Episode 687: Buy This Passport : Planet Money Most of us don't think of citizenship as a product. It's something more: It's part of who you are. On today's show, we look at what happens when citizenship goes up for sale.
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Episode 687: Buy This Passport

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Episode 687: Buy This Passport

Episode 687: Buy This Passport

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STACEY VANEK SMITH, HOST:

Wendell Lawrence lives on a tiny island in the Caribbean. Like any proud citizen, he knows all the basic stuff - country's flag - red and green with two white stars.

WENDELL LAWRENCE: Stars indicate hope and liberty.

VANEK SMITH: Oh, that's nice.

And he can sing you the national anthem.

LAWRENCE: (Singing) Oh, land of beauty, our country where peace abounds, thy children stand...

I'm not a good singer. I'll leave it.

VANEK SMITH: He can give you directions to one of the island's main tourist attractions.

LAWRENCE: Alexander Hamilton, he was born about 50 feet from where I was born.

VANEK SMITH: You were born right next to Alexander Hamilton?

LAWRENCE: Exactly. He is, in fact, a son of this soil.

VANEK SMITH: The soil in question is St. Kitts and Nevis, a tiny country made up of two islands. I went there last week. It is a beautiful place with beaches and big, jungley (ph) mountains. But I went to visit because the country is at the center of this very odd experiment. St. Kitts is selling something I didn't even know you could sell. It's selling citizenship. If you want to be a citizen of St. Kitts, that is something that you can buy. If you give them enough money, you become a Kittician. Just like that, they'll give you a St. Kitts passport. Citizenship is a product they sell. Actually, it's the main thing they sell.

(SOUNDBITE OF MUSIC)

VANEK SMITH: Hello, and welcome to PLANET MONEY. I'm Stacey Vanek Smith.

DAVID KESTENBAUM, HOST:

And I'm David Kestenbaum. Most people do not think of citizenship as a product. For a lot of people, it's something more, like citizenship is special. It's part of who you are. It's your identity. It's your home.

VANEK SMITH: But St. Kitts had this idea to treat citizenship like oil or bauxite or cars or anything else a country sells - like a product.

KESTENBAUM: Today on the show, what happens to your country if you just start letting people buy their way in?

(SOUNDBITE OF MUSIC)

VANEK SMITH: The man who was singing the national anthem so beautifully, Wendell Lawrence, is one of the people responsible for the St. Kitts citizenship experiment, although he came by his citizenship the old-fashioned way. His parents are from here - and their parents and their parents.

So you're a local?

LAWRENCE: I am very local.

KESTENBAUM: If you are local, there's one thing you know - people here are poor. Wendell grew up in this little fishing village. No one had much money. They'd get fish for dinner right off the boats, sometimes cook them on the beach.

LAWRENCE: We start a fire with three stones. And we really had a good life.

VANEK SMITH: Wendell loved his country, and he loved school.

KESTENBAUM: He was really good at school.

VANEK SMITH: He was. In middle school, he won a prize for best student.

KESTENBAUM: Best middle school student in the country. Then, in high school, he took one of those achievement tests, and he got the highest score in the country, which is - how many people in the country?

VANEK SMITH: Forty-five-thousand people, but still.

KESTENBAUM: He got a scholarship to go to college in Jamaica, but St. Kitts was his home. And when he was done, he came back. Eventually, he got a job where he could try to help his country. He became the finance minister for St. Kitts.

VANEK SMITH: It was a rough time to be the finance minister. A terrible hurricane hit the islands in 1998, and the country had to take out a whole bunch of loans to rebuild.

KESTENBAUM: Then, the next year, in 1999, two more hurricanes hit the islands.

LAWRENCE: It was a huge debt load that posed a significant risk. It reached probably one of the highest in the world.

VANEK SMITH: They said the highest debt-to-GDP ratio in the world.

LAWRENCE: One of the highest in the world.

KESTENBAUM: Things got worse. The sugar business, which really was the country's entire economy at the time and employed a quarter of the population, it just collapsed.

