Global Citizenship
3rd Edition 2019
•
The Legacy Issue
Future Forecast: Risk, diversity, and legacy design
The Varied Geographies of Citizenships 01 9 772571 794008
Tax, Due Diligence, and Anti-Money Laundering in Investment Migration
ISSN 2571-7944
A New Tax Benefit for Art Collectors
Henley & Partners’ annual Global Citizenship Conference has become the world’s largest and most significant conference on investment migration. In celebration of the conference’s 13th successful year, we again expect well over 400 attendees, a multitude of industry leaders, top-tier international service providers, and senior government officials who will share first-hand information on the latest developments in residence and citizenship planning. Register now using the promotion code ‘GCR’ to secure your attendance by visiting henleyglobal.com/london2019
Antigua · Australia · Austria · Canada · Croatia · Cyprus · Dubai · Greece · Grenada · Hong Kong · Jersey · Latvia · Malaysia · Malta · Moldova
13th Global Citizenship Conference 11-13 November 2019 ∙ Rosewood London
Define your Future Montenegro · Philippines · Portugal · Singapore · South Africa · South Korea · St. Kitts · St. Lucia · Switzerland · Thailand · United Kingdom · Vietnam
Contents Upfront 6
Contributors
9
From the Editor
10 News and Updates 14
16
Events
Columns 21
Kochenov Good European Citizenship
22 Diogenes Where Are All the Aliens? 23 How to Navigate Intangible Property Taxation
24
24 On Trend Managing Increasing Personal Security Risks
Opinions 28 The Varied Geographies of Citizenships 36 The Humble Passport: Here to Stay? 38 Why Nuclear Weapons Risks Are Increasing
28
40 Of Yellow Vests, French Democracy, and EU Prosperity 42 The Long-Lasting Impact of the Windrush Scandal 44 Expanding Our Understanding of Gender 48 Tourism in Montenegro: Value beyond Numbers
40 2 | Global Citizenship Review
50 Cultural Considerations for Doing Business in the Middle East 52 Open Borders: History, Theory, Utopia
Future Forecast: Geopolitical Risks for 2020 Ryan Cummings, Director, Signal Risk, South Africa
56 The Economic and Fiscal Effects of Granting Refugees Formal Labor Market Access 59 The Geopolitics of Data
Cover Story 64 Future Forecast: Geopolitical Risks for 2020
Country Review 68 Montenegro: Place of Natural Splendor
Features 74
Interview Vít Jedlička
78 The Global Appeal of British Independent Schools and Leading Universities 82 The Changing Face of the EB-5: How Emerging Markets Are the New Driving Force 84 Selling Property by Auction: Transparent
T
he discourse around globalization has for a long time centered on how the shared realities of different people, places, and even spaces show Logical, that Fair, the world is more connected than many perceive it to be. These commonalities are often touted as being the panacea to the socio-economic and political challenges
64
constraining the creation of a more synchronized prosperous world. The severity of these challenges is less evident in these discussions, however, as well a manner in which they cut across spatial and social clea — effectively dividing the collective ‘us’. As 2020 bec these issues flare as brightly and influentially as eve
86 Tax, Due Diligence, and Anti-Money Laundering in Investment Migration 64 | Global Citizenship Review Above: xxxxx
90 The Allure of the UK among Emerging Market Family Offices 92 Improving Your Prowess as a Private Property Investor 94 The Rise of Micronations 98 Foreign Direct Investment: The Lifeblood of Developing, Recovering, and Transitional Economies 101 A New Tax Benefit for Art Collectors
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104 Montenegro’s Real Estate Market: Something for Everyone 107 The Ski Boot: An Invention for Generations 108 Is Homeschooling the Right Choice for Your Child? 110 Keep Your Assets Liquid: Invest in Wine 112 Top Concierge Services for the Astute Traveler 114
104
Buying Your First Yacht
116 Ius Doni: Citizenship-by-Investment 120 Interview H.E. Duško Marković
Global Life
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124 Global Citizen Chris Godfrey 128 Property 8 Rowe Avenue • Perth 130 Marco Polo Rosewood London • London 132 Culinaria Osteria Francescana • Modena
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133 Medicus Prof. Dr. Dr. med. Thomas Rosemann 134 Books 136 Reflections Archimedes of Syracuse
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Contributors 28
Alexander C. Diener
Dr. Dario Mazzola
Director of Graduate Studies and
Executive Scientific Coordinator
Associate Professor of Geography
PROTECT, University of Bergen
University of Kansas, USA
40
42
Michael Clemens
Graduate Center, City University of
Co-Director of Migration, Displacement
New York, USA
and Humanitarian Policy, Center for
56
Global Development, USA
Dr. Patricia Lewis
Cindy Huang
Research Director: International
Co-Director of Migration, Displacement
Security, Chatham House
and Humanitarian Policy, Center for
UK
56
Global Development, USA
Emmanuel Martin
Jimmy Graham
Economist and Expert, Geopolitical
Research Assistant, Migration,
Intelligence Services; Lecturer
Displacement, and Humanitarian Policy
Aix-Marseille University, France
Center for Global Development, USA
56
Prof. Thom Brooks
Abishur Prakash
Professor of Law and Government and
Geopolitical Futurist, Center for
Dean of Durham Law School, Durham
Innovating the Future
University, UK
Canada
59
Lisa Kenney
Ryan Cummings
Executive Director, Gender Spectrum
Director, Signal Risk
USA
South Africa
44
66 Kai Dieckmann
Dr. Alvin Leung
General Manager, Regent Porto
Education Consultant, Carfax Education
Montenegro, Montenegro
Group, UK
48
50
Norway
John Torpey
36
38
52
78 Nasif Kayed
Dominick Ashe
Founder and Chief Executive Officer
Director, Carfax Education Group
The Arab Culturalist
UK and UAE
UAE
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Marie Ekberg Padilla
Kieran Kelleher
Editor in Chief, EB5 Investors
Founder and Managing Director
Magazine, USA
Dream Estates Croatia and
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104 Martin Göppert
Milton Gaither
Founder, property-auctions.ch
Co-Director, International Center for
Switzerland
Home Education Research
108
84
USA
Raúl Markos
Robert Kunzman
Director, Private Wealth
Co-Director, International Center for
Vistra, UK
Home Education Research
90
108
USA
Constantin von Dalwigk
Malu Lambert
Head of Engel & Völkers Private
Food and Wine Writer
Office, Germany
South Africa
110
92
101
Montenegro, Montenegro
Doug Woodham
Kurt Fraser
Managing Partner, Art Fiduciary
Commercial Director, West Nautical
Advisors
UK
USA
114
Interviews Vít Jedlička
H.E. Duško Marković
President, Free Republic of
Prime Minister, Montenegro
Liberland
74
120
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Global Citizenship
Editor in Chief Dr. Christian H. Kaelin Group Publishing Director Charlie Scott Managing Editors Janine Droux Ilka Lane Senior Editor Monwabisi Mhlophe Publishing Designer Wade Hunkin Editorial Board Ghada Al Atrash Canada Laura Austin USA Dr. Tony Gao China Nadine Goldfoot UK Prof. Dr. Christian Joppke Switzerland
Marnin J. Michaels Switzerland Kamal Rahman UK Jim Rogers Singapore Correspondents Philippe Amarante Middle East Irina Curbelo UK/Europe Polina Kuleshova Russia/CIS Jennifer Lai China and North Asia Domenic Presutti North America Amanda Smit Africa Andrea St. Bernard Latin America/Caribbean Dominic Volek Southeast Asia
Online Visit globecit.com or issuu.com/ideos_publications Subscribe Visit globecit.com or email info@globecit.com Advertise If you are interested in advertising in Global Citizenship Review, please write to editor@globecit.com Feedback Comments and suggestions, praise, and criticism are welcome. Please write to info@globecit.com Publication information Global Citizenship Review (ISSN 25717944) is published quarterly by Ideos Publications Ltd., Zurich, Switzerland Š 2019 Ideos Publications Ltd. This periodical and the individual contributions contained in it are protected under copyright and applicable terms and conditions of the publisher.
Global Citizenship
3rd Edition 2019
•
The Legacy Issue
Future Forecast: Risk, diversity, and legacy design
Dr. Parag Khanna Singapore Prof. Dr. Dimitry Kochenov Netherlands Dr. Robert W. Kuipers Switzerland
The Varied Geographies of Citizenships 01 9 772571 794008
8 | Global Citizenship Review
Tax, Due Diligence, and Anti-Money Laundering in Investment Migration
ISSN 2571-7944
A New Tax Benefit for Art Collectors
UPFRONT
From the Editor
Are You Futureproof?
H
umans have a propensity to attempt to foretell the future — whether by staring into crystal balls, by examining the past for patterns, or by being cognizant of and analyzing trends. This somewhat intrinsic desire is often at its most robust during the reflection-laden year-end period we are now approaching, and it is amplified by significant developments on the global political scene: case in point the election of Boris Johnson to the position of prime minister of the UK. With a focus on global risk, this edition of Global Citizenship Review offers perspectives from the personal to the existential, including the biggest risk of all — that nuclear weapons will again be deployed in a conflict. Our contributor on the matter posits that this has become more probable due to global consensus fragmenting and treaties not being renewed. Our Cover Story was not written by a fortune teller, but it will give you pause for thought. By tracking key geopolitical risks for 2020, this insightful article challenges us to think more critically about the state of the world and the condition of the planet. Extending the thought further, we also look at the role of data in shaping global geopolitical dynamics and its potential to prompt inter-state conflict, impact public policy, and bolster the influence of emerging economic powerhouse countries. There are indeed serious risks that our global community faces today, some incipient and others fully developed, but all summoning our collective attention and questioning our determination to explore innovative solutions. May your reflection on 2019 stimulate your resolve to subdue in your life any risks to your health, well-being, and investment legacy.
IMAGE: Henley & Partners
Dr. Christian H. Kaelin Editor in Chief
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News and Updates As the global economy transforms and centers of power shift, Asia’s dominance appears to be unfaltering. In the final quarter of 2019, Japan and Singapore retain a firm hold on first place on the Henley Passport Index (HPI), each with a visa-free/visa-on-arrival score of 190 out of a maximum 227. For most of the index’s 14-year history — which is based on exclusive data from the International Air Transport Association (IATA) — the top spot has been held by a European country or by the USA. However, this shifted dramatically in 2018, with Asian countries now firmly established as world leaders when it comes to both global economic activity and global mobility. With visa-free/visa-on-arrival scores of 188, Finland, Germany, and South Korea remain in 2nd place, while Denmark, Italy, and Luxembourg are in 3rd place, with citizens of those countries now able to access 187 destinations worldwide without requiring a visa in advance. With a score of 184, the UK and the USA remain in joint 6th place — the lowest position either country has held since 2010 and a significant drop from their 1st-place ranking in 2014. While the positions on the index’s top 10 have remained relatively stable since the last update in July, there have been some striking shifts further down the ranking. Most dramatically, the UAE has climbed an extraordinary five places over the last three months after gaining visa-free access to a number of African countries, including South Africa, and now sits in 15th place, with UAE passport holders able to access 172 destinations without a prior visa. Syria, Iraq, and Afghanistan remain at the bottom of the ranking, with visa-free/visa-on-arrival scores of just 29, 27, and 25, respectively. Dr. Christian H. Kaelin, Chairman of Henley & Partners and the creator of the passport index concept, says: “Our ongoing research has shown that…there is a strong correlation between visa freedom and other benefits such as business and investment freedom, independence of the judiciary, fiscal health, and property rights.” Using historic data from the HPI and the Index of Economic Freedom, political science researchers Uğur Altundal and Ömer Zarpli of Syracuse University and the University of Pittsburgh, respectively, found a strongly positive connection between visa freedom and a variety of indicators of economic freedom, including foreign direct
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investment inflows, property rights, tax burden, and investment freedom. Altundal and Zarpli observed that “countries that have higher visa scores also rank higher in economic freedom, especially in investment, financial, and business freedom”. One especially striking example of this positive correlation is Singapore, which ranks highest in nearly all economic indicators and holds the top spot on the HPI. Top 5 on the 2019 Henley Passport Index 1. Japan, Singapore Visa-free access to 190 destinations 2. Finland, Germany, South Korea Visa-free access to 188 destinations 3. Denmark, Italy, Luxembourg Visa-free access to 187 destinations 4. France, Spain, Sweden Visa-free access to 186 destinations 5. Austria, Netherlands, Portugal Visa-free access to 185 destinations
Bottom 5 on the 2019 Henley Passport Index 103. Yemen Visa-free access to 33 destinations 104. Pakistan, Somalia Visa-free access to 30 destinations 105. Syria Visa-free access to 29 destinations 106. Iraq Visa-free access to 27 destinations 107. Afghanistan Visa-free access to 25 destinations This graph shows the countries that occupy the top and bottom five ranks on the 2019 Henley Passport Index. In certain cases, a rank is shared by multiple countries because these countries all have the same level of visa-free or visa-on-arrival access. The information provided here reflects the Henley Passport Index ranking on 8 October 2019
SOURCE: Henley & Partners
Asian Countries Dominate as UK and USA Passport Power Decline
SOURCE: Henley & Partners
UPFRONT
Montenegro Prepares to Receive Citizenship-byInvestment Program Applications
IMAGES: Shutterstock
According to Montenegrin officials, the country is set to start receiving applications for its citizenship-by-investment program in late 2019, following the announcement of the program’s launch in 2018. It is expected that the program will follow stringent due diligence processes, including the vetting of applications by auditors and international credentials agents. According to Head of the Secretariat for Development Projects, Dejan Medojević: “The final controls are to be taken by the Ministry of Internal Affairs and National Security Agency…[in order] to grant citizenship to the most suitable applicants willing to invest in the development of Montenegro.” The Montenegro Citizenshipby-Investment Program was launched as part of an effort by the Government of Montenegro to boost foreign direct investment and economic development in the country. In addition to a contribution of EUR 100,000, designated for the advancement of local under-developed, self-government, units, applicants must either invest at least EUR 450,000 into an approved real estate development project in Podgorica or in the coastal region of Montenegro or invest at least EUR 250,000 into an approved real estate development project in the northern or central region of Montenegro, excluding Podgorica.
Grenada Reduces Investment Requirement for Real Estate Option Individuals interested in acquiring Grenadian citizenship through the real estate option are now required to invest USD 220,000. The required amount was previously USD 350,000. It is worth noting that the reduced requirement applies only to applicants who make a joint investment in a property for a total value of USD 440,000.
St. Kitts and Nevis Citizenship-by-Investment Program Aids Development of Key Sectors St. Kitts and Nevis’ Minister of Tourism, International Trade, and Commerce, the Hon. Lindsay F.P. Grant, has praised the Caribbean dual-island nation’s citizenship-by-investment (CBI) program for its significant contribution to the development of the country’s key sectors, including education, climatechange resilience, and tourism, and infrastructure development, particularly in the sphere of medical facilities. Through revenue generated by the Sustainable Growth Fund — a CBI program investment channel launched in March 2018 through which applicants can choose to make non-refundable contributions of any amount starting from USD 150,000 (for a single applicant) — the Government of St. Kitts and Nevis has been able to support various sustainable development projects. More broadly, St. Kitts and Nevis’ CBI offering, which is the longest running since being established in 1984, has had an undeniably positive impact on the nation’s fiscal well-being.
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UPFRONT
“Today the distinction between refugees and migrants has been blurred and politicized. Refugees have been forced to flee their country because of persecution, war, or violence. Migrants have chosen to move, mainly to improve their lives. Some leaders deliberately use the terms refugee and migrant interchangeably, using hostile rhetoric that whips up fear against all outsiders. Everyone deserves dignity and fair treatment, but we need to be clear about the distinction. Under international law it is not an option to assist refugees, it is an obligation.”
Booming Interest in Thailand Elite Residence Program International interest in the Thailand Elite Residence Program continues to grow, with the latest statistics showing 50% more successful applications in the first quarter of 2019 than the previous, yielding profits of almost USD 9 million. Interest in the program is particularly strong in individuals from Australia, Germany, Japan, the UK, and the USA. Wealthy investors and entrepreneurs favor Thailand’s offering because of the country’s exceptionally high standard of living and advantageous tax regime.
Saudi Arabia Launches Residence Program As part of an ambitious ‘Vision 2030’ plan spearheaded by Crown Prince Mohammed bin Salman to grow the economy and reduce unemployment in Saudi Arabia, the country has launched a residence program that is expected to attract investors and entrepreneurs to live and work in the country. The Premium Residency program does not require foreign nationals to have a local sponsor and will allow applicants to purchase property. Saudi Arabia has implemented several economic reforms that are expected to dilute the economy’s dependence on oil and grow a variety of other sectors.
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IMAGES: Getty Images; Shutterstock
Angelina Jolie ‘What We Owe Refugees’, Time, 19 June 2019
IMAGES: Getty Images; Shutterstock
M A LLO R C A A N EXC LU S I VE H I D EAWAY For many years Mallorca has been regarded as one of the best places to live in the world. Its wonderful Mediterranean climate, year-round social life, international schools, first-class health and sports facilities, excellent gastronomy and more, are all available on Mallorca – offering a quality lifestyle which is hard to beat! Mallorca’s property market is stable, with an excellent range of premium real estate. Market stability boosts confidence as buyers invest in a destination that is undergoing dynamic growth with steady price development. Thanks to its extraordinary global connectivity from Palma International Airport, Mallorca offers easy access to Europe and beyond. Engel & Völkers · Puerto de Andratx · Mallorca · Spain Phone +34 971 67 47 80 · Andratx@engelvoelkers.com www.casa-dali.com
Casa Dalí is an imposing contemporary residence with a south-orientated position located in Mallorca’s southwest in one of the most exclusive residential areas of Puerto de Andratx. The innovative and refined interior design, furnishing and decoration, has been taken to the highest level; working with only the best manufacturers and brands to create a very special living atmosphere. Casa Dalí has many features including a spacious outdoor living area with pool and several terraces, a separate guest house, a large spa and fitness area, a private cinema, a lift, a glass panelled wine cellar and the latest home-control technology. E&V ID: W-02D7G8
UPFRONT
Events
Only Watch is a biennial charity auction of exceptional timepieces from about 50 of the world’s finest watchmakers in aid of Duchenne muscular dystrophy research. The past seven iterations of Only Watch have raised more than EUR 35 million, and 99% of the proceeds from the event go directly into research projects. With His Serene Highness Albert II, Sovereign Price of Monaco as its patron, and at the initiative of Luc Pettavino, president of the Association Monégasque Contre les Myopathies, this noteworthy event brings together generous philanthropists, partner collectors, and tastemakers with an appreciation for beauty. This year, Christie’s will conduct the auction for the first time. The event will feature one-off collaborations offering guests novel experiences. The auction is preceded by an extensive world exhibition tour.
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13–16 December 2019 ASW Winter Weekend 2019 GstaadX Switzerland ASW (ASMALLWORLD) Winter Weekend is an exclusive annual gathering of elite guests in the luxurious resort town of Gstaad in the heart of the Swiss Alps and 2019 is the 10-year anniversary. Guests are members of a select referral-based international network. The intimate weekend event brims with stimulating curated activities and experiences that allow guests to relax, socialize, and network in person with like-minded individuals from all over the world. Gstaad’s soaring mountains and impeccable hospitality industry have long made it the holiday destination of choice for celebrities and royalty alike. The weekend program includes private access to Gstaad’s top restaurants.
13–16 January 2020 Hong Kong Fashion Week Hong Kong On 13 January 2020, the 51st Hong Kong Fashion Week kicks off at the Hong Kong Convention Centre, showcasing the fall/winter collection of top fashion houses and rising young designers alike. The event is one of the highlights of the international fashion calendar. Spanning four days, the presentation will offer the glitz and glamor of exclusive catwalk fashion shows featuring some of the world’s top models and attended by fashionistas and celebrities from across the globe. In addition to the high-profile events, fashion week is also a trade fair for the fashion industry, attracting around 1,400 exhibitors and boasting a wide variety of products. Hong Kong Fashion Week is steadily carving out a place for itself among the ‘big four’ sartorial cities of London, Paris, Milan, and New York.
IMAGES: New York Times; Derry Ainsworth/Getty Images; Vogue
9 November 2019 Only Watch Switzerland
14–18 February 2020 London Fashion Week UK 14–16 February 2020 Investec Cape Town Art Fair South Africa
IMAGES: Investec Cape Town Art Fair; Edward Berthelot/Getty Images; Shutterstock
IMAGES: New York Times; Derry Ainsworth/Getty Images; Vogue
UPFRONT
The Investec Cape Town Art Fair is an annual trade fair that showcases the work of African and international artists at the forefront of contemporary art. The fair brings art dealers, collectors, and enthusiasts from around the world to Cape Town, South Africa’s scenic Mother City, which has a flourishing local art scene. Cape Town is home to some of the continent’s best galleries, attracting artists and art professionals from all over Africa. In addition to exhibiting emerging talent alongside well-known names, the fair hosts a Talks Program that facilitates stimulating discussions between leading critics, artists, curators, collectors, and advisors. The event also offers a comprehensive VIP program, including exclusive access to the vernissage, exhibition openings at participating Cape Town galleries, and invitation-only social events.
London Fashion Week is one of the most talked-about events in the fashion year, showcasing more than 50 of the world’s best-known and most avant-garde fashion designers shown by the industry’s top models. The London Fashion Week Designer Showrooms at London Fashion Week host a rich selection of ready-to-wear and accessory brands, emphasizing creativity, diversity, and craftsmanship. London is the only fashion capital to host the Designer Showrooms in the same venue as the official British Fashion Council’s Catwalk Showspace, giving featured designers additional exposure to top publications, stylists, and trend forecasters. Alongside the event’s world-renowned runway shows, London Fashion Week sparks a month-long, city-wide celebration of the arts and where music, art, technology, and design intersect. Artists, performers, and retailers alike participate to make this a truly immersive and memorable experience.
March 2020 Africa Climate Week Ghana Hosted annually by the government of Ghana — in collaboration with UN Climate Change, UN Development Programme, UN Environment, and the World Bank — Africa Climate Week aims to promote sustainability activities and boost investment in green initiatives across the African continent. These goals align with those of the UN Secretary-General’s Climate Action Summit and the UN Framework Convention on Climate Change’s Conference of the Parties 25. Key focus areas include the role of cities and local action, moving to clean energy sources and nature-based solutions, and examining the relationship between economic development and the climate agenda. The 2019 event, which featured more than 80 side events, such as the Pitch Hub and Knowledge Corner, where ground-breaking solutions were illustrated, emphasized the need to align climate plans with development plans in order to meet the goals of the Paris Agreement.
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11–19 January 2020 Singapore Art Week Singapore
20–26 January 2020 Monte-Carlo Rally Monaco
24–26 January 2020 Snow Polo World Cup St. Moritz Switzerland
Condé Nast International Luxury Conference
B 5–7 November 2020 14th Global Citizenship Conference Singapore
16 | Global Citizenship Review
illed as “the premier business event for luxury leaders”, the fifth instalment of Condé Nast International’s Lu xur y Conference, themed ‘The Nature of Luxury’, explored the intersection of nature, luxury, digitization, and the growing relevance of African creatives on the international fashion landscape.
Africa has become integral to today’s ever-changing concept of luxury. The continent is poised to become the world’s second-fastest growing region in consuming luxury goods, driven by the rapid penetration of new technologies, especially smartphones, in societies. While high-net-worth individuals on the continent are interested in
IMAGES: Samsung CSC; Reporter Images/Getty Images; Shutterstock; Indigital Images
Event Review
IMAGES: Indigital Images
IMAGES: Samsung CSC; Reporter Images/Getty Images; Shutterstock; Indigital Images
UPFRONT
international luxury goods, there is also a growing interest in locally and sustainably made products that elegantly fuse traditional values and nostalgia with contemporary and globalized aesthetics. The unassuming but highly esteemed Suzy Menkes, Editor of Vogue International, hosted the annual conference. She also chaired most of the sessions, engaging leading and rising industry figures on the continent, including Omoyemi Akerele (Founder, Lagos Fashion Week), Laduma Ngxokolo (Founder and Designer, Maxhosa by Laduma), and Abrima Erwiah (Co-Founder, Studio One Eighty Nine). Providing global perspectives were speakers such as Alessandro Bogliolo (CEO, Tiffany & Co), Greg Williams (Editor, Wired UK), Morin Oluwole (Global Head of Luxury, Facebook and Instagram), and Marco Bizzarri (President and CEO, Gucci) who talked about the role of business in society and inclusivity in fashion — a timely topic, considering the recent controversy that the premium brand was embroiled in. Session topics at the two-day conference included themes such as ‘Contemporary Art and Culture in
Top: Founder of Lagos Fashion Week Omoyemi Akerele Above: Founder of Zeitz Museum of Contemporary Art Africa Jochen Zeitz Opposite page: Host of the annual conference and Editor of Vogue International Suzy Menkes in conversation with Naomi Campbell and Marco Bizzarri, who is president and CEO of Gucci
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Africa’, ‘From Accra to the World, via New York — Fashion as an Agent of Change’, ‘Thoughtful Luxury: How Business and Creativity can Drive Sustainability and Growth’, ‘Building Brand Loyalty with the Luxury Consumer of Tomorrow’, and ‘The “Luxury” of Water’. Speaking at the opening event of the conference, held at the Zeitz Museum of Contemporary Art Africa (whose founder Jochen Zeitz also participated at the conference), Naomi Campbell shared: “I want to give back to Africa…change the perception of the way people think about Africa…and change the narrative of getting big brands to invest in the infrastructure of Africa.” Campbell is a member of Gucci’s advisory council on matters of diversity and inclusion. The conference was attended by some 500 guests from more than 30 countries. In 2018, the conference took place in Lisbon, Portugal, with the theme ‘The Language of Luxury’. In April 2020, Austria’s capital Vienna will host the event, with ‘The Gateway to Luxury’ as the organizing idea.
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COLUMNS
Kochenov
Good European Citizenship Prof. Dr. Dimitry Kochenov, Chairman, Investment Migration Council Chair in EU Constitutional Law, University of Groningen, Netherlands
IMAGE: Supplied
A
s the integration project matured, what was significant role in the system than the market logic. Market Europe’s main strength became its chief logic will remain particularly problematic in the citizenship weakness. Conceived as a market to serve those context as long as it shapes the formal status of citizenship, which can be deactivated by a failure to engage with the ideals that are grander than simple economic prosperity market sufficiently, forming the worst and the least humane and that are thus intended to benefit every European by blend of the legal truth and social reality paradigms of becoming part of Europe’s “legal heritage”, as noted in Van Gend and Loos vs. Netherlands Inland Revenue personhood in law. In a constitutional system, even where 1 Administration in 1963, European law democracy as such is out of reach, has failed to move on with the times. rights cannot be acquired by engaging Once considered a stepping stone to in ethically and morally irrelevant acts. For the first peace and other valuable ideals, the EU For instance, the parents are not time in its history, has gradually lowered its ambition; the punished when their child’s disability means for greater progress, which was prevents them from working, and tax the EU is today the market, has assumed chief place breaks do not depend on the nationality among the EU’s ends. of one’s former spouse. routinely perceived as For the first time in its history, the The core problem with EU citizenship a potentially powerful EU is today routinely perceived as a today is precisely that the principle potentially powerful agent of injustice behind the application of the law, which agent of injustice — not only by nationalists and outcast directly impacts on countless lives, is lunatics but also by its own servants rather farcical and thus inexplicable and facilitators, professors of EU law. Perceptions have from a rational, humane perspective. Moreover, violence likely changed because the market without a mantle of is perpetrated in the name of member states’ perceived ideals is not a pretty sight; the citizenship it is responsible sensitivities when in fact it is (often absurdly) dull, marketfor — having de facto overpowered the core elements inspired sophistry that is at play: “When he grows up, he of the nationalities of member states in a number of might want to move across the non-existent border.” respects — frequently punishes rather than protects. This is done with a most meticulous attention to detail. Endnote The ‘good citizenship’ that the EU cherishes rests on 1 Case 26/62, NV Algemene Transport en Expeditie an intimate personal connection with the idea of the Onderneming van Gend en Loos v Netherlands Inland Revenue internal market and cross-border movement: virtually Cf. Case C-148/02 Carlos Garcia Avello v Belgian State, the only measure of someone’s worthiness in the eyes ECLI:EU:C:2003:539 [2003], ECR I-11613 of the supranational law. The full contribution of the author on ‘The Citizenship of The EU could try to redeem itself through making its Personal Circumstances in Europe’ is available in Daniel law at least sensitive to human suffering. This can be done, Thym (ed.), Questioning EU Citizenship: Judges and the Limits at the bare minimum, through allowing the Van Gend of Free Movement and Solidarity in the EU (Oxford/Portland: Bloomsbury/Hart 2017) and Loos legal heritage of the citizens to play a more
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COLUMNS
Diogenes
Where Are All the Aliens?
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IMAGE: Shutterstock
A
merican-Italian physicist Enrico Fermi formulated the vastness of the universe they would be so far away the paradox of the lack of evidence for, yet the from one another, and from Earth, that the distances between them would be unimaginably great. In all high probability of, the existence of civilizations likelihood, this would not allow us to verify whether they on planets other than Earth. Are there other intelligent house any form of life or civilization. What we claim to beings in the universe besides our species? And if they do know about our own galaxy, not to mention more distant exist, where are they? This is indeed a good question — ones, is extremely uncertain and tenuous. For instance, and a very old one, too. Answering it, though, requires some clarification. the most recent data concerning the estimated number of Scientific disciplines such as biochemistry, biology, chemistry, stars in the Milky Way alone varies from 100 billion to and physics have expansive knowledge of the characteristics 400 billion. Such arbitrary figures are mere guesswork, typical of the phenomenon that sustains us, and that we call lacking in scientific seriousness. life. They cannot, however, give a clear, satisfactory definition In 1927, German physicist Werner Karl Heisenberg inof what life is. The same applies to the troduced the uncertainty principle, statabstract term ‘intelligence’. Despite the ing that the physical properties of a parfact that scientists have been trying for a ticle do not allow us to know its state What we claim clearly, for if its position is known, its long time to find out whether there are to know about our momentum is unknown, and vice versa. civilizations of any kind besides ours in This fundamentally uncertain characthe universe, the success of this quest so own galaxy, not to teristic of even the most elementary parfar has been non-existent. If we take into consideration the ticles makes having complete knowledge mention more distant estimated billions upon billions of stars of virtually everything impossible. Since ones, is extremely in the visible universe, this failure is quite Heisenberg’s breakthrough, physics astonishing. The number of planets likely — the most foundational science — has uncertain and tenuous exceeds that of stars. It is not easy to been floating on an ocean of probabiliaccept the idea that, among so many ties. Scientific certainty has disappeared; planets, only a single one — our Earth — is suitable for different degrees of probability are now what matter instead. harboring life. The alternative idea is far more compelling: This way of thinking and arguing abandons the ideal that there have been, still are, and will continue to be of scientific truth, yet it serves a certain purpose in politics, numerous civilizations in the universe. However, while this economics, and all spheres of human activity because, notion is logically sound, herein lies the rub: so far, despite with its refined mathematical calculations and complex highly sophisticated methods and available technical means, psychological strategies, it can generate more satisfactory scientists have not managed to find even a trace of life, let than unsatisfactory predictions. In other words, there is alone of civilization, beyond Earth. It is precisely this a touch of the democratic principle in it. It is in fact conundrum that constitutes the Fermi paradox. unscientific and incorrect, but people do not know better. This mode of thinking pervades all spheres of human life Even if millions of planets with similar properties to everywhere. Even cosmologists employ it when they those of Earth were to exist in the universe, because of
consider the possibility of the existence of life and other civilizations elsewhere in the universe. Whatever they say is necessarily pure speculation without any real scientific basis — perfect nonsense, in short. The Drake equation is probably the most beautiful example of such speculation. It is a probabilistic argument for estimating the number of active, communicative, extraterrestrial civilizations in the Milky Way. It is much used by cosmologists, who never tire of telling ill-informed governments and the unwitting masses about their latest
discoveries: a new galaxy or planet somewhere deep in the universe might have characteristics like our Earth’s and thus might be a possible future destination for the human race when our own planet becomes uninhabitable. Even mere contact with such planets, thousands or even millions of light years away from Earth, is practically impossible. Civilizations that are unverifiable, uncontactable, and inaccessible may be of interest to cosmologists, but the possibility of their existence holds no weight for people who appreciate clear reasoning.
How to
Navigate Intangible Property Taxation James Quarmby, Partner and Head of Private Wealth, Stephenson Harwood LLP, UK
I
IMAGE: Supplied
IMAGE: Shutterstock
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ntangible property (IP) can be defined as anything that one cannot feel or touch. These days, the term is used to describe concepts related to intellectual property, such as patents, trademarks, and copyrights. There are other types of intangibles; however, these are not as commonly held. The taxation of IP is a hot topic, mostly because of the tax planning techniques used by large, multi-national companies such as Facebook and Google. The UK government, among others, has proposed a digital services tax in an attempt to recover what is seen as lost tax revenues. It is likely that the EU will also introduce a similar kind of tax across its member states. The income derived from IP is generally described as a royalty payment, which is essentially ‘rent’ for the use of the IP and is payable to the owner. In nearly all cases, the payer’s country of residence will impose a withholding tax on royalty payments to non-resident IP owners. This amount can range from 15% to 35% of the sum. In addition, IP owners will pay tax on receipt of the royalty in their home jurisdictions. Evidently, this could give rise to double taxation, which is why most IP
structures are situated in countries that have a doubletaxation treaty in place. Such treaties generally reduce the rate of withholding tax to around 5% or 10% and give a tax credit to the recipient, thereby eliminating the possibility of double taxation. Within the EU there is a directive that enables royalties to be paid from one member state to another without any withholding tax. As a consequence, many of the controversial tax arrangements that have involved EU member states, such as Google’s use of the Double Irish company structure, have emerged. Nearly all royalty structuring involves the use of either an EU member state or a country with access to a wide network of tax treaties. It is unusual to see IP held directly by so-called tax-haven companies, because they tend not to have any access to tax treaties. The taxation of IP is a complicated area of international tax law that has been the focus of much scrutiny, not only from the press but also from the EU and the Organisation for Economic Co-operation and Development, an influential intergovernmental body with over 35 members. As such, the structuring of IP holdings should be undertaken only by specialists in the field. Do not try this at home.
