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Episode
42

The Countries That Sell Their Passports

First published on
April 7, 2020
Politics
-
23
minutes
Corruption
Economics
Russia
Malta

The passport sales industry is booming, and is worth around $1 billion a year.

In today's episode we take a look at how it all works, how much it all costs, and the people and countries that make it all possible.

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Transcript

[00:00:05] Hello, hello, hello and welcome to English Learning for Curious Minds by Leonardo English. 

[00:00:11] The show where you can learn weird and wonderful things about the world at the same time as improving your English. 

[00:00:20] Today, we are talking about the countries that sell their passports. 

[00:00:26] It may just be a piece of paper, but a passport has become the ultimate status symbol for the ultra rich, with around a billion dollars in passports being bought every year.

[00:00:42] Today we'll be discussing why people are buying passports, how it all works and what the implications might be for our concept of sovereignty and nationality, of what a country actually is and what it means. 

[00:01:00] Before all that though, let me just quickly remind those of you listening to the podcast on your favourite podcast app that you can find a copy of the transcript and key vocabulary for the podcast over on the website, which is Leonardoenglish.com. 

[00:01:17] The transcript and key vocabulary are super helpful for following every single word and building up your vocabulary, and if you are listening to this episode with the express intention of improving your English, well, I'm confident that you will do that a lot faster with the learning materials in front of you.

[00:01:38] So go and check that out, it is at leonardoenglish.com. 

[00:01:44] Okay then, let's talk about buying passports.

[00:01:48] I think we all know what a passport is, so we can skip that part, but what is worth clarifying is exactly how you can get a passport and what a passport gives you. 

[00:02:02] So there are five general ways in which you can get a passport.

[00:02:07] Firstly, the most obvious one is through birth, through your ancestry, by descent

[00:02:15] The rules depend on the country, of course, but generally some combination of parents, grandparents, and even great-grandparents will mean that you can get a passport just because of who your family is. 

[00:02:32] Secondly, just being born in a particular place.

[00:02:36] Some countries grant citizenship to that country just by birthright

[00:02:43] The United States is probably the example of this that most of you will be aware of. 

[00:02:51] Thirdly, we could call this category "time". 

[00:02:55] If you live in a country for a certain period of time, you can often get a passport from that country.

[00:03:02] The times vary hugely, but most countries offer some sort of this way to get a passport. 

[00:03:12] Fourth, we have a sort of weird category of "being flexible" or "big life changes", as I'd call it.

[00:03:20] So that's things like marrying a citizen of another country, giving birth in another country, or even converting to another religion, like Judaism.

[00:03:32] These are some of the things that you can do to get another passport of certain countries. 

[00:03:39] We are not really going to talk about any of these ones today though. 

[00:03:43] We are going to talk about reason number five, method number five. 

[00:03:48] And that's for people who either don't have the time, the will, or the ability to do any of the above, but what they do have is cold, hard cash. 

[00:04:02] Money, dollar bills.

[00:04:05] Our option number five is that you can buy citizenship

[00:04:09] You can buy a passport from another country. 

[00:04:15] Now, the concept of buying a passport goes back to 1984 when Saint Kitts and Nevis, a small two-island country in the Caribbean, introduced the first and original what's called "Citizenship Investment Programme".

[00:04:34] In short, the way for you to pay the government and get a passport from that country. 

[00:04:42] But back in 1984, to state the obvious, the world was a very different place. 

[00:04:49] The Cold War was still going on. 

[00:04:51] East Asia and the Middle East were still relatively underdeveloped and there were considerably fewer ultra rich people in the world than there are now. 

[00:05:02] So, to give you an example, the richest person in America in 1984 was John Paul Getty, who had an estimated fortune of $4.2 billion. 

[00:05:16] Yes, obviously that's a lot of money, but even adjusting for inflation, he wouldn't be in the top 100 richest people in the world in 2020.

[00:05:31] So when the first cash for passports scheme opened up, it wasn't hugely popular as firstly, there just weren't that many massively rich people. 

[00:05:43] And secondly, there weren't that many advantages of getting a passport from another country, of buying a passport. 

[00:05:53] It was mainly for tax and security reasons. 

[00:05:57] You could, in some cases, pay a lower rate of tax, and if you lived in a country with a government that you didn't trust not to steal your possessions, well, you could become a citizen of Saint Kitts and Nevis. 

[00:06:11] However, over the next 30 years or so, as the world has become more and more globalised, and places like Russia, China, and countries in Southeast Asia and the Middle East have started to produce incredibly rich people, demand for passports has boomed

[00:06:34] And why is this? 

[00:06:35] Why are the super rich suddenly so keen to start collecting passports? 

[00:06:41] Well, there are a few reasons. 

[00:06:44] Firstly, as I said before, with some countries offering pretty generous tax incentives for people to buy a passport and take up residency in a country, for some super rich people, it becomes a financial decision. 

[00:07:00] They just want to save money. 

[00:07:03] And the second reason we could sort of call an insurance policy

[00:07:09] As I said, if you don't trust the government not to steal your money if you get on the wrong side of them, well then it's quite sensible to be able to take that money out of the country and leave it somewhere else, in a country that you trust a little bit more.

[00:07:26] And it's not just that people sometimes don't trust the government not to steal their money, things can be even worse. 

[00:07:32] If you really get on the wrong side of your government, as has happened to quite a few super rich people in Russia, for example, some oligarchs, well then you might find yourself not only with all of your money being taken, being seized, but you might also find yourself in a prison cell.

[00:07:53] So you want to have the ability to have the safety of having a new home, a new country that counts you as one of its own, that counts you as one of its own citizens. 

