In an April interview with the Financial Times, French President Emmanuel Macron said that following the coronavirus, “it’s going to change the nature of globalization.”
Writing for The Guardian, professor of economics and public policy at Harvard University, Kenneth Rogoff, said, “The post-pandemic world economy seems likely to be a far less globalized economy, with political leaders and publics rejecting openness in a manner unlike anything seen since the tariff wars and competitive devaluations of the 1930s. And the by-product will be not just slower growth but a significant fall in national incomes for all but perhaps the largest and most diversified economies.”
Rogoff said that while developed nations with large and established economies, such as the United States, could see a decline in GDP as a result of deglobalization, it is developing countries that are likely to be hit hardest.
Mohammed Asaria, Managing Director and Board Member of Range Developments says that most of his clients seeking second citizenship are from emerging markets. “Second citizenship is no longer viewed as a luxury but an asset for high-net-worth individuals from developing economies.” He says that while the middle classes in emerging markets are more likely to be price-sensitive, high-net-worth individuals continue to seek the security of more stable economies.
By investing US$220,000 (plus government fees) in a state-approved real estate project in Grenada, individuals can become eligible for citizenship. By subsequently investing in a viable business in the US (there are no statutory prescribed minimum amounts), individuals can apply for the residency in the United States through an E-2 visa in around six weeks.
According to Asaria, since the pandemic many people are seeking second citizenship. “We are seeing a lot of second-generation Arab expatriates, NRIs, Russians and Africans look at the threat of deglobalization and looking at Grenada and the US E-2 visa.”
Following the disruption to international supply chains and travel following the outbreak of COVID-19, investors are looking for stability for their families and businesses. “In the case of Grenadian citizenship, applicants’ spouse and children below the age of 21 are also eligible for E-2-dependant visas. The dependents spouse can also apply for authorization to work anywhere in the United States.”
Grenadian citizenship also permits attractive visa-free travel advantages (including the Schengen region, UK, Russia, China and in total close to 140 countries globally), although Asaria sees this as a required expectation rather than a primary consideration in the current climate. The ability to have the option to migrate to a mature market is nevertheless often at the forefront of high net worth investors’ minds.
Taxation in a deglobalized world
Second citizenship in Grenada, while offering residency to the United States through the E2 visa, does not require investors (subject to being present in the US for less than 122 days in a year) to pay US taxes on their non-US income from the worldwide US taxation system, which is especially attractive to investors such as NRIs who are concerned about increasingly deglobalized government agendas.
The US, even before the coronavirus, was urging firms such as Apple and Intel to build plants at home. In Japan, the government’s COVID-19 stimulus package offers subsidies for companies that repatriate factories.
We’re currently living in a reality where many governments and central banks are asking taxpayers to underwrite national businesses through stimulus packages, subsequently shifting populations’ incentives to these firms’ survival.
Asaria refers to three types of clients who commonly seek second citizenship. The first are investors looking to liquidate their businesses in emerging markets and reinvest their capital in advanced economies such as the US, avoiding the risk of exposure to economic, political or social challenges in their home countries.
The second group of investors are often those with substantial, globalized businesses who are increasingly seeking to establish a physical presence in developed markets such as Europe & United States to combat deglobalization and forge closer relationships with clients in key markets.
The third segment are those looking for a better quality of life with increased standards of health and education.