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On Trend
Managing Increasing Personal Security Risks
The global private security services industry is set to reach a value of USD 257 billion by the year 2020, according to projections by market research firm Technavio. The industry relies significantly on the services and expertise of former official state security operatives and law enforcement personnel.
When Kim Kardashian West was robbed at gunpoint in Paris, the assailants made away with more than USD 6 million worth of jewels — the biggest robbery of an individual in France for decades.
I
n April 2019, a Forbes article reported that Facebook spent more than USD 22 million on travel and personal security in protection of its co-founder and chief executive Mark Zuckerberg in 2018. While the figure is alarming, the fact that it is almost double the USD 9.1 million spent the year before is even more significant. The figures may not be the same for other ultra-high-net-worth individuals (UHNWIs) and their families; however, Zuckerberg’s security bill does reflect a global growing interest in and expenditure on security, with more wealthy individuals paying
greater attention to their security needs and the sophisticated means necessary to keep themselves and their families protected. Additional reporting around Zuckerberg’s security bill reveals that almost USD 3 million was spent on private air travel in 2018. People often associate using private jets with convenience and glamor, but choosing private aircraft over commercial options has in fact been an integral part of security programs for individuals and families needing protection. This is because non-commercial aircraft can provide levels of control and privacy
Security Costs for Leading USA Executives 10
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8 7 6 5 4 3 2 1 310,000 Jeff Bezos
Tim Cook
Larry Dara Sundar Ellison Khosrowshahi Pichai
(Source: Business Insider, May 2019)
Sheryl Mark Sandberg Zuckerberg
IMAGES: Brands of the world
In 2018, Facebook spent over USD 1 million on private aircraft travel for COO Sheryl Sandberg. According to World Protection Group, VIP clients spend USD 250,000 to USD 1.5 million per year to ensure their security and privacy.
9 Amount in USD million
The Jet Traveler Report 2018 states that “many UHNWIs don’t like to travel on older aircraft”, which has driven the consideration of private travel as part of a broader, more comprehensive security strategy.
Above: Mark Zuckerberg’s security costs have surged amid negative sentiment and increasing backlash against Facebook sparked by various scandals, including those over data privacy. Zuckerberg’s net worth is reported to be in the region of USD 70 billion. He is seen here jogging with his security detail
IMAGE: Paul Zinken/picture alliance
IMAGES: Brands of the world
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that cannot otherwise be achieved. According to The Jet Traveler Report 2018, “commercial flights present a significant risk, by comparison. The shared nature of first-class cabins — even with the use of private suites, VIP lounges, and discreet boarding — means that fliers are at risk of recognition” because information about their location, movements, and security detail is exposed. Interestingly, private jet ownership is not always the solution to this risk, as details concerning registration can be accessed with relative ease — cue an increased interest in private aviation membership programs and on-demand charter services. Using private travel companies can reassure UHNWIs and their security providers that all those who are involved in their travel arrangements are highly skilled and will do what is necessary to ensure their safety. Leading security risk-management firms rigorously vet candidates to ensure that they employ only the most skilled individuals. They also train their employees to understand the importance of handling clients’ details discreetly. When wealthy individuals arrive at their destinations away from home, they often appoint bodyguards, for example, to scout every location they will visit and identify security risks, including the possibility of terrorism, kidnapping, or robbery.
In 2016, reality TV and beauty mogul Kim Kardashian West made news headlines when five robbers entered her luxury rental apartment in Paris, France, and robbed her at gunpoint of jewels worth more than USD 6 million. Kardashian West was in the city for Paris Fashion Week. Just before the incident, she had posted images of herself with her magnificent diamonds on social networks. Kardashian West’s insurer later sued her bodyguard for negligence, alleging that a lock had been missing or broken and an intercom system had not been functional. Both of these are critical security features that security providers should have checked and resolved before Kardashian West’s arrival. While Kardashian West had been alone in the apartment that evening, with no security detail, the incident highlighted the efficiency with which the robbers were able to establish where she was, work out when she would be most vulnerable, and overcome the location’s security. More recently, in May 2019, Austrian–American actor and former Governor of California Arnold Schwarzenegger’s safety was compromised, despite the presence of a visible security detail, while he attended the annual Arnold Classic Africa event in Johannesburg, South Africa. At the event, an individual ran at Schwarzenegger. The star’s security was quick to respond to the assault, and fortunately Schwarzenegger wasn’t hurt. Schwarzenegger had also been posting online — in this case, his movements. A key part of both of these unfortunate incidents was the way that people with criminal intent used social media as an intelligence tool; innocent posts had given away clues that they could use for illegal purposes. A policy of posting locations on social media only once the individual has departed may form part of a defensive security strategy designed to throw off potential criminals. This may be particularly important when someone fears kidnapping, or if security believes that the risk of kidnapping is higher than usual. Kidnappers recently abducted Tanzanian billionaire Mohammed Dewji — reported to be Africa’s youngest billionaire — from a hotel gym in Dar es Salaam, Tanzania, then held him hostage for a week. Although abductions may be declining, this incident shows there is cause for concern and a need for comprehensive security measures, even when wealthy individuals are pursuing ordinary activities. Many people are opposed to having security with them constantly — probably because they feel that protection agents could infringe their freedom to live flexible and private lives. However, there are strategies to work around this. For
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instance, frequent UHNW travelers and their families can engage countersurveillance and dual-role employees. This approach, together with better awareness of basic security practices, can reduce the need for visible security. The number of deaths due to terrorist attacks has dropped in recent years, yet 67 countries recorded at least one death from terrorism in 2017. According to the Global Terrorism Index, this is the second highest number of countries since 2002 (although still a decrease from the 79 countries that recorded at least one death in 2016). Because of this continuing threat, many UHNWIs fear terrorism and use protection officers, choosing to have a skilled professional guide them safely through any potential strikes, even at apparently low-risk venues such as Disney World. A holistic approach to personal security would be incomplete without a sharp assessment of an individual’s online existence. In many instances, UHNW families spend millions on their physical security needs but neglect to allocate the same resources and attention to their digital lives. The results can include exposing banking information, identity data, travel itineraries, and more. An effective security plan should also include home security, beyond baseline elements such as walls and fences. Bloomberg reports that “typical measures inside residences can include ballistic windows, cameras, safe rooms, reinforced doors…and simple things such as strong hinges to prevent doors from being knocked down”. The same report highlights the role of features that might seem of minor importance, such as dense vegetation and crushed gravel — which makes a noise when walked on — between
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the house and external fence or wall. These can provide an additional layer of protection against intruders who breach the first barrier. It is also important for UHNWIs to consider using companies that offer more integrated security that spans security and risk-management solutions. A comprehensive approach will ensure that security solutions are layered so that they cover all areas of the client’s life. The strategies below can complement an approach of this sort: • Know your employees Conduct thorough background screening to ensure that you are hiring the most suitable staff. Screen employees regularly before and during their employment to identify any areas of concern. Review publicly available financial information to uncover risks such as unmanageable debt or other financial distress. • Implement appropriate monitoring and communication channels Have the appropriate technology to enable trusted members of your security team to monitor your home and keep track of where your family is. These channels should facilitate sharing information and communicating with family members, staff, security advisors, and law enforcement. • Stay alert when traveling While traveling, use technology to your advantage, such as smart phones with GPS tracking. Carry a personal alarm system too — these are now so small and discreet that they can be taken anywhere without attracting attention.
IMAGE: James Devaney/GC Images
Above: Security outside Kim Kardashian West’s New York City apartment following her return home after the Paris incident
IMAGE: James Devaney/GC Images
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OPINIONS
The Varied Geographies of Citizenships
T
he concept of citizenship has demonstrated a profound capacit y for reinterpretation, reformulation, and nuancing over time. This said, it has often been linked to specific scales of place or types of places, which tend to coincide with the dominant political territories of certain eras. Should this be regarded as an evolving search for a geographic optimality for citizenship? To view states as the terminus of a linear, historical process linking identity to territory gives short shrift to the various political geographic structures that have emerged, submerged, and re-emerged in the spatiality of political belonging throughout world history. Moreover, conceiving of citizenship as evolutionary risks ignoring the alternative notions of socio-political membership, sometimes territorialized and sometimes not, that have existed and continue to coexist within and in opposition to the nation-state system. This article considers various manifestations of human socio-spatial organization, including the polis, the empire, and the nation state, to demonstrate how other definitions of citizenship have manifested in conjunction with varied modes of political territorial organization and, equally importantly, at times rejected geographic limitation.
Placing the Earliest Citizenships The earliest forms of human socio-political organization involved small, nomadic bands of hunter-gatherers. The groups would occasionally coalesce into larger tribal associations, adopting systems of chiefdom governance and limited degrees of social stratification. Membership in such bands was rather fixed, and the demands of the hunter-gatherer lifestyle placed severe restrictions on the scale and duration of these arrangements. The Neolithic Revolution (circa 10,000 BCE) involved not only the advent of agriculture and the domestication
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of plants and animals but also social stratification and specialization. These developments combined with technological innovations to catalyze new and more durable institutions of political organization, namely small-scale states or poleis. Poleis manifested as relatively small urban cores and their immediate agricultural hinterlands in a variety of regional settings (for example, the Indus, Mesopotamia, Nile, and Yellow river basins, Mesoamerica, and the Northern Andes). The integrated economic systems they supported have compelled scholars to refer to them as city-states, initiating a longstanding relationship between urban settings and concepts of citizenship. Though emerging in clusters within an area of linguistically related people, the city-states of the Greeks, Phoenicians, and Sumerians were regularly embroiled in inter-polity warfare. Subjugation of one polis by a stronger neighbor gave rise to ethnic states in which the governing elite and other privileged classes — merchants, priests, scribes, warriors, and so on — shared common cultural traditions. In circumstances where ethnic states extended their scope of conquest beyond an immediate and readily accessible territory, the term ‘empire’ may be applied. Although ruling elites were generally drawn from the dominant ethnic group, an imperial concept of citizenship acquired a relatively multi-ethnic character. The sustained appeal of empire formation is evinced by the political histories of the Tigris-Euphrates and Nile basins, in which the succession of Achaemenid, Akkadian, Assyrian, and Babylonian empires, and millennia of Pharaonic dynasties, perpetuated complexly inclusive but still stratified socio-political memberships. Beyond the broader Fertile Crescent region, however, tribal, city-state, and ethnic-state variants of sociopolitical organization held sway.
IMAGE: Supplied
Alexander C. Diener, Director of Graduate Studies and Associate Professor, Department of Geography and Atmospheric Sciences University of Kansas, USA
IMAGE: Supplied
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While city-states, ethnic states, and empires had distinct advantages and proved remarkably durable under the right circumstances, they were embroiled in a dynamic ebb and flow between centralization with direct territorial control and systems of decentralization and vassalage. The latter were, therefore, common. Those living outside of poleis and ethnic states and on the frontiers of empires (hunter-gatherers, mobile pastoralists, and small-scale agriculturalists) were in complex relationships with the ‘citizens’ of political territorial entities for resources, land use, and power. One may contend that state citizenship requires an ‘other’ against which membership may be defined and that the geographic imaginary of citizenship is founded on bounded spaces of responsibility and limitations of moral concern. But should this be regarded as an innate aspect of human behavior or as the choice commonly enacted by elites? Though the history of citizenship is overwhelmingly linked to specific places, an alternative is articulated in Diogenes the Cynic’s proclaiming himself a “citizen of the world” (kosmou polite, or citizen of the cosmos) and thereby defying the polis as a source of identity construction by embracing an ideal of cosmopolitanism. The Stoics also put forth a mode of moral responsibility based on concentric circles of compassion, in which larger webs of mutual obligation extend from self and family to community, region, and ultimately the world.
Places of Belonging in Classical Antiquity As material technologies moved from bronze to iron, human pre-history moved to human history, and chroniclers emphasize the rise, fall, and churn of successive empires on a global scale. From the Mediterranean basin to the plains of Eastern Central Asia, the concept of the state as empire came to dominate broad swaths of land and commensurately afforded large numbers of people status as ‘citizens’. But where Rome and the Han Dynasty are often credited with forming clear divisions (Hadrian’s Wall and the Great Wall) between their territories and those of ‘others’ (citizens and non-citizens), in practice they relied on a range of territorial and social strategies that often produced ‘fuzzy boundaries’. Nevertheless, for later generations, these empires came to represent the epitome of territoria lly integrated, centra lly administered states, while citizenship claimed a new status through the concept of ‘rights’. One prominent
example of leveraging this power of belonging is Paul the Apostle’s claim to Roman citizenship and the right to a trial in Rome as a way to evade flogging at the hands of his captors in Judea. While the idea of the state as empire and citizenship as ‘right-based belonging’ appeared well on its way to becoming an irresistible logic and the defining characteristic of ‘civilization’, its status as the natural order of things was nonetheless questioned by advocates of cosmopolitanism. When Plutarch, for example, said, “We should regard all human beings as our fellow citizens and neighbors”, he indicted the practice of ‘othering’ and the circumscription of moral responsibility inherent to political territorialization.
Destabilizing the Natural Order of Citizenship The ‘natural order’ ideal in which empires were commonly couched in conjunction with notions of a monarch’s ‘divine right’ to rule was also challenged by a variety of alternative concepts of political organization and standards of group membership (the Hanseatic League, the Turkic Khaganates and other nomadic confederations, papal authority, and so on). For reasons that remain the subject of much debate, this period witnessed large-scale migrations out of the Eurasian Steppe region by semi-nomadic groups governed through tribal lineages, personal oaths of loyalty, and cavalry-warrior ethea. The Germanic, Hunnic, Mongol, Scythian, Slavic, Tatar, and Turkic tribes, to name a few, seemed the antithesis of sedentary states as empires. Through a series of both accommodative and conf lictual interactions with these groups, the seemingly ascendant imperial structure of the period was shown to be fragile. Imperial sustainability was undermined also by internal strife that resulted in many empires fragmenting into a loose and shifting assortment of petty states and feudal systems. While the pretense of imperial authority persisted, new spatialities of power and belonging emerged. Catholic Popes, for example, claimed universal sovereignty over religious matters, which were invariably entwined with secular affairs. Other types of feudal arrangements often manifested in complex networks of allegiance between empires, lords, and vassals. These allegiances were hardly unique to medieval Europe, so there was little to suggest that the groundwork was being laid for a new manifestation of the state and the ideal of communal membership.
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Invasions of the Roman Empire 100–500 CE
Hun Capital Chalons 451 Adrianople 378 Constantinople Western Roman Empire
Eastern Roman Empire
Rome
Carthage
Angles, Saxons
Franks
Goths
Visigoths
Ostrogoths
Huns
Vandals
(Source: The Sack of Rome by the Barbarians in 410 by Joseph-NoĂŤl Sylvestre)
Towards Modern Citizenships and the Nation State While claims of divine mandate for absolute rule can be found throughout history and in a variety of regional settings, European monarchs proved adept at coupling them with capacities to establish and maintain more direct rule over their subjects. Monarchical alliances with a burgeoning urban-based merchant class incrementally garnered power from the lesser nobility and the Church. In European medieval and Renaissance cities, modern notions of citizenship took shape, wherein an urban elite (burghers and bourgeoisie) gained limited local rights and powers. But it was the growing capacity to precisely demarcate land and identify people as belonging to one state or another that laid the socioterritorial foundations of modern states.
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International agreements, most notably the Peace of Westphalia treaties of 1648, gradually codified a system of statehood. These agreements mutually affirmed territorial sovereignty, which accorded the right to govern free from outside interference, and the status of states as equals and the only legitimate actors in international affairs. Violations of these precepts were common, but this specific scale of statehood and its commensurate ideal of membership gained standing on practical and normative grounds. This served to naturalize a system of socio-spatial organization that ultimately became the international system we know today. While a qualitative shift occurred with the French Revolution and its precept that sovereignty lies with the people and their consent to be governed, the
OPINIONS
territorial scaffolding of citizenship remained the same. The state’s role would nevertheless be recast in service to the nation rather than the opposite. Once again, despite voices calling for more universal conceptions of human community (for example, philosophers Christopher Martin Weiland and Immanuel Kant, and the founder of the Bahá’í faith Báhá’u’llah), the notion of citizenship coalesced around a group of people with a shared cultural identity, usually embodied by a primary language. ‘Nationalists’ posited that the political borders of the state should be congruent with the cultural-linguistic borders of their nations, thereby giving rise to the ideal of the nation state. While various forms of citizenship and/or rights emerged under different political, legal, and/or socio-religious systems, jus soli (right of the soil) and jus sanguinis (right of blood) were the most common. Jus soli was usually associated with multi-ethnic, multi-cultural, imperial yet territorially cohesive states within Europe (such as France), while jus sanguinis was associated with territorially fragmented ethnic states (such as Germany). Both forms of citizenship coalesced through different processes, highlighting the distinct role of state-building and territory. Although there are variations, mixed or blended forms (such as the USA) and local distinctions (such as Switzerland — jus domicile), both became international norms and remain predominant today.
Colonialism and the Homogenizing of Citizenship The status of national citizenship and territorial sovereignty was enhanced by Europe’s wars of the 19th and 20 th centuries and the colonial ventures preceding and during these centuries. Wars united populations around ideals of the ‘sacred nation’, and colonies manifested as territories operationally and institutionally imbued with the sovereignty of their patron societies. It should, however, be noted that the benefits of full citizenship were rarely extended to the non-European populations. Variance in the methods of European colonization resulted in direct rule and an influx of settlers in some cases, while indirect rule through local clients and a negligible European presence was prevalent in others. In line with the largely unheeded advocates for less circumscribed ideals of belonging and morality in earlier eras, voices promoting the rights of non-European peoples existed throughout the colonial era. For example, the
16th-century Dominican friar Bartolomé de las Casas spoke on behalf of Native Americans and against Spanish genocidal practices. Europeans nevertheless almost universally privileged economic gain and pursuit of imperial advantage in colonial ventures over the enlightened ideals gaining traction at home. Indigenous territorial practices and political structures were circumvented, marginalized, or plowed under to make way for Europe’s modernist preferences for bounded space and fixed citizenship. These preferences reached an apex during the so-called Scramble for Africa (1881– 1914), when European negotiators superimposed a map on the continent that resulted in the dissection and division of groups possessing long-standing ideals of community and membership. A similar process unfolded across much of Asia. In the aftermath of the First World War, international law sought to reconcile, however imperfectly, the basic principles of Westphalia with the new realities of nationalism. Beginning with Woodrow Wilson’s Fourteen Points but also in subsequent iterations of international law, including the UN’s founding charter of 1945, nation-state principles were affirmed as a global norm. By the 1970s, most colonies had transitioned, sometimes through revolution and sometimes by attrition, to sovereign states. This process should not, however, be viewed as natural or as an inevitable evolution to an optimal stage of sociospatiality. Efforts to enshrine this norm have always met with the protestations of anarchists, Marxists, certain religious groups, and internationalists, and, though this point is overlooked in much of the scholarly and policy literature, they have continually coexisted with trans- and sub-national economic, political, and communal practices. More so today than at any point in history, such dynamics are conspicuous and considered threatening to the nationstate norm. A variety of processes under the broad category of globalization (neoliberal capitalism, mass migration, communication technology, transnational human rights regimes, and so on) challenge national citizenship in important ways. While standard political maps continue to portray the world as a collection of discrete territorial units and naturalize national ‘circles of we’, it is important to consider how they obscure the complexity of supraand sub-state citizenships, cross-border relationships, and the daily practices of integration that pervade the contemporary processes of human life.
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The 21st Century’s Changing Geographies of Citizenship
of compassion, Kant’s discourse on universal ethics in the era of Enlightenment and colonialism, and stateMany people are familiar with the idea that globalization centered integrative dynamics of nationalization during challenges long-standing ideals of national-territorial the 19th century. However, Benedict Anderson1 famously citizenships. But have those territorializations of identity argues that specific technologies of power (newspapers, ever been as robust or as explicit as commonly perceived? political parties, national currencies, national Just asking this question throws an ironic light on bureaucracies, and services like postal systems, education, contemporary efforts of countries such as India, the UK, and standing armies) produce the dynamics of nationalization. This enables ‘imagining’ communities and the USA for example, to return to more restrictive citizenships, and their attendant bordering practices horizontally across space and vertically through social designed to cloister the ‘national we’ from a variety of class within a bordered homeland. ‘others’. These others are characterized by differences in Yet the prospects for scaling up communities of economic status, nationality, religion, sexual orientation, belonging are greater now than at any point in history. and so on. New communication technologies — mobile phones, the internet, and social media — combine with foreign In the 21st century, citizenship seems to highlight the contradictions and global variations in multi-scalar, investment, transnational firms, and international mobility globalized, political processes. We witness emergent forms to form networks that transcend space–time and, to a of citizenship, such as citizenship that greater or lesser extent, the human can be acquired by investment, and constructs of national citizenship and e-citizenship for the highly dispersed. state territoriality. In the 21st Scaling up governance takes shape in At the same time, pressures on jus soli century, citizenship new regional organizations to which (“the right of the soil”, in other words, many states have conceded a measure the right to citizenship in the country seems to highlight the where a person was born) rise to the of sovereignty. The EU is at the point of wall-building, separating forefront of this new regionalism by contradictions and hybridizing national identities with a children from migrant parents and global variations in revoking citizenship as a mechanism of supra-state European identity. Not social control. These policies speak to multi-scalar, globalized, many would have considered the ideal how complex it is to manage neoliberal of European citizenship to be possible political processes capitalism, increasing global mobility, in centuries past, even though in and revolutions in transborder practice it is imperfect and people communication technology within stillquestion how sustainable it would be territorialized ideals of national exclusivity. How can one in a crisis — think Brexit. reconcile these policies to transnational human rights Efforts in the 20 th and 21st centuries to establish a regimes, let alone moral edicts (whether based on religions global legal infrastructure also constitute an expanded or not) for compassion toward one’s neighbor and care ideal of citizenship. For example, the 1948 Declaration for the poor and hungry? This essay approaches citizenship of Human Rights’s attempts to prevent creating stateless through the lens of territory, exploring existing processes populations, the UN intervening in various humanitarian of re-scaling political belonging, applying legal rights, and situations, and the International Court of Justice and the considering civil beneficence. International Criminal Court being established. In practice, all of these attempts are limited, but they depart Transitioning Citizenships of the 21st Century — substantially from Westphalian or state sovereignty and Scaling Up the 1789 Declaration of the Rights of Man, which held There are scores of challenges, alternatives, and prospects that: “The principle of all sovereignty resides essentially of citizenship amid post-modernity and its globalizing in the nation. No body nor individual may exercise any dynamic. Some would say that technological innovations authority which does not proceed directly from the nation.” (such as better roads) and subsequent geographic Today, global civil society often supersedes the Westphaextensions of authority inspired the Stoics’ varied realms lian view of rigidly bounded communities of belonging,
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OPINIONS
IMAGES: Shutterstock
compassion, and responsibility, for example by transborder charities, environmental groups, religious or professional or non-profit organizations, human rights advocates, and trade unions activists.
which they are located. In line with this, and partly in response to international trade and business being steadily more competitive, governments around the world have given extraterritorial privileges to the Partly in response businesses and workers they favor. Transitioning Citizenships Export processing zones and other to international trade of the 21st Century — liberalized economic spaces give and business being Scaling Down essential workers special citizenship Nevertheless, one should remember statuses within sub-state spaces. steadily more competitive, that the 21st century began with the These elite workers, sometimes governments around the gradual stabilization of imperial called the new Argonauts, 2 include collapse. Former socialist states of certain corporate executives and world have given extrathe Eastern Bloc and Soviet Union professionals of various global incoalesced around their new national dustries such as education, resource territorial privileges territories, thereby scaling down extraction, development, music, and to the businesses and citizenship. In this process, global sports. Members of this thin stratum cities and sub-state regions have resist restrictive definitions of naworkers they favor carved out unique transborder tional or state citizenship. However, economic links while they augment non-elite diasporic communities cosmopolitan identities similar to those that once existed share a more common experience of transnationality; in medieval free cities. These identities are commonly these communities include guest workers, visiting students, distinct from the politico-territorial ideals of the states in refugees, remittance communities, and immigrants.
Above: Catalonia, with a population of roughly 7.5 million, accounts for 16% of Spain’s population and 20% of its GDP, making it one of the leading economically active regions in the country. Should Catalonia gain independence, it is reported that it will have a GDP that surpasses Finland’s
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The relationship between citizenship and territory is therefore manifold and sometimes contradictory. Data from the World Values Survey in 2000 suggests that more than 20% of the world’s population self-identifies with the global community as a primary or secondary identity. But this same data reveals that citizenship’s dimensions are commonly regarded as relating to local and national territorial scales. Although everyday spatial behaviors and patterns of interpersonal encounter may explain why the local is so prominent, it seems that at least 200 years of venerating the national has made it the norm for belonging, rights, and access to civil beneficence.
erecting a new ideal of identity territorialization, the present system is sustained as people try to secure their place within it. Given the trend to recalibrate territorial scale so that it coheres better with the capacity for social control and the ability to provide civil beneficence, one can reasonably suggest that the nation-state appeals partly because it can achieve particular ends and can operate responsive institutions that citizens can access. The nation-state’s construction of sameness is another facet of its appeal. The optimal territorial scale of any institution is at the juncture of commitment between leadership, populace, and the process of self development. In other words, Sustainability of State Citizenship expanding and contracting territorial scales link to Although some consider that deinstrumental ways of defining territorialized democracy, neoliberbelonging and geographic attachment, al capitalism, global environmentalsince citizenship has political, Re-scaling ism, and broad-ranging applications economic, and social aspects. citizenship is and of justice and human rights herald a These elements are embodied in universalizing cosmopolitan citizenthe notion of imagining community, always has been part ship, currently only 3% of people which advances the Lockean premise change their citizenship from their of state rule made legitimate by the of the human effort citizen consenting. Public institutions place of birth. Even the most interto organize political nationalized corporations and instiand symbols (flags, statuary, maps, tutions are staffed by people for and so on) channel the national space and set limits whom communities of local belongimagination towards a political form ing and ideals of nation-state citizenand territorial scale. Well-founded on the scope of civil ship are still significant. Most people interventions by feminist, postbeneficence, rights, continue to feel that these ideals are modern, and other political theorists sacrosanct, despite resounding cripunctuate the elite-driven nature of and responsibilities tiques of patriotism and nationalism such citizenship, signaling its common in certain circles. failure to integrate social groups that Contemporary headlines are full of nationalism’s are marginal because of ethnicity, gender, race, or region. continuing role in politics, rather than chronicling its Moreover, a historical perspective in conjunction with sweep into the dustbin of history. Demands by minority these critical lenses reveals how attributes considered groups for nation-statehood may challenge the necessary for citizenship have changed according to sovereignty and territorial integrity of some states, but contingent criteria. The Statue of Liberty’s inscription do not systemically undermine the assumptions and welcoming the tired, poor and huddled masses would structures of the system. Instead, many minority seem less relevant in today’s economic and political nationalist efforts aim to revise the territorial framework environment sewn with populist nationalism. of states better to reflect the ideal of national selfFear — whether justified or concocted — engenders determination (for example, independence movements securitization and protectionism. But legal innovations, enhanced by biometric technologies, make the individual’s in Catalonia, Euskadi, Kurdistan, and Scotland). The body the site of the border. They also enforce security concomitant rise of majority, exclusionary, or populist nationalisms may relate to this. These populist throughout national territories, rather than solidifying nationalisms try to buttress identities that are feared to the margins and fomenting interior spaces of true be eroding under pressure from global culture and unacceptance, or at least tolerance. In short, borders of assimilating resident others. Here again, rather than citizenship are everywhere — at the physical boundary
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of the national territory, in political practices and policies, and in social norms (gender, sexuality, and so forth). These borders are embodied in all individuals, noncitizens and citizens alike.
voting. In addition to age-old processes of naturalization, states try to accommodate recent globalized realities, such as non-nested identities, by innovating policies such as citizenship-by-investment, citizenship deprivation (or revocation), jus domicile (residence citizenship), jus nexi Novel Spatialities of Citizenship (earned citizenship), and e-citizenship (or residence). But what alternatives exist? As Lynn Staeheli argues, to Many would argue that borderland identities, dual date “post-national, transnational, cosmopolitan, and citizenries, and scale-jumping, while problematic to nationglobal citizenships…are not alternatives to citizenshipcentric citizenship ideals, are mounting realities to which in-the-state but instead are constructed through and in systems must adjust. Vesting people in place at different, relation to it”. 3 This said, re-scaling citizenship is and not necessarily nested, scales of political authority allows always has been part of the human effort to organize affective and communal bases for citizenship through political space and set limits on the scope of civil elemental facets of social familiarity and everyday spatiality. beneficence, rights, and responsibilities. Concepts of That said, legitimizing extra-territorial belonging feeds territory do not rigidly delimit ideals many people’s concerns that dual of belonging now, nor have they ever. citizenship could become treble Rather they are socially assigned in citizenship or more. Can democracies Rather than relation to a series of contingent function without the defining structure processes, events, technologies, and of territorial citizenship? How would ignoring scale-jumping, shifting values that are multi-valent that work?4 states are creating and polylocal. Increasing mobilities that extend institutions to support Endnotes and References 1 well beyond tourism and guest worker Benedict Anderson, Imagined polylocal citizenships. Communities: Reflections on the Origin migrations will re-scale citizenship in and Spread of Nationalism (London: the 21st century. Advances in More than 90 countries Verso, 1983) communications technology facilitate 2 Annalee Saxenian, The New Argonauts: connections between individuals, have embraced dual Regional Advantage in a Global Economy (Cambridge: Harvard University Press, families, and groups across space in a or multiple citizenship, 2006) manner unprecedented in human 3 Lynn Staeheli, “Political Geography: history. The result is, for lack of a better and in 2006 more Where’s Citizenship?”, Progress in Human term, hybridity of belonging — Geography 35 (August 26, 2010): than 40 states allowed 393–400, journals.sagepub.com/ perceptions of personal and group doi/10.1177/0309132510370671 investment within different polities. 4 non-citizen voting This essay suggests that the search for an Polylocality is normal across the optimal scale of citizenship is ongoing, jurisdictional geographies of states (for being complicated by historical transitions from religious–monarchial sovereignty to popular–territorial example, living in one municipality or province but being sovereignty. An imagined unity of peoples and their sanction of employed in another), but it is now increasingly common the state to represent them facilitated the latter. The way that across international borders. Long-term migrant communities this framework rapidly proliferated over the last 200 years — often possess a sense of investment in and belonging to a though it was often split with gendered, ethno-linguistic, and/or temporal-occupancy privilege — solidified the relationship neighborhood, or even their city of residence, but lack between democracy and territory at the same time as it allegiance and a sense of responsibility to the host state. In demarcated the borders between contemporary nation-states. this sense, their citizenship ideal jumps scales according to These linkages are so embedded that critiques of territorial conceptions of homeland that tie the locale of a transnational sovereignty are often depicted as challenging the rule of the people. The way that the world is portrayed on maps — as a destination to a locale of origin in another state. collection of discrete territorial units — makes these twoRather than ignoring scale-jumping, states are creating century-old circles seem natural. This cartographic portrayal institutions to support polylocal citizenships. More than also obscures how complex cross-border relationships are, and 90 countries have embraced dual or multiple citizenship, how daily practices of integration initiate new supra- and sub-state citizenships. and in 2006 more than 40 states allowed non-citizen
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The Humble Passport: Here to Stay? John Torpey, Graduate Center, City University of New York, USA
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magine a world in which governments did not restrict basic point is that there was once a time when movement people’s movement, in which people interacted directly was largely unrestricted. with nature. Imagine that individuals moved about to In order to control workforces or outsiders entering for feed themselves, to stay warm, and to keep safe. Gradually, a variety of reasons (economic, ethnic, medical, military, they began to master their environment so that they could and so on), control mechanisms and processes have grown build up stores that would outlast their immediate needs. in number and elaboration over time. Keep in mind that, Some people then asserted their strength so they no longer other than in wartime, for a long time the main concern needed to work as much as they had before. Instead, others for states was to keep people from leaving rather than from worked on their behalf and received part of the fruits of entering — our major concern today. For example, that labor. slaveholders in the American South branded slaves to identify them, while slaves needed passes to ‘go abroad’ Those who worked for the benefit of others naturally found this arrangement unappealing — that is, to leave their plantations. and would often seek their fortunes Likewise, serfs in other countries elsewhere, where they would be unneeded permission to travel; this The change from encumbered. In response, those who would frequently be in the form of benefited from the work of others documents from their masters. controlling departures sought to constrain the movement of But these constraints would evento controlling entries those they exploited, perhaps chaintually be met with challenges: the first constitution of revolutionary France, ing them, or branding them to make arose partly from the it easy to identify them if they esthe short-lived Constitution of 1791, caped. This sort of primitive arrangemandated that people should be free 20th century being the ment occasionally proved a hin“to move about, to remain, [and] to era of the refugee drance, for example, when workers leave”. This was a forerunner of a needed to travel some distance to broader trend. In time, people would work. This was particularly true if come to view forced labor that needs workers had to cross territory controlled by others. to curtail individuals’ movements as indefensible. Concerns Two parties, the sender and the receiver, would be about entry would replace anxiety around departures. particularly interested in knowing exactly what the worker Yet the Constitution of 1791 notably makes no mention was doing. The sender wanted to be sure that the worker of the freedom to enter. The French Revolution helped to nationalize politics across the continent. Then, during was going to return, because population was wealth — whether in economic or in military terms. Meanwhile, the 19 th century, the right to remain became widely the receiver might be happy to have the new arrival but accepted and concern shifted towards those who were also wanted to be sure that the worker would not stay and coming in from other ‘countries’ rather than those who make unreasonable demands on the receiver’s resources. were leaving. This story is an extremely simple version of what might As a result, the passport grew, over time, from being have led to controls on human movement in history. The a document often used to regulate internal movement into
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one that was seen as a mark of national citizenship. The reason? People were no longer unambiguously allowed to enter another’s domain, but they were supposed to be free to return to their countries of origin. To do so, they just had to prove where they came from. The change from controlling departures to controlling entries arose partly from the 20th century being the era of the refugee. The first coordinated global effort to address the problem of refugees emerged after the First World War, when the newly founded League of Nations made the Norwegian explorer Fridtjof Nansen its first High Commissioner of Refugees. He dispensed the Nansen passport to facilitate the movements of those who lacked the documents they needed to cross European boundaries. After the upheavals of the first half of the 20th century, border officials would demand people’s passports as proof of identity and confirmation of nationality. Gradually, however, it became clear that possessing certain nationalities privileged those who had them, while other people required visas in addition to their passports because their nationalities were seen as dubious. With time, passports were made with different technologies in the interest of greater reliability and security. From being either simple or elaborate documents issued under the authority of a non-professional diplomatic corps, they would gradually become standardized and filled with the bearer’s biographical details. But using a document to vouchsafe a person’s identity always poses a problem: is the bearer who they say they are and does the document really belong to them? The need to tie the document to the person named in it has produced various kinds of techniques: descriptions of the person’s bodily features and distinguishing marks, fingerprints, photographs, and most recently, retina scans, palm prints, and other electronic means of verification. After the Second World War, the International Civil Aviation Organization has guided these efforts. This is a UN-observer body whose members collaborate to achieve passport standards and methods acceptable to all member states. Passport-like functions are increasingly being achieved by computer applications that permit travelers to traverse international borders more quickly and easily than standing in the usual lines, for example, the Global Entry program and the Mobile Passport Control app, both from the USA. With transportation easier and mobility greater, some ask: does the world still need passports? It is interesting to recall that in the aftermath of the Second World War, the
top West German law enforcement official, the interior minister, argued in the Bundestag in 1951 that passports were essentially a big waste of time. After all, he argued: “All the experts essentially recognize that the really dangerous people almost always find a way to get in and out.” But we live in a period in which people are afraid of terrorism. In 2018, the UN Security Council unanimously voted to require “all nations to collect airline passenger data, maintain watch lists of known and suspected terrorists, and collect biometrics” to try to reduce terrorism. Under these circumstances, it is difficult to imagine that passports could be eliminated, even if terrorism is not nearly the threat that it sometimes appears to be and “the really bad people almost always find a way to get in and out”. The humble passport, therefore, is likely to stay with us — in one form or another — for a long time to come.