[00:08:07] But the key thing here is that for many of the holders of these bought passports, they don't actually need to go to that country very much, if at all. 

[00:08:21] One of the main attractions now is the ability to travel to other countries visa free, without a visa. 

[00:08:31] Especially for people from places like China, Russia, and Saudi Arabia, if they want to visit a country in Europe, let's say, they have to go to the embassy, apply for a visa, and obviously it takes time and is a hassle to do.

[00:08:49] Yes, they might fly to Europe on a private jet, but without the right passport, they still have the same visa problems as anyone else from their country.

[00:09:02] The attraction of getting a second, or sometimes even third, fourth or fifth passport is that these passports offer you visa-free access to a plethora of different countries. 

[00:09:18] Europe, for example, has the Schengen area and so one passport, even from a non Schengen country such as Saint Kitts and Nevis since 2009, means that you can visit all 26 countries in the Schengen area. 

[00:09:36] For some people who are buying these passports, this is a lifestyle thing. 

[00:09:41] They are so rich and unaccustomed, unused, to any restrictions in their day-to-day life that they just want the freedom to travel and not worry. 

[00:09:54] And for others, it's partly a business thing.

[00:09:57] If you are, let's say, a business person from China and you want to visit a client in London, then Paris and Berlin, you would have to go and apply for a UK and a Schengen visa, wait a few weeks for it to be processed, then you'd have a long and tedious immigration process. 

[00:10:19] With the right passport, you skip the queue, literally, and walk into almost any country you want. 

[00:10:27] So it's pretty evident why people want them. 

[00:10:31] It's the flexibility, the protection, and in lots of cases, the tax savings. 

[00:10:38] But who are the countries that are actually selling them though? 

[00:10:43] And how much does it actually cost to get one?

[00:10:47] In terms of the countries that are selling them, there are almost too many to name really. 

[00:10:53] A passport from Antigua and Barbuda can be yours from $100,000. 

[00:11:00] The classic Saint Kitts and Nevis passport is slightly more, so it's from around $150,000. 

[00:11:09] Malta, one of the most popular passports, will set you back around a million dollars when you factor everything in

[00:11:18] The UK will even grant you a British passport if you fork out over two and a half million dollars, although I should point out that the requirements here are quite a bit more strict. 

[00:11:31] In general, the more powerful the passport in terms of the visa-free travel that it offers, the more expensive it is, as you might imagine. 

[00:11:43] But you might ask, why are these countries selling passports? 

[00:11:48] Some of them have fought hard for independence, often from colonial powers. 

[00:11:54] They fought hard to be their own country, to be able to offer their own passports. 

[00:12:00] Why are they then just selling the right to become a citizen to the highest bidder, who in many cases isn't actually bidding very much, in the grand scheme of things?

[00:12:14] The answer is easy: money, cash. 

[00:12:18] There are a few similarities between the countries that sell passports most aggressively. 

[00:12:25] Often they are small islands, frequently with some kind of colonial past. 

[00:12:32] They don't have that many natural resources or ways to generate money, so they need to get a little bit creative.

[00:12:41] Passports don't really cost them anything to produce, in financial terms at least. 

[00:12:48] And they can be incredibly lucrative, they can make these countries a lot of money. 

[00:12:55] For Saint Kitts and Nevis, passport sales account for about 25% of its GDP, 25% of all of the money generated in the country. 

[00:13:10] And even for Malta, a European Union country, and one that prides itself on various other industries, passport sales accounted for almost the entire government surplus in 2018, and are partially credited for Malta being one of the fastest growing economies in Europe over the last five years or so.

[00:13:36] So for Malta, passports are very important. 

[00:13:40] For these countries, selling passports is an absolute gold mine, at least on a superficial level. 

[00:13:48] They don't really need to give anything away, and in most cases, the people who they are selling the passports to don't really need to spend much time at all in the country. 

[00:14:03] For Vanuatu, the small group of islands in the Pacific Ocean, only one in ten people who bought Vanuatu passports have ever even been to the country.

[00:14:16] There are many cash for passport schemes in the Caribbean, where countries struggle to raise investment through traditional means, and so they have turned to passports as a quick, easy and cheap way to bring money into the country. 

[00:14:36] Of course in a lot of these countries, there are quite a lot of question marks over who the real beneficiaries are of this money, where the money actually ends up.

[00:14:53] In Malta, for example, there are widespread allegations of corruption relating to the passport sales program. 

[00:15:01] Daphne Caruana Galizia, whose name you may recognise, was Malta's most famous investigative journalist, and she was a huge critic of the passport scheme. 

[00:15:13] The reason you may recognise her name is because she was blown up by a car bomb in October, 2017.

[00:15:23] I should add though, it's not thought that she was murdered because she was investigating the passport scheme. 

[00:15:32] In any case, it's thought by many to be a pretty murky business, filled with slightly unscrupulous characters, some quite shady people. 

[00:15:43] Critics of the schemes in general say that they erode the value of nationhood and of sovereignty.

[00:15:52] If a passport can be bought and sold, borders don't really exist for the 1% or the 0.1%, 0.01%, for the ultra rich. 

[00:16:07] And for these ultra rich with multiple passports, on the one hand, they have now become citizens of several countries, but on the other hand, they are sort of citizens of none. 

[00:16:24] In many cases, the passport holders spend very little time in the country. 

[00:16:30] They don't speak the language and have no interaction with the local people or culture. 

[00:16:37] They are citizens in name only, really, and if they have escaped their home country, they are now essentially stateless.

[00:16:49] In addition to this, as many of the "cash for passports" schemes make the person buying their passport buy or rent a property in the country, this reduces the amount of available property for local people and of course increases the prices for local people. 

