St.Kitts-Nevis seeks to sell more passports by getting back in the U.S.’s good graces
The tiny Caribbean nation of St. Kitts and Nevis, population 54,191, has a lot going for it. White sand beaches. Balmy weather. Proximity to the United States, which makes it easy for the snowbirds of New York and Boston to pop down for a weekend in the sun.
But tourism can only do so much for an economy. St. Kitts was hit hard in the mid-2000s, when European reforms got rid of trade preferences the country had enjoyed for its high-cost sugar industry. So, St. Kitts has tried to revive another product for export: Passports.
That’s why the prime minister of St. Kitts and Nevis, Timothy Harris, found himself in the lobby of a Washington D.C. public relations firm on Thursday night, taking part in the launch of Belong, a new magazine promoting second citizenship in St. Kitts, Dominica, and Grenada. Harris pitched a collection of diplomats and journalists on the advantages of buying a second citizenship for as little as $200,000 a pop — not just for their own sake, but for the sake of his constituents as well.
“Small countries are faced with the challenge of being much more creative in pursuing some parts of development,” Harris said, as the small crowd munched on battered and fried island snacks. ”Ultimately, that is the true test of a democracy. It is the freedom that is important. The freedom to choose. And we want our people to choose prosperity.”
In order to attract much interest in its passports, however, Harris needs to convince someone else: The U.S. Treasury, which has been concerned about the use of such citizenship to evade sanctions and other restrictions. That’s where the crisis management consultants come in.
Of course, selling passports isn’t a new idea. St. Kitts pioneered the industry back in 1984, when it set up the first program for “citizenship through investment,” allowing foreigners to enjoy the benefits of visa-free travel to scores of other countries, the freedom to retire in a place that wouldn’t ask too much in taxes, and the ease of setting up offshore businesses in a place with few pesky transparency laws.
A number of other countries followed suit. Many Caribbean nations now have similar programs, as do several countries in Eastern Europe, Austria, the United Kingdom, and the United States itself, which grants green cards to people willing to invest $500,000 in a qualifying project.
Now, a whole cottage industry of consultants has grown up around the market for secondary citizenship, promising “security” and “freedom” for today’s globetrotting elite. One of the most established such outfits, Henley & Partners, advertises “residency and citizenship planning services” for high net worth individuals who prefer not to be confined by their nationalities — as well as the firm’s deep knowledge of the programs gleaned from having helped to set many of them up. They estimate that people spend some $2 billion a year globally buying additional passports.
The effort was going well for St. Kitts & Nevis in the 2010s, when sales of passports generated 36 percent of the government’s revenues in 2014. The European programs were ramping up restrictions, so more people started opting for programs with less red tape. But then, in May of that year, the axe fell: The U.S. Treasury’s Financial Crimes Enforcement Network issued an advisory to financial institutions after determining that “lax controls” had allowed several Iranian nationals to obtain St. Kitts and Nevis passports, potentially with the intent of evading sanctions or committing financial crimes. (The country might have had a sense of deja vu; in 2000 Treasury issued a similar advisory for all companies set up in the islands.)
Although St. Kitts’ government doesn’t disclose exact numbers for its passport sales program, the Treasury’s advisory wasn’t good news. And when Harris defeated 20-year incumbent prime minister Denzil Douglas in February 2015, he pledged to clear the program’s name by any means necessary. To that end, he retained a global risk management firm to make recommendations for reforms, and announced on Thursday that the changes had been “substantially completed.” The modifications included the authority to ban certain nationalities from participation, and Harris says he has barred Syrian nationals — along with people from Iran and Afghanistan — “in order not to expose our program to that particular vulnerability.”
“Those who have nefarious anticipations and expectations need not apply, because we only want the best,” Harris says.
And then, Harris hired an old Washington hand: Lanny Davis, a former Clinton administration official whose firm Levick (tagline: “Communicating trust”) has been in the business of helping small nations rehabilitate their images for years. Recent clients include Qatar, Hungary, and the state-owned news agency of Nigeria; past ones include the Ivory Coast and Equatorial Guinea. Davis thinks he can persuade Treasury to lift the advisory and clear St. Kitts’ name.
“We are hopeful that we can help this great little democracy,” Davis says. “What we’re going to try to do at my law firm is persuade everyone that we have done the due diligence and the vetting to be sure that this program only allows the appropriate people to get a passport.”
Once that’s done, Harris can keep making his sales pitch to the world’s wealthy elite that a second passport is worth the money. In doing so, he talks about making the islands a real home for these people, rather than just an accounting trick, or a convenient portal to other places. “We want our country to have the discerning citizen who wants to contribute to the success and the development of our beautiful country,” Harris said.
It’s not mandatory, though. If you don’t want to visit St. Kitts and Nevis, they’re happy to send your new passport in the mail.
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