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Why Nuclear Weapons Risks Are Increasing
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reversal in progress on arms control and disarmament and a volatile international scene have renewed fears that nuclear weapons may be used. The risks are significant and should be taken seriously. Risk is defined as the product of the probability and the consequence of an event occurring. The high risks associated with nuclear weapons have always been dominated by the ‘consequences’ component of the risk equation. When impacts are overwhelming, risks are high, no matter how small the likelihood of an event as long as it is not zero. During the Cold War, there were several near-accidents and near-deliberate detonations of nuclear weapons. Thanks primarily to good luck and the sound judgment of some key individuals, we avoided the worst dangers of the nuclear stand-off between the USA and the Soviet Union. Could such good fortune and judgment still hold today? Amid growing concerns about nuclear weapons, Ireland introduced a UN General Assembly resolution that resulted in the 1968 nuclear Non-Proliferation Treaty (NPT). The NPT was a grand bargain in which the states that did not possess nuclear weapons promised never to develop or acquire them, to develop peaceful forms of nuclear energy only, and to subject themselves to safeguarding inspections by the International Atomic Energy Agency (IAEA). In return, states that possessed nuclear weapons promised to
negotiate nuclear disarmament in good faith along with disarmament in other weapons categories and not to transfer or assist with nuclear weapons technologies. All states party to the NPT could then share in safeguarded nuclear technologies for peaceful uses. The NPT was originally given a lifespan of 25 years. In retrospect, this decision betrays a touching faith in commitments to disarmament. In 1995, the treaty was extended indefinitely as part of a suite of commitments to: a) completely eliminate nuclear weapons; b) strengthen the NPT review process; and c) progress towards a Middle East zone free of weapons of mass destruction. Nearly 25 years later, there has been no substantial advancement on any of those commitments. In the run-up to its 50th anniversary in 2020,1 the NPT is in trouble again. In part, nuclear proliferation in states both outside and inside the NPT has caused this turbulence. Outside, following their nuclear tests in 1998, both India and Pakistan have cemented their nuclear-armed status, with India having been granted special status for peaceful-use technologies through the Nuclear Suppliers Group and Section 123 of the USA Atomic Energy Act. Israel’s nuclear weapons capability is unspoken and rarely challenged by other states that possess nuclear weapons, although this capability is of considerable concern in the Middle East. None of these countries is likely ever to join the NPT. Although more
Above: Russian Navy Northern Fleet’s Project 955 Borei nuclear missile cruiser submarine in Avacha Bay, off Kamchatka Peninsula on Russia’s Pacific coast
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Dr. Patricia Lewis, Research Director: International Security Chatham House, UK
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intrusive IAEA inspections have made it far more difficult for states inside the treaty to use a peaceful nuclear program to hide the development of a clandestine military capability, this has not stopped proliferation: North Korea announced its withdrawal from the NPT in 2003, while concerns about Iran’s program led to the 2015 Joint Comprehensive Plan of Action (JCPOA). Lack of progress in the step-by-step process of multilateral and bilateral nuclear arms control and disarmament also destabilizes the NPT. Since the USA Senate rejected the Comprehensive Nuclear Test Ban Treaty in 1999,2 things have gone badly for multi-lateral processes, except in the humanitarian domain. Efforts to control landmines, small arms and light weapons, cluster munitions, and the arms trade have been the only progress on conventional forces. These humanitarian efforts rather than traditional disarmament have led to more than 120 countries negotiating the 2017 Treaty on the Prohibition of Nuclear Weapons;3 they have done so with a sense of purpose and urgency not seen since the NPT days of the 1960s. In contrast, since the USA withdrew from the Anti-Ballistic Missile Treaty in 2002, bilateral nuclear controls and regional conventional arms control involving Russia and the USA — including the latter’s withdrawal from the Intermediate-Range Nuclear Forces Treaty announced in February of 2019 — have all but halted. This is despite the USA and Russia agreeing New START, a new nuclear arms reduction treaty, in 2010. It is now uncertain whether they will extend it when it expires in early 2021. This sorry state has formed the backdrop to nuclear weapons being prominent in military doctrines in Russia and the USA. Both countries have started to develop new nuclear weapons programs. This increases the chances of proliferation and even of nuclear weapons’ use. Throughout the Cold War, nuclear weapons were ‘weapons that could not be used’ — they were for deterrence only. Their innately terrifying effects were the foundation of this view. In recent years, the consensus against their use has weakened. More than 70 years have passed since the USA used nuclear weapons on the Japanese cities of Hiroshima and Nagasaki, so decisionmakers may not be as aware of the devastating immediate and long-term effects of nuclear weapons. For example, during the 2016 presidential election campaign in the USA, Donald Trump asked why a president would not consider the use of nuclear weapons; in the same year, former UK prime minister Theresa May stated her resolve to use nuclear weapons; and Russian President Vladimir Putin has frequently made clear his readiness to use them.
In 2018, threats from the leaders of both North Korea (Kim Jong-un) and the USA (Donald Trump) made the possible use of nuclear weapons all too real. Hawaii reinstated missile alert drills, while authorities accidentally broadcast a ‘real’ alert in January 2019, leading to 40 minutes of panic and uncertainty.4 People readily believed the mistaken alert because of the increasingly hostile manner in which the USA and North Korea are talking. Although the Trump–Kim Summits introduced some optimism into the situation, it is difficult to gauge their chances of success. Since the 2019 Hanoi Summit, their chances seem low. With leaders using social and broadcast media to trade insults and threats, military exercises could be misinterpreted and rhetoric could escalate to missile attack. Similar tensions in the Middle East also raise the stakes. Unless Europe and Iran find a way through, the USA’s withdrawal from the JCPOA could renew the risk of Iran developing a nuclear capability and thus of an Israeli or Saudi pre-emptive military response. In this multi-polar and increasingly turbulent world, the ‘probability’ component of the nuclear risk equation has grown in significance. Although there were near-accidents and near-misses throughout the Cold War, military planners and politicians shared a belief in deterrence and assumed that nuclear weapons would not be used, however fraught a situation might be. With new players in the mix; increased regional instabilities; command, control, and communication technologies subject to daily cyber threats; and leaders preferring to use social media rather than quiet diplomacy, we can no longer assume non-use. Nuclear war may only be “one tiny tantrum away”, as Beatrice Fihn, director of the International Campaign to Abolish Nuclear Weapons, warned when she received the 2017 Nobel Peace Prize. This article was originally published in ‘Chatham House Expert Perspectives 2018: Risks and Opportunities in International Affairs’. Endnotes and References 1 The NPT came into force in 1970, two years after it was agreed. 2 Craig Cerniello, “Senate Rejects Comprehensive Test Ban Treaty; Clinton Vows to Continue Moratorium”, Arms Control Today 29, September/October 1999, armscontrol.org/ act/1999_09-10/ctbso99 3 Aria Bendix, ‘122 Nations Approve ‘Historic’ Treaty Banning Nuclear Weapons’, (The Atlantic, 8 July 2017) theatlantic.com/ news/archive/2017/07/122-nations-approve-historic-treaty-to-bannuclear-weapons/533046/ 4 Associated Press, ‘Hawaii Worker Who Sent Missile Alert Was 100% Sure Attack Was Real’, (The Guardian, 3 February 2018) theguardian.com/us-news/2018/feb/03/hawaii-worker-sentmissile-alert-100-percent-sure-attack-real
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Of Yellow Vests, French Democracy, and EU Prosperity Emmanuel Martin, Economist and Expert, Geopolitical Intelligence Services; Lecturer, Aix-Marseille University, France
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finally to have connected high taxes with increased public spending — France ranks highly here too, with public spending accounting for nearly 57% of GDP1 — and were asking for serious change.
No Change After All Soon, the yellow vests movement became less reasonable and far less pro reform, with its cahiers de doléances (register of grievances) — an expression taken from the French revolution in the late 18th century — indeed, the register began to resemble a long letter to Santa Claus. On it were many conflicting goals, such as demands for lower taxes but calls for higher public spending; greater taxes for the rich; a higher minimum wage (which would hurt the small entrepreneurs supporting the movement) and a cap on wages; and a ban of business off-shoring — which would lead to less French and foreign investment and fewer jobs in France. This ragbag of positions seems to come from the programs of competing French populist parties, the National Rally on the right and la France insoumise (unbowed France) on the left, although the movement remained officially independent from those parties. It is possible that the change from a tax revolt to a register of grievances could be a ‘hacking’ of the movement by people with sympathies for either of the two parties. Another possible cause is the perceived arrogance with which the government addressed the demonstrations. President Emmanuel Macron said that the government would continue with the carbon tax, but it became evident that it would have to backpedal. During the crisis, a member of parliament belonging to the government majority said she had no idea what the minimum wage was. This made the Parisian elite appear remote and arrogant, a group who seemed to care more about the ‘end of the world’ and climate change, than the struggles faced by ordinary people at the ‘end of the month’.
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f you are interested in France, you may be asking questions about how that country’s democracy works because of the yellow vests movement (or the mouvement des gilets jaunes), which erupted in late 2018. The movement was originally a tax revolt. After years of praising the environmental benefits of diesel engines because of their lower CO2 emissions (thus ignoring the issue of fine particles), the French government announced an increase to its carbon tax, particularly for diesel vehicles. In large cities and other places considered to be economically strong, the government hoped to encourage people to use metro services and tramways instead of cars. In poorer, remote areas without public transport alternatives to private cars, this is a tax on the only viable means of transport. Following the authorities reducing the speed limit on secondary roads from 90 to 80 km per hour and increasing and modernizing road radar — and thus the likelihood of more fines — the higher carbon taxes announcement was the proverbial straw that broke the camel’s back. Yellow vests supporters felt that the government was implementing transportrelated taxes not for the environment or public safety but to fill the country’s coffers. In fairness, the feeling of being over-taxed is not an exaggeration: France is one of the top countries in the Organisation for Economic Co-operation and Development for tax pressure, with the country’s tax income accounting for 46.2% of GDP. No wonder early yellow vests gatherings blockaded tax offices, and the movement encouraged shopkeepers not to collect value added tax. At the time, the movement wanted to give politics and policies a dose of reason. Many participants felt strongly that the government should first manage public spending better before raising taxes again; they felt that they could, for example, reform parliament, which is costly, and reduce state subsidies to various groups. French citizens seemed
Divide and Rule Arguably the most important factor in the situation is that the movement is the logical conclusion of the dysfunctional democracy created by the French political, administrative, and social model. Regarding the millennium since the Capetian monarchs, the history of France tells of increasing centralization to gather again the old empire of Charlemagne. It is a history of statism, of defiance towards local, regional powers (which could threaten the project of a unified France), and of defiance towards civil society itself — a history of “divide and rule”. The most radical instances of this statist trend are probably Jacobinism under the French revolution and Napoleon Bonaparte’s imperial delirium. To some extent, French republicanism, although much more reasonable, is part of the same school of thought: that the enlightened elite should guide the people. Some philosophers thus see a conflict between French republicanism, viewed as profoundly paternalistic, and genuine democracy. The French welfare state is also symptomatic of this trend. Economist Pierre Cahuc and sociologist Yann Algan describe the type of welfare state that was created in France in the 20 th century as “centralized, corporatist, and conservative”. 2 Various professional corporations compete for different social rights that are paid for by a common pool of resources, with the central government usually deciding who gets what. The system naturally encourages social groups to compete — for favors, as in the ancien régime — and thus to mistrust one another. A noteworthy consequence of that mistrust is that the French are unable to discuss social issues with one another in a horizontal manner and reach consensus. With such a competitive environment, nobody wants to lose their privileges, so conservatism rules, and reform is virtually impossible.
Other People’s Money
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France’s administrative system also takes a ‘divide and rule’ approach. Instead of implementing a sound, decentralized system with a fair amount of local autonomy — there is a clear link between local public spending and local taxation — this approach has produced a complicated system with too many layers of governance, in which the central government redistributes grants. The French call it a ‘layer cake’. Complex financing pipelines blur who spends what, effectively preventing accountability and, by extension, democratic control. The system inadvertently encourages an ethos of ‘I spend therefore I am’, with an obvious negative impact on public spending, taxes, and debt. This complexity
contributes to fiscal myths (such as numerous, invisible, and painless taxes, or a minority of citizens paying income tax) that infantilize people by enabling them to believe that public spending is either free or paid for by others. This defiance could also explain why many French people react negatively to the EU and, more broadly, to globalization — they may well feel that they have enough of an unaccountable elite and enough centralization at home, so don’t need more of what’s not working for them. Despite the EU’s undeniable vast advantages for citizens, it seems to be increasingly modeled on the French system (a system that many feel institutionalizes irresponsibility) and thus produces the same outcome of mistrust. The EU is a hybrid: a federation, but without a federation’s accountable central government and instead a very weak parliament, blended with a confederation, but with less and less subsidiarity and autonomy because of its harmonization policies. This awkward hybrid is pasted onto a territory that is not even a nation and that has few chances of being genuinely democratic. Its current redistribution schemes have caused tensions and mistrust between the ‘contributors’ and the ‘takers’. Now seems a good time for both France and the EU to think less about dysfunctional democracy and more about accountability — a model that would foster trust and, more importantly, economic and social peace, both crucial components of prosperity. References 1 Insee, ‘Dépenses et recettes publiques, Données annuelles de 2010 à 2018’ (Insee, 2019) insee.fr/fr/statistiques/2381414 2 Yann Algan and Pierre Cahuc, La société de défiance, (Paris: Editions ENS Rue d’Ulm, 2007) cepremap.fr/en/ publications/la-societe-de-defiance-comment-le-modele-socialfrancais-sautodetruit/
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The Long-Lasting Impact of the Windrush Scandal
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he government-created Windrush scandal has shamed Britain. The Windrush generation takes its name from the passenger liner HMT Empire Windrush. In 1948, about 500 people boarded this ship from Jamaica on their way to Essex in England to work. This was at the invitation of the British government as these were Commonwealth citizens. For over half a century, these individuals and their families helped rebuild post-war Britain, making an invaluable contribution to the country economically, culturally, and in other ways. During this time, immigration rules changed, becoming more restrictive. By the early 1970s, the members of the Windrush generation had rights to permanent residence (indefinite leave to remain) in the UK, if not British citizenship. At issue is that many did not formally request a change in status, partly because none was required for continuing to live, work, and study in the UK as they had been doing for decades. The consequence is that not everyone had official documents from the Home Office to certify their right of abode, allowing them to continue living in Britain. When then Home Secretary Theresa May launched her ‘hostile environment’ policies aimed at helping the Conservative government to reduce annual net migration significantly, this lack of documents became a problem. These policies came across as an effort to metaphorically ‘smoke out’ people unlawfully residing in the UK by introducing new checks. For example, anyone renting private accommodation had to prove their right of residence to landlords; similar requirements affected people opening a new bank account or applying for a driver’s license. Because not all of the Windrush generation had the official documents proving their right of abode — although these individuals did, in fact, have this legal right — the new checks impacted them negatively. As a result, the new hostile environment policy (aimed at exposing people
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residing unlawfully in the UK) actually caught in its net many lawful UK residents and British citizens instead. Because of this change in government policy, some citizens were said to have been deported to countries they had left as babies or young children, for example. This result could have been foreseen. Another element of the new Home Office policy involved shifting the burden of proving an individual’s right to abode onto the individual instead of the state. By implementing this, the state created the unwelcome situation of treating everyone, citizens and non-citizens alike, as unlawfully resident until proven otherwise. This change ran the significant risk of causing trouble for citizens every bit as much as for non-citizens. The scandal worsened when it was discovered that the government had, in a separate development, started to destroy the records of the ships that had brought the Windrush generation to Britain. This meant that lawful residents and citizens no longer had available a piece of evidence that would prove when they first arrived in the UK, and that would support a claim for permanent residence or citizenship. This evidence, which could have made lawful residents and citizens safe from deportation, was unavailable because of the government’s own actions. This policy has been a disaster, shattering lives and drastically reducing already low public confidence in the way government has handled immigration more generally. Interestingly, the scandal united both those for and those against more restrictive immigration policies in protest against the government’s hostile environment. The repercussions are still being felt and compensation claims are still being received. The counterproductive consequences of the hostile environment were the tip of the iceberg, although they were unknown at the time. Despite the government assuring the public that the new checks were about exposing
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Prof. Thom Brooks, Professor of Law and Government and Dean of Durham Law School, Durham University, UK
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previously unknown persons unlawfully resident in the UK, this was surprisingly not the case. I advised the Labour Party frontbench to use a series of forensic parliamentary questions to examine the evidence on how effective the hostile environment was. We uncovered that the checks being done when someone wanted to open a bank account, rent private accommodation, or apply for a driver’s license, only checked names against a list of known persons believed to be in the UK unlawfully. If someone was identified in this way, they would not be able to rent, open an account, or drive legally. The policies that so badly damaged public confidence in the immigration system and also Britain’s reputation globally have still not identified a single individual not already known to be in the country unlawfully. Yet these policies have threatened British citizens with deportation. Measures meant to reassure and provide improved border control have done the opposite. We might expect the long-lasting impact of this scandal to take two shapes. The first is the widely acknowledged wrongs done to the Windrush generation, which will take time and much reassurance to heal. A compensation scheme is a helpful first step, but families and communities that have given so much for half a century have been treated appallingly. Their wounds will not heal overnight. The second long-lasting impact is that this is a scandal only lying dormant until triggered again, as there has been no change in policy direction. Unfortunately, the moment of triggering is nearly upon us. The UK public voted to leave the EU in a hotly contested and controversial referendum in 2016. Despite former Prime Minister Theresa May’s repeatedly promising that Brexit would happen by
29 March 2019, it did not. The issue here, however, is that the Windrush generation had at least some documentation on when they entered the UK, which they could use to claim permanent residence or citizenship later on. Many did do so. Because of a policy change, the government’s move to destroy some of these records, precisely when they were most needed, is scandalous. But EU citizens are in a very different space. Their arrival in the UK often goes unmarked, as they are waved through entry points without any check or record of their entry or exit from the UK. Without any stamp in a passport or documents scanned at airports, EU citizens will find it much more difficult than the Windrush group to prove when entry happened and residence began. Now, too, since Brexit could lead to an end to free movement and the need to prove eligibility for permanent residence, the Home Office rules for EU citizens entering the UK have changed. This, in turn, requires documentation that some may find cumbersome to obtain. An estimated three million EU citizens live in the UK and share this uncertain future. No scandal has yet emerged apart from a growing number of people reporting that their residence applications for post-Brexit had been rejected by mistake. If the government does not fix this soon — and, frankly, there is little sign that it will — then the Windrush scandal that shamed Britain globally could well be dwarfed by the scale of a similar scandal affecting EU citizens. Stopping Brexit could avoid this crisis from happening, but only changing policy direction and ending the hostile environment that May unleashed will help make this scandal history.
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OPINIONS
Expanding Our Understanding of Gender Lisa Kenney, Executive Director, Gender Spectrum, USA consequences of this deficiency are significant for all of us, particularly for those who do not conform to traditional gender expectations. For children to understand their own genders, engage in healthy relationships, identify and place media and social messages in context, and have agency in determining aspects of their genders now and in the future, we must provide them with a basic gender literacy.
Dimensions of Gender How is the understanding of gender expanding for today’s youth? Let us start by discussing the dimensions of gender. Gender is a complex relationship between three distinct but interrelated dimensions: body, identity, and expression. Comfort within our gender is relative to the degree to which we experience gender congruence, which is harmony across these dimensions.
Body Discussions about the body often begin and end with a person’s sex (female, male, or intersex). Beyond our sex, however, bodies are also gendered in the context of cultural expectations and norms. Masculinity and femininity are equated with certain physical attributes, labeling us as more or less a man or a woman based on the degree to which those attributes are present. For instance, how visibly muscular people are will likely be associated with how masculine they are assumed to be — when, in fact, a person’s physique does not make them more or less a man. This gendering of bodies affects how we feel about ourselves and how others perceive and interact with us.
Identity Gender identity receives much attention in the public conversation about gender. Identity is essentially the label we use to communicate our internal experience of our genders. Individuals do not choose their genders, nor can they be made
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ur understanding of gender is changing, and rapidly so. A few years ago, the J. Walter Thompson Innovation Group, the in-house think tank of the global creative agency J. Walter Thompson, set out to see if this changing understanding was a fad. What they discovered was that the Generation Z youth aged 13–20 see gender in significantly different ways from previous generations, and that far from being a fad, these changes are emblematic of a global reimagining of gender. While millennials may be the first generation with a majority that sees gender as a spectrum rather than as binary, their understanding of gender seems quaint in comparison with those in their teens and twenties today. The truth is that gender has always been more complex than we have acknowledged it to be. The binary, biologybased perspective we have been given has left us ill-equipped to effectively address the complexity of gender. The
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to change them. However, the words individuals use to communicate their identities may change over time. Because we are provided with limited language for gender, it may take us quite some time to discover or even create the language that best communicates our internal experiences. Likewise, as language evolves, individuals’ gender identities may also evolve. This does not mean their genders have changed but rather that the words to best describe their genders are shifting. The two gender identities people are most familiar with are boy and girl (or man and woman), and often people think that these are the only two gender identities. The idea that there are only two, mutually exclusive genders is known as the ‘gender binary’. Throughout human history, however, many societies have seen, and continue to see, gender as a spectrum. Youths and young adults today no longer feel bound by the gender binary. Instead, they are establishing a growing vocabulary for gender. This shift in language is more than just a series of new words, however: it represents a far more nuanced understanding of the experience of gender itself. In particular, terms that communicate the broad range of experiences of non-binary people are growing in number. ‘Genderqueer’, a word that is used both as an identity and as an umbrella term for non-binary identities, is one example of a term for those who do not identify as exclusively a man or a woman.
Expression Gender expression is how we present our genders in the world, and how society, culture, community, and family perceive, interact with, and try to shape our genders through gender roles and norms. Expression changes across societies and over time. While we may have been taught that we know people’s genders based on their expressions, the connections between gender expression and identity are far less rigid than they used to be. Ideas about what is ‘normal’ continue to be upended as younger generations no longer feel constrained to make traditionally gendered choices, and non-binary expression expands the spectrum of possibilities for everyone.
What Next? It is time to cultivate a richer, more complex understanding of gender and encourage a world in which interests, styles, emotions, and careers are not limited by gender but are instead available to all. In order to bridge the generational divide regarding gender, those of us who were raised with a more limited view of it can take this as an opportunity to explore it with new eyes. As with any learning experience, we will discover more about the world around us and about ourselves in the process.
Here are a few suggestions that may help in your exploration: 1. Take 15 minutes to understand the key concepts and language of gender. One quick read is ‘Understanding Gender’, which can be found on the Gender Spectrum website.1 2. See the world around you through a ‘gender lens’ and interrogate what gender messages are being relayed by advertisements, books, films, and TV shows. 3. Understand your own gender. Ask yourself questions such as: • Did you think of yourself as a boy, as a girl, as both, as neither, or in some other way when you were growing up? How did you come to that recognition? When? • What messages did you receive from those around you about gender? Did those messages make sense to you? • How were people who did not fit into societal expectations about gender treated by others? How did you treat them? • How have your class, community, ethnicity, faith, race, and sense of place influenced your gender? • How has your understanding of gender influenced the way you relate to others? If you are a parent, you may also want to consider the key messages you want your children to receive about gender. It is easy to pass on unconsciously any restricting messages you may have received as a child. Ask yourself what messages about gender you want to relay, and talk to your children about gender. Find opportunities to discuss things they are interested in (such as movies, TV shows, books, and games) from a gender perspective. Sharing personal insights about your own gender story is another great way to spark conversation. Communicate an openness to understanding gender in new ways and that you are interested too in learning how your children see and experience gender. Today’s expanding understanding of gender is an opportunity for all of us to see the ways we may have constricted ourselves to fit gender expectations, becoming less of who we are along the way. This is a chance to reclaim those lost parts of ourselves and to help those we care about step more fully into their whole, authentic selves too. Endnote 1 genderspectrum.org
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OPINIONS
Tourism in Montenegro: Value beyond Numbers Kai Dieckmann, General Manager, Regent Porto Montenegro Montenegro
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ccording to the World Travel and Tourism than in 2017. These travelers booked around 13 million Council, tourism contributed EUR 988 million overnight stays, which accounts for both hotels and to Montenegro’s GDP in 2017, representing private accommodation and is 1 million more bookings 23.7% of the total. While this percentage was forecast than in 2017. For hotels in particular, 2018 was a record to rise by 8.9% in 2018, the role of tourism in the year, with over 4 million overnights recorded. The country is significant beyond these statistically largest number of tourists to Montenegro traveled from showcased numbers and data. other parts of the region and from France, Germany, The increase in tourism in Montenegro is indicative and Russia but there has also been an increase in tourists of a positive shift in perceptions about the destination from other Western markets. and of the growing awareness of the country among The Government of Montenegro is devoted to creating a competitive investment environment, through which it those who had previously not thought of it as a destination worth considering. As well as providing a valuaims to position Montenegro as a luxury, high-end able stream of direct income, travel and residential destination. the influx of tourists has unFor example, investors are exveiled opportunities for busiempt from the payment of import According to the ness growth in Montenegro, VAT on the supply of products Ministry of Sustainable and services for the construction with this indirect source of income providing further supof five-star hotels, and the annuDevelopment and Tourism, port for economic development. al real estate tax rate is reduced An immeasurable positive by between 30% and 70% for more than 2.2 million impact of inbound travel is exfour- and five-star hospitality tourists visited Montenegro posure to different views and facilities that are open year-round people. This allows locals — and are located in prime tourist in 2018, which is 200,000 ordinary citizens and governzones. Furthermore, since 2018, ment officials alike — to expea VAT rate of 7%, reduced from more tourists than in 2017 rience new perspectives on their 21%, is applied to accommodaown lifestyle and culture, which tion and hospitality services for is both beneficial and educational. As tourism develops, the preparation and serving of food and beverages in the skills and services of the country become more hotels with a minimum four-star rating in the northern diverse, offering travelers a variety of quality experiregion and a minimum five-star rating in the central and coastal regions. It is worth mentioning that 58 new hotels ences that celebrate local heritage and specialties. have been opened in Montenegro in the past two years. Hotel Heaven In 2018, six of them were in the five-star category, which According to the Ministry of Sustainable Development meant that the capacities of high-category hotels (that is, and Tourism, more than 2.2 million tourists visited four- and five-star hotels) increased to 51% of the total Montenegro in 2018, which is 200,000 more tourists number of hotel beds nationally.
Proper Positioning
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Montenegro is very much a hidden gem of the Adriatic. In a world in which most things are only two clicks away, Montenegro has managed to maintain its mystery. It is for this reason that Montenegro’s association with luxury and elegance is fast attracting affluent travelers, which is an incredibly exciting prospect for the country. Montenegro really stands out as a luxurious and sustainable destination. The way Montenegro is portrayed makes a world of difference to ensuring its strong positioning both continentally and globally. The country’s success in this regard has set new standards and attracted some of the most renowned hotelier chains to its shores. Among them is Regent, whose hotel in Porto Montenegro had a record-breaking year in 2018, with reports showing a 38% increase in room bookings compared to 2017. The top three source markets for the hotel are Russia, which showed a 28% increase in overnight room bookings, the UK, with a 43% increase, and the USA, with a 53% increase. Furthermore, Regent Porto Montenegro has seen a dramatic increase in room-nights revenue from the Gulf Cooperation Council region.
A key factor influencing tourism in Montenegro is the country’s undeniable natural beauty and rich cultural and historic heritage. Creative messaging around these assets has served to improve awareness of the country globally and so support tourism growth. Because Montenegro is not a destination that one arrives at by car, priority needs to be given to scheduling additional flights during peak season and encouraging airlines to maintain flights to the country even beyond the peak months, when the destination remains highly desirable for tourists. Looking ahead to the next five years, it is likely that more global brands and competitors will come to see Montenegro as a prestigious destination and will seek to establish branches or hotels in the country. As such, Montenegro has a unique opportunity to define itself as a leading luxury tourism destination. The main challenge, however, is balancing this growth and the impact it has on natural resources and the impact on locals. The first steps in striking this balance have been successful, and with the continued support of all stakeholders, the country will be able to achieve its tourism goals with relative ease.
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Cultural Considerations for Doing Business in the Middle East Nasif Kayed, Founder and Chief Executive Officer, The Arab Culturalist, UAE
Social Social considerations are defined as our first impressions — they are how we establish respect through learning basic acceptable social norms within a cultural environment. Here are a few ways to improve social awareness when doing business in the Middle East: • Learn the language, or at least the simple greetings and protocols associated with Arab culture, such as Assalamu alaikum (peace be upon you), Marhaba (hello), and Ma̔al-salāmah (goodbye). This show of interest and effort to adapt will go a long way in your earning the respect of your potential business partner or customer. • Study the process of greetings. Do you bow, shake hands, or hug and kiss? Is it the same for men and women? Most Arabs have adopted shaking hands — that is, in a man-to-man interaction. Some women do shake hands, but if you are a man, wait for the woman to extend her hand first. Note that greetings between women can be a simple handshake or a
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•
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touching of the cheeks. Getting this right might take some practice but let your counterpart lead. Be aware of your proximity to the opposite sex. It is best to keep a proper distance and avoid any physical gestures or touching, such as a pat on the back. Observe the tradition of allowing the right-most person to leave first when exiting a room. Similarly, when serving guests, start on the right. Avoid conversations about politics and religion initially. Listen deeply and disagree respectfully. Remember that while cultural norms may apply, not all individuals will fit within stereotypical social behaviors. Treat people and situations individually.
Religious In an Arab Muslim country, business planning should consider the following religious practices: • Friday is a holy day that is strictly for worship and family for the majority of Muslims. In addition, knowing the timings of the five daily prayers and planning work around these times shows respect. When in a Muslim country, extended meetings should have a provision for a prayer break as a courtesy. Holding telephonic meetings or sending communications (such as e-mails and text messages) during prayer times is considered a display of poor cultural awareness. • Thursday evening after sunset is technically the start of the Friday holy day, so be aware of this if planning events and functions at this time. When hosting, prohibitions on alcohol and pork inside or outside the region should be discussed with guests. The majority of Arab Muslim guests prefer a business function or a gathering at which neither of these is offered. • The Islamic calendar includes annual holy periods, such as Ramadan. Keep these in mind and learn the
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issing out on the cultural considerations necessary for business decision-making in an unfamiliar culture or work environment can be risky and can prompt financial loss and missed opportunities. This article highlights strategies for limiting your risk and taking advantage of opportunities outside your cultural comfort zone, especially in the Middle East. The first thing to do is to set aside any stereotypes and misconceptions and suspend judgment. The best way to do this is to pause, observe, ask questions, learn, and reflect. The next step is to look into the cultural factors that affect day-to-day decision-making, negotiations, and corporate culture in the region. These factors can be categorized into four key groups: social, religious, legal, and business.