[00:17:09] Houses lay empty, with entire blocks of flats just pitch black in the evening, with the lights out, because they are all owned by "citizens", in inverted commas, citizens who never actually live there. 

[00:17:24] This is certainly the case in Malta, which suffers from a huge housing shortage and has been experiencing a construction boom, all while the properties from these new citizens are empty, with some of the houses, probably never having been set foot in by their owners.

[00:17:45] They just exist so that they can say they have a house there.

[00:17:50] In the "cash for passports" industry, or the citizenship by investment, as it's technically called, it's clear that there's definitely one big winner though, and that is the middlemen, the agents, the companies who arrange all of these passport sales. 

[00:18:10] The most famous one is called Henley & Partners and its founder, a Swiss man called Christian Kälin has been dubbed, he's been nicknamed "The Passport King". 

[00:18:26] Henley & Partners is the company that markets and sells passports for countries all over the world, and it was the mastermind behind the schemes in Saint Kitts and Nevis as well as in Malta.

[00:18:42] And they made a lot of money. 

[00:18:44] In Saint Kitts, Henley & Partners would reportedly earn $20,000 for each passport it sold. 

[00:18:54] As of October, 2018 Saint Kitts had sold 16,000 of them, which if they had all been sold by Henley & Partners would have netted them a cool $32 million. 

[00:19:08] In Malta, Henley & Partners gets around 4% of each passport sale, so that's around $40,000. 

[00:19:17] And since the scheme started in 2014 they have made around $40 million in commission.

[00:19:26] So you know what they say about the gold rush in America? 

[00:19:30] It wasn't the people digging for gold that became rich, but the people selling shovels, the people who sold the tools to find the gold. 

[00:19:40] If we think of passports as the new gold for the ultra rich, then Henley & Partners, and The Passport King are definitely getting rich selling the shovels.

[00:19:54] Okay then that is it for passports. 

[00:19:58] It is a pretty interesting concept and the concept of who gets a passport and why is quite relevant to me personally. 

[00:20:09] As regular listeners to the podcast may remember, I actually live in Malta, one of the biggest passport sellers in the world. 

[00:20:17] I don't live here because I bought a passport, but I can live here because I was lucky enough to be born in the UK, to British parents and get a British passport for free, I guess. 

[00:20:31] So just through luck, I get a passport that other people need to pay millions of dollars for. 

[00:20:38] And at the end of this month, at the end of April, I will also be able to get an Italian passport, because my wife is Italian. 

[00:20:48] I'll be able to get one for free, I should add. 

[00:20:51] But do I really need one? 

[00:20:53] Do I deserve to have one? 

[00:20:55] I certainly don't think I'm any more deserving than someone who was born in Italy and who has lived all of their life in Italy, but to non-Italian parents, which by the way is the case for a child born in Italy who might live in Italy for the formative years of their life, but to non-Italian parents - they can't get an Italian passport.

[00:21:19] And finally, I have a little boy who was born in Malta and has lived all of his six-month life so far in Malta. 

[00:21:29] He doesn't get a Maltese passport at least until he decides to pay the Maltese government $1 million. 

[00:21:36] But someone else who has absolutely no connections to Malta whatsoever can, for the right price, of course. 

[00:21:44] So whatever you think of the countries that sell the passports, the people who buy them, and the middlemen who make it all possible, you can't deny that it is a pretty weird and interesting phenomenon

[00:22:01] Right, as always, I'd love to know what you think of the show. 

[00:22:05] We do actually have a few listeners from some of the countries that I mentioned, so if that's you, or even if it isn't, I'd love to hear from you. 

[00:22:15] You can email hi@leonardoenglish.com. 

[00:22:20] And for those of you wanting to up your game with transcripts and key vocabulary as well as bonus member-only podcasts, then the link to go to is Leonardoenglish.com.

[00:22:33] You've been listening to English Learning for Curious Minds by Leonardo English. 

[00:22:38] I'm Alastair Budge. 

[00:22:39] You stay safe and I'll catch you in the next episode.

[END OF PODCAST]


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[00:00:05] Hello, hello, hello and welcome to English Learning for Curious Minds by Leonardo English. 

[00:00:11] The show where you can learn weird and wonderful things about the world at the same time as improving your English. 

[00:00:20] Today, we are talking about the countries that sell their passports. 

[00:00:26] It may just be a piece of paper, but a passport has become the ultimate status symbol for the ultra rich, with around a billion dollars in passports being bought every year.

[00:00:42] Today we'll be discussing why people are buying passports, how it all works and what the implications might be for our concept of sovereignty and nationality, of what a country actually is and what it means. 

[00:01:00] Before all that though, let me just quickly remind those of you listening to the podcast on your favourite podcast app that you can find a copy of the transcript and key vocabulary for the podcast over on the website, which is Leonardoenglish.com. 

[00:01:17] The transcript and key vocabulary are super helpful for following every single word and building up your vocabulary, and if you are listening to this episode with the express intention of improving your English, well, I'm confident that you will do that a lot faster with the learning materials in front of you.

[00:01:38] So go and check that out, it is at leonardoenglish.com. 

[00:01:44] Okay then, let's talk about buying passports.

[00:01:48] I think we all know what a passport is, so we can skip that part, but what is worth clarifying is exactly how you can get a passport and what a passport gives you. 

[00:02:02] So there are five general ways in which you can get a passport.

[00:02:07] Firstly, the most obvious one is through birth, through your ancestry, by descent

[00:02:15] The rules depend on the country, of course, but generally some combination of parents, grandparents, and even great-grandparents will mean that you can get a passport just because of who your family is. 

[00:02:32] Secondly, just being born in a particular place.

