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September 07, 2018

Greece to expand golden visa business

Apologies for the late briefing. We had a server breakdown just before our deadline. Our main story is about the ease with which it is possible to get an EU residency permit. Get access to Schengen with a property in Greece, reads one of the advertisements for the golden-visa scheme in Greece. The golden-visa business is been growing as a lucrative way to raise funds, not only in Greece. Over the last five years about 8000 applications were granted in Greece, 3000 alone this year, according to Spiegel Online. Among them are rich Chinese and Russians, but also increasingly Turks, Syrians and Iraqis. Given the take up in demand the Greek government is now working on extending the scope for golden-visa applications. 

Under the current scheme, in place since 2013, residence permits are granted in return for purchasing a property worth €250,000 for five years, with the option of an extension.

The minimum investment of €250,000 is much less compared to other EU countries which grant residence under similar schemes like Portugal, Malta, Cyprus, Austria and Belgium. Also the Greek government does not require a minimum stay in Greece, so that in principle the investor can remain in his country and still get the residence permit. For Turkish people with money an investment in a Greek property has become an insurance scheme in case things turn nasty at home under the autocratic regime of Recep Tayyip Erdogan. And wealthy Syrians pay their way to a visa instead of ending up in refugee camps. There are firms that specialise in offering clever investment schemes, already up and running for some years now for Russians and Chinese clients. It is not hard to see why the scheme raises moral, legal and security concerns. 

Recently legal provisions were put in place to allow those residents to apply for Greek citizenship after seven years, and thus receive an EU passport. Once they have a passport they can travel freely in the Schengen area. The obstacles for getting a Greek passport are still high compared to other golden-visa countries like Cyprus, where there are no minimum requirements other than to bring in €2m in investment. 

The Greek government is also preparing to widen the scope of investments under this scheme. Prospective buyers then would have an option not only to buy a property but also bank deposits, shares on the Greek stock exchange, Greek government bonds, or investments in companies based in Greece. For these investments, however, the minimum amount is higher than for property, requiring at least €400,000. The expansion is designed to meet demand and ensure the programme remains the most competitive in Europe, explains Vasso Kyrkou, director of communications at Enterprise Greece, an organisation with the objective to attract foreign investors.

The European Commission is deeply concerned about the growing number of EU passports granted in exchange for money, and called on the countries that offer them to quickly adopt new EU anti-money laundering laws, according to Politico.

The European Commission is also preparing for the end of the year a directive on Visa regulations in member countries, in particular addressing these golden-visa schemes. Athens reassures that it will implement whatever comes out of this. But since citizenship is a matter for the nation state, the EU's hands are tied to limit the golden-visa business.

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September 07, 2018

Debunking the Brexit options, Sherlock Holmes-style

One of the reasons the Brexit debates has become so nauseous is the endless iteration in the arguments. We are hearing that the cabinet is preparing a plan B for a Canada-type deal, while a back-bencher is preparing an EEA option. It might be better to approach Brexit in the way Sherlock Holmes approached a crime scene: once you eliminate the impossible, whatever remaining option must be the truth. Eliminating the impossible does unfortunately not give us a single clean answer, but at least it gets rid of the nausea. Here are three candidates for elimination. 

1. A no-deal Brexit is impossible because there is no majority for it in the British parliament

This argument seems to be popular among newspaper columnists who have not read Article 50, which we suspect is the majority. If the UK parliament rejects a withdrawal deal, or if no deal is agreed, a positive majority must be found for a means to avert a no-deal Brexit: force the government to revoke Brexit; or find a way to force elections and get the public to elect a pro-deal government. At no stage will there ever be a legally meaningful vote on a no-deal Brexit. It will simply happen when nothing else happens. 

2. the Canada option

We read in Buzzfeed that Theresa May’s cabinet is preparing a Canada-type deal as a default position. Have they talked to the EU? A Canada model would require a customs border in the Irish Sea, since the EU is not giving up on the red line of an Irish backstop. The only Canada scenario we see possible is one following a no-deal Brexit. It would probably take five to ten years until the EU even agrees to sit down with UK officials again. So this is not an option that needs a lot of preparation right now.

One of the big misunderstandings by those in favour of a Canada-style deal is the role of the EU. The EU would, in principle, agree to a Canada deal, but only on condition of a customs border in the Irish channel which is an option already ruled out by the UK parliament. From the perspective of the EU, it would constitute the neatest option of all: a clean Brexit; respect for the unity of Ireland; and no funny stuff with the single market and the customs union. But the Irish question intrudes.

3 The EEA

A backbencher is now trying to find support for the Norway option. But the Irish backstop would remain in the withdrawal treaty. The same dilemmas would apply as above. Would the UK accept a customs border in the Irish Channel? Or would the UK join the EU customs union as well as the EEA? A time-limited EEA-plus-customs-union membership is a different matter, but this would give rise to a vassal-state argument. 

We are not saying that EEA or Canada deals are theoretically impossible, but they both require U-turns in both the UK's and the EU’s negotiating positions. The EU may compromise on the political declaration about the future relationship, but has so far shown no signs of agreeing a fudge on the Irish backstop. 

Simon Nixon makes an important point in his Times column, when he writes the Irish border question is what drives Theresa May’s Brexit policy more than the demands of business. This is the rationale behind the Chequers proposal. He writes that the Irish border, however, remains the single biggest obstacle to an orderly Brexit, and there has been no progress whatsoever on this issue, and no sign of any party giving in. A hard Brexit is entirely possible, with severe and fairly symmetric economic costs to both the UK and Ireland.

Sam Lowe argues in Prospect that both sides have an interest to draw out the negotiations to the last possible minute. May will need the threat of what Lowe calls attributable, actual peril. He is more optimistic on the Irish backstop, citing reports of a backstop to the backstop. His conclusion is that a factual capitulation is the only conceivable route out of a no-deal Brexit.

We disagree with Lowe’s last assertion. A capitulation that is seen as such will make it harder for pro-European Labour MPs to support it, and will give the Brexiteers the ammunition they are seeking. We believe that both the UK and the EU must move. A hard Brexit would also be a disaster for the EU — a fact often obscured by arguments that a no-deal Brexit is worse for the UK. While true, this does not make it any less bad for the EU: its pain tolerance is lower than the UK’s as nobody in the EU voted for Brexit. We are sure that several European member states, not only Poland, will question whether they should permanently fracture the relationship with an important strategic and commercial partner for the sake of the Irish border. Especially if you consider that a hard Brexit would be the worst imaginable outcome for Ireland itself.

That discussion hasn’t started yet in earnest because hardly anybody on the continent truly believes in a hard Brexit. For now hard Brexit has the quality of a scary bedtime story. But just wait to see what happens when that changes.

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