Markets in Everything: European Passports

Wild About Travel asks, “Ever gazed with envy on the European citizen lines at European aiporst while waitimg in line with a non-EU passport?” (sic)

You may soon be able to obtain one, in exchange for an investing in European government bonds.

The ruling party in Hungary has proposed offering citizenship to anyone willing to invest 250,000 euros in their government’s bonds.

It’s one strategy for rolling over massive government debt, and it’s expected to appeal mostly to wealthy Chinese who would gain the ability to travel freely and live anywhere within the European Union.

While this is not outright sale of citizenship, it’s ‘preferential treatment’ for foreign investors seeking to become Hungarian citizens, it has predictably brought near-universal ire from the rest of Europe.

This initiative was met with criticism. A number of members of the House of Commons of the United Kingdom found the proposal of the Hungarian deputies a “shocking abuse” of their EU membership. Other European countries are hardly likely to be enthusiastic about the actions of the Hungarians. Western Europe has enough problems with immigrants from Asia and Africa and does not need a new inflow of people with passports of a country-member of the Schengen area.

Finally, many in Europe do not like the fact that a large part of the buyers of the Hungarian passports will be the Chinese. At the very least, China is often seen as an economic competitor. Today, the Chinese consider the purchase of part of Iceland that is applying for the EU membership. Now the Chinese will be able to turn the country in the center of the continent into a base for further expansion.

The ruling party is seen as historically nationalistic, so some observers find the proposal surprising.

I wonder, though, whether the easily-anticipated reaction from the rest of Europe suggests that the proposal is more strategic than serious. Hungary seeks a financial bailout from the European Union, but balks at the spending reductions and constitutional changes demanded as a price funds. This move could well be seen as a bargaining tactic, a threat to offer cheap entry into the Union unless their demands are met.

Still, on face the proposal actually strikes me as not unreasonable. The U.S. offers an employment visa with a lower investment than insisted on by Hungary. And there’s a green card path for investors as well.

Someone willing to cough up a quarter million euro investment in Hungarian state debt arguably ‘deserves’ citizenship more than a person born in the country by happenstance that has been benefiting from state borrowing. And why shouldn’t it be this possible to become a citizen?

I’d love to see a parallel focus on humanitarian granting of citizenship. What if the two programs were linked?

(With apologies to Marginal Revolution for the post title.)

About Gary Leff

Gary Leff is one of the foremost experts in the field of miles, points, and frequent business travel - a topic he has covered since 2002. Co-founder of frequent flyer community, emcee of the Freddie Awards, and named one of the "World's Top Travel Experts" by Conde' Nast Traveler (2010-Present) Gary has been a guest on most major news media, profiled in several top print publications, and published broadly on the topic of consumer loyalty. More About Gary »

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  1. Nice! Even if the UK is against it, they in fact have the same option starting from 1 million pounds. So if Hungary opens the door, it will really become a free market of European passports. It’s really not worth it just for traveling but if one wants to open up the European job market, could be a viable option.

  2. the Europeans are miffed at us for having many convoluted rules and TSA inconsistencies, and a very disorganized system. For decades they already had many things in place we did not have. Now we are flexing all this muscle about travel safety and it has made travelers upset. So now when we are in the EU, they get to get us back. When I travel there, I feel that’s what it is, to be honest. Could be wrong though.

  3. Both examples given for US are far more complex or limited than what Hungary is proposing.

  4. I don’t understand the the negativity around this. Citizenship by investment is nothing new. American citizenship is only $0.5 million, Canadian $1 million, etc.

  5. What FlyingBear wrote was true. Andy: The Hungarian proposal is a “buy your citizenship” offer, the US does not have ANYTHING like that. US offers Lawful Permanent Residency through investment and before you can become a citizen (after 5 years of LPR) you need to aomply with all the US regulation in the meantime such as paying taxes on time, no felony conviction, citizenship test and be physically present in the US for at least 50% of the times in the last 3 years…

    Hungary says:
    Give us this money and we give you a citizenship right away… there is absolutely nothing else to comply with!

    I totally understand why the EU is mad at Hungary and if Hungary plays this out and it turns sour, they can be kicked out from the EU easily. And without Hungary being part of the EU, no one will want Hungarian citizenship since it will be worth close to nothing.