[00:02:36] Some countries grant citizenship to that country just by birthright

[00:02:43] The United States is probably the example of this that most of you will be aware of. 

[00:02:51] Thirdly, we could call this category "time". 

[00:02:55] If you live in a country for a certain period of time, you can often get a passport from that country.

[00:03:02] The times vary hugely, but most countries offer some sort of this way to get a passport. 

[00:03:12] Fourth, we have a sort of weird category of "being flexible" or "big life changes", as I'd call it.

[00:03:20] So that's things like marrying a citizen of another country, giving birth in another country, or even converting to another religion, like Judaism.

[00:03:32] These are some of the things that you can do to get another passport of certain countries. 

[00:03:39] We are not really going to talk about any of these ones today though. 

[00:03:43] We are going to talk about reason number five, method number five. 

[00:03:48] And that's for people who either don't have the time, the will, or the ability to do any of the above, but what they do have is cold, hard cash. 

[00:04:02] Money, dollar bills.

[00:04:05] Our option number five is that you can buy citizenship

[00:04:09] You can buy a passport from another country. 

[00:04:15] Now, the concept of buying a passport goes back to 1984 when Saint Kitts and Nevis, a small two-island country in the Caribbean, introduced the first and original what's called "Citizenship Investment Programme".

[00:04:34] In short, the way for you to pay the government and get a passport from that country. 

[00:04:42] But back in 1984, to state the obvious, the world was a very different place. 

[00:04:49] The Cold War was still going on. 

[00:04:51] East Asia and the Middle East were still relatively underdeveloped and there were considerably fewer ultra rich people in the world than there are now. 

[00:05:02] So, to give you an example, the richest person in America in 1984 was John Paul Getty, who had an estimated fortune of $4.2 billion. 

[00:05:16] Yes, obviously that's a lot of money, but even adjusting for inflation, he wouldn't be in the top 100 richest people in the world in 2020.

[00:05:31] So when the first cash for passports scheme opened up, it wasn't hugely popular as firstly, there just weren't that many massively rich people. 

[00:05:43] And secondly, there weren't that many advantages of getting a passport from another country, of buying a passport. 

[00:05:53] It was mainly for tax and security reasons. 

[00:05:57] You could, in some cases, pay a lower rate of tax, and if you lived in a country with a government that you didn't trust not to steal your possessions, well, you could become a citizen of Saint Kitts and Nevis. 

[00:06:11] However, over the next 30 years or so, as the world has become more and more globalised, and places like Russia, China, and countries in Southeast Asia and the Middle East have started to produce incredibly rich people, demand for passports has boomed

[00:06:34] And why is this? 

[00:06:35] Why are the super rich suddenly so keen to start collecting passports? 

[00:06:41] Well, there are a few reasons. 

[00:06:44] Firstly, as I said before, with some countries offering pretty generous tax incentives for people to buy a passport and take up residency in a country, for some super rich people, it becomes a financial decision. 

[00:07:00] They just want to save money. 

[00:07:03] And the second reason we could sort of call an insurance policy

[00:07:09] As I said, if you don't trust the government not to steal your money if you get on the wrong side of them, well then it's quite sensible to be able to take that money out of the country and leave it somewhere else, in a country that you trust a little bit more.

[00:07:26] And it's not just that people sometimes don't trust the government not to steal their money, things can be even worse. 

[00:07:32] If you really get on the wrong side of your government, as has happened to quite a few super rich people in Russia, for example, some oligarchs, well then you might find yourself not only with all of your money being taken, being seized, but you might also find yourself in a prison cell.

[00:07:53] So you want to have the ability to have the safety of having a new home, a new country that counts you as one of its own, that counts you as one of its own citizens. 

[00:08:07] But the key thing here is that for many of the holders of these bought passports, they don't actually need to go to that country very much, if at all. 

[00:08:21] One of the main attractions now is the ability to travel to other countries visa free, without a visa. 

[00:08:31] Especially for people from places like China, Russia, and Saudi Arabia, if they want to visit a country in Europe, let's say, they have to go to the embassy, apply for a visa, and obviously it takes time and is a hassle to do.

[00:08:49] Yes, they might fly to Europe on a private jet, but without the right passport, they still have the same visa problems as anyone else from their country.

[00:09:02] The attraction of getting a second, or sometimes even third, fourth or fifth passport is that these passports offer you visa-free access to a plethora of different countries. 

[00:09:18] Europe, for example, has the Schengen area and so one passport, even from a non Schengen country such as Saint Kitts and Nevis since 2009, means that you can visit all 26 countries in the Schengen area. 

[00:09:36] For some people who are buying these passports, this is a lifestyle thing. 

[00:09:41] They are so rich and unaccustomed, unused, to any restrictions in their day-to-day life that they just want the freedom to travel and not worry. 

[00:09:54] And for others, it's partly a business thing.

[00:09:57] If you are, let's say, a business person from China and you want to visit a client in London, then Paris and Berlin, you would have to go and apply for a UK and a Schengen visa, wait a few weeks for it to be processed, then you'd have a long and tedious immigration process. 

[00:10:19] With the right passport, you skip the queue, literally, and walk into almost any country you want. 

[00:10:27] So it's pretty evident why people want them. 

[00:10:31] It's the flexibility, the protection, and in lots of cases, the tax savings. 

[00:10:38] But who are the countries that are actually selling them though? 

[00:10:43] And how much does it actually cost to get one?

[00:10:47] In terms of the countries that are selling them, there are almost too many to name really. 

[00:10:53] A passport from Antigua and Barbuda can be yours from $100,000. 

[00:11:00] The classic Saint Kitts and Nevis passport is slightly more, so it's from around $150,000. 

