The clientele for second passports is diverse

… in a DEI way. I’m only half kidding. A couple of citizenship consultants reported that they has multiple same-sex couples and transgender clients who feared for their future in the U.S and who were making moves to secure an exit strategy. Another expert told me that well-off Black Americans are considering buying Caribbean passports because of the decline of US civil rights. If you read the news, none of this should be particularly surprising. 

2. Relocation tours are gaining momentum

In the Netherlands, Panama, Costa Rica and Mexico, tour groups are catering to people looking for new homes abroad. There are specialized ones for Black expats in Panama (I heard from a local sea captain that the community throws the best parties!) and Americans in Amsterdam (a company called GTFO Tours, whose name is perfect, informed me that under the Dutch-American Friendship Treaty, US citizens can get residence permits by opening a business and investing just $4,500.) 

Not all of this is new—US and EU retirees have long moved abroad to lower costs and enjoy life—but this infrastructure seems to be expanding to accommodate younger people as well. These programs are unlikely to end because they involve people actually moving, even if there’s cash involved in the transaction.

3. Choose your next adventure

You can pay to take a quiz on Newroots to see what expatriation route is best for you. I got a complimentary report and based on things like income, family, languages and other preferences, it recommended I move to Portland, Montreal, Barcelona, Austin or Lisbon, in that order. I think I might have under-reported my seasonal depression in the survey. But the report was very well-considered and extensive otherwise and has loads of technical information on things like visas, schools, professional licensing, etc.

4. Americans are doing other weird visa stuff

David Lesperance, who I incidentally spoke to for my first-ever story on citizenship sales, sent me a playbook for Americans who don’t want to be citizens anymore (often because they don’t want to be taxed indefinitely on their worldwide income) but still want to come and go freely for family reasons or just because they <3 New York. These “itineraries” are complex and typically involve renouncing citizenship, establishing residence abroad, and obtaining a business-related visa to enter the States. The takeaway? Never, ever underestimate what a rich person will do to avoid taxes!

5. Fool’s Gold

The Trump administration claims it has sold boatloads of Gold Cards even though there are no official channels through which to obtain them. Nobody I’ve heard from has begun a transaction of this nature. I look forward to the day I can talk to a real, live Gold Card applicant. If you are one, you can e-mail me anytime!