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| | |-+  From Westphalia To The West Indies: Citizenship investment Programmes Overview
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Author Topic: From Westphalia To The West Indies: Citizenship investment Programmes Overview  (Read 159 times)
Iniko Ujaama
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« on: November 05, 2017, 07:50:50 PM »

https://stluciastar.com/westphalia-west-indies/

From Westphalia To The West Indies: Citizenship investment Programmes Overview

Citizenship has always been a fluid concept. While the Treaty of Westphalia signed in 1648 between Spain and the Dutch Republic is often flagged as the beginning of the modern nation state, only in 1914 did the modern passport, as we know it today, come into being.

World Wars I and II may have illustrated powerfully the divisions between nations in Europe and around the world but it was only in the post-war era, and with the end of old colonial empires, that strong conceptions evolved among many New World nations regarding their unique identity. No longer chiefly an allegiance to an empire or monarch, but instead to their own state and people first.

With the notable exception of the European Union, and its relationship to Europeans across its continent (and notwithstanding the existence of dual citizenship), to be a citizen of a nation state today is to belong exclusively to that nation state. This modern understanding is how citizenship has chiefly operated in the post-war world. It is now set to dramatically change in the years ahead, as Citizenship by Investment Programmes (CIPs) grow.

OVERVIEW

CIPs have long been forecast as an evolution in our global world. Just as the Treaty of Westphalia laid the foundations for the modern passport, so too did the potential for rapid global trade possible by airplanes, in tandem to the speed of communications in the online era, draw us closer and closer to the concept of a truly ‘borderless world’.   One need only take a cursory look at the current list of territorial disputes around the globe to know any geographical recognition of such a world remains far away. Especially so in a post-9/11 world that has seen higher walls erected once more. At times literally, as seen with US President Donald Trump’s plan for a US-Mexican border wall, and in other instances via the ballot box, as seen with the UK’s Brexit vote to leave the EU.

Yet, notwithstanding the ongoing divisions in politics and security, Earth is economically closer to a global citizenry than ever before. So much so that free trade agreements – once held to be a blue ribbon item that signified a ‘special relationship’ between two trading nations – is now seen as increasingly pedestrian and unexceptional in the global economy. This has been supercharged by the online era and digital economy, ensuring we not only trade around the world more freely than ever before, but do so in a real time 24-hour economy.

This is even apparent in culture and entertainment. Once TV footage would be shipped or flown from one country to another – and music albums and movie premieres released months apart – but today it’s a pop culture scandal if a blockbuster movie doesn’t have a simultaneous worldwide release.

Sure, territorial disputes may remain in the Middle East, in the South China Sea, and along the Northwest Passage – but economically and culturally the world did away with borders long ago.

With this understanding, the contemporary phenomenon of CIPs cannot be seen as a new development, but rather an overdue occurrence.
WHY NOW?

Though the world may be more interconnected than ever before globally, this does not mean economic prosperity has been shared evenly. A discussion of this issue in-depth, as it impacts in the Caribbean, is best explored in a future piece but its core element applies to any CIP discussion: CIPs seek to attract affluent global investors with cash to spare.

Where economic prosperity has seen a direct impact on the Caribbean economy is the attractiveness of the region as a safe haven for affluent citizens of the world who’ve first acquired their wealth in a nation with an unstable or controlled economy. A fortune may have been made in this setting but the odds of maintaining it long-term are often held to be uncertain.

In tandem with the attraction of stable government, a free market economy and a transparent legal system across many Caribbean nations, there is, of course, the appeal of the broader lifestyle. Entrepreneurs and investors who are able to allocate millions to a regional nation, often enjoy considerable flexibility surrounding their weekly schedule. Regularly decamping here in a tropical climate to wait out a chilly winter back home (if not staying longer) was often previously made possible only by seeking out a permanent residency or citizenship.

THE EFFECT ON LOCALS

While at face value CIPs may not seem such a great issue – ‘wealthy tourists and global entrepreneurs have always visited the Caribbean, so how is a longer stay different?’ one might wonder – the permanency of citizenship, and the privileges it accords are huge factors here.

Within this dynamic three issues are especially prominent, the first as seen in the leaks of the Panama Papers. Notwithstanding the sovereign right of Panama and other like-minded nations to tax at any rate desired, other nations around the world are increasingly targeting global tax minimisation strategies of their most affluent citizens. The potential for a CIP to be used solely as a means of avoiding taxation is a live issue in a world with a growing rich-poor gap.

Many nations have begun placing tighter restrictions on the ownership of property. This is done not to discourage foreign investment as a whole but chiefly to see housing remains affordable to buy for permanent residents and citizens who primarily live and work in the nation.

Erecting such barriers while leaving the door ajar for quick access to citizenship via a CIP could greatly undermine such policies. What’s more, the risk of individual nations creating a ‘two tiered’ citizenship is growing. Affluent nations like the United States and the UK have always had an internationalist culture, and may well adapt to a new world where citizenship is not only the sovereign right of native-born residents but also available for purchase to a wealthy buyer.

Yet, within developing nations there is a far greater risk that CIPs could erode confidence in public institutions, as governments focus on growing a CIP to lure foreign investment, to the detriment of working on resolving issues and delivering services to native-born and resident citizens of the country.

This risk goes beyond confidence in a government’s operations, to also include national security, as the risk of a wealthy foreign government seeking to influence local affairs via citizenship programmes grows. The difference between a CIP requiring a US$500,000 fee in the United States but only $5,000 in Paraguay is a core example of the potential of the risk that foreign policy could increasingly be pursued via a CIP when not properly regulated.

CONCLUSION

The evolution of citizenship and the issues raised surrounding CIPs serve as an overview of the environment as it exists today. While these issues are real and ones that warrant ongoing public dialogue, it would certainly be a mistake to misread CIPs as uniquely bad or ill-advised.

Rather, like any government policy or investment programme, the chief concern is ensuring they are utilised effectively: to fairly attract and incentivise foreign investors – especially those with a feeling of kinship or ongoing links to a nation – while also avoiding the risk that citizenship of a sovereign Caribbean nation could come to be seen as a ‘revolving door’, always available to a wealthy buyer.



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