Since the pandemic kicked in earlier this year, not only have a record number of US citizens registered an interest in citizenship by investment, they have shown one of the biggest nationality spikes in CBI programme applications over the past nine months. So why exactly are Americans in pursuit of a pandemic passport?
According to US-based citizenship consultancy American Investment Migration, a record number of American citizens are investigating and applying for economic citizenship in 2020. This is backed up by numbers from global citizenship and residence advisory firm Henley & Partners, which has noted a dramatic 100% increase in enquiries from US citizens in the first six months of 2020 compared to the same period in 2019, as well as seeing America showing the biggest spike in applications over the past nine months.
And the official statistics on Americans renouncing their citizenship back this up. According to recent research by Bambridge Accountants New York, in 2020, Americans are renouncing their citizenship at the highest levels on record.
In just the first six months of 2020, 5,816 Americans gave up their citizenship, which shows a 1,210% increase on the prior six months to December 2019, when only 444 cases were recorded. This also puts the country on track to see a record-breaking 10,000 renouncing citizenship in 2020, compared to just over 2,000 in 2019. Legally, in order to secure citizenship of an alternative countries, US citizens must give up US citizenship.
The pandemic has been a catalyst for change
While the coronavirus pandemic has certainly upped demand for second citizenship from all corners of the globe – as historically, a surge for second citizenship or residency from any country increases during times of turmoil – the 100% increased interest from American citizens has been a huge surprise.
There was certainly expectation that interest from the traditional citizenship by investment clientele such as China and the Middle East would increase during the pandemic, and no-one was especially surprised when interest and applications from citizens of India, Nigeria, Pakistan, South Africa and Lebanon topped the country lists during 2020. But, when America, a developed country, joined these countries at the top of the economic citizenship enquiry tree, it raised a few eyebrows.
It seems the pandemic, which has hit the US hardest with 201,000 fatalities (as of September 23rd), has finally motivated American citizens to cut ties and thereby also avoid the current political climate (impending presidential elections), unpredictable social climate (riots and protests), and annual tax reporting hassle.
“The tumultuous events of 2020, including the unplanned pause during the Great Lockdown, have resulted in people from all walks of life re-evaluating their circumstances and reconsidering how they wish to conduct their lives, and for those fortunate enough, choosing where they want to live by opting for investment migration,” says Henley & Partners CEO, Dr Juerg Steffen.
“Many are taking stock and ensuring they are better prepared for the next pandemic or major global disruption. The relentless volatility in terms of both wealth and lifestyle has resulted in a significant shift in how alternative residence and citizenship are perceived by high-net-worth investors around the world.”
Americans are therefore seeing citizenship by investment as an insurance policy, a Plan B, a way to secure the safety of both their family and assets, as well as a way to ensure freedom of movement in the future.
The once powerful American passport pulling less of a punch
After all, the American passport doesn’t have the pulling power that it once did. If you search American passport on the Passport Index, you will see that Americans can travel easily (without applying for a visa) to just 89 countries, when last year (2019), they could travel visa-free to 184. In fact, the US passport is now less powerful than those from Moldova, Malaysia and Montenegro, as well as the UAE, Ukraine and Bulgaria.
Armand Arton, the founder of Arton Capital, a global citizenship financial advisory services firm, believes that this drop of American passports over 5 per cent in terms of mobility is “a wake-up call for a lot of families”.
Commenting in the recently released Henley Passport Index Q3 Report, Assistant Professor of Sociology at Tel Aviv University in Israel, Prof. Dr. Yossi Harpaz, says the Covid-19 crisis has caused the world’s premium passports to lose some of their shine.
“For decades, visa policies were designed to keep out illegal immigrants, asylum seekers, and terrorists. Citizens of wealthy and democratic countries – including Canada, the US, and the Western European nations – apparently posed no such risks and enjoyed extensive visa-free travel throughout the world. In the current crisis, a new category of risk has emerged: the spreader. Since the US and Western Europe were among the world’s hardest hit areas, their citizens faced stringent mobility restrictions. This is, of course, a temporary situation, but in the long run it is likely to erode the prestige of EU and Western passports,” predicts Prof. Harpaz.
The Caribbean islands are attractive to US citizens
With many Americans seeking a safe, remote place where they can hide with their family in case of a further outbreak, interest in smaller countries that haven’t been as badly hit pandemic-wise, is high. The Caribbean countries – Dominica, Antigua, Grenada, Saint Kitts and Saint Lucia – have been especially popular choices for US citizens in the past and continue to be of high interest in 2020.
From March to August 2020, Dominica’s award-winning six-star CBI-approved resort The Residences at Secret Bay reported a 66% increase in enquiries from Americans, who are now seeking an alternative citizenship.
It’s not just that the Caribbean countries are geographically closest to the US, though this factor is important, low investment thresholds, fast processing times, freedom of movement offer, and lovely lifestyles are boosting their attractiveness to US citizens. No surprise that the Caribbean islands once more came out on top in the recently released CBI Index 2020.
Even more attractive to many Americans right now is the fact that all five of the Caribbean islands offering CBI Programmes have had very few Covid cases and even fewer fatalities (while Antigua has reported just three deaths from Covid, Saint Kitts, Dominica, Grenada and St Lucia have have witnessed no deaths). All Caribbean islands have shown their ability to quarantine effectively, healthcare readiness and government efficiency in the protection of citizens, making them some of the safest countries in the world.
Nuri Katz, founder of international financial advisory firm Apex Capital Partners recently told CNN Travel: “These small countries seem to be opening up and there’s a feeling that they’ll be able to manage this problem a lot better than big countries, so there’s a lot of interest in that in terms of healthcare and lifestyle.”