Business
dos and don’ts. Find out about the Eid (festival) celebration, which marks the end of Ramadan. What does it mean, and how can you can be part of it? Make sure you are well informed on all such special occasions, as there is much to be considered. Again, your awareness and consideration will indicate a great deal of respect.
Legal The intrinsic values of Arabs, such as hospitality, honesty, and honor, are embedded in the legal structures of the region, reflecting attitudes towards legislation that promote equality and fairness. Some cornerstone values include: • Welcoming guests with great hospitality • Honoring deals and always engaging in an honest manner • Ensuring deals are fair for all parties involved • Aiming for peaceful, courteous, and just resolutions to conflict
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When there is conflict, lawyers and court systems are considered a last resort. While some countries have adopted parts of Sharia law and jurisprudence, no country in the Middle East has implemented it in its entirety. It is important to be aware of what this is and how it can affect business contracts in particular.
From a business perspective, to improve your chances of success, practice the following: • Know the name of the person you are dealing with and its proper pronunciation. In the Middle East, we typically use the first name rather than call someone by their last name, and meetings and first encounters are usually peer-to-peer. • Know the position or status of your contact. Middle Eastern countries are generally high-power distance societies, so decisions are usually made by seniority. If a matter requires quick attention and is of great importance, it should be handled by senior executives on both sides. • Observe time and be punctual. • Engage in a bit of small talk before business but avoid subjects such as politics, religion, personal questions, or even questions based on generalizations, such as “Do all Muslims pray five times a day?” A more appropriate question would be along the lines of “What does a day in your life look like?” • Listen carefully. Arabs tend to be indirect in describing their needs and wants during negotiations, so pay attention to comments on what you are presenting. Reflect meaningfully on the responses you receive and learn to pick up on the subliminal messages in conversations. • Ensure that contracts or agreements are fair, clear, and without any ambiguity. Establishing a relationship with your business associate is what matters most. • Take time before you enter a new venture. Be patient: business people in the Middle East generally prefer not to rush and appreciate some time and space to seek the advice of trusted family members and advisors. Once you have established a good, mutually beneficial relationship, you will probably be able to do more business, and dealings will move much faster. What matters most is one’s earned reputation. Investing in learning about the values and protocols of the local culture provides the foundation for making a deal and doing business successfully in the Middle East. While being mindful of cultural considerations is a valuable exercise, the most impactful approach is to treat the individual with respect and to frame your interactions with integrity.
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Open Borders: History, Theory, Utopia
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hese seem like no times for open borders, nor for utopias in general. Philosophers have invoked the ideal of freedom of movement for a long time: according to Henry Sidgwick, in many respects one of the masters of modern ethics, this was “the ideal of the future”. Yet the moment does not seem ripe for the realization of his forecast, at least if one heeds the political climate, news, and polls. Present circumstances hardly seem favorable for utopian thinking and talking. People listen to and vote for hard-headed leaders whose rhetoric is rarely flowery. Nor does there seem to be space for utopian agendas, at least not since 1989 when the Berlin Wall fell. What kind of discourse would appeal, then? We would be tempted to look at history, which, as the late Romanian philosopher Emil M. Cioran showed, is utopia’s quarrelsome twin. Indeed, if utopia is literally a non-place, a ‘nowhere land’, history is the science of ‘what has been seen’. Actually, historical references are often invoked to decipher our confusing era: the Cold War for world relations, the Monroe Doctrine for USA foreign policy, and nationalisms of different ages for the challenges of the EU. In this antiutopic recourse to history, where are we to find the converse of the open-border ideal? Whether we consider events or ideas, this is unexpectedly difficult. The history of Western philosophy begins with thinkers often associated with homogeneity and closure. However, Aristotle himself migrated from Macedonia to Athens and back, and Plato ventured towards danger into the realm of Syracuse. Philosophers of late antiquity were apparently cosmopolitan, at least since Hellenism transformed the background of Western thought by transcending the scenarios of a single language or culture. Martha Nussbaum 1 identifies Diogenes the Cynic as the paradigmatic ‘world citizen’, but this eccentric figure is far from being isolated. Seneca, and especially Marcus Aurelius and Epictetus, all considered themselves citizens
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of the cosmopolis in their roles as paradigmatic figures — intellectual, emperor, and slave, respectively. When Christianity took up many of the classic ideological and institutional structures, its appearance did not shatter cosmopolitanism but rather reinforced it: two of the most representative thinkers of the Middle Ages, Augustine and Aquinas, spent their own lives in relentless movement and theorized beyond borders too. Augustine wrote about the opposition of the celestial and the earthly cities but conceived of neither along the perimeters of real-life communities, while Aquinas included in his encyclopedic writing a mention of migration that surprises for its modernness. Both held the viator, the pilgrim, not as an accident of personal or public fate but as the very essence of the human condition. If it is indisputable that voyages and the wide opening up of horizons to and by explorers and conquerors marked the beginning of modernity, it is also paradoxically true that issues of migration then arose and became problematic in a way that is still recognizable today. For if there have always been migrants, state borders have not been around for as long, at least not with the meaning we currently attach to them. While Vasco da Gama, Ferdinand Magellan, and James Cook were out to dismantle what were thought to be unsurpassable and unknowable natural barriers, their financiers at home were consolidating, guarding, and protecting artificial barriers in ways that had been thought impossible. And while the former confines were progressively reduced, the latter multiplied due to the erosion of old empires. By that time, the diverse cosmopoleis dreamed, created, and ruled by Alexander, Augustus, Charlemagne, and Charles V became historic memories or untenable and suddenly unappealing ideals. Each epoch has its theorists: with Francisco Suárez and Francisco de Vitoria, questions of rights of passage and rights to refuge were articulated philosophically in an original way. In the background, there is the development
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Dr. Dario Mazzola, Executive Scientific Coordinator, PROTECT University of Bergen, Norway
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of early modern theories of international law of the kind finding that history is not inhospitable to cosmopolitan written by Hugo Grotius. Many specificities still ideals, including open borders — but also the acute distinguished the debates of the time: democracy was a awareness that the terms of the question are hard to grasp radical and uncommon ideal; liberty and equality were and prone to transformations and interpretations. Theorists not yet the central moral and political principles; much of the open-border ideal, such as Chandran Kukathas, 2 of this thought was elaborated with substantial theological have been wise in advising us that openness and closedness references, if it was not laid on plainly religious foundations. are suggestive but mostly metaphorical images, and that It is the French and other revolutions that brought most even the state as an entity is not easily defined or captured. of these conditions to an end. Not by accident, Immanuel It is equally difficult to define mobility: when speaking of Kant, who despite his quiet and stationary lifestyle took ‘migrants’, how many realize they are speaking of the an interest in all major events worldwide, formulated the conventional kind? ‘right to hospitality’ in a way that resonates well with the Yet some certainty can ground a tentative suggestion in human rights vocabulary of today and with contemporary response to our opening interrogatives: history is here to political ideas — specifically, the idea of a global polis stay. There is no way back. The nationalisms of our days are without a global sovereign, or a world republic. not those of the past, and 70 years of international institutions Such an ideal was sternly tested by the history and the and human rights, including the right to asylum, cannot be theories of the 19th century. Georg Wilhelm Friedrich brushed away. Paradoxically but not unrealistically, nation Hegel retorted that Kantian ideas found a paradoxical states, in their attempts to bring back control and elaborate embodiment in the reactionary on regulations, might want to apHoly Alliance, roughly a resurpeal to third-party agencies and gence of cosmopolitan ideas of a multi-lateral fora, especially as a Two of the most medieval and early modern variwarranty against the encroaching ety. Yet with these revolutions interests of the other. representative thinkers of the about to explode, it became clear Thus, the fate of migration Middle Ages, Augustine and that there was no future for a rights would depend on the global government, at least not in credibility displayed by such Aquinas, spent their own lives the sense of a triumvirate of emagencies: in democratic conditions, in relentless movement and pires. Furthermore, a new cosmothis holds for citizenry even more politanism of technology was than for governments or elites. theorized beyond borders too soon to take off, aboard British Whether this specific path is or is steamers and along Russian railnot walkable, and despite all the way lines. But even the tranquil unrests and switchbacks of history, optimism of the Belle Époque, the standpoint on which if open-border theorists refuse to be allured by the selfSidgwick could write so hopefully, was not to last long. flattering perspective of forever belonging to ‘the future’, The world’s nations, through the vicissitudes of two world then they and those who embody freedom of movement in wars, were eventually to convene in the form of present their concrete lives — and today there are many in this international institutions such as the UN. category, from refugees to people with multiple nationalities It is in this — which is to say, our current — institutional — will no doubt find a way to understand and live by this and political context that the idea of human rights has ideal in the light of the present. emerged: as their name suggests, these rights are of an References essentially cosmopolitan character. Among them, the right 1 Martha Nussbaum, “Patriotism and Cosmopolitanism”, Boston to asylum finally finds explicit expression, even if only in Review (1 October 1994). A quote from Diogenes opens the abstract. Its specific formulation, and the relevant Nussbaum’s article. 2 Chandran Kukathas, “Why Open Borders?”, Ethical national policies associated with it, is famously a matter Perspectives 19, No. 4 (2012) 649–675 of heated controversies and political clashes, to say nothing of the condition of the right to migration. This is a popularizing piece: because of this, and for reasons of From utopia to history and back again: what did we gain space, detailed references have not been included. The author would be happy to answer any enquiry at dario.mazzola@unimi.it from the journey? First of all, the relatively surprising
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OPINIONS
The Economic and Fiscal Effects of Granting Refugees Formal Labor Market Access Michael Clemens, Co-Director of Migration, Displacement, and Humanitarian Policy and Senior Fellow, Center for Global Development, USA Cindy Huang, Co-Director of Migration, Displacement, and Humanitarian Policy and Senior Policy Fellow, Center for Global Development, USA Jimmy Graham, Research Assistant, Migration, Displacement, and Humanitarian Policy, Center for Global Development, USA
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efugees can contribute immensely to the likelihood of negative effects on wages and employment. economies of the host communities in which Formal LMA allows refugees to be more productive they settle. To maximize their contributions, employees and business owners, which leads to more efhowever, and to achieve improved well-being and selfficient economies and increased GDP for host countries; reliance, refugees need formal labor market access new employment opportunities for both hosts and refugees; (LMA).* In developing countries this access is often an increased labor supply, which benefits businesses; especially limited; even where the law allows refugees higher incomes for refugees and thus greater self-reliance to access formal employment, administrative and and less dependence on aid; greater consumer spending, practical barriers often limit access. which stimulates local markets; and increased tax revenues. One reason refugees have little access to formal Other economic benefits include the possibility of increased employment is the unsubstantiated trade, innovation, and investment belief that they inevitably drive in human capital. For refugees, down wages, take jobs from hosts, formal LMA can also mean greatFormal LMA allows and reduce the quality of services.* er workplace protection, greater refugees to be more While these fears are under security and stability, and destandable because of the complex creased rates of child labor and productive employees and economic and fiscal effects of child marriage. hosting refugees, they are for the Some degree of job competition business owners, which most part not borne out by the is real and should be taken leads to more efficient evidence.* Rather, formal LMA — seriously, but these effects are more the right to seek employment and pronounced when the absence of economies and increased start a business with some degree formal LMA crowds refugees into GDP for host countries of freedom of movement — is a small corners of the informal critical lever for unlocking the sector, as appears to have occurred significant potential contributions during the first two years of the of refugees who are already present in a country. Overall, flow of Syrian refugees into Turkey.* Thus, formal LMA even short of a comprehensive version of formal LMA, itself can mitigate the labor market impact on hosts, and wherein both legal and de facto barriers to access are complementary policies can mitigate or eliminate the cost minimal or non-existent, greater rights and fewer barriers to host workers associated with formal LMA to refugees. around work and business ownership enable greater Importantly, such policies can also amplify benefits. benefits. Furthermore, in many cases, policies restricting Examples of these policies include: access to formal work can exacerbate negative effects • Allowing refugees complementary rights, such as rather than mitigate them. For example, restricting freedom of movement, which minimizes the refugees to certain geographies and sectors intensifies concentration of any negative impact while competition between refugees and hosts, increasing the increasing refugees’ productivity by enabling
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•
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them to find jobs that better match their skills and experience Supporting hosts displaced from their jobs by helping them find new employment opportunities (including by moving to other regions) and upgrading them to higher paying positions Helping refugees integrate into the labor market, with a focus on supporting women and the most vulnerable groups Offsetting any short-term increases in spending by the host government with fiscal support from donors Recognizing formal workplace protection for refugees and vulnerable host populations, which ultimately benefits host workers as well
There has recently been an increased momentum around g ra nting ref ugees g reater forma l L M A a nd complementary rights. In 2016, UN member states unanimously adopted the New York Declaration for Refugees and Migrants, which “[encouraged] host governments to consider opening their labor markets to refugees”.* Towards this goal and others, the declaration laid out plans for a Comprehensive Refugee Response Framework (CRRF), which, among other objectives, aims to ease pressure on host countries through increased support while increasing employment opportunities for refugees.* The CRRF enables and incentivizes host governments to expand formal LMA for refugees, even in the face of political challenges. Some developing countries with restricted formal LMA, such as Ethiopia, have already embraced the CRRF as a productive path forward.* In this context, new opportunities are emerging: • Governments have the chance to unleash the unrealized contributions of refugee populations
while also receiving international support, to the benefit of their economies. • Civil society organizations have more room than ever to push for greater rights for refugees and implement programs that support self-reliance among refugees and hosts. • Businesses can mobilize as advocates for pragmatic policy and engage refugees as employees and suppliers. If refugees had greater rights, many global and regional businesses would be well positioned to hire and be supplied by refugees: nearly 40% of working-age refugees in developing countries are in major urban areas, where these businesses are most likely to be located.* With these new opportunities, there is a growing interest in understanding what the economic and fiscal effects of granting formal LMA to refugees are likely to be. This article previews these effects, highlighting the potential benefits refugees can generate and the policies that can enable these benefits and mitigate or avoid potential costs.*
What We Know about the Effects of Refugee Inflows Most research finds that the average effects of refugee inflows on hosts’ wages and unemployment are minor or null — for both developed and developing countries. A large body of literature shows that this is typically true even in the case of large, short-term influxes.* In some cases, more substantial average negative effects are observed,* but these tend to occur only in the short term or when there is an especially large concentration of refugees in certain geographies and industries.* In the much more common instances of minor or null average effects, it is typical to observe significant positive or negative effects for certain groups in the population. Hosts with skills, job preferences, and education levels most similar
Population of Forcibly Displaced People Worldwide
0
10
20
30
40
50
60
70
Unit: million Internally Displaced People
Asylum Seekers
Refugees
Above: According to the UN’s Refugee Agency, 68.5 million people have been forcibly displaced from their homes (Source: Global Trends: Forced Displacement in 2017, UN High Commissioner for Refugees 2018)
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Countries Hosting the Highest Numbers of Refugees
Iran 979,400
Lebanon 1 million
Pakistan 1.4 million
Uganda 1.4 million
Turkey 3.5 million Above: Turkey has hosted the highest number of refugees for several years consecutively (Source: Global Trends: Forced Displacement in 2017, UN High Commissioner for Refugees 2018)
to those of the refugees are more likely to be negatively impacted (as refugees could substitute for hosts in jobs). Hosts who are more distinct from refugees are more likely to benefit from complementary effects.* For example, if refugees complete lower-skill tasks, hosts that are higherskilled are able to focus on more skill-intensive tasks.* It is also common for varied impacts to occur across genders. Women often face disproportionate barriers to accessing labor market opportunities, including social, cultural, and other barriers. Sometimes women are the most likely to benefit, but depending on the context and skill levels of the women, they may be the most negatively affected.* In some cases, no negative effects are observed for any groups within the host population. Take, for example, the Mariel boatlift in 1980, an event that resulted in an influx of Cubans to Miami, USA, and increased the low-skilled labor
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force by 20% within three months. There were no negative outcomes for any education group, including low-skilled hosts.* In the long run, initial negative effects often disappear and may even translate into positive outcomes. In Denmark, a surge of Yugoslav refugees in 1995 displaced some lower-skilled hosts in the short term. Ultimately, however, being displaced led the hosts to upgrade to more advanced occupations, and by 2008 they earned 3% more on average. Thus, the net effect of exposure to refugee arrivals on low-skilled hosts was a significant rise in earnings.* In the short term, policies can prevent or mitigate potential negative effects that are real and serious concerns. For example, to avoid the adverse impacts caused by a high concentration of refugee labor in one geographic area, freedom of movement and other policies to encourage geographic dispersion and job matching should accompany formal work rights.
Fiscal Effects are Minor in the Short Term and Positive over Time In both developed and developing countries, the fiscal effects of refugee inflows are usually minor and tend to become more positive over time.* For example, in the USA, supporting the average refugee costs a net USD 20,000 to taxpayers in the refugee’s first year (a small amount when considered as a percentage of total government expenditure, even accounting for all refugees) but that cost falls sharply to about USD 5,000 by the second year, and refugees begin to make a net contribution after eight years. After 20 years, the average refugee has made a net contribution of USD 21,000 over the course of their time in the USA.* It takes time for refugees to find jobs and begin earning income. Once hired, it takes time for them to improve their skills and advance to higher paying positions. But with time, many refugees will pay more in taxes, stimulate the economy, and use fewer government services.* One of the most important determinants of refugees’ fiscal effects is therefore the degree to which they succeed and remain in the labor market. This, in turn, is determined by how quickly refugees are allowed to access the labor market following their arrival, and by their skills, education levels, language abilities, and ages.* Thus, depending on context, it may take refugees more or less time to become net contributors — but the greater their LMA, the sooner they can do so. As the notes for this paper are extensive, please refer to the original, which can be found on the Center for Global Development’s website cgdev.org/ *
OPINIONS
The Geopolitics of Data Abishur Prakash, Geopolitical Futurist, Center for Innovating the Future, Canada; Author, Next Geopolitics: Volume One and Two and Go.AI (Geopolitics of Artificial Intelligence)
W
IMAGE: Supplied
hat would you do if you wanted to travel to Germany but couldn’t buy an airline ticket because you had a low social score? If you haven’t heard of the term “social score” perhaps you should travel to China. In 2018, more than 9 million Chinese individuals were blocked from booking flights because their social scores were too low. Their scores were derived from their online activity, spending habits, and political party loyalty. While this may sound peculiar to some, what is happening in China reflects just one way in which data is now being tapped.
may very well consider Line products. In turn, the app could use Line Score to determine what Thai clients can access, posturing Line inadvertently to govern the lives of people in Thailand thanks to access to vast amounts of data and complex algorithms. Would the Royal Thai Government be comfortable with this, or might it view Line processes and strategy as being a new kind of colonization via data? In case of the latter, the Royal Thai Government might decide to cut off the supply of data to Line in an effort to sap the app’s potential stronghold, meaning Line would no longer have access to data from Thai banks and/or retailers. Could Data Prompt Clashes This would likely create chaos for between Japan and Thailand? Line’s business lines and may force Over 700 million people around the Japan to intervene to protect its Because of data, world use Line, a Japanese technology company. the next geopolitical messaging app. In 2019, Line Consider what is happening launched a new feature called Line here: Line’s new business model is flashpoint could very well Score, which uses algorithms to give essentially a social design that has be related to public policy users a score calculated based on the very real potential to take away the data a user produces (their power from the Royal Thai activity across the different Line Government and spark tensions services). Depending on their score, a user will be able to between the governments of Thailand and Japan. For the access various Line services. For example, Line Pocket first time, a private company may cause two governments Money, which offers app users loans, is in the process of to clash because of data. As for Japan, how might she determining how much credit a user can get based on their respond? Perhaps Japan could threaten to shut off all Line Score. By giving users a score, Line is changing the Japanese robots operating in Thailand, bringing the Thai role of business in the lives of individuals; the firm is manufacturing sector to a halt, or Japan could direct all transitioning from a private company to a digital of its artificial intelligence (AI) firms to stop hiring Thai government that punishes and rewards people based on engineers and programmers. their activity data. There is also the role that the Association of Southeast How might this affect geopolitics in Asia? In the coming Asian Nations (ASEAN), of which Thailand is a member years, Line might look to explore the Thai market, state, could play, possibly involving the entire region in subsequently finding itself in a position of being able to the inter-state conflict. If ASEAN feels that one of its ‘shape’ the lives of locals. To illustrate, if an individual members is being influenced by the Japanese algorithms, needs a job, a loan, investment options, or insurance they it could threaten trade or diplomatic action against Japan.
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ASEAN may do this not just to support Thailand but to for that matter — can’t fuel their AI systems. With also send a message to the world that creating problems data, however, AI can advance to new levels, meaning with ASEAN members may prompt the intervention of that public policy around data is becoming a new the intergovernmental organization. geopolitical flashpoint. It is also worth considering the broader ecosystem that Take the USA and India. In 2018, India proposed a new may be reliant on Line Score. For example, banks in the set of laws that would compel technology companies Middle East may be providing local collecting data in the country to clients financing for loans through store that data therein (data Line. Or, insurance firms in the USA localization). As technology As world powers may be providing health and auto companies held their breath, the protection through Line. If Line Score USA government intervened. In compete over technologies is affected in Thailand, the entire 2019, the USA warned India that if like AI, data is becoming ecosystem may be adversely affected. data localization laws came into Could this spur other governments effect, the USA could reduce the one of the keys to to step in? Could Line or Thailand number of H-1B visas it grants to gaining an advantage have imagined that a regional issue people from India. For the first time over data could become so global? in history, the data laws of one countr y are affecting the Could Public Policy around Data Fuel New immigration policy of another country, and caught in the USA Power? middle are technology companies ‘merely’ wanting to As world powers compete over technologies like AI, expand their commercial footprint through India’s market. data is becoming one of the keys to gaining an Significantly, the data laws that India is considering advantage. Without data, companies — and countries today may be nothing compared to what is to come. Niti
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IMAGE: Ore Huiying/Getty Imagesy
Above: Heads of state of ASEAN nations gathered at the 33rd ASEAN–Republic of Korea Summit held in Singapore in 2018
IMAGE: Ore Huiying/Getty Imagesy
OPINIONS
Aayog, India’s government think tank, has proposed creating an open marketplace where companies share their data. Companies of all sizes, foreign and domestic, would be required to share their data so everyone can benefit, including competitors — meaning USA firms could lose their competitive edge in India. How might the USA respond to this move? While the country would have to weigh the importance of data with other parts of its relationship with India, such as weapons sales, it may be spurred to take a particular course of action in light of how other countries react to India’s data laws, such as China for example. Weeks before the USA threatened using H-1B visas, the government of China announced that it would comply with India’s data localization ruling. Instantly, multiple geopolitical shifts are taking place. Firstly, India’s laws are pressuring USA–India ties. Secondly, the laws appear to be bringing India and China closer. These two shifts — pressure on USA–India ties and closer India–China ties — may impact on a third set of relations: USA–China ties. If USA businesses lose access to foreign markets because of public policy while Chinese companies succeed, it could anger the USA government. In turn, the USA may double down on current sources of tension, such as trade, intellectual property, or currency devaluation as a way to strike back at China. In other words, how China and the USA comply with public policy in India could begin to impact on the geopolitics between Beijing and Washington. Thirdly, private companies from the USA and China are being restricted by how their respective governments are reacting to India’s data laws. Will they listen? The USA government may be able to control companies from traditional sectors, such as defense or investment banking, but technology companies, many of whom have government-like power, may ignore or reject the USA rulings or desires. What this means is that for the first time, because of technology, companies could have a different foreign policy than the country they originate from. If the USA feels outplayed in India and other markets because of data laws, it might take a different route to enforce its will. Could it introduce the world’s first Data Trade Organization (DTO), tasked with prescribing global rules for data? By forming the first DTO, the USA may be in charge of creating the rules, laws, and protocols that govern data use from San Francisco to Shanghai to Sydney. Just like the World Trade Organization, which gave the USA power over trade, so too could the DTO give the USA
Allocation of H-1B Visas Issued to Indian Nationals 2012 135,530 80,630 2013 153,233 99,705 2014 161,369 108,817 2015 172,748 119,817 2016 180,057 126,692 2017 179,049 129,097 2018 179,660 125,528 Total H-1B Visas Issued
H-1B Visas Issued to Indian Nationals (Source: The Economic Times, July 2019)
significant power over data. What this means is that while India may control where companies store data (i.e. in India), the USA may control how that data can be used. What’s more important — where data is stored or how data is used? This would be a new strategy through which to reconfigure USA geopolitical power through data. For the first time, nations may ‘feel’ the presence of the USA not through warships or corporations but by complying with data rules set in Washington. Of course, this assumes India and other countries join the USA’s DTO. If not, could they create their own data bloc?
Will Data Begin to Control People? Until recently, companies and countries collected data for a handful of reasons: some brands collect data to boost sales through hyper-personalized ads, while some governments collect data to identify national security challenges such as terrorism. These uses come with major privacy implications but, for the most part,
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the way data is collected and used today does not limit The New Zealand government is experimenting with what someone can or cannot do. Soon things may be algorithms that look at data and predict whether a new different however. immigrant is likely to commit crime. Based on these For example, the UK is experimenting with citizen scores. predictions, the immigration agency can then decide More than 50 councils throughout the UK have spent a whether to arrest an immigrant, extend their visa, or combined GBP 2 million to buy AI even deport them. The ethical that crunches data, divides people implications of this are enormous. into different groups, and allocates Governments are starting to view Governments them a score. Then, the software people through the predictions and makes predictions about ‘future assessments that algorithms may create economic outcomes’. For example, the AI produce. The human element is plans 10 or 20 years in analyzes variables like martial status, disappearing. socio-economic status, family This may end up creating a new advance based on the members, and financial information geopol it ic a l ch a l lenge for predicted intelligence to divide households into different Wellington. The next generation categories. Then, the AI uses this of immigrants may decide not to of future populations analysis to predict possibilities such move to New Zealand because of as whether one area will be at the algorithms. And, if these higher risk of alcohol addiction. algorithms are biased, it might Governments then use these predictions to formulate policy. deter immigrants even more. If fewer people immigrate This represents a new kind of society that is emerging. For to New Zealand, new opportunities may unveil for other the first time, the data that someone produces — from nations. For example, as people ignore New Zealand, commenting online to paying bills late — could end up the UAE might reach out to countries and begin to market controlling them in ways previously unimagined. the UAE as a data-neutral zone. What this means is that
Above: USA tech firms including the likes of Amazon, Google, and Microsoft are among the leading employers of H-1B applicants. Seen here are Amazon employees at the firm’s largest campus building in Hyderabad
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IMAGE: NOAH SEELAM/AFP
OPINIONS
OPINIONS
IMAGE: Shutterstock
IMAGE: NOAH SEELAM/AFP
Above: The Government of New Zealand is exploring the use of algorithms and data in its immigration criteria an policies
the data people produce in the UAE may not be used themselves. Through this picture, somebody could against them, unlike in New Zealand. understand how a person thought, felt, and ultimately, Things become more confusing when considering the who that person was. This is what has made social media ‘other’ kinds of data that are being collected and used. In so valuable and is what has made surveillance so scary. the USA, a firm called Genomic Prediction is applying Data is now no longer just about people: it is also about machine learning algorithms to huge sets of genomic data. geopolitics. Thanks to data, new social designs are Based on this analysis, the firm hopes to predict the cognitive emerging, transforming countries from Europe to Asia. abilities of embryos. In other words, the firm wants to At the same time, how governments regulate and control determine how smart a child will be before data within their borders is affecting the child is born. If such technology is global relationships. All of this means adopted, it will fundamentally change the that local and global are being connected Data is now world. For example, in order to grow its in ways that have not existed before. economy, Brazil could implement A photo that someone posts in Taipei, no longer just about predicting the intelligence of future a message that somebody sends in people: it is also generations and assign people jobs before Munich, a video that somebody uploads they are born. This means that private in Dubai are no longer disconnected from about geopolitics companies may be working with each other. They all are connected and governments to decide where people can carry major geopolitical consequences. work before those people have even arrived. The geopolitics of data then, is not actually about data at Governments may create economic plans 10 or 20 all. Rather, it is about people and the choices they are years in advance based on the predicted intelligence of making every single day — all of which is being tracked, future populations. This extreme use of data carries collected, and analyzed through complex algorithms. For enormous ethical and moral consequences. It means that the first time, people are part of geopolitics in a way they for the first time the world will be judging how valuable have never been, and that means the next time you see somebody is before they even see first light. Are people someone taking out their phone, buying a cup of coffee, ready for this? or making a purchase at a retail store, remember that what Why is data now so powerful when until recently it they are doing is producing data that may play a small was essentially just a mirror for society? As people produced part in shifting global power and changing societies in all data, they were also producing a digital picture of four corners of the world.
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Future Forecast: Geopolitical Risks for 2020
T
he discourse around globalization has for a long time centered on how the shared realities of different people, places, and even spaces show that the world is more connected than many perceive it to be. These commonalities are often touted as being the panacea to the socio-economic and political challenges
constraining the creation of a more synchronized and prosperous world. The severity of these challenges is often less evident in these discussions, however, as well as the manner in which they cut across spatial and social cleavages — effectively dividing the collective ‘us’. As 2020 beckons, these issues flare as brightly and influentially as ever.
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IMAGES: Getty Images; Shutterstock
Ryan Cummings, Director, Signal Risk, South Africa
IMAGES: Getty Images; Shutterstock
COVER STORY
Climate Change
billion people live — will face an increasing threat of Climate change has appreciably impacted the developing conflict linked to climate-induced migration and world, although in the developed world it is more a point associated resource rivalries in the coming years. of debate for policymakers. This is particularly so in Africa, Intra- and Inter-State Conflict where it has slammed into the continent’s social, economic, and political landscape. Cyclones Idai and Kenneth that Conflict itself will continue to be a key geopolitical risk in made landfall in Mozambique in the first quarter of 2019 2020. In most parts of the world, conflict remains hypermay highlight this best. Of the two, Cyclone Idai was by localized, generally occurring on an intra-state level. far the most destructive, killing more than 1,200 people, Although this trend is not expected to shift, even localized destroying more than 90% of the port city of Beira, and conflict can have wide-ranging geopolitical repercussions. leaving a trail of damage amounting to an estimated USD While localized and intra-state conflicts dominated the 2 billion. Although the impact of the cyclones was amplified global landscape in 2019, the potential for an inter-state by poor infrastructure and insufficient emergency conflict of potentially global proportions will threaten in coordination, both storm systems had reached strengths 2020. Tensions between the USA and Iran reached nearclose to that of Hurricane Katrina of 2005, which unprecedented levels when Iranian missiles downed a USA devastated New Orleans and surrounding areas when it naval reconnaissance drone that Iran alleged had entered made direct landfall along the USA coastline. its airspace. Following the incident, USA President Donald Hurricane activity data recorded Trump reportedly ordered an airstrike by meteorologists at the Colorado against Iranian military installations State University revealed that the 2018 but later reversed the order several The effects of North Atlantic and Eastern Pacific minutes before it was executed. Talks hurricane season was the most active between the erstwhile rivals have since climate change are on record. Considering the combined eased tensions. However, the incident not limited to the number, strength, and duration of indicates how a seemingly innocuous tropical storms that formed, the season act could lead to armed conflict impact of severe had generated more energy on the between two powerful and wellweather phenomena: Accumulated Cyclone Energy index supported countries in a region that than any other year recorded. is still stumbling from ongoing conflict changes in climatic The effects of climate change are in Iraq, Syria, and Yemen. not limited to the impact of severe Iran is not the only country with conditions can influence weather phenomena: changes in whom the USA has a difficult political stability climatic conditions can influence relationship that could escalate into political stability. In geopolitical open conflict in 2020. Tensions zones such as the Sahel and the Horn between the USA and North Korea of Africa, more frequent droughts have affected food are still elevated despite both countries committing to security and driven people to migrate. In many instances, dialogue. Highlighting the fact, reports quoting USA climate-induced shortages of water and land have forced military sources in July indicate that the North Korean communities out of their established habitats, leading to government has continued to develop ballistic technology them encroaching on land belonging to other populations. capable of detonating a nuclear warhead in any part of These encroachments, in turn, have sparked violence the USA. A country that possesses this technology may that has increased in scale and frequency. Trend analysis not necessarily use it. But North Korea’s continued suggests that forced migrations and related communal development of its nuclear program does not align well violence are likely to increase in 2020. with negotiations, which center on the Asian country Although the impact of climate change is most obvious getting rid of its nuclear capability in exchange for the in Africa, the Stockholm International Peace Research USA and other countries lifting their economic sanctions. Institute is concerned that climate-related conflict may A trade war between the USA and China could cost the also occur in South and Southeast Asia.1 It notes that global economy as much as a conflict waged with weapons. both geopolitical regions — where an estimated 2.5 The trade war, played out through reciprocal tariff hikes
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on goods manufactured in the other’s backyard, has negatively influenced revenue streams for companies in both countries. Since negotiations between China and the USA have only paused the spat, the World Trade Organization noted that global free trade was on the precipice of its worst crisis in half a century — a sentiment that experts reiterated at the 2019 G20 Osaka Summit held in June.
