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Empowering Global Citizenship

Empowering Global Citizenship

The New Year has come with good news for Cyprus, as the Cypriot passport appears to be among the strongest in the world. According to the latest Passport Index, (updated on January 4), it has achieved a Passport Power Rank of 13, an Individual Power Rank of 37 and an impressive visa-free score of 144. Armand Arton, Chairman of Arton Capital, the global financial advisory firm specialising in residence programmes and citizenship, spoke to Gold about the reasons behind Cyprus’ recent achievement, analysing how foreign investors can obtain Cypriot citizenship and explaining why not all EU passports are equally attractive.  

Gold: According to the updated Passport Index, Cyprus has achieved a Passport Power Rank of 13 and an Individual Power Rank of 37 globally. Which are the main factors that have led to this?

Armand Arton: Passport Power Rank is based on the total Visa-Free Score (VFS) accumulated by each country’s passport. This includes visa-free and visa on arrival provisions set in place by countries. All countries’ VSF are then indexed from the highest to the lowest number, thus the Passport Power Rank indicates each country’s position within the Passport Index. As no two passports are alike, the Individual Passport Power Rank shows the unique position of a passport within the Passport Index. The individual Passport Power Rank is tabulated by a three-tier method. Firstly, countries are sorted by their VFS. Secondly, two identical VFS are sorted by the visa-free portion of the score and thirdly, the United Nations Development Programme Human Development Index (UNDP HDI) is used as a differentiator. This is more concerned with a country’s reputation abroad and its level of economic development.

 

Gold: In your opinion, can anything be done to make a Cyprus passport even more desirable?

A.A.: The desirability of a passport will be a function of the freedom of mobility it guarantees, the level of security the country has and its political and economic stability. The most efficient way for a country to climb up the Passport Index ranking is to secure visa-free agreements with those countries with which it currently doesn’t have one. For example, negotiating a visa-free or visa on arrival policy with the likes of the US, China, India, Cuba, Russia, and a handful of African countries, would propel the Cypriot passport ranking to new heights. For example, as of January 2017, Kazakhstan has opened its borders to citizens of Cyprus, thus adding one point to its visa-free score. Given the positive signs that the Cypriot economy has been demonstrating and the political predictability it has compared to the rest of Europe, it is certain that the Cypriot passport will climb up the ranking.

 

Gold: Since Cyprus is an EU member state, why is the country’s passport valued less highly than those of countries like Germany, Sweden, Finland and France?

A.A.: EU membership does not necessarily mean that all member states have homogeneous mobility agreements with third countries. There are a number of European countries that still don’t have visa-free travel to the US or Canada, for example. Cyprus has a visa-free score of 144, where Germany’s is 157, followed by Sweden and Singapore with 156. The German passport (the strongest overall) can be compared to that of Cyprus, through the ‘compare’ feature on the passportindex.org website.

 

Gold: What are the main benefits of Cypriot citizenship to a foreigner? Do you have data on where most of those applying for Cypriot citizenship through Investment originally come from?

A.A.: The Citizenship-by-Investment (CIP) Programme of Cyprus offers a variety of advantages to applicants, especially as it enables them to obtain citizenship of an EU member state. Its major advantage is the speed of approval and the ease of the process. We have found, however, that although people are initially attracted by the above, they generally like Cyprus and establish much more than just residence on the island. The fact that Cyprus is an international business centre and a low tax jurisdiction, one of the safest countries in the world, characterised by mild weather, warm and welcoming people, low stress and a beautiful environment adds considerably to the popularity of Cypriot citizenship.

No official data is published about the countries of origin of applicants. Our information shows that about 50% of applicants originate from Russia and the ex-Soviet Union countries, about 20% from China, about 20% from the MENA region and the Gulf, and the rest from other countries.

 

Gold: What are the current investment options/criteria available to those looking to obtain a Cypriot passport?

A.A.: The investment criteria were revised and simplified in September 2016. An applicant must buy a housing unit at a price of €500,000 (excl. VAT or transfer fees) and make an investment of €2 million in one or a combination of the following: company shares or bonds, financial products, property or property development. The mix can include a maximum of €500,000 special government bonds. If the applicant wishes to invest in housing units only, the investment amount is reduced to €1.5 million. Bank deposits are no longer accepted and the emphasis is on what the Government calls ‘real investments’ mainly in property. A major change from the previous programme is the requirement that citizenship be preceded by residency. Investors need now to visit Cyprus several times before they obtain their passport. This is necessitated by the need to select and finalise their investment, the requirement to give their biometric data so that they secure their residency permit and the requirement to be present for the issuance of their passport after 6 months of residency elapses.

 

Gold: Is there more that the Government could be doing in order to make its citizenship/permanent residence schemes even more attractive?

A.A.: Cyprus’ Programme is already very attractive as it is appeals only to very High Net Worth Individuals. Therefore, it can be said that Cyprus already attracts the very best, especially bearing in mind that a rigorous Due Diligence process is applied and applicants need to pass a number of filters, even if that is not particularly evident at first glance. In redesigning the Programme, the Government drew from global experience of such programmes and incorporated many suggestions which led to the Programme’s increased competitiveness. One major issue had to do with the minimum investment threshold to be adopted. A lower investment threshold would lead to a higher number of applicants whereas a high threshold results in attracting only the upper slice of international investors. As the Minister of Interior has said, Cyprus is honoured when such people select Cyprus as the country where they and their descendents will take root. What is also evident is that these people also feel honoured by Cyprus when the country accepts them as its citizens and they show their appreciation through further investment on the island which takes place once citizenship is granted.

 

Gold: How has the industry of citizenship/residency evolved over the years? How do you respond to claims that passports are ‘being sold’?

A.A.: The concept of granting residency and/or citizenship in return for a significant contribution by a foreign individual is very old, going as far back as the Roman Empire. In more recent times, countries such as the UK, France, Germany, the Netherlands, etc. have attracted large numbers of people from India, Pakistan, Algeria, Tunisia, Turkey and elsewhere, especially since World War II, when the rebuilding of Europe required the mass importation of labour. These people moved to their host countries to produce economic benefits in exchange for better wages and living conditions as residents at first and later, after some years of residency, as citizens. The relationship between economic benefit and the granting of residency/citizenship became, therefore, established and widespread. In modern times the economic needs of host countries have changed from attracting human capital to attracting investment capital. Therefore, we see that countries such as the UK, the USA, Canada, Australia, Austria and the Caribbean islands have introduced programmes of residency/citizenship-by-investment programmes of. Countries such as Cyprus, Hungary, Malta, etc., are newcomers to the industry, which is expanding rapidly. It is true that the increasing interest in these programmes has led some to voice their concerns about the ‘immorality’ of ‘selling passports’ and about whether the granting of passports in this manner poses security risks. Although there have been a limited number of instances in which citizenship of certain Caribbean islands was granted to persons of ill repute, this has been the exception rather than the rule. Where the specified due diligence process is enforced, no problems arise especially since the process is much stricter than the normal one applied in all countries in issuing passports to other types of applicants.

What is of the utmost importance to all concerned states and stakeholders is that applicants should be thoroughly filtered and stringent criteria continue to be applied. Also, the host countries should receive tangible economic benefits from such investors, thereby boosting economic development, local employment and income. 

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