VANEK SMITH: And Wendell's country, these two little islands, was headed for total economic failure, and no one could think of a way out. There only natural resource was sunshine, and, frankly, other countries had better beaches.

KESTENBAUM: But then, one day, Wendell got a call from the prime minister, who said, there is this guy who says he has a plan to save our islands. He's a Swiss guy named Christian Kalin. Can you go talk to him?

VANEK SMITH: I met Christian in St. Kitts. He rents this really beautiful house in the mountains. It has a view of the Caribbean Ocean. And while we were talking, a little troop of monkeys ran by.

CHRSITIAN KALIN: Yeah, monkeys - a whole lot of them. See that?

VANEK SMITH: Oh.

KALIN: (Laughter). So cute.

KESTENBAUM: Christian has an unusual job. He works for a company that helps wealthy people who want to become citizens of a new country.

VANEK SMITH: Christian says a lot of his clients are people from really unstable or dangerous countries, or they have a passport that makes it really hard to travel. They have to apply for a visa if they want to go anywhere.

KESTENBAUM: Some people just want the option of living somewhere else. Christian's job, though - getting these people citizenship - is tough because most countries make it really, really hard to become a citizen.

VANEK SMITH: Christian told the prime minister of St. Kitts, why don't you make it easy to become a citizen of this country? Countries treat citizenship like this sacred thing.

KESTENBAUM: Like you've got to be born there or your parents have to be from there.

VANEK SMITH: But that, he said, is a really old-fashioned way to look at it.

KALIN: Actually, citizenship is one of the last institutions that are still basically governed by, essentially, ancient, feudal birthright principles.

VANEK SMITH: Christian thought, this is really unfair. Where you're born, your citizenship, it plays such a huge role in your life, and it's the luck of the draw.

KESTENBAUM: Christian tells the prime minister and Wendell, look, you should just straight out sell your country's citizenship to people who can afford it.

VANEK SMITH: You have to be rich. Do you feel weird about that?

KALIN: Maybe some people might feel, you know, it's unjust or unfair because it's essentially for wealthy people, but at least this option is possible.

VANEK SMITH: Wendell Lawrence was not in love with this idea, but it was a way to bring in some money. And the country really needed money.

LAWRENCE: Under the most normal of circumstances, you probably look at citizenship much more carefully. But when your stakes are that high, then you basically have no option.

VANEK SMITH: Wendell decided this was an experiment worth trying, so he teamed up with Christian to see if they could make it work.

KESTENBAUM: First, they had to decide on a price. Like, how much were they going to charge people who wanted to become citizens?

VANEK SMITH: They decided to give people two options. The first one - you could just make an outright donation to the country of $250,000.

KESTENBAUM: Or, if people didn't want to do that, they could make an investment on one of the islands - buy an apartment or a house with a value of $400,000.

VANEK SMITH: That is a lot of money.

KALIN: If something is too cheap of that nature, it kind of raises question marks. So I'd rather have a citizenship program to be more expensive because then it attracts the right kind of people, you know?

VANEK SMITH: So you wanted to set the price high enough that it seemed reputable?

KALIN: Yeah.

VANEK SMITH: Wendell started going around the country trying to convince his fellow citizens that this was not a crazy thing, that it was OK for people all over the world to suddenly become citizens of their little islands.

VANEK SMITH: That people had all kinds of questions, like what happens if they all vote? They could take over our government. Wendell said, no, that won't be a problem. These will not be voting citizens. Still, people were wary.

LAWRENCE: Well, people feel like citizenship is almost sacred, so that - one of the important things that needed to be done immediately was to make sure that the risks of the program were minimized.

VANEK SMITH: Like making sure you didn't sell passports to criminals or...

LAWRENCE: That's correct.

VANEK SMITH: They hired an outside company to do background checks on all of the applicants. And then, it was time to sell their product to the world. Wendell and Christian started traveling all over the place on what they call a global road show.

KESTENBAUM: They met with rich people and business people and said, hey, do you want to be a citizen of St. Kitts?

VANEK SMITH: You should.

LAWRENCE: We went to the UK, Zurich, Hong Kong, Singapore. We went to some Latin American countries. And we will do a formal presentation to introduce them to St. Kitts and Nevis, where we are.