    Signed by someone who is proud to be an American, but was born in Hungary and lived there for 21 years – if that matters at all…

  6. I believe it is for Perm Residency too for Hungary. It is a lot easier. For Canada, you either invest in a business or create a business or actually move there.

    I was raised in Toronto and it’s filled with chinese people along with in Vancouver which is even more.

    I am chinese myself but moved over a while back first to the US.

    I dont see this as a problem, a LOT of money is invested in the economy.

    For the chinese that actually stay and join the community, they are very valued and bring a lot of wealth/knowledge/skills.

    They are the last to be in line for welfare, unemployment.

    Same applies to any other country they go to. Though this is by far the easiest. Considering interest rates are next to nothing in China, investing in EU bond for 5 years make good financial sense and Perm Residency along with it would be a very clear cut advantage.

    There are mainly 2 types of chinese people who do this.
    1) to give a better future to their family and kids, and this is the majority
    2) to have a backup home in case China implodes(becoming more common now) read the Economist on this trend but isolated to people usually with 10mil and up.

    Either way, no doubt about it, it benefits the country they go. Though some people my complain they are stealing their jobs etc. But they are bringing so much value to the country.

  7. @Gary

    My objection is your casual equating vastly different programs in US to buy-your-citizenship proposal in Hungary. As pointed out by Anonymous, US programs require both presence and involvement in creating/supporting business and employment in States. It’s the same as saying that a diploma-mill degree is the same as Harvard degree. After all, it cost money and you got a degree!


    I believe your over-simplification of the matter was quite well addressed by Anonymous

  8. Aren’t there any cheaper countries for sale? What’s the current rate on Amazon to get a passport from Freedonia?

  9. If only China allowed dual citizenship! Looking at lucky guys such as lucky, who has both US and EU passports!

  10. @Anonymus123456 and @FlyingBear: According to Reuters, the Hungarian offer is: “Proposed legislation listed on parliament’s website would grant permanent residency and ultimately Hungarian citizenship to outsiders who buy at least 250,000 euros ($322,600) worth of special government bonds.”
    As with US, Canada and other countries, Hungary is selling permanent resident cards that lead to citizenship. It’s nothing new. You can even buy citizenship in the Caribbean in their Economic Citizenship Programs without ever living there. If one is rich enough to join one of these programs, everything is taken care by a immigration agency so it’s quite easy in my experience.

  11. @Andy

    You did not in anyway address the differences between the programs in US and in Hungary. US is not “selling” anything outright. Please do tell which one of the two programs you used that “everything is taken care by a immigration agency”.

  12. 13 – Wei: Thanks… I love these 2 passports too 🙂

    14 – Andy: OK, that makes more sense then… but what you wrote here was not in the original article and the way the article was written made me think that this is a “Buy your citizenship” type of deal… at least the writer of the article made it sound like that. In that case it is a different story indeed.

    Question is: Did they regulate this in a way that they do a full background check on the applicants or do they just allow any criminal with big money to buy his/her way in???

  13. It’s taken care of by lawyers. It’s the same in the US, Canada and probably Hungary.

    There was a documentary on CBC(Canada) about Chinese (from HK) pre 1997 to Canada. They actually dont even show up, they just send their lawyers who present their plan to invest in Canada along with bank statements etc. That’s an extreme case how it was done. But it can be done like that. US can be the same, UK is also the same.

    I know because, I came from China, moved to US, moved to Canada, moved back to US, moved to UK, now back to US.

    I could have applied for Perm residency in UK but chose to come back(didnt like the weather).

    I also currently hold 3 citizenships China, Canada, US. Will probably apply for my forth(Brazil) within a year or 2 and possibly my fifth(Italy) after that, though that will cost 5-10K (Wife is Brazilian but family originally from Italy). Though I can potentially lose my Chinese citizenship within 8 years if they dont allow dual by then or if I’m not a perm resident of another country.

  14. The article that Gary linked to says the proposed law “would grant permanent residency and ultimately Hungarian citizenship”, not immediate citizenship.

  15. @David

    This isn’t apples-to-apples comparison. Chinese pre-1997 from HK, as you are saying, were in a different position than say, mainland Chinese. For one, they had a British passport (not UK) and Canada is still part of the Dominion. Canada was quite interested in supporting the exodus from HK before the handover, so it made things easier at the time as well.

  16. @David – Dual citizenship with Italy won’t cost you a dime unless you are hiring someone else to do the work for you. I did it myself–took some time and small amount of $ to order all the proper docs, but not impossible. For a spouse, it depends on when you were married and for how long.

