In the tropical paradise of Saint Kitts and Nevis, it isn’t the visitors to its golden shores and pristine beaches who sustain the economy. It’s those buying its navy blue passports.
For as little as $100,000, foreigners can secure citizenship in certain Caribbean nations that promise tax breaks and visa-free travel to Europe. In Saint Kitts, the “golden passport” program was expected to bring in about $192 million, or 51% of the country’s revenue, in 2023.
That’s why Prime Minister Terrance Drew is urging residents to rally behind the flagship industry, which is in danger should the European Union tighten travel rules for countries that sell their citizenship.
“Our national economic prosperity hinges on the robustness of our citizenship-by-investment program,” he said during the annual budget address last month. “This program must be protected at all costs.”
For Saint Kitts and four other Caribbean countries — Dominica, Saint Lucia, Grenada, and Antigua and Barbuda — citizenship-by-investment, or CBI, programs rake in more than $579 million a year. In Saint Lucia and Antigua, the cost per passport is as low as $100,000. Saint Kitts carries the highest price tag at $250,000.
The countries have collectively extended citizenship to at least 88,000 people — many of them Chinese, Russian, Nigerian or other nationalities that would usually be required to apply for travel permits — the EU said in an October report.
That’s pushing the EU to consider changes that would make it easier to clamp down on travel from nations with CBI programs. A recent report from the Organisation for Economic Co-operation and Development said the programs can serve as a means for criminals “to perpetrate massive frauds and launder proceeds of crime and corruption reaching into the billions of dollars.”
Should the EU make good on its threat, “it would be an immediate game-changer,” said Rafael Cintron, whose company, Wealthy Expat, advises people on second passports.
In Dominica, CBI accounts for 55% of all government revenue, and the funds have been used to build the international airport and dredge rivers. In Grenada, those funds have built prisons and supported welfare programs.
For all five nations — small tourism-dependent economies with few natural resources — the programs are an economic lifeline.
“It would pretty much cripple the Caribbean industry,” said Cintron, who gave up U.S. citizenship after acquiring passports from Saint Kitts, Serbia and Mexico. “The reality is nobody wants a passport that only gives you access to Latin America and a couple of African countries.”
Saint Kitts became the first country to offer citizenship-by-investment in 1984 after it gained independence from England the year prior. For the 48,000-person nation, citizenship sales and promoting tourism were seen as a way to wean itself off the sugar trade.
Mc Claude Emmanuel, CEO of Saint Lucia’s CBI program, said the islands are acutely aware that ease of travel is one of their major selling points.
The five nations have been meeting with European and U.S. officials to underscore their security procedures. In March they barred Russians and Belarusians from the programs in response to the invasion of Ukraine. Even so, in July, the United Kingdom revoked visa-free travel from Dominica and a handful of other nations, citing security concerns.
“Whenever we get an application, we have to review it under a microscope,” Emmanuel said. “We know that one lapse in our due diligence, one crack in our in our research, can cause irreparable damage to the brand.”
If rejection rates appear to be low, as the EU has warned, he said it’s only because applicants have to jump through so many hoops that many drop out before they complete the process.
If the cloud over CBI has a silver lining, it may be U.S. anxiety.
Even though U.S. citizens have to pay federal taxes regardless of where they live — and they already enjoy visa-free travel to Europe — their interest in the passport programs surged during the pandemic and has continued to run strong during global uncertainty, officials and passport brokers said.
What seems to be driving demand is a sense of unease, said Katie Ananina, the founder and CEO of Texas-based Plan B Passport. She said most of her U.S. clients have a “prepper mentality.”
“The U.S. election always comes with a spike in CBI interest,” said Ananina, who goes by “Katie the Russian” on social media. “A lot of people expect civil unrest no matter what side wins, so they want a hedge, an insurance policy, that allows them to go the warm Caribbean and enjoy their time there instead.”
In Antigua and Barbuda — the only Caribbean country that publishes a breakdown by nationality — the number of Americans applying for citizenship has tripled since since 2019.
Nuri Katz, the founder of Apex Capital Partners, a Montreal-based firm that advises clients on second citizenship, said the company is now focusing all of its energy on clients from the U.S.
“We have seen an increase of hundreds of percentages since 2020, when there was just a negligible amount of applicants from the U.S.,” he wrote in an email.
Read More: Americans rush to Portugal ahead of changes to expat tax breaks
In many countries, the influx of wealthy foreigners has exacerbated social tensions. Portugal recently scrapped its resident investor program, as it was blamed for skewing the real estate market. And various countries within the EU have been ending or reforming their CBI programs to be more rigid.
Not to mention the EU’s publicized concerns over security.
While the Caribbean programs also generate some discomfort among locals, the benefits are, perhaps, more apparent.
During his recent speech, Prime Minister Drew announced that most workers in Saint Kitts and Nevis would be receiving a “CBI dividend” — the third in recent years — of between $95 and $185.
That is felt all throughout the island’s country’s, said Sherry Gajor, the owner of Sherry’s Beauty World in Charlestown, Saint Kitts.
“When you give people a little incentive like this, they might come to the salon and have a treatment,” she said. “The government is giving back to the people some of the money that they collected, so that’s got to be a good thing.”