Niggling Nationalism Growing nationalist sentiment may explain the hardline positions of the governments of China and USA— the same sentiment that is influencing the economic, political, and social trajectories of an increasing number of states. This is especially evident in Venezuela. Bolivarianism (the continuation of national-patriotic ideals) initially provided relief from poverty and defined the reign of the late former president Hugo Chavez. But now Venezuela is buckling under crippling debt and geopolitical isolation. Hyperinflation and the collapse of social services have resulted in at least 3.6 million Venezuelans leaving the country since 2015, an exodus that shows no signs of abating. As a result, the UN
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Refugee Agency and the International Organization for Migration have asked for international support to help the resource-constrained countries (such as Ecuador, Colombia, and Peru, and others in the Caribbean) that have absorbed refugees. Across the Venezuela border, Brazil is undergoing a nationalist tilt of its own. Former military officer Jair Bolsonaro was elected to the presidency in the country’s October 2018 elections, coming to power on a program that memorialized the military regimes that once dominated South America’s political landscape. Adopting the political ideologies of these regimes has polarized the country. The Indian electorate has re-elected Narendra Modi as prime minister, a move that will likely see the continuation of a shift away from liberalism toward ethno-religious nationalism. Modi’s bold promotion of Hindutva — an ideology that views Hindu hegemony as the natural condition of the Indian state — has widened fissures within the country’s social fabric, particularly between its Hindu and Muslim citizenry. Moreover, Modi’s nationalist stance has only increased long-standing tensions with Pakistan. Modi has accused India’s neighbor of hosting and possibly
IMAGES: ADRIEN BARBIER/AFP/Getty Images
Above: Cyclones Idai and Kenneth made landfall in Mozambique in March and April, respectively. Idai, which also affected Malawi and Zimbabwe, was described by UNICEF as being “the worst natural disaster to hit southern Africa in at least decades”. The cyclones left almost 2 million people in Mozambique in need of humanitarian services
IMAGES: ADRIEN BARBIER/AFP/Getty Images
COVER STORY
sponsoring Muslim separatists operating in Indiaadministered Kashmir. After a suicide bombing by a Kashmiri-based terrorist group and an Indian airstrike in Pakistani territory in retaliation, these sentiments led to a military exchange between Indian and Pakistani forces in late February this year. As many as 40 Indian soldiers were killed in the original suicide bombing along a section of the Jammu– Srinagar National Highway. Although tensions eased when Pakistani authorities arrested several individuals suspected of Settlements of Venezuelan Refugees and Migrants (in Thousands)
being involved in the attack, the incident showed Modi’s willingness to act aggressively toward India’s neighbor in response to the actions of Muslim secessionists operating within its borders. The rise of nationalist governments in Brazil, China, India, and Russia makes South Africa the only country within the BRICS consortium to have maintained its liberal appearance. The rise of nationalism in Europe was substantiated during the EU elections in May 2019. Although proEuropean centrists will maintain their grip over the EU legislature for the next five years, nationalist parties in France, Italy, Poland, and the UK performed strongly, which will undoubtedly concern European leaders seeking greater interconnectedness within the regional bloc. Of these countries, attention will focus squarely on the UK, which must formalize its exit from the EU in the lead-up to 2020.
Secessionist Surge
As of 2018 **As of 2017 ***As of 2016 (Source: Council on Foreign Relations, July 2019)
The desire to secede also burns strongly across the African continent. In Cameroon, armed groups in the country’s anglophone Northwest and Southwest regions continue to vie for independence. Its francophone-dominated government has been accused of marginalizing the regions economically, politically, and socially. There are no immediate signs of this so-called Anglophone Crisis reaching a peaceful resolution, since both the separatists and the Cameroonian government remain committed to armed violence. Although not currently focused on seceding, Hong Kong residents’ discontent with a contentious piece of legislation could escalate into calls for complete independence from mainland China. At present, the protest movement’s goal is for the extradition bill to be scrapped. This bill provides for both foreign and local Hong Kong residents to be subject to prosecution in mainland China. With initial protests of a few thousand people growing to more than 1 million as seen in early June, the campaign, if successful, could embolden Hong Kong nationals to pursue more ambitious social and political objectives.
Above: According to the Council on Foreign Relations, at least 3.3 million Venezuelans have fled the country since 2015. Described by the UN as being a “humanitarian crisis”, the migration is one of the largest and most significant ever in Latin America, with Colombia and Peru receiving the largest numbers of refugees and migrants
Reference Pernilla Nordqvist and Florian Krampe, “Climate Change and Violent Conflict: Sparse Evidence from South Asia and South East Asia”, SIPRI Insights on Peace and Security No. 2018/4 September 2018 reliefweb.int/sites/reliefweb.int/files/ resources/sipriinsight1804.pdf
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Above: The Bay of Kotor, or Boka, and the Old Town as seen from Mount Lovćen, which is believed to be the inspiration behind the naming of the country Montenegro. Mount Lovćen is the burial place of Petar Petrovic Njegoš, widely described as “the greatest hero of the Montenegrin people”
Montenegro
L
ocated on the Adriatic Sea, Montenegro is one of the smallest countries in Europe. With an area of just 13,812 km 2 , it could be easy to overlook this Mediterranean gem and take for granted its beauty, history, and potential. But in recent years, Montenegro has done
an impressive job of improving its appeal on the world stage, increasingly gaining popularity with travelers — who are charmed by the country’s natural wonders, including a coastline of 293 km, with 72 km of beaches — and investors alike.
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IMAGE: Shutterstock
Place of Natural Splendor
IMAGE: Shutterstock
COUNTRY REVIEW
Kotor, which is a UNESCO-protected heritage site, adds to its appeal. On the opposite side of the coast, in the town of Ulcinj, the southernmost point of the country, is the longest beach in the country, extending for around 12 km. Ulcinj is home to the ancient Ulcinj Fortress, believed to be more than 20 centuries old. Another remarkable site to visit in Montenegro is Lake Skadar, the largest lake on the Balkan Peninsula. Situated within a national park, the lake is shared by two countries, Montenegro and Albania, since it lies on their common border. Home to hundreds of bird species, including the rare European pelican, Lake Skadar offers a delightful escape for bird-lovers. The area is known too for its historic churches, fortresses, monasteries, and monuments. One of the great advantages of living in Montenegro is the option to visit beaches and ski resorts a mere couple of hours’ drive away. For ski enthusiasts, the Bjelasica mountain range is the most favored ski destination and is well on its way to becoming a regional favorite for fans of the winter sport.
Historic Tales Montenegro has a great history to tell, which can be witnessed in part through the many old towns scattered along its coast. As a country, Montenegro’s history dates back over a thousand years. At the end of the 10th century, the rule of the first Montenegrin dynasty, Vojislavljević, began. (The country was then called Doclea or Duklja; the name Montenegro was first used in the 13th century.) However, the period that left a more significant trace on the country’s history began in 1496 when the Ottoman Natural Beauty Empire attacked Montenegro, sparking a struggle for Montenegro, which has a stunning nature profile, offers freedom that was to last four centuries. a diverse range of interesting locations for visitors to the As the town of Cetinje (today’s Old Royal Capital and country, be they on short- or longa popular tourist destination) was term stays. Almost the entire never conquered, it served as a base country is covered by hills and for the rebellion. It was also home Montenegro has mountains, hence the name Monto the fourth and the most signiftenegro, which means ‘black icant Montenegrin dynast y, done an impressive job mountain’ in Venetian. Petrović-Njegoš. Until 1852 Monof improving its appeal Among the better-known sites tenegro was a theocracy, and the is the Bay of Kotor, or Boka, which Petrović rulers were bishops. The on the world stage is surrounded by dramatic mountain most important of them was Petar scenery that never fails to awe II Petrović-Njegoš, who was also a spectators. The Bay of Kotor is currently the most prosperous world-famous poet. The last member of the dynasty was region in terms of tourism: many large and strategic tourist King Nikola, who was banished in 1918 and died in projects are developing there, and its historic old town of exile. After the Second World War, Montenegro became
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a republic within socialist Yugoslavia. The transition to a democratic parliamentary republic with a multi-party system began in 1989 and remains in place today. The most important event in the recent history of the country is the referendum of 2006, by which the country regained its independence from Serbia. Since then, Montenegro has made significant progress both economically and politically. For example, the country became a member of the NATO alliance in 2017, thus positioning itself as a leading location for investment. Currently the leader of the Balkan Peninsula in terms of European integration, the country is expected to become a member of the EU in the next few years. Montenegro is a member of the International Monetary Fund, the World Bank, and the World Trade Organization.
Top: Lipa cave is one of the oldest caves in Montenegro, offering visitors 2.5 km of passages and halls and other wonders and marvels Above: Đurđevića Tara Bridge was built in late 1930 and stands more than 170 m above Tara river
The pillars of Montenegro’s economy are trade, tourism, agriculture, and the energy sector. While the latter is utilized to just a small degree of its true potential — only about 20% of the country’s hydropower capacity is harnessed, for instance — impressive plans are underway. An underwater electricity transport cable connecting Italy and Montenegro is being developed and is expected
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IMAGES: Shutterstock
Developing Economy
range of buyers from around the globe. Substantial positive drives in the tourism and real estate sectors have led to, and continue to lead to, large investments in tourist complexes and resorts on the coast.
Montenegro Citizenship-by-Investment Program
IMAGE: Shutterstock
IMAGES: Shutterstock
COUNTRY REVIEW
In its robust effort to attract new foreign investors, the Government of Montenegro has launched a citizenshipby-investment program (CIP). The move has been commended given the weighty impact such programs have had on the economies of various small countries such as Malta and the Caribbean’s Antigua and Barbuda. Montenegro’s CIP requires applicants to make a defined economic contribution to the country. In exchange, and subject to a stringent vetting and due diligence process (which includes the verification of sources of funds), applicants and their families will qualify to be granted Montenegrin citizenship. To qualify for Montenegrin citizenship, the main applicant must be over 18 years of age, must meet the application requirements, and must make the qualifying contribution to the Competent Authority of the Government of Montenegro (Secretariat for Development Above: The Cathedral of the Resurrection of Christ in Projects), namely: Podgorica, the capital city of Montenegro, is a relatively young 1. Contribute EUR 100,000 into an escrow account church, construction having been completed in the early 1990s for the advancement of underdeveloped, local self-government units to have an immensely positive impact on the electricity 2. Contribute EUR 450,000 into an escrow account trade. This is a key aspect of the government’s plan to for the purpose of investing into one of the commence exporting the commodity in future. approved real estate development projects in the Another important driver of capital, Podgorica, or in the the economy is foreign direct coastal region of Montenegro; or investment (FDI), recorded at EUR 250,000 for the purpose of In its robust effort around EUR 650 million in 2017. investing into one of the The Government of Montenegro approved real estate development to attract new foreign is business friendly and open to projects in the northern or investors, the Government interested investors. A significant central regions of Montenegro, portion of FDI goes to the tourism excluding Podgorica. of Montenegro is actively and real estate sectors. After the developing a citizenshipvote for independence in 2006, Holders of Montenegrin passports real estate prices and demand enjoy a number of benefits. by-investment program flourished, especially on the coast. Montenegro is part of Europe’s This was in large part because of Schengen Area and its citizens have a strong Russian interest, which diminished after the visa-free or visa-on-arrival access to 122 countries and 2008 financial crisis. The market stabilized at that time territories. When Montenegro becomes a member of the but prices kept growing at an average of around 5% per EU this will further improve the freedom of movement year, a rate of growth which has been maintained until available to passport holders, offering even greater value today. This growth is bolstered by interest from a diverse to early-bird investors.
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COUNTRY REVIEW
Montenegro With a breathtaking natural profile and an array of historical wonders to explore, Montenegro is a delightful European country that bursts with beauty.
Country Information
Languages
Currency
Economy
Population
Montenegrin, Serbian, Bosnian, Croatian
Euro
Developing free market
614,249 (CIA World Factbook, 2019)
Montenegro has become one of the most talked about destinations today thanks to its offering of world-class living, a stunning landscape, and a rich history. The country is growing in appeal to travelers and investors [to avoid the orphan in the last line] the world over, who are increasingly attracted by Montenegro’s lucrative real estate sector.
Montenegro
Kolašin
Kotor Cetinje
Natural Wonder Montenegro’s natural diversity enhances its appeal among travelers. Whether one is interested in a ski in the morning, a deep-sea swim in the afternoon, or an early evening walk through marbled streets, all are possible. Durmitor National Park, a pine forest along the Tara river canyon, is a UNESCO World Heritage Site.
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Podgorica
Tourism Boost 2018 was a record-breaking year for Montenegrin tourism, with increases noted in the number of visitors to the country and revenue generated. Over 2 million tourists visited Montenegro, generating profits in excess of EUR 1 billion, an increase from the EUR 900 million recorded in 2017.
COUNTRY REVIEW
Economy and Markets Exports USD 560 million
GDP 2017 Trade Industry production Accommodation and food State administration and obligatory social insurance Agriculture Construction Real estate Finance and insurance Education Other services
Aluminium Special purpose ships Cars, Packaged medicaments
Imports USD 2.76 billion Refined petroleum, Cars Electrical transformers Packaged medicaments Broadcasting equipment
(Source: Montenegro Ministry of Finance, 2019)
(Source: Observatory of Economic Complexity, April 2019)
Country Rankings
Tax Benefits
46th
Henley Passport Index
50 th
2019 Henley Passport Index
64th
Quality of Nationality Index
2018 Human Development Index
70 th
ND-GAIN Country Index
Travel Freedom Ranking
• • • •
Corporate income tax and capital gains are at a 9% flat rate. Annual real estate tax varies between 0.25% and 1%, depending on the municipality. Real estate transfer tax is 3% but does not apply to new properties. There are no wealth, inheritance, or gift taxes.
Kälin – Kochenov Quality of Nationality Index 3rd Edition
Kälin – Kochenov Quality of Nationality Index 3rd Edition
57th
Human Development Index
45th
Good Country Index
Superyacht Heaven Forbes recently described Porto Montenegro as “becoming the ultimate superyacht sanctuary along the Adriatic coast”. A growing number of ultra-high-net-worth superyacht owners are discovering the beauty of Montenegro as a home base for their prized vessels, positioning the country in the same league as Monaco.
Investment Potential In 2017, Montenegro became a member of the NATO alliance, thus securing the country as a leading location for investment. Importantly, Montenegro is expected to become a member of the EU in the next few years, complementing the country’s membership of the IMF, World Bank, and the World Trade Organization.
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Interview In an insightful conversation with Czech national Vít Jedlička, the President of the Free Republic of Liberland, a self-declared libertarian micro-nation, Global Citizenship Review explores some of the topics around nationhood and citizenship Global Citizenship Review (GCR): Can you describe
GCR: What role do you envision Liberland fulfilling on
for us the socio-political context that led to the formation of Liberland? Vít Jedlička (VJ): For over a century we have witnessed the ever-increasing size of the state at the expense of people’s freedom. Ever-increasing taxes and regulation are choking the economy. Despite our incredible technological advancements we have seen a rather slow economic growth in the Western world, without ever reaching any real potential when compared to countries in other parts of the world. The EU, for example, estimates that its own regulations slow down the economy in Europe by 4% per year. This means that for every 20 years, half the potential prosperity is damaged by excessive government directives. Moreover, nobody really seems to care about this huge, invisible destruction of wealth. By contrast, countries outside the EU — like Panama, Singapore, and Switzerland — have been doing really well and are already experiencing economic booms that are making their citizens ever more prosperous. For a number of years I have been proposing to the Czech Republic that we follow the Swiss model, but to no avail. And so, one day I realized that it is easier to start a new country than to fix an existing one.
a global scale? VJ: Liberland aims to be a good example for other countries. It has already attracted and gathered together the most brilliant minds and people from all walks of life.
GCR: What are the founding principles of Liberland? How did you go about developing its constitution? VJ: We have chosen to combine only the best elements from republics, democracies, meritocracies, and corporations. As a matter of fact, the Liberland Constitution is written in such a way that it strictly limits the power of the state. We have introduced the concept of voluntary taxation as in other countries people are expected to pay taxes, but they are often not told how much. Liberland is also a democracy, since a majority of citizens can veto any governmental decisions. All of this is now tested on a blockchain platform developed by top programmers in the EOS community called Ghostbustersx.io.
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IMAGE: Francois Guillot/AFP/Getty Images
Vít Jedlička
IMAGE: Francois Guillot/AFP/Getty Images
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Liberland has attracted more than half a million people, and millions more will be applying for citizenship in the coming years. People already know the many benefits that such citizenship will bring to their lives. They know that as a part of Liberland they will be able to have and enjoy greater freedom in all aspects of their lives, which traditional nations and states are not able to offer — that is, freedom without endless bureaucracy in business, finance, services, dual citizenship, and many other sectors and fields.
GCR: To what extent is Liberland — its context and vision — a personal project and a reflection of your own negotiation of the political and economic status quo? VJ: Liberland, for me, has become a rational way out of an outdated system. At some point, I realized that it does not make sense to fight the existing system. It is much easier to start from scratch.
GCR: There is a growing sentiment that contemporary
liberals are moving further away from the core principles GCR: Has Liberland formed diplomatic ties with any held by classical liberals. Would you consider this to be other sovereign states? How important is international an accurate statement? recognition for the future of the country? VJ: For many decades, socialists in American politics VJ: In 2018 we signed a memorandum of understanding have been able to capture and use the word ‘liberal’, with Somaliland. We support its diplomatic struggle twisting its meaning in the process. So now, classical for recognition. We have also liberals and real liberals are on launched the recognition process completely different sides of the in various states in the USA. Our political spectrum. Unfortunately, They know that as anniversary was attended not only we see this shift in Europe as well, by members of the USA Congress and many liberals are actually part of Liberland they but also by leading political figures pushing for neo-Marxist policies. will be able to have and in Croatia. We are seeking to open diplomatic connections with GCR: Can we expect innovation enjoy greater freedom countries worldwide through our from Liberland in the area of in all aspects of their 100 representative offices. digital identit y and virtual citizenship? lives, which traditional GCR: In your assessment, will traVJ: Liberland aims to provide the ditional notions of nationhood and best e-residence program on the nations and states are citizenship hold up for much longer? planet. We have just launched the not able to offer What new form might they take? first version. This will allow VJ: We should expect a drive an individual to set up and towards more and more decentral incorporate traditional companies ization of state services, much as we are now witnessing, or decentralized, autonomous organizations in a couple with central banks becoming obsolete in some of minutes. Our plan is to use blockchain for our land, countries, and citizens adopting other, non-traditional ship, car, and other registries. currencies. In this era of cryptocurrencies, more people will turn to smart contracts and smart courts to solve GCR: What are some of the next key steps and activities their disputes. Traditional states will likely try to that you will be embarking on in the name of Liberland? maintain their monopolies over the physical power of VJ: We have launched our first tradeable token called their territories, but I predict that we will be seeing Merit. We are also prioritizing the support of the actual more new competitors like Liberland emerging all over development of Floating Liberland, consisting of various the world. Incorporating companies will become houseboats permanently berthed on the Danube, at the stateless , w ith sophist icated mecha nisms for front of Liberland, to create a small village with a spa, enforcement in the field of justice. Liberland will restaurant, and co-working facilities. There are, in spearhead this shift, and because of our experience, addition, many developments being built by our diaspora we will become a bridge between the old world and a all over the world — villages in over 14 countries in new, decentralized world. places like Belize, Malaysia, Norway, and Panama.
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The experts for international health insurance
Your Choice for Life 20 Years of Excellence 1997 – 2017
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T. +41 44 266 61 11 E. zurich@sip.ch www.sip.ch
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The Global Appeal of British Independent Schools and Leading Universities
B
ritain’s independent schools and leading universities have been the gold standard of education for centuries. They are renowned for their high quality, not only within the UK, but around the world too; their global outlook and proven ability to compete on an international scale guarantee excellent education. In fact, the UK’s independent schools and foremost universities together provide invaluable learning experiences that prepare students for the fast-changing world, helping them to realize their full potential.
Independent Schools Independent schools are fee-paying institutions that are run independently of the state. On average, tuition fees are USD 35,000 to USD 45,000 a year. Many well-known schools, including Eton College, Harrow School, and
Westminster School, are independent. There are more than 2,400 independent schools in the UK. Of these schools, 1,300 of them — including 473 boarding schools — are represented by the Independent School Council (ISC). According to the latest ISC statistics, there are more than 524,000 students studying at ISC schools in 2019; about 10% of them, 55,280 to be exact, are non-British. The top sending countries and territories are mainland China (9,585 students), Hong Kong (SAR China) (5,222), the USA (3,840), and Germany (3,182). The numbers are steadily increasing. The global appeal of British independent schools stems from their provision of excellent academic guidance — teaching staff at independent schools are generally highly qualified in and truly passionate about education. These schools usually offer decent remuneration to attract the best teachers, who are also drawn by the prestige of
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IMAGE: Tim Graham/Getty Images
Dr. Alvin Leung, Education Consultant, Carfax Education Group, UK Dominick Ashe, Director, Carfax Education Group, UK and UAE
IMAGE: Tim Graham/Getty Images
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Permanent Secretaries Lords
59% 57%
-6%
Football (Women)
+4%
Football (Men)
+8%
Shadow Cabinet
9%
-13%
Local Government CEOs
9%
-1%
Diplomats
52%
0%
Junior Ministers
52%
-4%
Armed Forces
49%
-13%
Change since 2014
65%
Senior Judges
The 10 Professions with the Lowest Independent School Attendance
Rugby (Women)
2%
n/a -8%
5%
13%
n/a
Vice Chancellors
16%
-4%
Shadow Junior Ministers
18%
n/a
Local Government Leaders
20%
+5%
20%
-2%
Public Body Chairs
45%
+1%
Newspaper Columnists
44%
+1%
News Media 100
43%
-11%
Popstars
Cricket (Men)
43%
+10%
Police Chiefs and PCCs
24%
Change since 2014
The 10 Professions with the Highest Independent School Attendance
+2%
(Source: Elitist Britain 2019 Report)
working for these long-standing institutions. The continue their studies in Oxbridge (Oxford and Cambridge abundance of resources at independent schools means that universities), and an overwhelming 49% of students continue class sizes tend to be smaller, allowing teachers to provide in other Russell Group Universities, an association of more personal support to students. internationally renowned public Most independent secondary research institutions including Bristol, schools offer a wide range of subjects Durham, and Warwick universities British independent that better cater to students’ needs; as well as Imperial College London, students are therefore well prepared King’s College London, and University schools deliver much for their university studies, which they College London. more than academic enter with highly relevant subject British independent schools knowledge. There is, furthermore, a deliver much more than academic guidance — they are range of specialist independent schools guidance — they are well known well known for their for students interested in pursuing for their whole-person approach to particular careers from a young age. education, believed to be the whole-person approach For example, Wells Cathedral School cornerstone of students’ success. and Chetham’s School of Music have This approach enables students to to education, believed solid reputations for honing their develop in a stimulating environment to be the cornerstone students’ musical skills and inspiring and to amplify a multitude of them through actively participating in valuable soft skills, including of students’ success popular music festivals. problem-solving, creative and The vast majority of students at communication skills, self-reliance, independent schools, roughly 93%, achieve good academic and self-discipline. This is done through a range of results and continue on to attend various universities, mostly activities such as student clubs and sports teams, in the UK. According to an ISC census, 5% of their students particularly at independent boarding schools where
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4. University of Oxford
7. University of Cambridge
8. University College London
9. Imperial College London
20. The University of Edinburgh
27. The University of Manchester
students can learn to live and work with people different from themselves in an encouraging and caring environment. Immersing themselves in such an environment allows students to develop their maturity and independence much more quickly than their dayschool counterparts do. Spending extended periods of time with their peers both in and out of classrooms cultivates a sense of community and a support network that many use to their advantage even decades after completing school. Studying in British independent schools moreover prepares students better for university life should they choose to stay in the UK for their tertiary studies. This is particularly the case for non-British individuals, whose earlier experience of British schools will enable them to understand British culture and ways of life to a greater degree. This effectively reduces the potential or impact of ‘culture shock’ when they enter university — an issue that foreign university students often grapple with.
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Parents may be concerned about sending their children to schools in Britain, miles away from home, but they can be assured that staff in both boarding and non-boarding schools will take care of their children, thanks to the very stringent safeguarding policies in the UK. Independent schools in Britain are keen to involve parents in making important decisions and, in the case of boarding schools, to keep in close contact with parents to ensure a holistic education approach.
Leading Universities British universities are among the oldest in the world. The University of Oxford was founded in 1096 and the University of Cambridge in 1209. With their rich histories and traditions, as well as stellar fundamentals and first-class education, Oxford and Cambridge are always ranked amongst the world’s top universities and, together with 22 other leading British research universities form the Russell Group. These universities are diverse in location and size — some of the bigger ones are in metropolitan areas such as London and Bristol, while some of the smaller ones are in countryside towns — offering parents and students a range of options. Compared to universities in other countries, those in the UK are more subject-specific. Students choose a subject for their three years of study (more for some subjects), by the end of which they are regarded as trained in their chosen profession. They are then ready for the job market or for further studies. The foremost universities offer a wide range of subjects, from actuarial science, astrophysics, biochemistry, engineering, mathematics, and medicine, to education, fine arts, history, law, medieval languages, and political science. The British A Level system supports this subject focus. The system, which is used in UK schools, enables students to gain expertise in the subject areas that they are passionate about and interested in. Nonetheless, strong bonds between students in colleges and school halls in these universities allow students of various disciplines to exchange ideas in an interdisciplinary way, helping them to learn about others and to consider the world from different perspectives. Studying at a British university is not only about growing one’s academic circle. There is an increasing level of cooperation between universities and the private sector in the UK, which contributes to a smooth transition from studying to working. Universities offer numerous opportunities such as internships, placements, and student projects, preparing students for their future careers as well as engaging them in their local communities. The close relationship between universities and some leading companies has been
IMAGES: Brands of the world
Leading UK Universities on QS World University Ranking of 1,000 Institutions
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The Impact of Independent Schools on the UK Economy 2,444 Schools 618,603 Students
GBP 13.7 billion
GBP 73 billion
GBP 62 billion Supply-side boost to annual GDP
GBP 11.6 billion Demand-side support for annual GDP 1,317 Schools 524,879 Students 302,910
GBP 3.5 billion
GBP 4.1 billion GBP 1.8 billion
257,020 jobs Independent Schools
GBP 3.5 billion annual tax
Wider contribution to publicly funded education system and society
GDP supported by non-British students
GBP 3 billion savings to taxpayer
ISC Schools
(Source: Independent Schools Council, October 2018)
mutually beneficial. For instance, a few years ago, steadily. In the 2017–2018 academic year, about 458,000 AstraZeneca, one of the largest British pharmaceutical non-British students were recorded, of which more than companies, moved adjacent to the biochemistry campus of 106,000 were from China, 20,000 were from India, 19,000 the University of Cambridge, creating space for truly exciting were from the USA, and 16,000 were from Hong Kong (SAR opportunities for collaboration. China). Among European countries, The global appeal of British universities France, Germany, and Italy each have comes from their emphasis on instilling about 14,000 students at universities in Despite the values in students in addition to their rich the UK. The number of non-British traditions and willingness to embrace students studying in the UK is expected to uncertainty of innovation. The values of honesty, continue to increase, due, in part, to the Brexit, the number integrity, perseverance, and self-reliance ever-growing middle class in China, India, have been central to the ethos of many and other parts of Asia. Africa, with its of international British universities. In our changing world, rapidly growing population, will also students studying employers want more than an impressive contribute to this trend. performance in core hard skills, since As a result of their global appeal and at UK universities people can be trained in many of these on their large numbers of international the job. Instead, employers seek recruits students, British universities are culturally has risen steadily whose values align with those of their diverse: their campuses are microcosms organizations. Leading universities of our globalized, hyperconnected world. cultivate such values through creating a sense of community Students from a wide range of cultures have excellent and belonging, and through offering a range of student opportunities to understand and connect with one another, activities, including sports, theater, and other student clubs. ultimately preparing them for careers that may require them Despite the uncertainty of Brexit, the number of to travel to other parts of the world and collaborate with international students studying at UK universities has risen people in different countries as true global citizens.
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The Changing Face of the EB-5: How Emerging Markets Are the New Driving Force
T
he USA’s EB-5 Immigrant Investor Visa remains strong and continues to be the largest residenceby-investment program in the world. However, after years of Chinese EB-5 investors leading the USA investment immigration sector and injecting more than USD 7.7 billion into USA property and business investments, market forces have shifted the industry to other emerging markets. The change is opening the door to new waves of investors from Africa, India, South America, and Vietnam.
Although Chinese investors still dominate the number of EB-5 approvals, times are changing. In 2018, for the first time since 2010, fewer mainland China-born EB-5 investors and their dependents received EB-5 visas compared to investors from the rest of the world combined. But the gap is small: Chinese investors received 4,642 visas in fiscal year 2018 (48% of the total) compared to 4,960 investors from everywhere else, according to data from the USA’s Department of State. Still, the change reflects
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Marie Ekberg Padilla, Editor in Chief, EB5 Investors Magazine, USA
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an extraordinary shift. Just five years earlier, 9,128 visas, or 85% of the total EB-5 visas issued, went to mainlandChina born investors, with just 1,564 going to investors from other countries.
Emerging Markets Are Expanding The Chinese EB-5 wave is breaking, primarily because of a rule by US Citizenship and Immigration Services that assigns only 700 visas a year, or 7% of the 10,000 annual total, to applicants from a single country. Surplus visas are then assigned based on investors’ application dates but, given the large number of EB-5 applications from mainland China, those applicants can face an average wait of 10 to 15 years before finally receiving their conditional green cards. The prospect of these delays has triggered a change in focus for EB-5 professionals and investors. EB-5 professionals are now promoting and holding educational seminars about the program in markets other than China. Both India and Vietnam saw double- or triple-digit annual growth in EB-5 applications, or I-526 filings, in 2015, 2016, and 2017. In total, Chinese investors accounted for 77% of I-526 filings in 2017, down from more than 85% in 2015, with the total number of I-526 filings by Chinese investors falling by almost 20% in both 2016 and 2017. The shift also comes as wealthy Chinese families reconsider plans to move away from their home country. According to a 2018 report published by the Hurun Research Institute, noticeably fewer ultra-wealthy Chinese people now plan to move to the West. Just 37% say they are considering relocating, down 10 points from 2017. Domestic economic and political trends seem to be exacerbating that situation. Chinese investors’ foreign real estate holdings grew by just 6.2% between 2016 and 2017, down from 40–50% annual growth between 2013 and 2015, according to a report from Juwai.com. The value of Chinese investments in American real estate fell by 32% in 2017, while Chinese investments in Europe soared by almost 228%.
Investors Exploring Other Options Because of the country quota limits of the EB-5 program, many of China’s high-net-worth individuals (HNWIs) are instead exploring European residence permit opportunities. While Portugal’s investment visa, used by more than 4,200 Chinese investors since 2012, saw total investments slip by 31% year on year in March 2019, the programs of other European countries are thriving. Since Greece launched
its program in 2013, the Mediterranean country has issued residence permits to more than 6,800 Chinese investors and family members, which accounts for almost 60% of all visas issued under the fledgling program. Russia, the second most common nation of origin for Greek immigrant investors, accounted for significantly fewer permits than the Chinese, at 1,072. The UK has also seen a continuing influx of Chinese capital, with the number of Tier 1 investor visa applications from China doubling since UK citizens voted to leave the EU in 2016. Last year, 63% of 228 total Tier 1 applications came from China, up from around half in 2017. Ireland, with its low corporate taxes and EU membership, is also increasingly popular with Chinese investors.
EB-5’s Popularity Is Increasing in Emerging Markets In the USA, developers and EB-5 regional centers are now contacting investors from nations where the program hasn’t traditionally had a strong foothold — and where, consequently, investors can obtain green cards without facing lengthy waiting periods. Vietnam, India, and, to a lesser extent, South Korea are the current markets for EB-5 professionals and migration agents. These three countries accounted for almost 12% of I-526 filings in 2017, up from around 4% in 2015. A total of 587 I-526 petitions were filed by Indian investors in fiscal year 2017, a six-fold increase from 2014. Vietnam has seen a similarly sharp increase in EB-5 activity. Several other countries are also seeing strong EB-5 growth, albeit from low baselines. The number of EB-5 applications from South Africa has surged by 600% from levels seen three years previously, while Turkish I-526 filings increased by 152% between 2016 and 2017. Over the same period, Japan, Taiwan, and Hong Kong also saw double-digit growth in I-526 filings. A key question is whether the new EB-5 markets will overheat too quickly, causing a flood of new investors from a small number of countries, which will trigger longer waiting times for green cards. Vietnamese investors now face a roughly seven-year wait for green cards, and Indian investors might soon become subject to a visa backlog. For now, though, developers are increasingly recruiting in non-Chinese markets, with the mission of increased diversity as the key to the future of the EB-5 program. The Chinese investment boom may be fading, but the EB-5 program is well placed to continue to attract foreign capital — and foreign investors — to the USA for years to come.