VANEK SMITH: Oh, like where you are on Earth?

LAWRENCE: Geographically.

VANEK SMITH: Was that weird to be like, here's a globe?

LAWRENCE: Yeah.

KESTENBAUM: This was a problem. People had never heard of St. Kitts. They couldn't find it on a map. Christian and Wendell did their best, and other companies got involved, contracting with the government to sell their citizenship. And they started putting out these ads with lovely beaches and coral reefs and very happy families.

(SOUNDBITE OF ARCHIVED RECORDING)

UNIDENTIFIED MAN: You and your family obtain a remarkable second citizenship for life, with no need to reside in the country.

KESTENBAUM: The ad says, don't worry if you've never heard of St. Kitts; it's a legitimate place.

(SOUNDBITE OF ARCHIVED RECORDING)

MAN: The country's reputation is untouched. It is part of the British Commonwealth, the head of state being the Queen of England.

KESTENBAUM: The currency, the ad says, it's pegged to the U.S. dollar. You know the dollar. But unlike the United States, very few taxes. This is the same ad, different music.

(SOUNDBITE OF ARCHIVED RECORDING)

MAN: One of the most attractive features of St. Kitts and Nevis is that you are not liable for wealth, gift, inheritance, foreign income or capital gains tax.

KESTENBAUM: At this point in the ad, there are dollar bills falling in slow motion down the screen.

VANEK SMITH: No taxes.

KESTENBAUM: The ad says with a St. Kitts passport, you can get into a hundred-and-some countries without a visa - Canada, Europe.

VANEK SMITH: Ads like this worked. I talked to this guy, Roger Ver, who decided to become a St. Kitts citizen. I talked to him over Skype. Roger was born in California. He made a lot of money in tech, and he actually goes by this nickname, the Bitcoin Jesus.

ROGER VER: Some people call me that, yeah.

VANEK SMITH: What does that mean?

VER: I was the first person in the world to start investing in bitcoin startups and started spreading the good word about bit coins.

VANEK SMITH: Roger left the U.S. about a decade ago and started looking for a new home. He hated the idea that his tax money in the U.S. was going to fund wars.

KESTENBAUM: He tried living in Japan. But it was almost impossible to become a citizen there. So when he heard about the St. Kitts program, he thought, maybe that's my country.

VANEK SMITH: He hopped on a plane and went to check out St. Kitts. He really liked it. He decided that day he wanted to become a Kittitian.

KESTENBAUM: He didn't want to just fork over $250,000. So he went the investment route. He bought a $400,000 condo on the beach, right next to the Marriott Hotel.

VANEK SMITH: Did it feel expensive, $400,000?

VER: Yeah, of course. That's a huge amount of money.

VANEK SMITH: Well, I don't know (laughter). I mean, to me it's a huge amount of money, but...

VER: To anybody I think it's a huge amount of money. I was euphoric when I finally got it. But the whole concept is crazy to me, like, to spend that much money on a piece of paper with my photo on it.

VANEK SMITH: Roger renounced his U.S. citizenship. He is no longer an American. He is straight-up Kittitian, at least part time. He spends a few months out of the year there.

Do you know the flag? Could you recognize the flag, do you think?

VER: Yeah, I would recognize the flag and all of the other flags here in the Caribbean.

VANEK SMITH: Do you know the national anthem?

VER: No, but I don't even stand up for the U.S. national anthem, even when I was an American. So...

VANEK SMITH: Roger told me he does not believe in national anthems. He thinks they are brainwashing.

KESTENBAUM: The citizenship program looked like a huge success. There were lots of new citizens. Sales of citizenship became a major source of income for the country. It came to account for one quarter of the country's GDP.