[00:11:09] Malta, one of the most popular passports, will set you back around a million dollars when you factor everything in

[00:11:18] The UK will even grant you a British passport if you fork out over two and a half million dollars, although I should point out that the requirements here are quite a bit more strict. 

[00:11:31] In general, the more powerful the passport in terms of the visa-free travel that it offers, the more expensive it is, as you might imagine. 

[00:11:43] But you might ask, why are these countries selling passports? 

[00:11:48] Some of them have fought hard for independence, often from colonial powers. 

[00:11:54] They fought hard to be their own country, to be able to offer their own passports. 

[00:12:00] Why are they then just selling the right to become a citizen to the highest bidder, who in many cases isn't actually bidding very much, in the grand scheme of things?

[00:12:14] The answer is easy: money, cash. 

[00:12:18] There are a few similarities between the countries that sell passports most aggressively. 

[00:12:25] Often they are small islands, frequently with some kind of colonial past. 

[00:12:32] They don't have that many natural resources or ways to generate money, so they need to get a little bit creative.

[00:12:41] Passports don't really cost them anything to produce, in financial terms at least. 

[00:12:48] And they can be incredibly lucrative, they can make these countries a lot of money. 

[00:12:55] For Saint Kitts and Nevis, passport sales account for about 25% of its GDP, 25% of all of the money generated in the country. 

[00:13:10] And even for Malta, a European Union country, and one that prides itself on various other industries, passport sales accounted for almost the entire government surplus in 2018, and are partially credited for Malta being one of the fastest growing economies in Europe over the last five years or so.

[00:13:36] So for Malta, passports are very important. 

[00:13:40] For these countries, selling passports is an absolute gold mine, at least on a superficial level. 

[00:13:48] They don't really need to give anything away, and in most cases, the people who they are selling the passports to don't really need to spend much time at all in the country. 

[00:14:03] For Vanuatu, the small group of islands in the Pacific Ocean, only one in ten people who bought Vanuatu passports have ever even been to the country.

[00:14:16] There are many cash for passport schemes in the Caribbean, where countries struggle to raise investment through traditional means, and so they have turned to passports as a quick, easy and cheap way to bring money into the country. 

[00:14:36] Of course in a lot of these countries, there are quite a lot of question marks over who the real beneficiaries are of this money, where the money actually ends up.

[00:14:53] In Malta, for example, there are widespread allegations of corruption relating to the passport sales program. 

[00:15:01] Daphne Caruana Galizia, whose name you may recognise, was Malta's most famous investigative journalist, and she was a huge critic of the passport scheme. 

[00:15:13] The reason you may recognise her name is because she was blown up by a car bomb in October, 2017.

[00:15:23] I should add though, it's not thought that she was murdered because she was investigating the passport scheme. 

[00:15:32] In any case, it's thought by many to be a pretty murky business, filled with slightly unscrupulous characters, some quite shady people. 

[00:15:43] Critics of the schemes in general say that they erode the value of nationhood and of sovereignty.

[00:15:52] If a passport can be bought and sold, borders don't really exist for the 1% or the 0.1%, 0.01%, for the ultra rich. 

[00:16:07] And for these ultra rich with multiple passports, on the one hand, they have now become citizens of several countries, but on the other hand, they are sort of citizens of none. 

[00:16:24] In many cases, the passport holders spend very little time in the country. 

[00:16:30] They don't speak the language and have no interaction with the local people or culture. 

[00:16:37] They are citizens in name only, really, and if they have escaped their home country, they are now essentially stateless.

[00:16:49] In addition to this, as many of the "cash for passports" schemes make the person buying their passport buy or rent a property in the country, this reduces the amount of available property for local people and of course increases the prices for local people. 

[00:17:09] Houses lay empty, with entire blocks of flats just pitch black in the evening, with the lights out, because they are all owned by "citizens", in inverted commas, citizens who never actually live there. 

[00:17:24] This is certainly the case in Malta, which suffers from a huge housing shortage and has been experiencing a construction boom, all while the properties from these new citizens are empty, with some of the houses, probably never having been set foot in by their owners.

[00:17:45] They just exist so that they can say they have a house there.

[00:17:50] In the "cash for passports" industry, or the citizenship by investment, as it's technically called, it's clear that there's definitely one big winner though, and that is the middlemen, the agents, the companies who arrange all of these passport sales. 

[00:18:10] The most famous one is called Henley & Partners and its founder, a Swiss man called Christian Kälin has been dubbed, he's been nicknamed "The Passport King". 

[00:18:26] Henley & Partners is the company that markets and sells passports for countries all over the world, and it was the mastermind behind the schemes in Saint Kitts and Nevis as well as in Malta.

[00:18:42] And they made a lot of money. 

[00:18:44] In Saint Kitts, Henley & Partners would reportedly earn $20,000 for each passport it sold. 

[00:18:54] As of October, 2018 Saint Kitts had sold 16,000 of them, which if they had all been sold by Henley & Partners would have netted them a cool $32 million. 

[00:19:08] In Malta, Henley & Partners gets around 4% of each passport sale, so that's around $40,000. 

[00:19:17] And since the scheme started in 2014 they have made around $40 million in commission.

[00:19:26] So you know what they say about the gold rush in America? 

[00:19:30] It wasn't the people digging for gold that became rich, but the people selling shovels, the people who sold the tools to find the gold. 

[00:19:40] If we think of passports as the new gold for the ultra rich, then Henley & Partners, and The Passport King are definitely getting rich selling the shovels.

[00:19:54] Okay then that is it for passports. 

[00:19:58] It is a pretty interesting concept and the concept of who gets a passport and why is quite relevant to me personally. 