  17. Good point FlyingBear,

    I do notice a lot more “Mainlanders” these days both in Toronto and especially in NY, Dallas, London. I must admit, I dont know how strict China is at allowing it’s citizens to leave China. But from people I know from Mainland, the easiest way out to any Western country is still through school followed by work visas leading to perm residency than citizenship.

  18. @FlyingBear: Hungary is selling permanent residency and so does US. I know it doesn’t look like the US gov is “selling” it, but the fact is it’s really that. $500k in investment = green card. Once a person is an PR, it is only a matter of time before one obtains citizenship. In fact, Hungarian citizenship requires 8 years of residency while US citizenship only takes 5 years. Both countries do not give citizenship right away, it is rather an expedited process. I did not do this, but I know plenty of people who took advantage of this to skip the long lines. You can Google EB-5 immigrant investor if you want more info.
    Dominica and St Kitts and Nevis (British Colonies) offer economic citizenship without having to live there.
    Henley & Partners is one of the big firms out there that takes care of everything. They even have a ranking chart of which passports are the most valuable (in terms of visa restrictions). You can easily find other agencies at any Chinatown.
    @Anonymus123456: Yes, applicants all have to go through full background screening before getting accepted to these programs.

  19. collecting passports ? I have 5 , Israel, USA, Russia, Canada and Norway. To be honest 2 are enough, my favorite is the Norwegian passport, because eventually i am moving to Oslo.

  20. @Ellen: Adios. Bring lots of cash to pay Norwegian taxes. However, you might want to wait 4 years as in that time Obama will transform our country into a Norwegian style socialist state —

  21. @FlyingBear: You do realize that Canada is an independent country, right? A British passport doesn’t entitle you to Canadian citizenship.

    As for being “part of the Dominion”, you’ll be glad to know we overthrew the Founders and their Jem’Hadar troopers back in 1867. I’m assuming that was a Star Trek reference since the British had an Empire (which fell apart decades ago and to which Canada hasn’t belonged since 1931).

    As for allowing rich HK citizens to buy their way into the country, that part’s true. They don’t call it Hong-couver for nothing.

  22. @Gary and Andy: The US E2 and EB5 Visas are a LOT harder to qualify for than what seems to be proposed in Hungary. It’s not just about a monetary “investment.” The US government is requiring that investors document that they are creating jobs via their investment and in some cases require an active director role within the invested company. This requires finding a suitable investment and devoting time/resources to making it succeed. Yes, there have been abuses; however, as many other commentators have already noted this is an apples to oranges comparison.

  23. @Rick, yes all are valid,my mother is Norwegian, my father is Russian, my husband is Israeli, my parents moved to the USA when i was 7 years old, and we got the Canadian through the Canadian government bonds investment program.
    @Rich you are correct about Norway, but it is a great country too, people are happy with their lives, beautiful nature , high taxes and high cost of living , but also high income and great education and health care. I want my daughters to grow up there.

  24. @Ellen: If you like all of that in Norway, you would find Finland great as it has all that you mentioned plus it has the highest rated educational system in the world and real saunas. Before moving permanently to Norway, I would suggest spending a whole winter there with its 6 hours of daylight – light at 9:00AM and dark at 3:00PM. And yes, Finland has the same problem. Language there is not a problem as EVERYONE under 50 speaks English well as it’s compulsory in school. I wish you well —-

  25. I have to run this by my attorneys, but I was under the impression that Norway remains a rather restrictive Nordic country in terms of allowing its citizens to voluntarily acquire citizenship of another country (with citizenship by marriage being a voluntary method of citizenship acquisition also restricted by Norway). Norway has a history of invalidating Norwegian citizenship status of some persons who had Norwegian citizenship but as an adult voluntarily acquired the citizenship of another country.

    About humanitarian grounds for acquiring citizenship, it is done too by a variety of countries. One such approach to such citizenship acquisiton in countries that aren’t generally considered jus soli citizenship countries (of the sort that is generally rather common in the Americas) is to grant citizenship to persons born “domestically” who otherwise could be considered “stateless” — even if the statelessness would be the product of deliberate decisions by parent(s) to not have the child recognized (in time) as a citizen of the country of the parent(s). There are also provisions in some places to grant easier paths of citizenship to refugees/asylum seekers than to other migrants to the same country.

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