VANEK SMITH: St. Kitts had been kind of this scruffy place. And even when I was walking around, there were all these dogs running around everywhere who didn't seem to belong to anyone. Some of the roads were really rough. But there were also these really fancy developments going up everywhere. I went to visit one. This guy Terry Scanlan (ph) showed me one development called The Villas at Pinney's Beach. It's his job to sell these villas, as he calls them, to prospective citizens. And they're really nice. They're these little two-story houses, three bedrooms, all right next to each other. They each have their own pool, really beautiful manicured lawn, little driveway. The thing was there was nobody there. Like, there were no cars anywhere. There were no people. Everything was just empty.

Is there anyone there right now?

TERRY SCANLAN: No, I don't believe there's anyone there.

VANEK SMITH: And is this person home?

SCANLAN: No. No, there's no one here right now.

VANEK SMITH: It was like this beautiful ghost town. And Terry said this is what happens. People are buying these villas because they want a passport. But they never come.

KESTENBAUM: And when you see one of these places that's empty, don't just think, one family, four passports. These are timeshares. Each one of these is owned by, like, 10 different families. They're all getting passports.

SCANLAN: It could probably be 50 passports now because you get a passport for the head of the family. You can get a passport for your wife, obviously, for your kids under - I think it's under 25 or 26. I'm not sure the exact. And then you can also get it for one generation up, for your parents. So you literally could have - one share could represent 10 passports for a family. So there could be a hundred passports represented in one of these villas.

VANEK SMITH: Whoa, that's a lot of passports.

SCANLAN: That's a lot of passports, yeah.

VANEK SMITH: But nobody's there.

SCANLAN: But nobody's there, yeah. There's no residency requirement on a St. Kitts Nevis passport. You don't have to spend - you know, you actually never have to come here.

VANEK SMITH: As we're talking, all these backhoes and forklifts are going by because they are building more houses.

KESTENBAUM: Terry says recently, some of these shady developments have started cropping up on the island - just concrete buildings that were never finished. And all the apartments, they are selling for the magic price of $400,000, paid for by people who never ask questions and sometimes never even saw them.

SCANLAN: And I always refer to them as the $400,000 concrete boxes because...

VANEK SMITH: Are there a lot of those?

SCANLAN: Yeah, yeah.

KESTENBAUM: Stacey, this seems super strange and also just wasteful, right? All this money is going to build these giant ghost towns. I mean, I get that maybe it creates some construction jobs and landscaping jobs. And the government is going to get money from building permits and whatever. But it just feels nuts.

VANEK SMITH: Well, the idea was that these places would be pretty nice, and eventually they would get rented out.

KESTENBAUM: Like, to tourists.

VANEK SMITH: Yes. And there have been more tourists. But I was there during the high season, and I saw some tourists but not nearly as many tourists as there were villas. And Christian Kalin, the Swiss guy who had proposed this whole idea of citizenship, he started to see all of these concrete boxes going up everywhere. And he got really worried.

KALIN: It was good as long as the numbers were manageable.

VANEK SMITH: What are manageable numbers?

KALIN: Let's say I think up to maybe about 200 a year.

VANEK SMITH: But the government was selling 2,000 passports a year.

KESTENBAUM: And when you are a small island nation granting 2,000 passports a year to people you don't really know, it is easy to mess up. They ended up granting passports to some people you do not want holding a passport.

VANEK SMITH: Canada noticed it had let a businessman into its country, this guy from Kazakhstan who was wanted for embezzlement. And he had - you guessed it - a St. Kitts passport.

KESTENBAUM: Another businessman from Iran showed up in Canada, demanding to meet with the prime minister. He had a diplomatic passport from St. Kitts that he said he had bought.

(SOUNDBITE OF ARCHIVED RECORDING)

UNIDENTIFIED REPORTER: St. Kitts and Nevis has pledged to resolve security concerns by Canada in the wake of that North American country now requiring nationalists of that island nation to obtain visas...

KESTENBAUM: The Canadian government looked into these incidents. And on November 22 in 2014, it sent out this notice. Quote, "as of 12 p.m. Eastern Standard Time today, citizens of St. Kitts and Nevis will require a visa to travel to Canada." In other words, you can't just walk in anymore if you have a St. Kitts passport. We want to know who you are.

VANEK SMITH: The U.S. also put out an advisory. And after this happened, people were suddenly not that interested in buying a St. Kitts passport. Sales plunged.

