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EU Citizenship by Investment is Dead: Long Live Citizenship by Merit · IMI Podcasts

• 0:00
  SPEAKER_00: There's an old Chinese proverb that says, quote, above there are policies, below there are countermeasures, end quote.
• 0:07
  SPEAKER_00: It's a timeless reminder that when authorities impose restrictions, those affected by them soon find creative workarounds.
• 0:14
  SPEAKER_00: Last month, from above, the European Court of Justice or the ECJ came a new restriction.
• 0:20
  SPEAKER_00: EU citizenship programs may not be transactional.
• 0:24
  SPEAKER_00: With that word, the ECJ has signaled its intent to end formulaic, structured, price-tagged citizenship by investment, also known as CBI programs across the European Union.
• 0:35
  SPEAKER_00: But demand for citizenship in the EU remains stronger than ever, and the companies that used to offer EU CBI will not simply stop catering to it.
• 0:44
  SPEAKER_00: It will adapt to the new policy through countermeasures.
• 0:47
  SPEAKER_00: You may have noticed that during the years of heated EU criticism of CBI programs in Malta, Cyprus, and Bulgaria, we never once heard a complaint about Austria, which has granted citizenship to hundreds based on investment.
• 1:00
  SPEAKER_00: The reason is that Austria doesn't have a CBI program.
• 1:04
  SPEAKER_00: Instead, Austria has relied on citizenship by merit, alternatively called citizenship by decree, by exception, or by discretion.
• 1:13
  SPEAKER_00: These are legal provisions that allow a country to grant citizenship to anyone it considers deserving of it, typically for broadly defined, significant contributions in sciences, arts, sports, business, or similar fields.
• 1:27
  SPEAKER_00: Citizenship by merit, referred to as CBM as a concept, has been around for as long as the concept of citizenship itself has.
• 1:35
  SPEAKER_00: According to the IMI citizenship catalog, 69% of all countries have CBM provisions in their nationality laws.
• 1:43
  SPEAKER_00: Each country has the discretion to determine what it considers a significant contribution, and the decision is typically left to the discretion of the Prime Minister, the President, Parliament, or the executive branch more broadly.
• 1:56
  SPEAKER_00: In some countries, it's only exercised in exceptional circumstances as While both CBI and CBM can lead to a passport, they operate on entirely different legal and practical foundations.
• 2:09
  SPEAKER_00: First, case by case, not box ticking.
• 2:12
  SPEAKER_00: CBM is not a standardized formulaic application process.
• 2:16
  SPEAKER_00: Each case is evaluated individually, allowing governments to maintain full discretion.
• 2:22
  SPEAKER_00: Second, nebulous criteria.
• 2:24
  SPEAKER_00: There are no published thresholds or quotas for what qualifies as a significant contribution.
• 2:29
  SPEAKER_00: This ambiguity makes CBM opaque, but also shields it from accusations of being purely transactional.
• 2:36
  SPEAKER_00: Firms that are in the know may still discern where the de facto price floor sits.
• 2:41
  SPEAKER_00: Lastly, opaque process.
• 2:43
  SPEAKER_00: Unlike CBI programs, which often publish approval data, processing times, and requirements, CBM operates in the shadows.
• 2:51
  SPEAKER_00: No public lists, no price tags, just quiet approvals.
• 2:55
  SPEAKER_00: Shielded from EU scrutiny.
• 2:57
  SPEAKER_00: While Brussels has aggressively targeted formal CBI programs, it views CBM as a sovereign prerogative of individual member states.
• 3:06
  SPEAKER_00: This distinction offers legal cover for countries that wish to grant citizenship selectively without triggering EU interference.
• 3:13
  SPEAKER_00: Other countries, such as Austria and Serbia, apply CBM more liberally and in exchange for investments.
• 3:20
  SPEAKER_00: And it is in countries like these where much investment migration industry ingenuity will focus in the coming years.
• 3:26
  SPEAKER_00: While the ECJ ruling will impact the supply of citizenship, it will do nothing to dampen the demand for citizenship in the EU and in countries on the European periphery.
• 3:35
  SPEAKER_00: Countries in regions like the Balkans and the Caucasus would love to raise capital by selling citizenship.
• 3:41
  SPEAKER_00: But the threat of EU sanctions has deterred them from launching formal CBI programs.
• 3:46
  SPEAKER_00: Now, these same countries with the assistance of enterprising investment migration firms will turn to CBM as the alternative.
• 3:54
  SPEAKER_00: The shift will bring greater complexity.
• 3:57
  SPEAKER_00: Unlike CBI, which offered predictable timelines and fixed fees, CBM is a less precise, more bespoke proposition.
• 4:05
  SPEAKER_00: But for those who can navigate it, the rewards, including higher fees for consultancies, are substantial.
• 4:11
  SPEAKER_00: The crucial question is whether countries and their advisors will attempt to standardize CBM processes by informally defining what qualifies as a significant contribution.
• 4:22
  SPEAKER_00: The question is to what degree companies and countries will attempt to standardize these CBM paths by putting a defined number on what's considered a significant contribution.
• 4:32
  SPEAKER_00: Investors want the predictability of a fixed price.
• 4:35
  SPEAKER_00: But openly fixing a price would make it transactional, potentially drawing the EU's ire.
• 4:41
  SPEAKER_00: The EU banned the commoditization of citizenship through CBI.
• 4:45
  SPEAKER_00: Now it will get the commoditization of citizenship through CBM instead.
• 4:49
  SPEAKER_00: Instead of fixed price programs, we will now see citizenship by merit, at scale but in private.
• 4:56
  SPEAKER_00: As long as demand for citizenship persists, the market will find a way.
• 5:00
  SPEAKER_00: The cat and mouse game of policy from above and countermeasures from below will continue.
• 5:05
  SPEAKER_00: Only now in the shadows.
• 5:08
  SPEAKER_00: This episode first appeared as an article by Christian Henrik Nischheim on IMIDaily.com.
• 5:14
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