09 January 2019 13:27:32 IST

A management and technology professional with 17 years of experience at Big-4 business consulting firms, and seven years of experience in high-technology manufacturing, Rajkamal Rao is a results-driven strategy expert. A US citizen with OCI (Overseas Citizen of India) privileges that allow him to live and work in India, he divides his time between the two countries. Rao heads Rao Advisors, a firm that counsels students aspiring to study in the United States on ways to maximise their return on investment. He lives with his wife and son in Texas. Rao has been a columnist for from the year the website was launched, in 2015, and writes regularly for BusinessLine as well. Twitter: @rajkamalrao

Citizenship is up for sale

Moldova, a newly-minted EU member, is now a safer bet for those who want to settle abroad

Most people probably can’t locate Moldova on a map. A landlocked former Soviet Union country, it is surrounded by large fraternity members of that failed socialist experiment — Romania to the east and Ukraine to the north and south. The southern tip of Ukraine cuts Moldova off from the Black Sea. The capital city is Chisinau, a place most people have never heard of.

But Moldova has moved up in the world after it became a member of the European Union in 2014. The EU, desperate to expand its geography and scale up its failing union (failing for different reasons), was eager for Moldova to not be under Russia’s influence. Crimea, the southern province of Ukraine, had, just a few months prior, been annexed by Russia in a blatant act of aggression. Crimean shores are just a hundred miles off the Black Sea coast closest to Moldova.

Global call

What is Moldova doing as a newly-minted EU member? It is selling citizenship to anyone in the world for a mere investment of €100,000 in a programme called MCBI (Moldova Citizenship by Investment). This is remarkable because in 2015, the entire EU came under intense pressure to accept North African refugees and many old-style European countries, unable to bear the strain of uncontrolled migration, came up with various methods to limit immigration. Governments fell and newer, more right-wing governments were elected. So, is Moldova saying that immigration to the EU is fine as long as the price is right?

MCBI confers benefits unlike most citizenship investment programmes. The main benefit is that the new Moldovan citizen gets the same cross-border privileges of a full fledged EU member, such as Germany or France. The new citizen can work visa-free in any EU state or travel to any of 122 nations in the world without a visa. The entire process of obtaining citizenship in this manner takes about three months. Citizenship is then transferable to all future generations without restrictions.

While €100,000 is still a lot of money (about ₹80 lakh), the visa is not overpriced considering the benefits one gets. Indian families who own a second home can sell their property and invest the proceeds in a Moldovan MCBI. (A family visa is 55 per cent more expensive, about ₹1.24 crore.)

For Moldova, the Global Passport Power index is at the centre of its selling point. This index ranks countries by the ease with which their citizens can enter other countries, without a visa or with a visa on arrival. The UAE ranks #1 — its citizens can visit 167 countries in this manner. India ranks #68; 134 countries require Indians to go through visa clearance at their consulates in India.

US visa

Moldova is not alone in pushing such a programme. As Indians do more business in America, the Employment-Based (EB-5) investor visa has become particularly attractive because, if the stars are aligned right, the path to getting a green card can be a lot quicker. The EB-5 allows foreign investors to essentially ‘buy’ a green card with as little as $500,000, if the funds are invested in a private company’s ‘regional centre’ that creates at least 10 jobs for US workers. As a bonus, those approved can jointly petition for their spouse and up to three children to get their own green cards.

There are four players involved — the EB-5 investor; their US lawyers; a private company promoting an infrastructure project in a targeted employment area (TEA) that has high unemployment; and USCIS, the government agency authorised to issue the green card. The minimum investment required is $500,000 if the project is in a TEA, otherwise it is $1 million. Most Indians risk their bets on TEA EB-5 projects.

First, the lawyer provides proof that the Indian’s investment is sourced from lawful means and the regional centre project is likely to win TEA classification from the US government. If the government okays the initial petition — a process which can take as little as three months — the investor is placed in line to obtain a ‘conditional’ green card through consular processing. In a period as short as one and a half years, an aspiring Indian can move their entire family to the US.

The catch

But there’s a catch. Within two years, the lawyer has to petition the government to remove the conditional constraints on the green cards by providing evidence that the TEA project has indeed created at least 10 US jobs that the original investment was expected to generate. This is the risky part of the bet. If the project has gone bust or has otherwise proved not to be a job creator, the temporary green cards can be revoked.

And there’s the investment portion of the bet. The investment is a bilateral agreement between the Indian and the promoter company, and neither the lawyer nor the government has a stake in the deal. If the company’s project fails or it refuses to refund the investment after the typical five years or declares bankruptcy, the Indian has little chance of recovering the principal.

These risks put off many Indian investors unless they are really wealthy and unafraid to lose the entire investment. But Moldova’s deal is far simpler and doesn’t have all of the administrative bottlenecks associated with the EB-5 visa. The price is about a third (for a family visa) and the processing is a lot faster. True, the destination is not the US, but for the Indian family that firmly believes that settling abroad is the only solution to life’s problems, the EU is not a bad choice.

Moldova is a small country with a population of about three million. New citizens will have to learn Romanian, which is the primary language spoken. This is not a requirement but it will be needed if a new citizen intends to live there.

Mobility has been a hallmark of globalisation. Programmes such as MCBI raise concerns if the drive to globalisation is going too far.