[00:20:09] As regular listeners to the podcast may remember, I actually live in Malta, one of the biggest passport sellers in the world. 

[00:20:17] I don't live here because I bought a passport, but I can live here because I was lucky enough to be born in the UK, to British parents and get a British passport for free, I guess. 

[00:20:31] So just through luck, I get a passport that other people need to pay millions of dollars for. 

[00:20:38] And at the end of this month, at the end of April, I will also be able to get an Italian passport, because my wife is Italian. 

[00:20:48] I'll be able to get one for free, I should add. 

[00:20:51] But do I really need one? 

[00:20:53] Do I deserve to have one? 

[00:20:55] I certainly don't think I'm any more deserving than someone who was born in Italy and who has lived all of their life in Italy, but to non-Italian parents, which by the way is the case for a child born in Italy who might live in Italy for the formative years of their life, but to non-Italian parents - they can't get an Italian passport.

[00:21:19] And finally, I have a little boy who was born in Malta and has lived all of his six-month life so far in Malta. 

[00:21:29] He doesn't get a Maltese passport at least until he decides to pay the Maltese government $1 million. 

[00:21:36] But someone else who has absolutely no connections to Malta whatsoever can, for the right price, of course. 

[00:21:44] So whatever you think of the countries that sell the passports, the people who buy them, and the middlemen who make it all possible, you can't deny that it is a pretty weird and interesting phenomenon

[00:22:01] Right, as always, I'd love to know what you think of the show. 

[00:22:05] We do actually have a few listeners from some of the countries that I mentioned, so if that's you, or even if it isn't, I'd love to hear from you. 

[00:22:15] You can email hi@leonardoenglish.com. 

[00:22:20] And for those of you wanting to up your game with transcripts and key vocabulary as well as bonus member-only podcasts, then the link to go to is Leonardoenglish.com.

[00:22:33] You've been listening to English Learning for Curious Minds by Leonardo English. 

[00:22:38] I'm Alastair Budge. 

[00:22:39] You stay safe and I'll catch you in the next episode.

[END OF PODCAST]


[00:00:05] Hello, hello, hello and welcome to English Learning for Curious Minds by Leonardo English. 

[00:00:11] The show where you can learn weird and wonderful things about the world at the same time as improving your English. 

[00:00:20] Today, we are talking about the countries that sell their passports. 

[00:00:26] It may just be a piece of paper, but a passport has become the ultimate status symbol for the ultra rich, with around a billion dollars in passports being bought every year.

[00:00:42] Today we'll be discussing why people are buying passports, how it all works and what the implications might be for our concept of sovereignty and nationality, of what a country actually is and what it means. 

[00:01:00] Before all that though, let me just quickly remind those of you listening to the podcast on your favourite podcast app that you can find a copy of the transcript and key vocabulary for the podcast over on the website, which is Leonardoenglish.com. 

[00:01:17] The transcript and key vocabulary are super helpful for following every single word and building up your vocabulary, and if you are listening to this episode with the express intention of improving your English, well, I'm confident that you will do that a lot faster with the learning materials in front of you.

[00:01:38] So go and check that out, it is at leonardoenglish.com. 

[00:01:44] Okay then, let's talk about buying passports.

[00:01:48] I think we all know what a passport is, so we can skip that part, but what is worth clarifying is exactly how you can get a passport and what a passport gives you. 

[00:02:02] So there are five general ways in which you can get a passport.

[00:02:07] Firstly, the most obvious one is through birth, through your ancestry, by descent

[00:02:15] The rules depend on the country, of course, but generally some combination of parents, grandparents, and even great-grandparents will mean that you can get a passport just because of who your family is. 

[00:02:32] Secondly, just being born in a particular place.

[00:02:36] Some countries grant citizenship to that country just by birthright

[00:02:43] The United States is probably the example of this that most of you will be aware of. 

[00:02:51] Thirdly, we could call this category "time". 

[00:02:55] If you live in a country for a certain period of time, you can often get a passport from that country.

[00:03:02] The times vary hugely, but most countries offer some sort of this way to get a passport. 

[00:03:12] Fourth, we have a sort of weird category of "being flexible" or "big life changes", as I'd call it.

[00:03:20] So that's things like marrying a citizen of another country, giving birth in another country, or even converting to another religion, like Judaism.

[00:03:32] These are some of the things that you can do to get another passport of certain countries. 

[00:03:39] We are not really going to talk about any of these ones today though. 

[00:03:43] We are going to talk about reason number five, method number five. 

[00:03:48] And that's for people who either don't have the time, the will, or the ability to do any of the above, but what they do have is cold, hard cash. 

[00:04:02] Money, dollar bills.

[00:04:05] Our option number five is that you can buy citizenship

[00:04:09] You can buy a passport from another country. 

[00:04:15] Now, the concept of buying a passport goes back to 1984 when Saint Kitts and Nevis, a small two-island country in the Caribbean, introduced the first and original what's called "Citizenship Investment Programme".

[00:04:34] In short, the way for you to pay the government and get a passport from that country. 

[00:04:42] But back in 1984, to state the obvious, the world was a very different place. 

[00:04:49] The Cold War was still going on. 

[00:04:51] East Asia and the Middle East were still relatively underdeveloped and there were considerably fewer ultra rich people in the world than there are now. 

[00:05:02] So, to give you an example, the richest person in America in 1984 was John Paul Getty, who had an estimated fortune of $4.2 billion. 

[00:05:16] Yes, obviously that's a lot of money, but even adjusting for inflation, he wouldn't be in the top 100 richest people in the world in 2020.

[00:05:31] So when the first cash for passports scheme opened up, it wasn't hugely popular as firstly, there just weren't that many massively rich people. 