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Selling Property by Auction: Logical, Fair, Transparent Martin Göppert, Founder, property-auctions.ch, Switzerland
A
property transaction can only be considered closed be losing a bruising amount of money. The risk of this or complete if it fulfils three requirements: the increases if, as is often the case, sellers know neither the buyer must be able to finance the purchase, the real financial power of potential buyers nor the value of transaction must be registered with the land registry, and their own property. Sellers may know what they paid for the seller must have received the full benefit in their own a property, or what they have invested in renovations, bank account. without knowing its current value. A profusion of questions confronts owners when they There are various ways of putting a property on the come to selling property, and many advisors and service market. For most kinds of properties, the internet is not providers usually appear on the horizon: real estate agents, the smartest solution for working out the best possible brokers, valuation experts, and, often, the curious. Sellers price of a property or for finding buyers. The place where who have not been involved in a property transaction a seller will get to know the best price is, in fact, a wellbefore are especially likely to be planned auction. An auction is the confused about how to find and choose most logical way of selling property: a buyer. The seller understandably Buying and selling the willing vendor gets their money wants to get the highest price, while directly while the buyers must play property is very often the buyer would like a ‘good deal’. Both open cards if they really want to buy parties generally prefer discreetness, a property. financially driven, and because people rarely display financial With an auction, a seller can avoid matters in public. expensive and often misleading the financial quality But buying and selling property property valuations — after all, a of the transaction is very often financially driven, and valuation is nothing more than a the financial quality of the transacnumber that may be right or may be should be important tion should be important for sellers wrong, or even a feeling, which can for sellers and buyers and buyers. be good or bad. At a professional auction, the Why Auction? auctioneer keeps control of brokers Dozens of different market players may try to act for a and the buyers’ agents, and any bidder must undergo houseowner. In this environment, how can the seller proper financial and legal due diligence before making identify the highest possible price? And how can they be an offer. sure to get this price? For most private sellers, a property Many people are familiar with auctions of vintage transaction is far more complex than they originally cars, memorabilia, jewelry, or paintings, or with the thought. Selling a property usually involves a considerable forced public sale of properties. This kind of auction amount of money for both parties, in addition to emotions — rarely discreet or transparent — has major drawbacks and uncertainties — this is sometimes because selfif it is used for real estate, where people are looking for declared experts, who are not taking any financial risks, more privacy. get involved. How to Start Your Own Auction Managing such challenges without professional support can be as tricky as climbing an unfamiliar In most countries, there are restrictions on how propmountain without a professional guide. The result may erty may be legally purchased. This means that the
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auction process requires some attention before a propApart from choosing the best marketing strategy for aterty may be put on the market for sale. These restrictracting a large number of bidders, a qualified auctioneer tions also mean that the number may be the optimum specialist for of serious buyers is rarely very coordinating a property transaction. high. Participants at auctions must This is especially so if the seller Apart from choosing like the bidding element and must would like the transaction managed the best marketing be willing to be transparent when in a truly discreet way, with bidders it comes to finances. willing and legally capable of buying strategy for attracting a What happens if there is only one the property of their dreams. bidder or if the property attracts a Since private property auctions large number of bidders, large target crowd? These are situaare new to the market, the choice of a qualified auctioneer tions that the seller may be concerned auction houses is very limited. For about. A professional auctioneer will vendors, it is crucial to have a partner may be the optimum have developed an individual strateworking for them in order to get the specialist for coordinating gy to pre-empt both scenarios. There best price. The worst situation for a are various methods that an auctionseller would be an auction house a property transaction eer could use within a single auction being paid by the buyer. Therefore, to ensure the best possible price is it is important for the seller to know achieved. But only an experienced how much financial risk they are auctioneer can manage such a situation for the benefit of willing to take in implementing an auction and whether the seller. they want to bring in an auctioneer to assist.
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Tax, Due Diligence, and Anti-Money Laundering in Investment Migration
T
he risks associated with residence-by-investment (RBI) and citizenship-by-investment (CBI) programs extend beyond economic and fiscal policy management. As with any law or policy pertaining to cross-border investment, RBI and CBI programs have the potential for misuse by unsavory individuals wanting to hide their illicit activities. For this reason, regulatory scrutiny of such programs has intensified in recent years as the supply of and demand for these programs has grown. In February 2018, the Organisation for Economic Co-operation and Development (OECD) issued a consultation paper outlining concerns that RBI programs, in particular, are being used to circumvent the Common Reporting Standards, or CRS — rules that national tax authorities use to combat tax evasion by collecting and passing information to their counterparts in other countries.1 Since the release of the OECD paper, the organization has met with the EU and the Group of 20 (G20) to discuss how to prevent the potential abuse of investment migration programs. In addition,
countries are acting on their own to curb abuses. In March 2018, the UK announced plans to investigate the source of wealth of 700 individuals who have settled in the country through its Tier 1 (Investor) program. Thus it is in a climate of rising scrutiny and regulation, and demanding expectations surrounding due diligence (DD) procedures, that countries launch new programs to meet the increasing appetite for alternative residence or additional passports. The European Commission’s concerns about RBI and CBI programs mirror those of the OECD. The EU Minister for Justice has said that these programs will be more closely examined as part of a broader campaign against tax evasion, money laundering, terrorist financing, and corruption. The EU is particularly concerned about Russian applicants for citizenship in Malta and several other EU member states and a perceived lack of controls on Russian individuals and funds migrating to the EU. EU concerns about Russian individuals and money entering Europe’s Schengen Area, however, should be
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Hugh Morshead, Group Director: Corporate Governance, Henley & Partners, Jersey
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viewed in the context of broader alarm about Russian to determine how suitable applicants are for residence or intentions towards Western democracies and global polcitizenship.4 The four-tier risk-based compliance program itics. While reports of Russian meddling in USA elections used by the Antigua and Barbuda Citizenship-by-Investment (and those of other nations) should be considered with Program is typical. the utmost seriousness, some commentators have suggest• Tier 1: Using Thomson Reuters World-Check, ed that fears of Russia interfering in the West often conInterpol’s red or other notices, the FBI Most Wanted flate good and bad actors, at times Terrorist List, and the UN’s bordering on Russophobia.2,3 These al-Qaeda Sanctions List to scan commentators tend to agree that it the name of the applicant, EU concerns about is important to distinguish between their family members, and any Russian individuals and criminals and other bad actors on businesses the applicant may be the one hand, and citizens and busiassociated with money entering Europe’s nesspeople merely wanting to access • Tier 2: Using third-party the legal benefits of investment miservice providers to conduct Schengen Area, however, gration programs on the other. background DD on the should be viewed in Nevertheless, the risks associated principle applicant and their with investment migration programs family members the context of broader remain, but countries and organiza• Tier 3: Submitting the applicant’s alarm about Russian tions can reduce these risks through name and other pertinent effective regulation, DD, and well-iminformation to regional and intentions towards plemented policy frameworks. The international governmental majority of RBI and CBI programs partners Western democracies have most or all of these in place now • Tier 4: Summarizing the and global politics or are in the process of implementing findings of the DD review and them. A recent comprehensive study making a recommendation to of RBI and CBI programs co-pubsenior management lished by the Investment Migration Council and Thompson Reuters found that the bulk of programs involve not only Malta utilizes a similar four-tier DD process in addition one background check but a series of comprehensive checks to its close collaboration with the International Criminal Court. Malta has also established an independent legal entity, Identity Malta, to manage its Individual Investor Program. It is headed by a chairperson with executive powers, which include the power to reject applicants — something Malta frequently does when applicants do not satisfy its citizenship criteria. Of the 377 applications submitted between 1 June 2016 and 30 July 2017, for example, 83 were either rejected or withdrawn, up from the 52 rejections recorded during the same period in the previous year. There is a set of internationally endorsed global standards put in place by the Financial Action Task Force (FATF) and known as the Forty Recommendations (against money laundering) and the IX Special Recommendations (against financing terrorism). 5 These recommendations address various forms of corruption, including bribery. Nations offering RBI and/or CBI use these standards in different ways as programs vary, yet most investment migration programs adhere to stringent
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standards of DD, and the vast majority of individuals who gain an additional passport through such programs are scrutinized intensely beforehand by multiple law enforcement agencies. 6 According to a policy paper co-published by the Investment Migration Council and Thomson Reuters, “The fact is…that no one is admitted to citizenship without undergoing a thorough vetting process in the vast majority of programs. The end result is that for the most part, only high net worth law-abiding persons are granted citizenship under these programs.”7 This fact contrasts with common misperceptions about the investment migration industry, including the complaint made to the European Parliament in 2014 that CBI programs “only allow the richest third-country nationals to obtain EU citizenship without any other criteria being considered”, 8 a statement that is simply wrong. Regulators and tax authorities remain concerned that even well-vetted RBI and CBI program applicants may use these programs to evade tax. As stated earlier, the OECD continues to investigate whether these programs allow individuals to avoid identifying their countries of tax residence. OECD concerns include the possibility that such programs can offer ‘a back door’ to tax evaders, as these individuals may exploit programs to undermine the CRS DD procedures, leading to inaccurate or incomplete reporting. These concerns are somewhat misplaced, for several key reasons. As the OECD itself acknowledges in its consultation document: “[CBI/RBI] schemes grant a right of citizenship of a jurisdiction or a right to reside in a jurisdiction. They generally do not provide tax residence. Reporting under the CRS is based on tax residence, not on citizenship or the legal right to reside in a jurisdiction. Even where tax residence can be obtained through some RBI schemes, they do not by themselves affect the tax residence in the original country of residence of the individual.”9 Merely obtaining the right to reside in a country neither creates tax residence in that country nor ends tax residence in any another country.10,11 The OECD admits that, on the whole, “CBI/RBI schemes do not offer a solution for escaping the legal scope of reporting pursuant to the CRS”. According to the tax laws of most countries, it is the individual’s responsibility to identify all the jurisdictions in which they have tax liabilities and to take the appropriate steps to understand how every alternative citizenship or residence affects their tax residence. Understanding these facts will make the OECD’s tax concerns easier to alleviate.
In addition, all reputable banks use ‘know your customer’ (KYC) guidelines to avoid being implicated in moneylaundering activities. For RBI and CBI program risk management, identifying customers and monitoring transactions are key elements. Under KYC guidelines, RBI and CBI applicants, the government receiving funds for its development fund, and the applicant’s real estate developer or business partners are all considered customers, and so are fully screened and scrutinized.12 All banks have a strong incentive to conduct robust KYC checks — as they otherwise risk losing global correspondent banking arrangements. These are critical to the international payments system that facilitates money transfers, for example, check clearing, wire transfers, and currency exchange. Without these relationships, businesses would be cut off from international trade and financing and, in some cases, people in the host country would be unable to receive money from relatives working abroad.13 References 1 ‘OECD Releases Consultation Document on Misuse of Residence by Investment Schemes to Circumvent the Common Reporting Standard’, (OECD, 2 February 2018) oecd.org/tax/oecd-releasesconsultation-document-on-misuse-of-residence-by-investmentschemes-to-circumvent-the-common-reporting-standard.htm 2 Thomas Frank, ‘The Hysteria over Russian Bots has Reached New Levels’ (The Guardian, 23 February 2018) 3 Stephen F. Cohen, ’Russophobia in the New Cold War’ (The Nation, 4 April 2018) 4 Chisanga Chekwe, ‘Staying Ahead: Due Diligence in Residence and Citizenship by Investment Programmes’ (Investment Migration Council, 25 July 2018) 5 FATF-GAFI, ‘FATF Recommendations’ (fatf-gafi, 2019) fatf-gafi.org/publications/fatfrecommendations/?hf=10&b=0&s= desc(fatf _releasedate) 6 Chekwe, Op. cit. 7 Ibid., 92 8 ‘EU Citizenship Should Not Be for Sale at Any Price, Says European Parliament’, (European Parliament News, 16 January 2014) europarl.europa.eu/news/en/pressroom/20140110IPR32392/eu-citizenship-should-not-be-for-saleat-any-price-says-european-parliament 9 OECD, ‘Preventing Abuse of Residence by Investment Schemes to Circumvent the CRS’, Consultation Document, 19 February–19 March 2018 10 John Richardson, ‘The Lack of Connection between “Tax Residency” and “RBI/CBI” programs’, (Investment Migration Council, May 2018) investmentmigration.org/articles/lackconnection-tax-residency-rbi-cbi-programs/ 11 Nicholas Gouder, ‘Tax in the Context of Residency and Citizenship by Investment’ (Investment Migration Council, 18 May 2018) investmentmigration.org/articles/tax-contextresidency-citizenship-investment/ 12 Chekwe, Op. cit., 58 13 Ibid., 58–59
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THINKING ABOUT REAL ESTATE IN MONTENEGRO? We have Something for Everyone
Pictured Porto Montenegro Residences
Stari grad 321, 85330 Kotor / +382 (0)32 304 788 / www.dreammontenegro.com
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The Allure of the UK among Emerging-Market Family Offices Raúl Markos, Director, Private Wealth, Vistra, UK
W
hile popular push factors for ultra-high-networth (UHNW) individuals in emerging economies have not changed much, pull factors affecting this group are evolving and now differ notably from what they were less than a generation ago. Approximately 67,000 (around a third) of the worldwide UHNW population come from Asia, the Middle East, and Latin America; this number is expected to grow at around 20% over the next four to five years.1 In its 2016 Family Office Guide, Ernst & Young estimates that there are around 10,000 single-family offices globally, at least half of which were established in the last two decades. The concept of single- and multi-family offices is relatively new to Asia, the Middle East, and Latin America — as are professionalized approaches towards asset protection, continuous creation, preservation, and transfer — but there is a burgeoning interest in the UK, more specifically London, as a first choice for establishing family offices. Push factors are what commonly drive families to relocate permanently, establishing an additional pillar to family operations abroad and spending significant amounts of time in foreign jurisdictions. These drivers fall into five braod sub-categories: • Regional socio-economic plans and legislative stability • Asset and geographical diversification needs • Regional legal and fiscal agenda (namely, does the legislative understanding, interpretation, and execution align with the family’s business and its needs? Are there functional fiscal and regulatory frameworks? Are they likely to change?) • The orientation of the wider family business (namely, is there sufficient scope in the home country for the family business to grow at scale? Is further professionalization that would enhance performance available in the home context?) • The impact of generational change (namely, does the local framework allow for a smooth movement of wealth and business between generations? Can
the next generation fulfill its ambitions within the home region, or will a change in location and jurisdiction become inevitable?) • Access to quality schooling and higher education (namely, how does the education offered in the home country compare to traditional centers of educational excellence? What are the family’s educational priorities?) These considerations have had a great impact on the proliferation of family offices and on the number of family-owned businesses located in different jurisdictions, but often linked to one another. Both family offices and family-owned businesses need to take a holistic approach to managing wealth. A holistic perspective should include effective and interlinked strategies for continuing to create wealth and value, control interest, transfer wealth, and preserve family wealth and legacies. The pull factors that lead to entrepreneurial UHNW families partially or totally relocating assets and interests are varied. They also fall into five sub-categories. Firstly, socio-economic stability and security that will provide a predictable, positive, long-term outlook for foreign direct investment. These elements, paired with a sense of openness and cross-cultural sensitivity, are essential to family enterprises originating in higherrisk jurisdictions. Secondly, a robust legal framework independent of the local government agenda, with enforceable rule of law and authority and an array of qualified professionals. Thirdly, a predictable and attractive fiscal framework that is well-positioned in this era of global transparency, dominated by enhanced substance and control and asset ownership requirements. Global entrepreneurial families from emerging economies have been closely monitoring these developments and adjusting their operations accordingly. Internationally exposed and expanding families should carefully assess the wider tax and operational landscape before establishing a group
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Global Population of UHNWs 2018
Russia and CIS 2,350 1.2%
Europe 70,627 35.6%
North America 51,912 26.2%
Latin America 10,457 5.3%
Middle East 8,301 4.2% Africa 2,050 1.0%
Asia 48,245 24.3%
Australasia 4,400 2.2%
(Source: Knight Frank, The Wealth Report, 2018)
holding company and/or other types of expanded overseas investment operations. Fourthly, increased exposure to new horizons as the appetite for cross-regional ventures (emerging to developed market or emerging to emerging market) and partnerships brings attention to global hubs. The sophisticated infrastructure environments of these centers appeals to individuals and families from younger economies, particularly those on the lookout for higherrewarding alternative asset classes (private equity, venture capital, and select real estate) and new technologies and innovation. This desire for alternative investment options becomes more important as families grow and welcome new stakeholders. Finally, financial and operational efficiencies are outweighing sentiment as performance becomes paramount to family business and investment operations. Unrelated external advisors enhance this scenario, as they increasingly participate in investment committees, company boards, and other decision-making bodies of the family enterprise, particularly if it operates abroad. While businesses will often preserve and consolidate a strong regional footprint, where possible, the international stage appeals more than ever — more so
where, geog raph ic a l ly spea k i ng, acces s a nd opportunities to new horizons exponentially multiply per square foot. Global hubs such as London have historically provided this abundance in business, professional, and social networking opportunities. These traditional functions will continue to benefit multi-layered networks. However, a soft re-education approach is needed when addressing new and now strongly dialectical relationships. This is expected to reflect in commercial and cultural terms. London and the UK have been a gateway to the world, receiving new arrivals and market participants from across the globe. As new players from well-known or previously overlooked regions (such as Asia, Latin America, and the Middle East) take center stage, the UK and its vibrant capital remain well-prepared for yet another beauty pageant in which they will reveal — to familiar and entirely new faces — their unique combination of endless commercial opportunities paired with a true sense of family life. Reference 1 Knight Frank, The Wealth Report, 2018
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Improving Your Prowess as a Private Property Investor Constantin von Dalwigk, Head of Engel & VĂślkers Private Office, Germany If an investor is buying for financial reasons, is the investment based on income returns and yields or capital growth? It is critical to understand whether a property will be well positioned in the current and future rental markets in addition to factoring in operating costs and fees. Investors may require investments that will enhance residence or preferred immigration status.
Let’s Be Diverse Following a diversified and balanced approach to investment is generally advisable. The advantage of this is that assets are spread out across markets, currencies, and economic cycles, so balancing potential risk. At present, ultra-high-net-worth-individuals (UHNWIs) from Germany are investing strongly in Barcelona, Lisbon, Madrid, and Mallorca, while UK-based UHNWIs
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R
eal estate has always been a significant avenue to building wealth. Investing in either residential or commercial property can yield stable cash flow, potential for growing your capital, and diversification, all of which are attractive to large portfolios. In addition, directly investing in real estate gives greater control of the risk profile, ownership structure, and business model. Furthermore, a property is something you can touch and experience, meaning that it is often a more emotional pursuit than stocks or bonds The first step to investing successfully in property is to determine the nature of the project: is it only a financial investment or is it a lifestyle investment too? If it is a lifestyle investment, what personal or family goals should it support? Consider details such as restrictions of use as well as the potential for appreciation over a specific length of time.
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have commercial property investments in Germany at the top of their list. Buyers in China prefer certain areas in Hong Kong due to their reputations, facilities, and locations. In Paris, international buyers from Italy and the USA currently dominate the market. An upswing in investors from the Middle East is also noticeable in the French capital. Special tax regulations might also encourage individuals to invest in real estate. For instance, Italy introduced a special tax regime in 2017. It is intended to attract Italian and foreign investors who have resided outside the country for at least nine of the previous ten years to transfer their tax residence to Italy and pay a fixed amount of EUR 100,000, instead of the regular Italian income tax, on their income from foreign sources. In terms of taxation, it is important to know whether an investor plans to use a property as a second residence after relocating or rather proposes to rent it out. This decision, made at the time of purchase, will determine the taxation that applies during the period of ownership and at resale.
From Coast to Island to Mountains When weighing up where to invest in property, consider that international holiday hotspots offer financially
rewarding opportunities. Owning luxury property in desirable holiday destinations is ideal for letting out during the high season when wealthy international clients are looking for exclusive accommodation. Profitable rentals depend above all on three factors: a very good location and infrastructure, first-class amenities, and a consistently high level of interest in the holiday region. One of the most attractive summer hotspots is the French Riviera. International buyers invest in houses and apartments, especially in the region around Cannes, Saint-Jean-Cap-Ferrat, and Saint-Tropez. Mallorca offers exclusive properties to UHN WIs seeking stunning locations in a secure environment, while luxury residences on Mykonos, Santorini, and Sardinia are also in high demand. This appetite is reflected in exceptional sale prices. Finally, bear in mind that buyers and investors with high public profiles frequently attract other wealthy clientele, adding value to a region. When it comes to winter holiday favorites, Aspen, Courchevel, Gstaad, Kitzbühel, St. Moritz, and Vail rank among the most exclusive ski destinations worldwide. Luxury properties in these areas will always be sound investments because there are so few homes available. To ensure long-term potential growth in value, investors should look for properties in top locations. The highest resale value comes from properties with first-class architecture and features and spectacular panoramic views of water or mountain scenery. So, how can you improve your prowess as a private property investor? Here are a few tips: • Develop an investment strategy, taking time to research the property and area. • Compare the property’s price to similar properties recently sold in the area. • Be sure to understand the property’s location clearly (on a micro- and a macro-level) and its condition. • Assess the annual running costs (including maintenance, taxes, and personnel). • Find a reputable, experienced, and trustworthy real estate advisor. Investing in property is a very emotional business — so take time to find the right person who can also help to identify the best external service providers (banks, tax advisors, law firms) to deal with financing, fiscal optimization, and a host of other matters.
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Y
ou could be forgiven if you have not thought much about micronations — except perhaps to be mildly curious about where they are and why they exist. Although people sometimes treat them as political or practical jokes, there may be genuine reasons why certain people want to secede from mainstream living. For example, some micronations arise out of protests about land, taxes, and services. Many people live on the fringes of society anyway — some by choice, others due to financial constraints. If they can’t maintain a lifestyle that needs a regular income, then perhaps modern living demands too much of them, and opting out becomes a necessity. There are also those who object to the world’s largest cities expanding ever further, absorbing the suburbs around them. Research shows that rural populations are becoming ever smaller as more and more people move to towns and cities. As village life disappears, people lose their identities as they scramble to get better educations and jobs, trying to keep up as times change. For some, creating a new, smaller society could be the answer to counter trends they dislike. If we scratch beneath the surface, it is clear that there are few micronations that are solely humorous or artistic statements. It is tricky to define what constitutes a micronation as there are no clear indicators. But various suggestions coalesce around it being a real or imagined piece of land
that is a self-declared sovereign state. However, there are micronations that defy our understanding of what constitutes a nation: the Territory of Elgaland-Vargaland, for example, is a digital nation claiming borders themselves as its territory — whenever anyone anywhere crosses a border, they briefly enter this micronation. ElgalandVargaland was created in 1992 by two Swedish conceptual artists, Carl Michael von Hausswolff and Leif Elggren, who are the monarchs of this kingdom. The concept behind their invention begins to make sense if you consider the damage done to the natural movement of people in Africa by the borders created by colonial powers in that continent, not to mention the current wrangles over Brexit borders. Although it is difficult to ascertain exactly how many micronations there are, it seems that there are at least 400 across the globe, with greatly differing degrees of sophistication. Some micronations have their own currencies, official regalia, postage stamps, systems of government, and even folklore, and seek to be officially recognized. Others are not culturally specific and are not focused on being recognized. What then is common to those people who create small kingdoms? It may be more interesting to ask how long some of them have endured. One small but stable micronation is the Principality of Sealand, which has probably persisted because its location,
Elgaland-Vargaland
Principality of Hutt River
The Free Republic of Liberland
Republic of Molossia
Principality of Sealand
Principality of Seborga
Republic of Somaliland
Republic of Whangamomona
Above: Shown here are the flags of a selection of micronations
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IMAGES: Wikipedia
The Rise of Micronations
Above: The Principality of Sealand, which records indicate has a population of fewer than 30, has its own prison and postage stamps
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an anti-aircraft platform off the coast of Suffolk, is of little use to anyone else. Smaller than any other known micronation, Sealand is one of the Maunsell sea forts, which were armed towers used to protect shipping routes during the Second World War. Attempts to have Sealand legally considered a sovereign state have failed. This is because the UN’s Convention on the Law of the Sea (1994) declares that artificial islands and structures do not have the same status as islands; they therefore have no sea of their own. Paddy Roy Bates, a former army major, along with his family and its associates, took the decommissioned Maunsell sea fort platform away from pirate radio broadcasters in 1967. Bates has since died and his descendants have moved to the mainland, but Sealand is considered a successful micronation since it has a chapel, a prison, and postage stamps. Some of the more eccentric micronations are the Republic of Molossia, the Principality of Hutt River, the Principality of Seborga, and the Republic of Whanga momona. The latter lies on Highway 43, known as the ‘Forgotten World Highway’, in the Stratford district of New Zealand. This small township lost many men in the First World War and endured a severe flood in 1924. After railways were installed in 1933 and electricity was brought in, the settlement recovered slightly, but the economy declined again when its school and post office closed. In 1989, when authorities redrew local maps, residents protested the new divisions by declaring themselves a republic. Now, their so-called independent Republic Day has become a popular biennial festival that attracts many visitors. Their elected presidents have included, among other notables, a goat, a poodle, a turtle, and a sheep.
The agricultural town of Seborga in the northwest of Italy has called itself a principality since 1963, when Georgio Corbone first popularized the idea and was elected head of state. After the elections many more tourists visited Seborga, and its historic buildings have been maintained to prevent over-commercialization of the town. After his death, the Sunday New York Times said of Georgio 1, Prince of Seborga, “he accepted no salary, he never invaded another country, he never taxed his subjects”. In 2010, he was succeeded by His Serene Highness, Marcello of Seborga, whose wife, Nina Döbler, is the Minister of Foreign Affairs. A consulate for the micronation has opened in Munich, Germany. Molossia, a 6.3-acre property in the USA’s Nevada desert, is the fruit of an elaborate childhood game invented by Kevin Baugh and a friend. When he grew up, Baugh declared himself president in 1999, acquiring all the accoutrements necessary to show independence and leadership: a military dictator’s uniform (Baugh is a self-proclaimed dictator), a bank and currency, postage stamps, a railway system (miniature), a space program (a rocket-launching site), and a prison. Molossia’s quirky national symbols are the mustang, the desert quail, the common juniper, and sagebrush. Baugh pays his taxes but calls it ‘foreign aid’ and has petitioned the White House for official recognition. He held Olympic games in 2000 and invited other micronations to participate. Although East Germany no longer exists, Molossia has declared war on the former country because Baugh blames his time spent in the military in Europe for depriving him of sleep.
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In 1970, Leonard Casley, a landowner, disagreed with the of an impact on its surrounding nations than other Australian government about wheat quotas. In response micronations have had on theirs. It is a 7 km2 piece of land to the dispute, he declared his farm, which lies 500 km between Croatia and Serbia. The Liberlanders’ motto, “To north of Perth, an independent country — the Hutt River live and let live”, might attract more settlers than life on a Province — and several years later he began promoting platform off the Suffolk coast is likely to. President Vit himself as Prince Leonard. In 2006 the Hutt River Province Jedlička, a former politician and financial analyst, welcomes officially became the Principality of Hutt River. Prince applications for citizenship from individuals who do not Leonard’s lengthy legal battle concluded in 2017 when he have dubious or criminal pasts. Bitcoin is the currency of and his son were ordered to pay more than Liberland, and already 250,000 applicants for citizenship AUD 3 million in income tax. He died at the age of 93 in have been received. This republic means to put itself firmly 2019, having abdicated two years before and passed the on the world map; an army of designers, architects, and crown to his son Graeme, who has declared he will artists are looking ahead to building a city that will house continue the fight for the principality. Prince Leonard 60 city blocks. The Liberland flag consists of a yellow once described himself as a mathematician and physicist. background (free market) dissected by a black stripe Of his time as prince, he said that it was “a very interesting (rebellion) with a heraldic symbol in the center and intellectual challenge”; he of a bird (for freedom), a tree published several associated research (for abundance), a sun (for energy), papers and books. Tony Seabrook, and a river (representing its location The Free Republic the president of the Pastoralist and on the Danube). of Liberland is the Graziers Association of Western Perhaps the most remarkable Australia said that Prince Leonard micronation is the Space Kingdom of world’s most recently was “larger than life” — “You don’t Asgardia, founded in 2016. A year find a lot of people today in our earlier, its founder Igor Ashurbeyli was declared republic, and society now that are prepared to awarded a UN Educational, Scientific, one which may have differentiate themselves with the and Cultural Organization Medal for daring and the dash that he did.” contributions to the development of more of an impact on The Principality of Hutt River nanoscience and nanotechnologies. its surrounding nations continues to attract tourists who buy Asgardia is a democracy with more its currency and have their passports than 1 million citizens. It invites indithan other micronations stamped. The only visible evidence viduals to “join a global, multi-culturof Prince Leonard’s princely status al transnational community of have had on theirs is a life-size sculpted bust of him on like-minded space and science visionthe property. aries”. Ashurbeyli hopes to update On a far larger geographical scale, the micronation of international space law and geopolitics, which he feels are Somaliland on the African continent has long been outdated. His three main goals are to ensure the peaceful use functioning successfully as an independent entity, despite of space, to protect the world from space hazards, and to not having gained international recognition. Somaliland create a free scientific base. The Asgardian coat of arms includes considers itself to be the successor to the former British the motto, “One humanity, one unity”. Somaliland Protectorate. It lies on the southern coast of Let us end this contemplation of variety in micronations the Gulf of Aden, with the rest of Somalia to the east, with the words of the Czech-born French writer, Milan Djibouti to the northeast, and Ethiopia to the west and Kundera: “No nation has been on earth since the beginning south. In 1988, after civil unrest, Somaliland declared of time and the very concept of nationhood is pretty recent. itself independent. It has been a democracy since 1991. Despite that, most nations look upon their own existence as Somaliland has a population of 4 million and has sought a self-evident destiny conferred by God, or by Nature, since international recognition as The Government of the time immemorial. Nations tend to think of their cultures Republic of Somaliland. and political systems, even their frontiers, as the work of The Free Republic of Liberland is the world’s most Man, but they see their national existence as a transcendent recently declared republic, and one which may have more fact, beyond all question.”
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Foreign Direct Investment: The Lifeblood of Developing, Recovering, and Transitional Economies
F
oreign direct investment (FDI) is the lifeblood of economic growth for developing, recovering, and transitional economies around the world. The IMF defines FDI as cross-border investment associated with a resident in one economy having a significant degree of influence on the management of an enterprise in another economy. FDI is distinct from other capital flows, such as portfolio flows, which involve investment in debt or equity securities, or development assistance from organizations such as the World Bank.1 It is, however, precisely the mechanism at work in residence-by-investment (RBI) and citizenship-by-investment (CBI) programs, where a crossborder investment is made by a private individual who, in exchange, becomes an influential member not of a local enterprise but, rather, of the country itself, as a fully fledged resident or citizen.
FDI flows have increased substantially in recent decades in the wake of the globalization acceleration that began in the 1990s, although today they remain well below their peak, which was just before the 2008 financial crisis. 2 Global FDI was estimated at nearly USD 1.8 trillion in 2017, according to the UN Conference on Trade and Development (UNCTAD); by Q2 2018, FDI flows had fallen 35% compared to the end of 2017, hitting their lowest level since the first half of 2013.3 A significant portion of FDI flows (more than 40% of global FDI flows in 2016) is directed to developing countries, “providing much-needed private capital”, according to the World Bank.4 And while other external sources of finance for developing economies have ebbed and flowed with considerable volatility, FDI flows have remained among the largest and least volatile of all types
External Sources of Finance for Developing Economies, 2007–2016 1,000
Billions of dollars
800 600 400 200 0 -200 2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
External sources of finance FDI
Remittances
Official Development Assistance
Portfolio Investment
(Source: UN Conference on Trade and Development, 2017)
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Other Investment
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Billions of dollars
Manufacturing FDI Flows to Developing Countries of financing to these economies. 5 This is because FDI is less focused on short-term developments than on 60 portfolio and other investments. In the development community it is widely agreed 50 that such flows are essential for emerging and 40 developing economies if these nations are to bridge their substantial and enduring gaps with advanced 30 economies in terms of economic growth and living standards. Indeed, FDI has become the largest source 20 of external finance for developing nations — greater than official development assistance, remittances, 10 and portfolio flows. 6 0 According to the OECD: “The overall benefits of FDI for developing country economies are well doc1990–1992 2005–2007 2009–2011 umented. Given the appropriate host-country policies Manufacturing sectors and a basic level of development, a preponderance of Lowest-Skilled Resource-Intensive Higher-Skilled studies shows that FDI triggers technology spillovers, Sectors Sectors Sectors assists human capital formation, contributes to in(Source: The Intergovernmental Committee, n.d.) ternational trade integration, helps create a more competitive business environment, and enhances enterprise development. All of these contribute to higher economic growth, which is the most potent • Transform economies through innovation and tool for alleviating poverty in developing countries.”7 productivity Attitudes towards FDI flows to developing countries • Create better paying and more stable jobs have undergone a sea change in recent decades, from an • Deliver much-needed infrastructure initial wariness about the influence of multi-national • Help improve environmental conditions by corporations and the potential for exploitation to a much transferring cleaner technologies to emerging more enthusiastic perspective on the economic and social market nations11 benefits of FDI. The caveat is that FDI flows need to be accompanied by proper investment policies and In addition, it is becoming increasingly apparent that safeguards to allow host nations to absorb FDI in ways FDI can alter and improve the comparative advantage that maximize benefits. 8 of the host economy and can be harnessed by develThe nature of FDI in developing countries has changed oping countries “to generate superstar exporters that dramatically. While it once focused almost entirely on start big and highly productive [firms], and penetrate natural resources and depended on the international markets on a competexploitation of cheap labor, today many itive basis”.12 developing nations are absorbing FDI A well-analyzed example is the FDI has become that involves the sophisticated producsignificant amount of FDI that global the largest source of tion of goods and services.9 Recent data automakers poured into India in the shows that FDI is increasingly flowing 1990s. An initial contraction among external finance for to medium- and high-skilled manufacindigenous Indian automakers because turing sectors and that this kind of ‘qualof the new competition was soon developing nations ity’ FDI closely links foreign investors followed by an extraordinary tripling 10 to local host economies. in the size of the country’s auto-parts According to the World Bank, this type of FDI into industry, including both local and international firms, developing nations has the potential to: as competitive pressures took hold, technology and • Confer technical knowledge, managerial and knowledge spillovers occurred, and much-needed organizational skills, and access to foreign markets infrastructure was built out.
