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The passport for sale strategy of Moldova: the wealthy immigrant Adventures in Wonderland

Updated: Jun 4, 2019

Moldova has been on a course towards rapprochement with the European Union since 2009, having both ups and downs on this path. Without a doubt, the high point of their relationship was the granting of the visa-free regime and the signing of the Deep and Comprehensive Free Trade Agreement that allowed a freer movement of persons and goods between the two parties.

A clear perspective did not follow this high point for the future relationship, and naturally, Moldova chose to capitalize on the real benefits and chose to create amongst other measures a mechanism for receiving the Moldovan Citizenship by investing in its economy.

Though the authorities have had serious corruption issues since granting the visa-free regime, this scheme does not generally fall under the category of measures lacking transparency or necessarily stimulating corruption.

The nature of Citizenship can be explained from an economic perspective, as it always includes a transactional element most commonly in the form of taxes. Moreover, it is common knowledge that the tax money in Eastern Europe provides minimal protection and services and is more often used in corruption schemes. However, this situation is not a new one — the financial capacity to contribute towards the 'common good' of the state. Only certain people of a high economic capacity were able to participate in the political processes of Ancient Greece. The Romanian electoral system had an income census based on the electoral law of 1864 until the end of the XIX century. From a libertarian perspective, the economic component of Citizenship is more important than the political one due to the inherent corruption and inefficiency of the state apparatus.

Coming back to the specific case of Citizenship by investment, European Union estimates that Bulgaria, Cyprus, Estonia, Ireland, Italy, Latvia, Malta and Portugal offer easy access to their Citizenship by investment (CBI) and residence by investment programmes (RBI). The European Parliamentary Research Service would argue that the requirements are quite lax without requirements of physical presence in the country or comprehensive background checks.

At the same time, CBI and RBI programmes have brought €9.2 billion of direct inflow for the EU economy in 10 years in the case of the easy-access plans. This seems to be an overwhelming sum, but we should bear in mind that there the information is for 7 EU countries over a span of 10 years. At the same time, the Moldovan economy provides more limited opportunities, as well as travel opportunities compared to the EU countries and no perspective of Citizenship.

However, what the programme lacks in opportunities, it makes up in ease of access. The regulation provides a series of conditions to be verified for the applicant but does not require background checks at the international level; the authorities responsible for the examinations are all local. Also, they need to provide their approval in 15 days that is not a long enough period for thorough research. Also, the applicant offers by himself the proof of provenance of the investment with no additional documents required from the country of origin.

A subsequent change of the regulation has made it mandatory for a due diligence company to check the financial and economic reputation of the applicant. Also, the investment sum of 250 thousand euros is lower than the European programmes; for example, Malta requires a minimum investment of 650 thousand euros.

A brief analysis of the Moldovan CBI programme shows that it means to be more flexible than the other similar plans to attract less discerning customers that need a comfortable way to travel and do business in Europe. While our views are that any of these requirements affect the privacy rights of potential applicants, the case for the violation of the non-aggression principle can be made. The Moldovan state has to guarantee that its new citizens attracted through this programme will not affect the economic stability and security of its society. The existing conditions, we would argue, do not guarantee that in full.

How could Moldova improve its Citizenship by Investment programme?

While to the day of the writing of this article, there is only one successful case of obtaining Citizenship through CBI, there is room for improvement of the programme:

The participation of the country of origin in the process. Moldova is a small country with limited resources and should rely on external resources in the background checks of the applicants. In this way, the costs of these checks will be lower, and potential conflicts over dual Citizenship can be avoided.

The market of CBI should be liberalized. It is currently implemented in partnership with Henley & Partners and the Moldovan Investment Company. Some of the implementation partners are allegedly linked to a corruption case in the implementation of the Maltese CBI programme that led to the killing of a journalist. The liberalization of the programme would avoid similar issues and might attract more applicants.

The CBI programme should be supplemented with Citizenship by job programme that would attract experts in critical areas for the Moldovan economy. The demographic situation in Moldova and the migration processes show a need for IT experts, engineers and other experts that could come from different countries attracted by the freedom of movement and a favourable tax system.

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