[00:05:43] And secondly, there weren't that many advantages of getting a passport from another country, of buying a passport. 

[00:05:53] It was mainly for tax and security reasons. 

[00:05:57] You could, in some cases, pay a lower rate of tax, and if you lived in a country with a government that you didn't trust not to steal your possessions, well, you could become a citizen of Saint Kitts and Nevis. 

[00:06:11] However, over the next 30 years or so, as the world has become more and more globalised, and places like Russia, China, and countries in Southeast Asia and the Middle East have started to produce incredibly rich people, demand for passports has boomed

[00:06:34] And why is this? 

[00:06:35] Why are the super rich suddenly so keen to start collecting passports? 

[00:06:41] Well, there are a few reasons. 

[00:06:44] Firstly, as I said before, with some countries offering pretty generous tax incentives for people to buy a passport and take up residency in a country, for some super rich people, it becomes a financial decision. 

[00:07:00] They just want to save money. 

[00:07:03] And the second reason we could sort of call an insurance policy

[00:07:09] As I said, if you don't trust the government not to steal your money if you get on the wrong side of them, well then it's quite sensible to be able to take that money out of the country and leave it somewhere else, in a country that you trust a little bit more.

[00:07:26] And it's not just that people sometimes don't trust the government not to steal their money, things can be even worse. 

[00:07:32] If you really get on the wrong side of your government, as has happened to quite a few super rich people in Russia, for example, some oligarchs, well then you might find yourself not only with all of your money being taken, being seized, but you might also find yourself in a prison cell.

[00:07:53] So you want to have the ability to have the safety of having a new home, a new country that counts you as one of its own, that counts you as one of its own citizens. 

[00:08:07] But the key thing here is that for many of the holders of these bought passports, they don't actually need to go to that country very much, if at all. 

[00:08:21] One of the main attractions now is the ability to travel to other countries visa free, without a visa. 

[00:08:31] Especially for people from places like China, Russia, and Saudi Arabia, if they want to visit a country in Europe, let's say, they have to go to the embassy, apply for a visa, and obviously it takes time and is a hassle to do.

[00:08:49] Yes, they might fly to Europe on a private jet, but without the right passport, they still have the same visa problems as anyone else from their country.

[00:09:02] The attraction of getting a second, or sometimes even third, fourth or fifth passport is that these passports offer you visa-free access to a plethora of different countries. 

[00:09:18] Europe, for example, has the Schengen area and so one passport, even from a non Schengen country such as Saint Kitts and Nevis since 2009, means that you can visit all 26 countries in the Schengen area. 

[00:09:36] For some people who are buying these passports, this is a lifestyle thing. 

[00:09:41] They are so rich and unaccustomed, unused, to any restrictions in their day-to-day life that they just want the freedom to travel and not worry. 

[00:09:54] And for others, it's partly a business thing.

[00:09:57] If you are, let's say, a business person from China and you want to visit a client in London, then Paris and Berlin, you would have to go and apply for a UK and a Schengen visa, wait a few weeks for it to be processed, then you'd have a long and tedious immigration process. 

[00:10:19] With the right passport, you skip the queue, literally, and walk into almost any country you want. 

[00:10:27] So it's pretty evident why people want them. 

[00:10:31] It's the flexibility, the protection, and in lots of cases, the tax savings. 

[00:10:38] But who are the countries that are actually selling them though? 

[00:10:43] And how much does it actually cost to get one?

[00:10:47] In terms of the countries that are selling them, there are almost too many to name really. 

[00:10:53] A passport from Antigua and Barbuda can be yours from $100,000. 

[00:11:00] The classic Saint Kitts and Nevis passport is slightly more, so it's from around $150,000. 

[00:11:09] Malta, one of the most popular passports, will set you back around a million dollars when you factor everything in

[00:11:18] The UK will even grant you a British passport if you fork out over two and a half million dollars, although I should point out that the requirements here are quite a bit more strict. 

[00:11:31] In general, the more powerful the passport in terms of the visa-free travel that it offers, the more expensive it is, as you might imagine. 

[00:11:43] But you might ask, why are these countries selling passports? 

[00:11:48] Some of them have fought hard for independence, often from colonial powers. 

[00:11:54] They fought hard to be their own country, to be able to offer their own passports. 

[00:12:00] Why are they then just selling the right to become a citizen to the highest bidder, who in many cases isn't actually bidding very much, in the grand scheme of things?

[00:12:14] The answer is easy: money, cash. 

[00:12:18] There are a few similarities between the countries that sell passports most aggressively. 

[00:12:25] Often they are small islands, frequently with some kind of colonial past. 

[00:12:32] They don't have that many natural resources or ways to generate money, so they need to get a little bit creative.

[00:12:41] Passports don't really cost them anything to produce, in financial terms at least. 

[00:12:48] And they can be incredibly lucrative, they can make these countries a lot of money. 

[00:12:55] For Saint Kitts and Nevis, passport sales account for about 25% of its GDP, 25% of all of the money generated in the country. 

[00:13:10] And even for Malta, a European Union country, and one that prides itself on various other industries, passport sales accounted for almost the entire government surplus in 2018, and are partially credited for Malta being one of the fastest growing economies in Europe over the last five years or so.

[00:13:36] So for Malta, passports are very important. 

[00:13:40] For these countries, selling passports is an absolute gold mine, at least on a superficial level. 

[00:13:48] They don't really need to give anything away, and in most cases, the people who they are selling the passports to don't really need to spend much time at all in the country. 

[00:14:03] For Vanuatu, the small group of islands in the Pacific Ocean, only one in ten people who bought Vanuatu passports have ever even been to the country.