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Theodore H. Moran, Senior Fellow at the Peterson Institute for International Economics, says: “What this picture shows is that the entry of foreigners and their first-tier suppliers introduces Schumpeterian 13 winds of creative destruction that may lead to a beneficial restructuring of the entire industry, including, over time, opportunities for better-performing domestic horizontal participants and vertical suppliers.”14 FDI is also critical to so-called fragile and conflictaffected states, where remittances, development assistance, and FDI often combine to form more than a third of national income. In many countries, these three sources of capital sustain a large portion of overall economic activity.15 Yet foreign investment remains below potential in these troubled states, which tend to be small and remote and tend to trade less with the rest of the world than other emerging economies. More broadly, there is some concern that direct investment into developing and recovering economies has dropped off slightly in recent years. While FDI flows to developed countries rose from 2015 to 2016, flows to developing nations fell 14% over the same period amid weaker growth in emerging markets and perceived policy risks among investors. FDI flows to Asia fell 15%, flows to Latin America and the Caribbean decreased by 14%, and flows to Africa were down 3% (mostly reflecting the drop in commodity prices in recent years).16 There are additional concerns that FDI flows in general — to both advanced and emerging economies — are beginning to suffer because of growing suspicions that China or other non-Western nations will use direct investment as a ploy to access advanced American and European technology. There is a risk that overly broad screening measures and other protective prohibitions can easily cross the line from national security to trade diplomacy, turning prudence about security into protectionism.17 As for emerging economies, FDI and other types of external financing are critical to the UN Sustainable Development Goals (SDGs) set in 2015. These 17 goals — to be achieved by 2030 — include gender equality, the elimination of poverty and hunger, clean water and sanitation, economic growth, and sustainable climate practices, among others. The financing required to achieve the SDGs, however, remains dauntingly large, and the annual shortfall to meet these targets is currently estimated at USD 2.5 trillion.18
It is widely agreed that bridging this financing gap and achieving the SDGs will require substantial private sector investments — and, in the case of CBI and RBI programs, private individual investments — in developing and emerging economies. A significant increase in the amount and quality of FDI will play a significant role in this allimportant undertaking. Endnotes and References 1 IMF, Balance of Payments and International Investment Position Manual: Sixth Edition (2009) 2 UNCTAD, World Investment Report 2017: Investment and the Digital Economy 3 OECD, FDI in Figures (October 2018) oecd.org/investment/ FDI-in-Figures-October-2018.pdf 4 World Bank Group, Global Investment Competitiveness Report 2017–2018: Foreign Investor Perspectives and Policy Implications 1 5 UNCTAD, Op. cit., 13 6 World Bank Group, Op. cit., 1 7 OECD, Foreign Direct Investment for Development: Maximising Benefits, Minimising Costs (2002) 5 8 Christine Qiang, ‘Foreign Direct Investment and Development: Insights from Literature and Ideas for Research’, World Bank Private Sector Development (24 November 2015) 9 Roberto Echandi, Jana Krajcovicova, and Christine Zhenwei Qiang, The Impact of Investment Policy in a Changing Global Economy: A Review of the Literature World Bank Policy Research (Working Paper 7437, October 2015) 2 10 Theodore H. Moran, Holger Gӧrg, Adnan Serič, and Christine Krieger-Boden, ‘Attracting Quality Foreign Direct Investment in Developing Countries’, International Growth Centre (October 2017) 11 World Bank Group, Op. cit., 1 12 Caroline Freund and Theodore H. Moran, ‘Multinational Investors as Export Superstars: How Emerging-Market Governments Can Reshape Comparative Advantage’, Peterson Institute for International Economics (Working Paper 17–1, January 2017) 18 13 Austrian political economist Joseph Schumpeter argued that innovation and technological change in a nation come from entrepreneurs, or “wild spirits”. 14 Theodore H. Moran, ‘Foreign Investment and Supply Chains in Emerging Markets: Recurring Problems and Demonstrated Solutions’, Peterson Institute for International Economics (Working Paper Series 14–12, December 2014) 24 15 World Bank Group, Op. cit., 136–138 16 UNCTAD, Op. cit., x 17 “How to Safeguard National Security without Scaring Off Investment”, The Economist (11 August 2018) 18 UNCTAD, Op. cit. 12
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A New Tax Benefit for Art Collectors Doug Woodham, Managing Partner, Art Fiduciary Advisors, USA
T
he Tax Cuts and Jobs Act signed into law in the USA in late December 2017 created a new tax benefit that is particularly beneficial to the country’s art-collecting taxpayers. This benefit comes from a program in which investors receive varying levels of special tax treatment if they invest capital gains into qualified Opportunity Zone Funds (OZFs) designed to spur economic activity in economically distressed communities. The longer investors keep their investments in OZFs, the greater the tax benefits they receive.
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How Opportunity Zone Investments Work Opportunity Zones (OZs) are economically distressed communities where new investments that meet certain criteria are now eligible for preferential tax treatment. By December 2018, nearly 9,000 communities across the country had been certified as OZs. They exist in every state and major city and include numerous suburban and rural locations. Some OZs are located near established
communities and transportation hubs. In New York City, for example, 306 census tracks (the unit of designation in the OZ process) have been classified as OZs: Brooklyn has 125 including parts of Williamsburg, Bushwick, and the entire Brooklyn Navy Yard; the Bronx has 75; Queens has 62; Manhattan has 36, with most in the northern half of the island; and Staten Island brings up the rear with 8. Approximately 1.2 million people live in these designated areas. The cornerstone of the OZ program is the OZF, a new type of investment vehicle. Taxpayers who sell appreciated assets such as fine art, real estate, or stocks, can receive three special tax benefits if they roll their gains into an OZF within 180 days. First, they can defer federal taxes on these gains until 31 December 2026 or until they sell their OZF investment — whichever is earlier. This enables investors to put more capital to work for a longer period. Second, if they hold the fund for at least five years prior to 31 December 2026 they can reduce their deferred gain
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subject to federal taxation by 10%, which will lower the an OZF within 180 days. For the purpose of this example, ultimate tax they paid on that gain. If they hold the they make their investment in July of the same year, after investment for two more years, the tax liability will be reduced receiving sale proceeds from the auction house. At the by an additional 5% for a total reduction of 15%. Third, current 28% federal capital gains rate for art and they can eliminate federal taxes due on OZF profits if they collectables, the new law enables the taxpayer to defer, hold the investment for at least 10 years. for now, USD 2.8 million, which would otherwise be OZF tax benefits are available only to taxpayers who remitted to the Internal Revenue Service. In addition, fund their investments with capital gains from asset sales. because of the way the Medicare surtax on net investment While taxpayers can elect to invest more cash into an OZF, income is calculated, the taxpayer may also be able to the tax benefits are limited to the portion of their investments defer this 3.8% tax. As a result, the taxpayer retains an funded with capital gains from asset sales. As a result, the additional USD 380,000 for a total federal tax deferral of OZ program is an attempt to use tax incentives to reallocate USD 3,180,000. Depending on the state in which they capital in the economy away from existing assets and into live, the taxpayer may have to pay state-based capital gains new investments in low-income communities. It is a way to taxes in tax year 2020 on the USD 10 million gain; the bring private sector dollars into distressed communities, OZ tax deferral applies at the federal level only. The value many of which have been passed over since the 2008 financial of the federal tax deferral to the taxpayer depends on two crisis. The five-, seven-, and ten-year tax-incentive triggers things: the length of time they hold the OZF and the rate are designed to help keep the money in these communities of return they earn on the deferral amount. Some for the long haul. hypothetical calculations on the To be an eligible investment, an value of this deferral are shared at OZF must acquire equity interests in The longer investors the end of this section. a business, business assets, or a real Continuing with the example, at keep their investments estate project located in a qualified the five-year anniversary of the OZ. Loans are not eligible for the investment in the OZF (which would in OZFs, the greater the special tax incentives. Real estate be in July 2025), the taxpayer is investments are also subject to a eligible to reduce the value of their tax benefits they receive substantial rehabilitation requirement, deferred capital gain by 10%, or so a fund cannot simply buy and hold USD 1 million. After seven years, or existing OZ real estate assets. They either need to be new in July 2027, they can reduce it by another 5%. If the real estate projects or, in the case of an existing real estate taxpayer then sells their OZ investment, they will pay asset, they must make improvements in the property equal federal taxes on a USD 8.5 million gain rather than on to the value of their initial investment. Some eligible OZF the original USD 10 million. That is a saving of investments include growth capital for mid-sized companies USD 477,000 for holding the investment for seven years located in OZs, equity capital to convert an under-used based on the 28% federal capital gains tax rate (on art) and warehouse into a mixed-use development, and funds to the Medicare surtax rate of 3.8%. If they continue holding develop and lease new affordable housing. their OZ investment, the taxpayer will need to pay capital gains taxes on the USD 8.5 million gain when the deferral Art-Related Capital Gains to Fund OZ period ends on 31 December 2027. But taxpayers will likely Investments elect to finance this tax payment with debt or take advantage Because the federal capital gains tax on art and collectables of special distributions offered by OZFs to keep as much is 28%, higher than the 15% or 20% rate for financial money as possible in the OZ for 10 years so it becomes investments, gains from the sale of fine art are a particularly eligible for the third, and last, special tax benefit. tax-efficient way to invest in OZFs. Let us walk through a Fast forward to July 2030, the 10-year anniversary of hypothetical example of how these benefits work with artthe taxpayer’s OZ investment. Suppose their USD 10 million related capital gains. investment grows 7% a year and is now worth Suppose a taxpayer sells several artworks during the USD 19.7 million. If they elect to sell the fund, they will early 2020 auction season, resulting in USD 10 million in be permitted to eliminate any federal taxes on this long-term capital gains. They then invest these gains into USD 9.7 million capital gain. That is a substantial tax
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After-Tax Value of Hypothetical OZ and S&P 500 Investments Year fund sold
OZF (USD million)
S&P 500 (USD million)
Ratio of OZF to S&P 500
2025
10.2
8.3
124%
2027
11.9
8.9
133%
2030
16.5
10.1
164%
Assumptions: USD 10 million of art-related capital gains invested in OZF; USD 6.8 million invested in S&P 500 fund after paying federal taxes on the USD 10 million gain; 28% federal capital gains tax on art, 20% on financial instruments, and 3.8% Medicare surtax on net investment income; 7% annual rate of return on the OZF and 5% on the S&P fund; 10% reduction in the value of the art-related gain subject to capital gains tax in 2025 with an additional 5% reduction in 2027; for the 2030 holding period, pay the 2027 tax year capital gains tax using debt with a 4% cost of capital
saving of USD 2.3 million based upon the current 20% federal capital gains (on financial assets) and the Medicare surtax on net investment income. Let us now combine the defer, reduce, and eliminate benefits to see how this hypothetical investment in an OZF performs compared to investing in an S&P 500 Index fund. Using the example above, the OZF tax-deferral benefit enables the taxpayer to invest USD 10 million of art-related capital gains into an OZF. But if instead they invest in an S&P 500 fund (or another non-OZ investment), the gain will first be subject to federal taxes. After the 28% federal capital gains tax on art and the 3.8% Medicare surtax, they will have USD 6,820,000 to invest in the S&P 500 fund. Using these initial investments, assume the S&P 500 fund grows 5% a year while the riskier OZF grows 7%. Let us now compare the value of these investments at five-, seven-, and ten-year holding periods. This enables an ‘apples-withapples’ comparison of the after-tax proceeds the taxpayer will receive from each investment. As shown below, the after-tax value of the OZF is significantly higher than the S&P investment across all time periods, especially once the investor has held the investment for at least 10 years. By 2025, the investor in the OZF will have enjoyed five years of capital gains deferral and a 10% reduction in the amount of their initial art-related capital gain subject to federal tax. If they sell their OZ investment in 2020, they will pay federal capital gains taxes on the remaining deferred balance (USD 9 million) and capital gains on the growth in the value of the OZF. Using these assumptions, they will receive after-tax sale proceeds of USD 10.2 million. In the S&P alternative, they would keep USD 8.3 million after paying federal taxes on the gain in value. On an apples-with-apples after-tax basis, the OZF is worth 24% more than the S&P 500 fund. By 2030, the difference in after-tax values will have jumped to 64%.
Despite the attractive tax benefits, it is essential for investors to conduct proper due diligence before committing to an OZF. Bad investments with good tax attributes are still bad investments.
Using Art and Culture to Stimulate Economic Growth Governors and mayors across the USA now widely acknowledge and embrace art and culture as a tool to promote economic development. The National Governors Association, for example, published a report in 2009 framing best practices for using art and culture to stimulate economic growth. Since then, many cities across the country have created arts districts to promote community engagement, pedestrian traffic, and business development. No doubt many of these districts are in or adjacent to the 8,700 designated OZs. Investing capital there may be an especially profitable and culturally rewarding strategy, particularly if investors partner with local governments and philanthropic organizations to identify investments that will help accelerate local growth. For example, a taxpayer could help cultivate a local creative community by buying and converting an unused light manufacturing facility into a mixed-use space suitable for artists’ studios, galleries, coworking spaces, and retail stores. The Miami Design District, which was started more than 15 years ago, is a prime example of how art and culture, when combined with private capital, can create housing, jobs, and vibrant communities. Many art collectors are starting to evaluate the merits of using art-related capital gains to fund tax-advantaged longterm investments in OZs. To pursue this strategy, collectors will need to identify artworks in their collections with substantial capital gains and then negotiate selling agreements with auction houses and private galleries.
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Montenegro’s Real Estate Market: Something for Everyone
O
ver the past 15 years, local real estate practitioners have enjoyed watching Montenegro emerge as a key second-home and property-investor market in the Mediterranean. As a testament to this, in 2018 the mixed-use projects of Porto Montenegro and Luštica Bay recorded the strongest sales-absorption rates in the region. Montenegro is punching well above its weight, and successfully so. One of the reasons for this is Montenegro’s ability to cater to everyone: investors can choose from glamorous seaside resorts, to quaint waterfront houses, to new establishments servicing increasingly popular mountain and ski areas in the north. For those who prefer the coast, the spectacular fjords are being transformed into a high-end destination that is attracting ultra-high-net-worth individuals seeking primary and second homes discerning investors with sharp eyes for potential. Investors are looking keenly to the future, considering how Montenegro will have evolved in five to ten years and banking on strong price growth and increas ingly attractive yields. Over the coming years, more than
EUR 5 billion will be invested in high-end resort projects in the region and will include new mixed-use projects such as Montrose (by Kuwait-backed company Northstar), Plavi Horizonti (by Qatari Diar), and Portonovi (by Azmont), which launched in August 2019. The eagerly awaited Portonovi luxury resort and megayacht marina, which brings a new level of lifestyle elegance to Montenegro, will be home to the first One&Only hotel in Europe, set to open in 2020. Speaking at the laying of the first foundations, Milo Djukanović, then Prime Minister of Montenegro, said: “Today, we proudly begin a new phase of Portonovi that is to be our pride — for Montenegro, its citizens, and investors.” In Portonovi, clients can purchase apartments starting at EUR 400,000 or One&Only villas starting at EUR 5 million. The new town of Luštica Bay was voted ‘Best European Property Development’ by the Luxury Network Group in February 2019. One of the more distinct features of the town is its laid-back resort atmosphere. There is also the
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Kieran Kelleher, Founder and Managing Director, Dream Estates Croatia and Montenegro Montenegro
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recently opened five-star hotel The Chedi Luštica Bay and a marina; a world-class golf course in a spectacular location will open soon. Investment options in Luštica Bay vary from reasonably priced apartments of around EUR 200,000 in the town center to impressive villas close to the marina from EUR 2 million. This new town is said to be leading a luxury real estate revolution in the country. Porto Montenegro, which was recently purchased by the Investment Corporation of Dubai and has become a globally renowned village, has arguably set the scene and standard for resort and marina living in the country. This fully upand-running marina town continues to offer excellent real estate investment opportunities and the chance to live a premium-quality life characterized by first-class dining and shopping options. The Regent Porto Montenegro in Montenegro village is one of the finest hotels in Europe. It has focused on improving the profile of visitors to the area and, by extension, the value of the properties therein. Here, investors are paying from EUR 300,000 for smaller apartments and over EUR 4 million for penthouses. Since Porto Montenegro’s launch in 2013, over 300 units have been sold. Tivat town, which is located in the Bay of Kotor, has enjoyed significant transformation on the back of the success of Porto Montenegro and has seen property prices increasing to become the highest on the coast. Around Tivat, a onebedroom apartment retails from about EUR 100,000. Similarly, the magnificent old town of Kotor, which is surrounded by fortifications built during the Venetian period, is a major attraction on the Adriatic coast. New
projects in the pipeline, close to the town, will offer fine new condo-hotel options that will no doubt appeal to discerning travelers. Apartments around the town are on the market from EUR 100,000 for single-bedroom units. While the popular fjords offer culture, history, and spectacular scenery, the Budva Riviera is known for wonderful beaches and a bustling nightlife. The area continues to attract significant investor interest, and new mixed-use projects on the go will elevate the riviera to world-class status. Budva remains the most attractive town for investors, with over 1,000 units changing hands in 2018. Here, apartment pricing begins at roughly EUR 80,000 and climbs to EUR 600,000. On the commercial property front, 2018 marked an impressive year: in key locations property sold at record levels, continuing to mark the town as a preferred location for businesses. Typically, rates for commercial premises start at EUR 3,000 per square meter. For investors seeking a getaway from the coast, a good option is to head north. The mountain towns of Kolasin and Zabljak are as popular in summer as they are during the ski season. A new motorway currently under construction will bring the area within two hours of the coast. Each year, new infrastructure investment is added to the ski resorts, and the area is quickly making a name for itself in the region. The announcement in January 2019 that the area is included in Montenegro’s new citizenship-by-investment program will catapult investment into its mixed-use resorts. Houses are currently on the market from EUR 125,000, and smaller apartments from EUR 50,000. New projects soon to be released will offer high-end ski-in, ski-out apartments from EUR 250,000, strategically matching the entry requirements of the Montenegro Citizenship-byInvestment Program offering. 2018 saw strong interest and growth in the market. Sales were recorded in all property brackets — be it a EUR 50,000 apartment in Herceg Novi or a EUR 10 million villa in Kotor Bay — and 2019 is on track to be another record year, with continuing interest from investors. There are more and more investors with strong interest from the Commonwealth of Independent States countries, the Middle East, and Western Europe. The launch of the Montenegro Citizenship-byInvestment program is set to further bolster the local real estate market and promote diversity among investors. Whether it is a studio hideaway, a quaint mountain retreat, a sophisticated apartment in a new marina town, or a waterfront mansion, Montenegro has something for everyone when it comes to second homes and investing.
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Gran Hotel Son Net — where luxury meets history Open all year for guests to enjoy an authentic escape and experience. The 31-bedroom hotel is also available for exclusive hire and offers privacy and elegance. Castillo Son Net s/n, 07194 Mallorca, Spain www.sonnet.es | sales@sonnet.es
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The Ski Boot: An Invention for Generations
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A
s a national sport in Switzerland, the pleasure of skiing is one that is held dear by locals. Even so, many would likely fail in giving an historical account of the all-important ski boot, an essential piece of equipment that is both a safety measure and a performance enhancer. This is despite Davos, the wellknown town in the Swiss Alps, being the birthplace of legendary ski boot maker Franz Heierling — the founder of Heierling — who, in 1885, produced the first leather ski boot based on a sample of the Norwegian Lauper boot. Decades on, Heierling created double-stitched ski boots and cemented the company’s status as specialist ski boot makers, going on to provide expert services to international, world-famous ski racers and ski jumpers, including American, French, and Swiss Olympic Games medalists. At the 1960 Winter Olympic Games, for example, the Swiss national team won six medals wearing Heierling boots. Heierling continues to kit out many skiing professionals and now considers itself to be more of a ‘sporthopedics’ specialist, at the forefront of ski-bootmaking technology. Sporthopedics is Heierling’s term to describe its orthopedics-based customization of ski boots and insoles. In addition to developing the first ski boot, Heierling introduced the concept of customized boots, reportedly producing around 3,000 unique boots annually in the 1960s. Alongside work for professionals, the Heierling team — at that time headed by Franz Heierling’s sons Thomas and Hans-Martin — serviced regular ski visitors to the country, whose boots they would replace each year using the measurements they had on file for each customer. At that time, the ski boot industry was growing in tandem with a booming interest in Davos as a winter holiday destination. While maintaining their customization specialty, Heierling’s sons also spearheaded the business’s venture into mass-produced items. The use of injection-molded outsoles enabled Heierling to scale considerably, at one stage exporting more than 15,000 pairs of boots a year. Later, partnerships with international companies saw the brand selling some 90,000 pairs in the early 1980s in markets such as Canada, England, and Japan.
The late 1990s was a challenging period for the Heierling business as it endured difficulties amid strong competition in international exporting. But this was also an opportunity to focus again on customized bootfitting, which coincided with growing interest in the family’s fitting center, the Heierling Salomon Racing Center. The Heierlings’ work at the center has been pivotal in reviving the family’s name and influence in the bootmaking industry. The latest invention by the team is the Heierling H1 ski boot, which incorporates new technologies such as the temperature-resistant material Templast and a shock-absorbing wooden wedge made from ash. Ever innovative, the Heierlings now engage circular economy principles in their products, specifically the use of sustainable and long-lasting elements. The products are designed in individual parts that can be combined with one another in many variants, meaning that many different boots can be made from only a few parts. Through this design, the business can achieve great efficiencies in logistics, construction, use, service, maintenance, dismantling, replacement, renewal, and re-use. Essentially, Heierling has committed to being more environmentally responsible in its business and will no longer sell as many raw materials as possible, but rather repeatedly make available to customers products made with the same non-toxic raw materials. Heierling is also a member of Next Generations, a network of Swiss companies that collaboratively develops products and services and implements projects that are suitable for future generations.
Above: Franz Heierling produced the first leather ski boot in 1885 based on a sample of the Norwegian Lauper boot
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Is Homeschooling the Right Choice for Your Child?
T
he modern phenomenon of homeschooling emerged in the 1970s — a practice that continues to be most prevalent in the USA as it was then. Although Americans have used their homes as educational spaces since colonial times, the home-based education of the past was nearly always done for pragmatic rather than ideological reasons. Sparse population and limited resources meant that formal schools were impracticable for many in colonial America or on the Western Frontiers of the 19th century.1 Laws criminalizing schooling for slaves drove many African Americans to clandestine learning in private quarters. 2 Women and working-class men who could not gain admittance to colleges enrolled
in correspondence programs by the millions. 3 Diplomats, missionaries, and world travelers relied on mail-ordered curricula to educate their children. These are but a few examples of the many ways the home was called upon to fill in for formal schools when necessary. But this is not homeschooling in the modern sense of the term.4 Homeschooling emerged in the USA as a self-consciously political act for a variety of reasons, including suburbanization, feminism, political radicalism and privatization, and the increasing bureaucratization and secularization of the public school system. Together, these broad social changes explain why many far-right religious conservatives and far-left anti-institutionalists turned to homeschooling. At first, these families collaborated to secure legislative victories that would make homeschooling easier to conduct in every state. Over time, however, religious conservatives, due to their greater numbers and greater organizational capacity, came to dominate the public face of the movement.5 By the turn of the millennium, homeschooling had reached critical mass in the USA, with significant growth in Australia, Canada, and the UK as well. The American legal and legislative battles of the 1970s and 1980s were long past, and homeschoolers had created complex networks of local support groups, curriculum fairs and conferences, periodicals, and internet-based communication platforms. In recent decades, two trends have become prominent. First, a wider range of people are choosing homeschooling for a wider range of reasons. Those who choose the practice out of an ideological commitment to radical pedagogy or theological mandates still exist in large numbers, but they are increasingly joined by families who choose to homeschool for more pragmatic reasons. Second, the barrier between homeschooling and traditional schools has grown increasingly permeable as various hybrid options, especially virtual public schools, have proliferated.6
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Milton Gaither, Professor of Education, Messiah College, and Co-Director, International Center for Home Education Research, USA Robert Kunzman, Professor of Education, Indiana University, and Co-Director, International Center for Home Education Research, USA
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While global numbers are difficult to estimate, it seems clear that interest and participation in homeschooling has risen worldwide in this new century. Some countries (including Canada and Poland) have provided regulatory space for this option, while others (including Germany and Sweden) have prosecuted homeschool parents. Many governments (including those of Brazil and the Czech Republic) continue to wrestle with the question of whether parents should have the right to educate their children at home and, if so, what requirements should be imposed on the practice. What are the reasons behind the decision to homeschool one’s child? The most prevalent motivations include dissatisfaction with conventional school curricula and environments; a desire for a particular kind of moral or religious instruction; a greater emphasis on family life; and provision for children with special needs.7 Of course, these categories are quite broad. The first one alone could include reasons such as the need for a more individualized learning pace, a desire for curricula more affirming of ethnic or racial diversity, or dismay over excessive testing mandates. Adding to the variability of this profile is the growing tendency for many families to homeschool their children intermittently, moving among various educational options. 8 While homeschool philosophies, methods, and practices range widely, two themes consistently emerge: the desire of parents to have greater oversight of the educational process and the flexibility that homeschooling provides. Both of these elements — parental control and a blank curricular canvas — can help make the homeschooling experience a rich one that is customized to the needs of the student. But these elements can also result in missed opportunities and relational dynamics that hinder learning. Simply put, the success of homeschooling depends on a host of variables that prevent any definitive claims about its inherent advantages as an educational option. When deciding whether homeschooling is a good choice for a child, many variables merit consideration. Perhaps most critical is whether the parent–child relationship can accommodate a different sort of dynamic that typically places parents in a more formal instructional role. Parents need not have expertise in every academic subject, but they do need to be able to access such expertise, not only in terms of academic content but also in terms of pedagogical strategies that appreciate a discipline’s typical learning progression, common misunderstandings, and ways to help novices construct new knowledge.
Furthermore, the typical blurring between daily family life and formal instruction can be an asset for enabling authentic learning contexts but can also risk a dynamic in which pedagogical goals are subsumed by other priorities. Most fundamentally, effective homeschooling requires a substantial commitment by parents in terms of time and energy and their own willingness to learn and adjust as their children grow and their interests and needs evolve. We began this article with a brief summary of the history of modern homeschooling. It is worth recognizing that the education of young people has taken many different forms and that the institution of formal schooling is a relatively recent development. At the same time, however, society itself has changed — while the basic skills of literacy and numeracy were once sufficient for most occupations, this baseline no longer provides the same degree of access to workforce opportunities. In addition, our increasingly global context requires citizens who can engage respectfully with cultural and ideological diversity; such values and skills are best developed in community with others. These societal shifts certainly do not eliminate homeschooling as a viable option, but they do require an educational experience — regardless of setting — that accommodates both the needs of children and the shape of the world they will inhabit.
References 1 Carl F. Kaestle, Literacy in the United States: Readers and Reading since 1880 (New Haven: Yale University Press 1993) 2 Heather Andrea Williams, Self-Taught: African American Education in Slavery and Freedom (Chapel Hill: University of North Carolina Press 2007) 3 Robert L. Hampel, Fast and Curious: A History of Shortcuts in American Education (Lanham: Rowman and Littlefield 2017) 4 Milton Gaither, Homeschool: An American History (New York: Palgrave MacMillan 2017) 76–83 5 Mitchell L. Stevens, Kingdom of Children: Culture and Controversy in the Homeschooling Movement (Princeton: Princeton University Press 2001) 6 Gary Miron, Christopher Shank, and Caryn Davidson, Full-Time Virtual and Blended Schools: Enrollment, Student Characteristics, and Performance (Boulder, CO: National Education Policy Center 2018) 264–282 7 Eric Isenberg, ‘Using Survey Data to Study Homeschooling’ in The Wiley Handbook of Home Education (ed. M. Gaither) (Chichester, UK: Wiley Blackwell 2017) 32–58; Joseph Murphy, Homeschooling in America: Capturing and Assessing the Movement (Thousand Oaks, CA: Corwin 2012) 8 Mark J. Schafer and Shana S. Khan, ‘Family Economy, Rural School Choice, and Flexischooling Children with Disabilities’ (2016) Rural Sociology 82, No. 3, 524–547
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Keep Your Assets Liquid: Invest in Wine
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ou may have heard the story of Rudy Kurniawan, a wine connoisseur who was said to possess the greatest cellar on earth. What he was, though, was actually the world’s biggest large-scale wine-forger. Kurniawan was a big fish at auctions, buying and selling great wines from Burgundy and Bordeaux. In an auction at Acker Merrall & Condit, he sold USD 24.7 million of wine, beating the previous record by USD 10 million. Soon after this, various anomalies began to appear in the market and in 2012, acting on tip-offs, the FBI raided his house in California, USA. There they found a counterfeiting workshop stocked with corking tools, labels, and empty bottles. Kurniawan had been decanting inexpensive wines into the bottles of more expensive wines. He was sentenced in 2014 to 10 years in prison, making him the first person ever to be convicted of wine fraud. Naturally, an important question to explore is how Kurniawan was able to get away with his illicit activities in the first place. Well, the world’s rarest and priciest wines are hardly ever opened: the majority are moved around on computers like liquid shares while they languish in temperature-controlled warehouses. Because of this, there are not many people who know how these fine wines should actually taste. Wine experts themselves sometimes struggle to identify wines, which is why many wine competitions are conducted blind, as a precaution against the panel being swayed by a
label rather than what is in the bottle. Fortunately, duplicity like Kurniawan’s is as rare as the wines he purported to trade, and fine wine as a class of investment is on an exponential rise globally. A minute portion of the world’s wines can be considered investable. In brief, investment wines are those from a prestigious producer who has a proven track record of producing wines that can age and that have a documented history of increasing in value. On Knight Frank’s Luxury Investment Index (KFLII) of 2017, wine overtook collectable cars for the first time ever, being placed just behind art, which held the top spot. On the 2018 KFLII, wine remained in 2nd place, recording an annual growth of 7%. Investment wines are traded largely at live auctions — most famously in California, Chicago, Hong Kong, London, New York, and Paris — and via online auctions. In 2018, at an auction at Sotheby’s Hong Kong, 1,700 lots brought in USD 14.5 million, beating the estimate of USD 13 million. Standouts included a 12-bottle case of Château Le Pin 1982, which sold for just over USD 206,000 (around USD 17,000 a bottle) and a lot of Château Cheval Blanc 2010 that brought in USD 166,000. Also in 2018, a Christie’s London auction included a 12-bottle case of Domaine de la Romanée-Conti 1988 (the world’s most sought-after single-wine producer), which was estimated to bring in more than GBP 200,000; it overshot that and realized GBP 288,000.
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Malu Lambert, Food and Wine Writer, South Africa
IMAGE: Tim Graham/Getty Images
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The people whose palates are driving these prices are the world’s most influential wine critics, such as Jancis Robinson, James Suckling, and Neal Martin. But perhaps the most influential of them all is Robert Parker Jr. — also known as ‘the million-dollar nose’ because his nose and palate are insured for USD 1 million. The Parker 100-point quality scale, a system of rating wines also known as ‘Parker Points’, has a direct effect on the pricing and perceived value of the wines tested. Only wines that score 95 and above are included in the London International Vintners Exchange (Liv-ex) Fine Wine 100 index, and 100-point wines are seen as the most valuable. For example, when Parker surprised the market with a 98-point score for Lafite 2008 in 2009, the price leapt 75% overnight.
Wine as an Investment Class Fine wines made their start in auction houses alongside more prosaic commodities. In 1766, Londoner James Christie held his first auction, an offering that included a feather bed and pillow, twelve oblong dishes, a pallet of Madeira, a pair of candlesticks, and more than three dozen cases of Bordeaux. This nascent sale soon became Christie’s — now the global empire of auction houses owned by French billionaire François Pinault. Working hand in hand with the world’s auction houses are formal exchanges. Exchanges for foods, fuels, metals, and stocks have long been in existence, but it was not until 2000 — with the formation of Liv-ex — that an exchange was available to merchants of fine wines. Speaking at the Hong Kong International Wine and Spirits Fair conference in 2009, the Director of Liv-ex, James Miles, said: “The wine investment market today looks increasingly mainstream. Private collectors in the UK alone hold more than USD 2 billion worth of fine wine in bonded warehouses. Liv-ex membership is currently offering USD 1.5 billion for sale, and professionally managed wine funds have invested some USD 300 million.”
Red Obsession The Netflix documentary Red Obsession tells of how the Chinese demand for Bordeaux has caused prices to skyrocket, forcing traditional buyers out. This is not restricted to Asian markets, however: the world is thirsty for fine wine investments. According to financial news website MarketWatch, a key reason for fine-wine trading’s year-on-year growth is “that yield-thirsty investors have turned to tangible assets in a world of ultralow interest
rates, where many other assets, such as bonds, are returning next to nothing”. Investing in rare wines is a long-term commitment, and you can expect around a 10-year wait to see a significant return. When that return comes, it can be highly lucrative.
New Markets Looking at wine investments with some foresight, new world wine countries — Argentina, Australia, Chile, New Zealand, South Africa, and the USA — are emerging with their own investment-class wines. As the demand for these competitive liquid assets grows, so will the reach beyond the traditional markets. In Australia, Langton’s Classification of Australian Wines is the go-to resource for Australian investment-grade wines. Those that make the list include Penfolds Grange, Henschke Hill of Grace, Rockford’s Basket Press Shiraz, Brokenwood Graveyard Vineyard Shiraz, Wendouree Shiraz, Torbreck RunRig Shiraz, Chris Ringland Shiraz, and Mount Mary Quintet. In South Africa, the big names are Vilafonté, De Toren, the Sadie Family (Columella), and Kanonkop (Paul Sauer). New investment platforms have recently been introduced, such as the Fine Diamond Wine Investment Fund, which for the first time introduced a 20% weighting of South Africa’s greatest wines into a global wine investment fund. Does investing in wine sound like a good way to keep liquid? Before raising the bidding paddle, keep these golden rules in mind: buy the best and rarest wines from the world’s acknowledged leading houses; purchase the largest quantity possible of these wines in their original packaging, when possible; ensure the wines are stored correctly — either by yourself or in an outsourced cellar that exists for this purpose — at optimal temperatures and in humiditycontrolled conditions. Most importantly, if you are going to invest, make sure you insure your collection. According to Forbes, the total value of collectible wines and spirits in private hands is estimated to be between USD 5 billion and USD 10 billion, and less than 10% of those collections are insured. It is worth remembering that if you are storing your collection yourself, your homeowner’s policy will not cover it, since wine is deemed a ‘consumable good’. Investment wine should be insured with a rider or separate policy, as you would do for fine art or jewelry. Unlike jewelry or art, wine as a luxury investment has one clear benefit over any other: if it does not realize the required returns, you can always drink it.