KESTENBAUM: St. Kitts citizenship, it just was not so useful anymore.

VANEK SMITH: There was a huge political fallout from this. The president of the country who'd been in power for more than 20 years was thrown out. And the new president made overhauling the passport program a top priority. So I talked to a lot of Kittitians about this, actual Kittitians who were in the country. And many of them had not so great feelings about the citizenship experiment.

DESIREE PERRY: The passport thing, I hope it will never happen again.

VANEK SMITH: This is Desiree Perry (ph). She's a waitress at a little restaurant called The Gin Trap.

PERRY: I mean, it's illegal. If it's something that is legal...

VANEK SMITH: Well, I mean, it is actually technically legal.

PERRY: (Laughter). OK.

VANEK SMITH: What if you had, like, $250,000?

PERRY: But it's wrong. It is wrong. There's ways to get money. Do it some other way. Don't sell us out. It's like you're selling us out.

VANEK SMITH: Other people I talked to said they were OK with the idea of selling citizenship. They said it had totally transformed these little islands. Yes, there are a bunch of empty houses. But there are also a lot more really nice hotels, and the roads are better. I asked Wendell Lawrence what he thought of the whole citizenship experiment.

Do you have any regrets about the program?

LAWRENCE: No. The benefits of the program has so far outweighed any negatives. The argument in St. Kitts now is in relation to how it - how the program is managed.

KESTENBAUM: Citizenship is this funny thing. It is basically the right to live in a country. It's a valuable thing. It's like membership to an exclusive club.

VANEK SMITH: And when you have something that is valuable like citizenship, there's this question of how do you decide who gets it?

KESTENBAUM: Yeah, you've got to make this decision, right? I mean, birthright, OK, that makes sense. But then what? Do you do a lottery? And what about all the refugees? Do you let them in? How do you decide who comes in? And what about people who want to buy citizenship? Do you sell it to them?

VANEK SMITH: In the U.S., you actually can buy a green card. But you do have to live here for five years before you can get citizenship.

KESTENBAUM: The St. Kitts experiment crossed this line that the rest of the world just does not seem ready to cross. If you read the statement that the Canadian government put out announcing greater scrutiny for St. Kitts passport holders, it says this a little further down. Quote, "Canada continues to welcome genuine visitors from St. Kitts and Nevis," like, from St. Kitts and Nevis. You have to be from there.

VANEK SMITH: Citizenship in St. Kitts and Nevis had been valuable because people didn't think of it as something that was for sale. And once people realized that you could buy a passport from St. Kitts and Nevis, it wasn't worth as much.

KESTENBAUM: One other thing has made the St. Kitts passports less valuable. A lot of other islands started copying the St. Kitts program. They are now selling their citizenship.

VANEK SMITH: Apparently, Malta is really hot right now. Citizenship there costs $1.5 million. But you do get an EU passport.

(SOUNDBITE OF SONG, "I'M HOME")

ANDREA PERRY AND SARAH SHARP: (Singing) It was hopes. It was dreams. But above everything, it was you.

VANEK SMITH: There are a few people we would like to thank. Atossa Abrahamian, she wrote an excellent book about this topic called "The Cosmopolites." It was the inspiration for the story - also, Eric Johnson (ph) and Dwyer Astivan (ph).

KESTENBAUM: You can find us on Facebook or send us email. We are planetmoney@npr.org.

VANEK SMITH: Our episode today was produced by Jess Jiang.

KESTENBAUM: And if you're looking for more podcasts to listen to, check out NPR's new Politics podcast. Maybe you're interested in trying to make sense of all the election stuff. You can find it at npr.org/podcasts and on the NPR One App.

VANEK SMITH: I'm Stacey Vanek Smith.

KESTENBAUM: And I'm David Kestenbaum. Thanks for listening.

(SOUNDBITE OF SONG, "I'M HOME")

ANDREA PERRY AND SARAH SHARP: (Singing) We came. We saw, and we conquered, felt the world beneath our feet. It was hopes. It was dreams. But above everything, it was you right here with me.

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