[00:14:16] There are many cash for passport schemes in the Caribbean, where countries struggle to raise investment through traditional means, and so they have turned to passports as a quick, easy and cheap way to bring money into the country. 

[00:14:36] Of course in a lot of these countries, there are quite a lot of question marks over who the real beneficiaries are of this money, where the money actually ends up.

[00:14:53] In Malta, for example, there are widespread allegations of corruption relating to the passport sales program. 

[00:15:01] Daphne Caruana Galizia, whose name you may recognise, was Malta's most famous investigative journalist, and she was a huge critic of the passport scheme. 

[00:15:13] The reason you may recognise her name is because she was blown up by a car bomb in October, 2017.

[00:15:23] I should add though, it's not thought that she was murdered because she was investigating the passport scheme. 

[00:15:32] In any case, it's thought by many to be a pretty murky business, filled with slightly unscrupulous characters, some quite shady people. 

[00:15:43] Critics of the schemes in general say that they erode the value of nationhood and of sovereignty.

[00:15:52] If a passport can be bought and sold, borders don't really exist for the 1% or the 0.1%, 0.01%, for the ultra rich. 

[00:16:07] And for these ultra rich with multiple passports, on the one hand, they have now become citizens of several countries, but on the other hand, they are sort of citizens of none. 

[00:16:24] In many cases, the passport holders spend very little time in the country. 

[00:16:30] They don't speak the language and have no interaction with the local people or culture. 

[00:16:37] They are citizens in name only, really, and if they have escaped their home country, they are now essentially stateless.

[00:16:49] In addition to this, as many of the "cash for passports" schemes make the person buying their passport buy or rent a property in the country, this reduces the amount of available property for local people and of course increases the prices for local people. 

[00:17:09] Houses lay empty, with entire blocks of flats just pitch black in the evening, with the lights out, because they are all owned by "citizens", in inverted commas, citizens who never actually live there. 

[00:17:24] This is certainly the case in Malta, which suffers from a huge housing shortage and has been experiencing a construction boom, all while the properties from these new citizens are empty, with some of the houses, probably never having been set foot in by their owners.

[00:17:45] They just exist so that they can say they have a house there.

[00:17:50] In the "cash for passports" industry, or the citizenship by investment, as it's technically called, it's clear that there's definitely one big winner though, and that is the middlemen, the agents, the companies who arrange all of these passport sales. 

[00:18:10] The most famous one is called Henley & Partners and its founder, a Swiss man called Christian Kälin has been dubbed, he's been nicknamed "The Passport King". 

[00:18:26] Henley & Partners is the company that markets and sells passports for countries all over the world, and it was the mastermind behind the schemes in Saint Kitts and Nevis as well as in Malta.

[00:18:42] And they made a lot of money. 

[00:18:44] In Saint Kitts, Henley & Partners would reportedly earn $20,000 for each passport it sold. 

[00:18:54] As of October, 2018 Saint Kitts had sold 16,000 of them, which if they had all been sold by Henley & Partners would have netted them a cool $32 million. 

[00:19:08] In Malta, Henley & Partners gets around 4% of each passport sale, so that's around $40,000. 

[00:19:17] And since the scheme started in 2014 they have made around $40 million in commission.

[00:19:26] So you know what they say about the gold rush in America? 

[00:19:30] It wasn't the people digging for gold that became rich, but the people selling shovels, the people who sold the tools to find the gold. 

[00:19:40] If we think of passports as the new gold for the ultra rich, then Henley & Partners, and The Passport King are definitely getting rich selling the shovels.

[00:19:54] Okay then that is it for passports. 

[00:19:58] It is a pretty interesting concept and the concept of who gets a passport and why is quite relevant to me personally. 

[00:20:09] As regular listeners to the podcast may remember, I actually live in Malta, one of the biggest passport sellers in the world. 

[00:20:17] I don't live here because I bought a passport, but I can live here because I was lucky enough to be born in the UK, to British parents and get a British passport for free, I guess. 

[00:20:31] So just through luck, I get a passport that other people need to pay millions of dollars for. 

[00:20:38] And at the end of this month, at the end of April, I will also be able to get an Italian passport, because my wife is Italian. 

[00:20:48] I'll be able to get one for free, I should add. 

[00:20:51] But do I really need one? 

[00:20:53] Do I deserve to have one? 

[00:20:55] I certainly don't think I'm any more deserving than someone who was born in Italy and who has lived all of their life in Italy, but to non-Italian parents, which by the way is the case for a child born in Italy who might live in Italy for the formative years of their life, but to non-Italian parents - they can't get an Italian passport.

[00:21:19] And finally, I have a little boy who was born in Malta and has lived all of his six-month life so far in Malta. 

[00:21:29] He doesn't get a Maltese passport at least until he decides to pay the Maltese government $1 million. 

[00:21:36] But someone else who has absolutely no connections to Malta whatsoever can, for the right price, of course. 

[00:21:44] So whatever you think of the countries that sell the passports, the people who buy them, and the middlemen who make it all possible, you can't deny that it is a pretty weird and interesting phenomenon

[00:22:01] Right, as always, I'd love to know what you think of the show. 

[00:22:05] We do actually have a few listeners from some of the countries that I mentioned, so if that's you, or even if it isn't, I'd love to hear from you. 

[00:22:15] You can email hi@leonardoenglish.com. 

[00:22:20] And for those of you wanting to up your game with transcripts and key vocabulary as well as bonus member-only podcasts, then the link to go to is Leonardoenglish.com.

[00:22:33] You've been listening to English Learning for Curious Minds by Leonardo English. 

[00:22:38] I'm Alastair Budge. 

[00:22:39] You stay safe and I'll catch you in the next episode.

[END OF PODCAST]