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I
n 2017, personal wealth worldwide reached a record USD 201.9 trillion, a 12% gain over the preceding year. Millionaires and billionaires held almost half of that, according to Boston Consulting Group’s 2018 Global Wealth Report. The report further states that in 2017 the upper high-net-worth and ultra-high-net-worth segments held more than USD 26 trillion in investable wealth. This massive growth provides wealth managers and luxury brands with grand opportunities and has stimulated an interesting climate in which businesses offering convenience and exclusivity can thrive. One such example is the trusted,
always-available discreet concierge service concept that is growing in appeal among luxury travelers. Renowned concierge services such as Quintessentially can attest to this growth. Since it was launched in 2000, the luxury lifestyle management service has extended its reach to over 60 offices globally. Positioning itself for the ultrawealthy, the 24-hour concierge agency provides clients with lifestyle management, restaurant bookings, and travel experiences. Over the years, extravagant requests have ranged from closing the Sydney Harbour Bridge for a marriage proposal to arranging dinner on an iceberg. The brainchild
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Top Concierge Services for the Astute Traveler
Above: A selection of top concierge service providers
IMAGES: Quintessentially; Nota Bene Global; Velocity; Luxury Attaché; Alberta La Grup
IMAGE: Shutterstock
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of Paul Drummond, Ben Elliot, and Aaron Simpson, Quintessentially is a member of Virtuoso, a global travel advisory network that is connected to over 1,300 of the world’s most luxurious hotels in over 100 countries. Membership is by invitation only. Providers of services similar to those offered by Quintessentially include Luxury Attaché and Alberta La Grup, which offers all-round services to its clients, from residential renovation planning, housekeeping, and moving and storage to corporate travel and high-end wellness treatments for employees. Another notable comprehensive concierge service for high-end travelers is Nota Bene Global. Founded and run by husband-and-wife team Anthony and Elaine Lassman, the bespoke travel consultancy was launched in 2005 and was built on the couple’s background in prime residential real estate and fine travel publishing. Nota Bene, which means ‘note well’ in Latin, is often referred to as ‘the Airbnb for billionaires’, with the company offering luxury accommodations the world over to clients with an individual net worth that is upwards of USD 200 million, including several in the billion-dollar range. Annual fees can be up to USD 26,000, for which Nota Bene will take care of all its clients’ travel requirements. According to its website, when someone becomes a client of Nota Bene Global, they are allocated a private client consultant who will be their exclusive point of contact and will plan and personally manage every detail of their annual travels. This could involve securing an audience with the Pope, playing tennis at Wimbledon, or taking a private jet to Antarctica. The consultancy also has an exquisite private estate in Laikipia, Kenya, with views of Mount Kenya, where clients can relax in seclusion. In an interview with Luxury Society, Nota Bene’s co-founder Anthony Lassman said that his clients are
increasingly younger and are seek ing instant gratification and on-demand services: “I think today, more and more people are much more demanding because there has been such an explosion in wealth, and wealth has probably gotten slightly younger. The quick money generally creates even more demanding people. Because there is so much out there, there’s so much content, there are so many options out there, people are more and more and more wanting to try new things.” Concierge services have recently entered the digital realm with offerings such as the Velocity Black App. Offering anything from attending the Oscars After Party or swimming with orcas in Norway, to gorilla trekking in the Congo or taking trips to the edge of space, Velocity Black is described as the ultimate members club. Besides being available to requests from its members 24/7, Velocity Black prides itself on its ability to respond to members in fewer than 60 seconds. Membership to the UK-based online club costs GBP 2,000 annually, but there is a waiting list, which adds to its exclusivity. The company was founded in 2014 by two exfinanciers, Zia Yusuf and Alex Macdonald, with the aim of delivering its members “a life without limits”. It has also been dubbed the “Uber for experiences” by Business Insider. Speaking to The Standard, Yusuf said that, in a world in which people use technology for on-demand food, games, and music, there is a gap when it comes to luxury travel and concierge services. “There is a wall of advertising intent on keeping us in: U ber Eats, A mazon Prime Video, Netf lix, PlayStation, and Xbox. People are really underserved by technology. Why don’t those type of products exist for travel? I wanted to build a product that I wanted to use myself.”
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Buying Your First Yacht Kurt Fraser, Commercial Director, West Nautical, UK
Consider Your Requirements
Financing You can pay for your luxury yacht the same way you would pay for a luxury car. If you are able to pay the full price of a yacht, then you can certainly do so. However, if you need to finance your yacht, this is also an option. Many yacht owners pay 20% to 40% as the initial down payment and then proceed with a monthly arrangement, often with a 20-year loan term.
Closing the Deal It is important to conduct a professional survey on the yacht: some insurance companies will not insure a yacht
Start by determining what type of boat you are looking for. If you have chartered yachts before, you may have a preference for sail or motor yachts, and the size you choose will depend on both your budget and with whom you are planning to sail. A good starting point is to find a knowledgeable advisor whom you trust — this could be a yacht broker or a captain. The yacht market is highly complex, and getting sound advice is an essential first step.
Plan Your Budget When you are ready to draw up a budget, remember to include a generous allowance for unexpected costs. First-time yacht owners might not think about making allowances for such costs, which may include the cost of replacing the engine or any gear on board. Remember that around 10% of the value of your yacht will be spent each year on insurance, maintenance, and mooring, and the larger the yacht, the more complex these issues become.
Arrange a Viewing Once a yacht has caught your eye, ascertain why the vendor is selling and make sure they are knowledgeable about the yacht. Working with your chosen industry specialist, you will be able to make a shortlist of the yachts you are interested in and to arrange viewings to give you a better sense of the space. View several yachts to help you understand the amenities, features, size, and style you value most, as this will allow you to assess the operational costs associated with various yachts.
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uying a yacht, especially your first, can be an overwhelming experience. You will need to consider your budget, where you want to sail, and what size vessel you require before you even start thinking about what styles and designs you prefer. Ask any yacht owner and they will tell you that yachting can bring unparalleled levels of joy, entertainment, and quality time with family and friends, but they will also tell you that it is vital to seek out the right advice upfront to avoid making expensive and time-consuming mistakes.
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without first confirming that it is in sound condition. A survey will reveal potential maintenance issues and can help you negotiate the price, if necessary. A survey team will generally consist of a lead surveyor, mechanical specialists (often from the engine and generator manufacturers), and technical specialists for aspects such as electronic equipment (including satellite equipment), air conditioning systems, and audio-visual equipment. Before signing anything, check all the documents thoroughly. You should receive the original VAT paid invoice, which will be essential if you choose to sell the yacht at a later stage. If you are uncertain about the VAT status or about any other documentation, it is best to consult an experienced professional. Once the survey has been concluded and the negotiations have been settled, you should receive proof of ownership, bills of sale for at least the past five years, a certificate of registry, and proof of VAT status.
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Ius Doni: Citizenship-by-Investment Dr. Christian H. Kaelin, Editor in Chief, Global Citizenship Review Chairman, Henley & Partners, Switzerland
C
itizenship laws reinforce birth-based membership: “advantaging those who have access to the inherited privilege of membership”.1 Most states base their citizenship laws on a person’s birth 2 — either ius sanguinis, citizenship by descent, or ius soli, citizenship by birth.3 Less commonly, one may become a citizen through naturalization, namely “acquisition after birth of a citizenship not previously held by the person concerned that requires an application to public authorities”.4 As pointed out by Prof. Dr. Dimitry Kochenov, “[c]itizenship, as a legal status of attachment to public authority, is always distributed uniquely by the authority itself (and) does not depend on any sentiments and feeling of the citizenry”.5
Inequality of Citizenship Citizenships are inequal in terms of their practical value, to which the Kälin – Kochenov Quality of Nationality Index (QNI) rankings testify. International law has been more concerned with such inequality6 in terms of the problem of statelessness; having citizenship of any state is better than having no state protection at all.7 However, attempts to resolve the issue of statelessness have neglected “rectifying inequalities that correlate with the birthright assignment of membership in ‘this or that’ particular country”.8 Our nationality has an enormous impact on our life. For example, a child born in Laredo, USA, is able to access all the social and economic benefits of the American welfare state as an American citizen and as an adult can seek employment opportunities throughout the USA and enjoy extensive visa-free travel around the world.9 A child born in the adjacent town of Juarez, Mexico, has significantly fewer options.10 Allocation of citizenship thus amounts to a “birthright lottery”.11
Ius Doni One of the latest trends in the allocation of citizenship is through investment, or ius doni.12 The emergence and rapid growth of citizenship-by-investment (CBI) programs and
residence-by-investment (RBI) programs has resulted from the discretionary powers of states in the field of immigration and citizenship on the one hand and a counterbalance to the exclusionary character and global inequality of citizenship on the other.13 Furthermore, a new class of ‘global citizens’ has emerged, who have numerous bases and for whom holding multiple citizenships is the norm.14 The acquisition of citizenship through a CBI program is an example of facilitated naturalization based on the applicant’s exceptional contribution to the country’s economy. Residence and various tests or requirements are usually waived. Such privileged access to citizenship results from the state’s particular interest in naturalizing certain citizens rather than from the latter’s keenness to live or socially integrate in the former. While ius doni took place even in antiquity,15 the first modern CBI program, that of St. Kitts and Nevis, was introduced in 1984.16 Today, immigration and citizenship laws of over 100 countries provide for RBI or CBI. Residence programs secure the investor’s residence and, after a relatively long period of time, citizenship. CBI programs vary: the majority require that investment is in the state’s national interest (without specifically defining this interest). Some programs have poorly defined goals, while others struggle to demonstrate meaningful economic benefits.17 The investment or donation requirements differ, largely depending on the attractiveness of the host country and the quality of its passport. The QNI offers a solid platform for assessing the general attractiveness of nationalities by taking into account a number of internal and external factors to determine the objective value and rank of each citizenship.18
Nationalities of Citizenship-by-Investment Countries Eleven countries were running formal CBI programs in 2018: Antigua and Barbuda, the Commonwealth of Dominica, Cyprus, Grenada, Jordan, Malta, Moldova, St. Kitts and Nevis, St. Lucia, Turkey, and Vanuatu. These
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are countries with standardized requirements and The nationalities of the five Caribbean countries with CBI procedures rather than vaguely defined criteria in their programs also ranked well in the latest General QNI legislations — such as is the case in Austria, Cambodia, ranking. All fall within the Medium Quality tier of or Cape Verde. Four are in Europe; of these Cyprus and nationalities. Antigua and Barbuda ranked best among these Malta are EU member states and hence may confer EU in 2018 in 45th place. Slightly weaker was the nationality citizenship alongside sovereign nation citizenship. of St. Kitts and Nevis in 46th place, followed by Grenada in Montenegro is expected to begin receiving applications 52nd place, St. Lucia in 54th place, and the Commonwealth for its program in late 2019. of Dominica in 57th place. EU nationalities are ranked either in the Very High All Caribbean countries are part of the Organisation of Quality tier or High Quality tier of the latest General QNI Eastern Caribbean States (OECS) and the Caribbean ranking; EU citizenship gives right of free movement and Community (CARICOM), which provide mutual and settlement in one of the world’s wealthiest regions and conditional mutual freedom of settlement, respectively, largest economic areas. In 2018, Cyprus and Malta ranked therefore, they also ranked well on the Settlement Freedom in the Very High Quality tier: Maltese nationality ranked ranking. Antiguan nationality was again most successful, 16th in the General QNI ranking, while Cypriot nationality taking 26th position (owing to the free settlement to Georgia st was ranked 21 . Citizens of both countries could settle and it provides), while the nationalities of the remaining four work visa-free in the same number of foreign countries or countries shared 30th position. All five Caribbean nationalities territories (41), positioning both provide relatively wide visa-free nationalities 7th in the Settlement travel, including in Europe’s th Freedom ranking. At 14 , Malta is Schengen Area countries. St. Kitts Inflows from the higher in the Travel Freedom ranking and Nevis performed best on the Antigua and Barbuda than Cyprus, which ranked 26th. Travel Freedom scale, ranking 41st, Given their Very High Quality followed by Antigua and Barbuda, Citizenship-by-Investment nationalities and access to the rest of (43rd), St. Lucia (51st), Grenada the EU, these two countries have (53rd), and the Commonwealth of Program — created in higher requirements than other CBI Dominica (58th). 2013 — now constitute programs: Cyprus requires investors A Caribbean passport can be to donate EUR 75,000 to the Research acquired through a contribution approximately 15% and Innovation Fund or another to a national development fund or of the government’s certified innovation enterprise, donate national treasury (ranging from EUR 75,000 to the Cyprus Land USD 100,000 to USD 250,000 for annual revenue Development Corporation, and opt a single applicant, more if to commit at least EUR 2 million to dependents are included) or the purchase or construction of real through real estate acquisition estate, the purchase or creation of or participation in (starting at USD 200,000), and is thus one of the best value businesses or companies that are based and operating in for money options. Furthermore, the socio-economic Cyprus, or participating in alternative investment funds or benefits that CBI programs have brought to these countries purchasing financial assets of Cypriot enterprises or are obvious. Inflows from the Antigua and Barbuda organizations licensed by the Securities and Exchange Citizenship-by-Investment Program — created in 2013 Commission, or a combination of the latter three options. — now constitute approximately 15% of the government’s Malta requires a non-refundable contribution to its annual revenue and are responsible for substantial National Develop ment and Social Fund of at least investments in the public and private construction sectors EUR 650,000 plus participation in approved financial and for the dual-island nation’s transition to renewable instruments of EUR 150,000 and the purchase of residential energy. The program has also been instrumental in real estate with a minimum value of EUR 350,000 or the generating sovereign equity to support the rebuilding of lease of a residential property with a rental value of at least Barbuda after a tropical storm devastated the island in 2017. EUR 16,000 per annum, which must be held for at least When the International Monetary Fund (IMF) reviewed five years.19 the Antigua and Barbuda economy it found that the revenue
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generated by investment migration had significantly boosted economic growth, pulling the country out of a deep recession. Antigua and Barbuda was able to pay back its entire debt to the IMF thanks to income generated by the Antigua and Barbuda Citizenship-by-Investment Program.20 In addition, according to the IMF, at the end of 2015, St. Kitts and Nevis’ national development fund had accumulated assets equivalent to 20% of its GDP because of CBI-related inflows.21 The quality of the nationalities of the remaining four countries with CBI programs in 2018 (Jordan, Moldova, Turkey, and Vanuatu) varies. Ranked 73rd, Moldovan nationality is of Medium Quality tier, as are those of Turkey (76th) and Vanuatu (78th). Jordan’s nationality is in the Low Quality tier, ranking 121st. Not being part of any agreements that facilitate the free movement of people, none of these four countries offers impressive international settlement rights. Their nationalities therefore rank lower on the Settlement Freedom scale. Moldova ranks 45th, offering free settlement access to two destinations, while Vanuatu is 50th, Turkey 51st, and Jordan 52nd, each offering settlementfree access to one destination only. Although ranked higher than the other three nationalities, Moldovan nationality is the most affordable, with a minimum contribution of around USD 100,000 to the Public Investment Fund for a single applicant, and more with dependents. The minimum investment for Vanuatu is USD 150,000 for a single applicant, and more for applicants with dependants. Despite the substantial reduction of the minimum investment, Turkey still requires a higher investment than Moldova and Vanuatu, with Turkey’s minimum investment for real estate being USD 250,000. Jordanian nationality can be acquired through several investment options, but at USD 1 million the minimum investment threshold is set rather high. Ranked 64th, Montenegrin citizenship is of Medium Quality. While this nationality currently offers free settlement to two destinations only and is ranked 45th in the Settlement Freedom ranking, its value is likely to increase steadily in future as the country progresses towards EU membership.
Arguments against Citizenship-by-Investment CBI is often criticized. EU institutions, notably the European Commission and the European Parliament, often express their dissatisfaction with CBI in general and with the existing CBI programs in particular. However, in claiming that ‘[i]n compliance with the criterion used under public
international law, member states should only award citizenship to persons where there is a “genuine link” or “genuine connection” to the country in question’22 and, in expressing concerns that obtaining citizenship through investment programs ‘undermines the very concept of European citizenship’23 both the European Commission and the European Parliament have misrepresented the law and undermined the achievements of the EU. The ‘genuine link’ is not a requirement in international law but has merely been engaged to resolve diplomatic protection issues in cases of multiple citizenship.24 Furthermore, the very existence of EU citizenship essentially pre-supposes rights beyond the member state. In practice, EU citizenship weakens ties with a member state. Acquiring citizenship through investment departs, according to the Commission, from the traditional ways of granting nationality in the member states and affects EU citizenship.25 However, while ius soli and ius sanguinis are traditional forms of granting citizenship, ius doni equally has its roots in antiquity.26 Furthermore, while Cyprus and Malta have typical CBI programs, several others have CBI provisions in their laws, including Austria, France, Italy, and Slovenia, and 20 member states have RBI programs. Acquisition of citizenship through investment is therefore not atypical as it is represented by the European Commission. In addition, the EU has diminished the legal relevance of member state nationalities in many areas where EU law applies, led by the principle of non-discrimination on the basis of nationality.27 And while recognizing the Micheletti ruling and the fact that EU law prohibits checking of genuine links and the right of sovereign countries to decide on their own naturalization procedures, the Commission concluded that member states must ensure that genuine links exist. Such a conclusion is the opposite of the Court’s judgment in Micheletti.28 While noting that “citizenship is granted under less stringent conditions than under ordinary naturalization regimes, in particular without effective prior residence in the country concerned’’, the Commission did not acknowledge other ways of facilitated naturalization that do not require residence either, for example, based on ethnic considerations, close history, or special merit and achievements. Furthermore, EU citizenships based on investment account for less than 1% of all EU natuaralizations.29 While every admission to citizenship may be seen as a potential security threat, CBI presents no greater risk than other routes. Residence requirements would not lower the risk; as noted by Kochenov, many security threats in the EU have been caused by first- or second-generation EU citizens.30
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Ius doni is an important stride towards supporting economies with sovereign equity rather than increasing sovereign debt.31 It is furthermore an important “step in the demystification of states and empowerment of individuals”.32 As Prof. Dr. Christian Joppke maintains, states “have always been strategists in matters of citizenship”;33 however, “[t]he novelty is to see individuals as citizenship strategists”.34 Endnotes and References 1 Ayelet Shachar, ‘Citizenship and Global Distribution of Opportunity’ in Engin F. Isin, Peter Nyers, and Bryan S. Turner (eds.), Citizenship Between Past and Future (Routledge, NY/ Oxford 2013) 145 2 Otto Palandt, Bürgerliches Gesetzbuch (71st edn., Beck, Munich 2012) 140 3 Douglas B. Klusmeyer and Alexander T. Aleinikoff, Citizenship Policies for an Age of Migration (Carnegie Endowment for International Peace, Washington D.C. 2002) 4 Definition borrowed from Sara Wallace Goodman and Rainer Bauböck, Naturalisation, European Union Direct Observatory (EUDO), Citizenship Policy Briefs (Robert Schuman Centre for Advanced Studies and European Union Institute, Florence 2010). 5 Dimitry Kochenov, ‘The Citizenship of Personal Circumstances in Europe’ in Daniel Thym (ed.), Questioning EU Citizenship: Judges and the Limits of Free Movement and Solidarity in the EU (Bloomsbury/Hart, Oxford/Portland, OR 2017) 39 6 Kingsbury, ‘Sovereignty and Inequality’ 7 Shachar, The Birthright Lottery 9 8 Ibid. 9 The USA nationality scored weaker than all EU nationalities but better than most other nationalites around the world, being ranked 25th in the 2018 General QNI Ranking with a value of 70.0%. 10 The Mexican nationality was ranked 52nd in the 2018 General QNI Ranking with a value of 45.7%. 11 Shachar, The Birthright Lottery 8 12 The term ius doni coined by the author derives from the Latin expression used for a gift or a contribution (dōnum/gen. dōnī) and signifies the right to citizenship by making a contribution by investing in the host state. 13 Peter J. Spiro, ‘Cash-for-Passports and the End of Citizenship’ in A. Shachar and R. Bauböck (eds.) in Should Citizenship be for Sale? (EUI Working Paper RSCAS, 2014/01) 14 Henley & Partners, Global Residence and Citizenship Programs 2017–2018: The Definitive Comparison of the Leading Investment Migration Programs (Ideos, New York/London/Zurich/Hong Kong 2017) 15 Christian H. Kälin, Ius Doni in International Law and EU Law (Brill/Martinus Nijhoff, The Hague 2019) 44 16 Ibid. 17 Madeleine Sumption and Kate Hooper, Selling Visas and Citizenship: Policy Questions from the Global Boom in Investor Immigration (MPI, Washington D.C. 2014) 3 18 Other important aspects influencing decisions of potential investors, such as favorable taxation, residence requirements, weather conditions, or environmental cleanliness to mention only a few, must not be underestimated either. These aspects, however, go beyond the scope of this work.
These requirements are currently under review and are expected to change. It is expected that the overall cost will increase slightly. 20 Henley & Partners, ‘ Sovereign Equity Launched as a Solution to Sovereign Debt and Financial Inequality in Davos Debate’ (Press Release, 25 January 2019) <henleyglobal.com/press-release-details/ sovereign-equity-launched-as-a-solution-to-sovereign-debt-andfinancial-inequality-in-davos-debate/> accessed 13 March 2019; Christian H. Kälin, Ius Doni in International Law and EU Law (Brill/Martinus Nijhoff, The Hague 2019) 44 21 International Monetary Fund, Country Report, St. Kitts and Nevis’ Article Consultation (Press Release and Staff Report 16/250, 26 July 2016) <imf.org/external/pubs/ft/scr/2016/cr16250. pdf> accessed 13 March 2019 22 Viviane Reding, ‘Citizenship Must Not Be up for Sale’ – European Commission, Plenary Session debate of the European Parliament on ‘EU citizenship for sale’ (Strasbourg, 15 January 2014) (Viviane Reding’s Speech) 23 European Parliament, Resolution of 16 January 2014 on EU citizenship for sale (OJ C 482/117 (2013/2995(RSP)) of 16 January 2014 (EU Citizenship for Sale Resolution) point G 24 Robert D. Sloane, ‘Breaking the Genuine Link: The Contemporary International Legal Regulation of Nationality’ (2009) 50 Harv. Int’l L.J. 13; Christian H. Kälin, Ius Doni in International Law and EU Law; (Brill/Martinus Nijhoff, The Hague 2019) 44 Gotthard Mark Gauci and Kevin Aquilina, ‘The Legal Fiction of a Genuine Link as a Requirement for the Grant of Nationality to Ships and Humans – the Triumph of Formality over Substance?’ (2017) 17 ICLR 167 25 European Commission, ‘Investor Citizenship and Residence Schemes in the European Union’ 6 26 Christian H. Kälin, Ius Doni in International Law and EU Law (Brill/Martinus Nijhoff, The Hague 2019) 44 et seq.; Deborah Kamen, Status in Classical Athens (Princeton UO, Princeton, NJ 2013) 79; Michael J. Osborne, Naturalization in Athens: The Testimonia for Grants of Citizenship (AWLSK, Brussels 1983) 147 et seq. 27 Kochenov, ‘The Citizenship of Personal Circumstances in Europe’ 28 C-369/90, Mario Vicente Micheletti and others v Delegación del Gobierno en Cantabria, [1992] ECLI:EU:C:1992:295 (Micheletti) para 10 29 The percentage is based on the total number of new EU citizenships granted each year provided by Eurostat <ec.europa. eu/eurostat/web/main/home> accessed 13 March 2019. 30 Dimitry Kochenov, ‘EU Report on Investor Citizenship and Residence – When the Commission Misleads’ (Investment Migration Insider, 23 December 2019) 31 Christian H. Kälin, Ius Doni in International Law and EU Law (Brill/Martinus Nijhoff, The Hague 2019) 44 32 Christian Joppke, ‘The Instrumental Turn of Citizenship’ (2018) J. Ethn. Migr. Stud. 18 33 Ibid. 34 Ibid. 19
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Interview
H.E. Duško Marković Global Citizenship Review (GCR): You have been active in the political and economic life of Montenegro for decades. Please share with our readers some of the country’s key developments in recent years. H.E. Duško Marković (H.E. DM): Once the leastdeveloped Yugoslav republic, Montenegro has been transformed into the regional leader when it comes to integrating processes of economic growth. As for the economy, we are not just a regional leader: last year’s economic growth rate of 4.9% was among the highest achieved across Europe. Over the last 10 years, Montenegro has been one of the countries with the greatest net direct
foreign investment per capita. We have also significantly boosted our tourism industry. At the start of my career, tourism was mostly organized by trade unions for their members who visited so-called workers’ resorts. Now some of the most prestigious resorts in the entire Mediterranean are on the Montenegrin coast. We recently started developing a winter tourist center in our mountains, which will be among the best in the region. Of course, we also have the islands Sveti Stefan and Ada Bojana, which are both well-known brands. Today, the parts of the Montenegrin coast without international brands or premium world-class services are the exceptions. It’s
Above: Duško Marković was elected Prime Minister of Montenegro in 2016
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H.E. the Prime Minister of Montenegro Duško Marković shares some insight on the future of Montenegro and the role of the country’s citizenship-by-investment program in stimulating economic development
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fantastic. I could give you more economic data, but the economy means little without a change in behavior: one needs to see a change in habits, even a change of consciousness. Montenegro has been transformed in these areas too.
IMAGE: Dursun Aydemir/Anadolu Agency/Getty Images
IMAGE: Xander Heinl/Photothek/Getty Images
GCR: In your speeches, you often emphasize how important it is that Montenegro is now a member of the North Atlantic Treaty Organization (NATO) and that the country is far advanced on its path to EU accession. Why are NATO and EU membership so significant for Montenegro and its potential investors? H.E. DM: By joining NATO, Montenegro joined the biggest security alliance — the country is therefore an equal partner with the most powerful and most developed countries in the world. This means Montenegro now feels closer and more attractive to investors from partner countries that are also members of the alliance. The joint security framework of NATO means investors can feel genuinely confident in Above: Montenegro formally joined NATO in 2017. Prime Montenegro; this is an important advantage! Montenegro’s Minister Marković is pictured here with the Secretary General of NATO membership signals to investors that the country the organization, Jens Stoltenberg enjoys the highest security standards and that it shares the values of the partner countries from which we wish to attract as many investors as possible. explored to improve the country’s infrastructure and Montenegro’s progress towards EU accession, on the foreign investment inflow? other hand, shows that it has successfully integrated within H.E. DM: Montenegro has a very competitive tax Europe and that the country is changing — that it is closer system and low tax rates — income tax is 9% and the and more compatible with EU member states. We are tax rate for the income of individuals is either 9% or harmonizing our entire system with 13%. The government encourages the EU’s model and are adopting business development through new standards. This will prepare several programs it has estabMontenegro’s our society for when we become a lished, for example awarding onemember. These positive signals time financial funds to investors. progress towards EU show investors that Montenegro is These are funds to stimulate inaccession shows that a stable country with a clear vestment, which Montenegro strategic direction. Predictability is awards following an open call for it has successfully the most important element for investment projects. The criteria integrated within Europe investment. When it comes to include a minimum investment Montenegro, ever y thing is value of EUR 500,000 and a guarpredictable — there are no surprises! antee of at least 20 new jobs withWe are on a good course and we are moving steadily in three years. There are also free zones, which carry towards our goals. The progress we have made in the business benefits such as certain exemptions and subEuropean and Euro-Atlantic integrations confirms this, sidies for employment. and so does the great interest shown by prestigious This year, the government’s Competitiveness Council, investors after we joined NATO. including representatives from business, will focus on four priorities to benefit the business environment. In GCR: Montenegro is often seen as an island that is not addition to the laws on business organizations that were easily accessible. What are some of the initiatives being the primary issue in the first quarter, the focus for the
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remaining quarters will be on tax policy and the gray economy, labor and related laws, and digitization. We have recognized the key challenges and feel that our further actions in these four areas will improve the business environment and the investment climate. We are also finalizing two important laws, one on public–private partnership and the other on public procurement. Through all these elements, we will create a solid legal framework that will facilitate investment decisions. This answers your question about how we are improving social infrastructure and strengthening Montenegro’s investment potential. As for physical infrastructure, we are generating the practical preconditions for an even stronger inflow of investment. We are executing the first stage of a motorway and will thoroughly upgrade our airports through reliable foreign partners. We are also concluding work on a submarine energy cable. These activities will bring about a more accessible and energy-safe Montenegro — key for The aim attracting quality investments.
We want investments that will grow the economy and increase employment, particularly in the northern region, which is less developed. The aim of the investment migration program is to precipitate investment in projects that will decisively impact the country’s economic development. I stress that investment migration is not about acquiring citizenship. Rather, the program carefully assesses investors; to those who meet the requirements, it offers citizenship. Some of the requirements, of course, are about security. Through investment migration, we expect investments in tourism, infrastructure, energy, manufacturing industries, agriculture, fisheries, wood processing, the textile industry, and so on.
GCR: A final question: what is your vision for the
development of Montenegro? What would you like to tell investors? H.E. DM: We Montenegrins love history and literature so this is what I will use to answer your question. of the Two great poets described investment migration Montenegro and Montenegrins: GCR: The government has focused Ivan Ma žuranić spoke of program is to precipitate on developing the northern part of Montenegrins as martyr fighters Montenegro and driving investment and knights, and Njegoš talked investment in projects into the coastal region. What is the about Montenegro as rocky karst, that will decisively potential for investment migration drenched in tears and blood. Even to showcase less recognized areas of though we are, of course, proud of impact the country’s the country to potential investors? the glorious history that the poets economic development H.E. DM: In 2008, Montenegro described, we want to change this adopted the ‘Tourism Development story of Montenegro and its people Strategy by 2020’. The goal of this — in fact, we want to leave this story strategy is for the country to appeal to high-end guests. behind us. We are no longer dealing with historical myths This was informed by Montenegro being ranked highly but instead with growing the economy and raising our by the World Travel and Tourism Council for growing its citizens’ standard of living. We no longer focus on being tourism at an impressive rate of 8.8%. fighters and knights, but on being successful — by working We can already see the success of this strategy. Earlier hard to create a better environment for our children. We I mentioned a few tourism brands that did not exist before do not see Montenegro as rocky and filled with sinkholes the Tourism Development Strategy but which are now like karst, but as a Mediterranean country. Therefore, we strong. After developing our coastal region, we are now know exactly what we want! We are committed to reaching concentrating on our northern region. I have said before our goals. We have come a long way together. As I mentioned that this is where our key resources lie. For 2019, the at the beginning of this interview — we have gone from government allocated the biggest ever capital budget — being an undeveloped Yugoslav republic to the most EUR 320 million, something that has never been done developed country in the region. And we are still growing. before. More than 70% of this sum will go to the northern Therefore, I want investors to know that Montenegro is a region. The government has therefore clearly told citizens success; a high quality, reliable, and safe harbor for and investors: this is our focus right now. I have no doubt investment — among the safest in the region. Investors that we will be successful. should dock here while there is still room.
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GLOBAL LIFE
Global Citizen
Chris Godfrey
F
or someone so advanced in their profession and highly regarded in the residential design industry, Chris Godfrey is charmingly humble, while acknowledging the influential role that home designers play in the lives of their clients. At a time when the approach of many designers is to make a name for themselves and be the star of the show, Chris’s unconventional — but perhaps time-honored — approach to work sets him apart. Born in April 1971 in the north of England (Hull, East Yorkshire to be exact), Chris’s childhood was fairly ordinary and affected by the hardship that hit
many families at the time. “Growing up in the 1970s in that part of the world was a difficult time economically.” Although it was over 40 years ago, Chris recalls clearly the three-day work week and experiencing electricity blackouts on certain days. Despite the widespread shortages and poverty of the time, he remembers his early years as being characterized by a sense of freedom that is hard to find now. “There was a playfulness in that time. The door was never locked. As kids, my brother and I would be out from 8a.m. to 10p.m. It was just a very different way of life.” Chris, his older brother, and their parents lived for
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IMAGE: Supplied
“I’m very passionate about what I do, and I believe in what I do”
IMAGE: Supplied
IMAGES: HBA Residential
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several years on the edge of a small town that was influenced by its rural surroundings and countryside ways of living, which likely had some impact on his “hippie parents and their liberal, free take on life”. He goes on to describe his parents as being “quite creative, particularly my father, who was avant-garde but in an unschooled, natural way”. It’s no wonder then that Chris displayed an interest in art from a very young age. In fact, at just six years old, Chris’s teachers commissioned him to paint murals throughout the school. His artistic curiosity was fueled by his father’s work, which surrounded the family: his father — who painted and drew — constructed parts of their family home, including their furniture, in his shed in the garden. He also collaged the interior walls of the house with decadesworth of architecture, design, and fashion images from the popular Sunday Times magazine. “Our whole house was like a trompe l’oeil, a 3D visual game of sorts.” Just 10 years after his first success with murals, Chris left school and took up a job as a print boy at a local architect’s firm. Although he started at the very bottom, feeding drawings into machines and spending endless days reading drawings, interrogating them, and trying to
understand their essence, he feels the experience was fundamental to his learning and growth. “I was given a really rare education in terms of who I was partnered with and how I was taught so that by the time I went to college at 21 I had already completed quite a lot of projects.” After attending the Glasgow School of Art, Chris moved to London, where he worked for a few small, newly established practices. The second of these was a residential design studio, which is where Chris began to appreciate this sector of the industry, working with ultra-high-networth (UHNW) clients. After only a year of working at that studio, Chris was offered the opportunity to work on a client project independently, having impressed the client on an earlier task. Ever ambitious, Chris decided to resign from his job and tackle the project alone, looking forward to the lessons that would come with working solo and being accountable to the client directly. He initially planned to return to more established employment once the project was complete, but the need never arose. Instead, Chris lined up client after client, inadvertently starting his own business: SCAPE. Pleased with the way his career was progressing organically, Chris found himself a successful business
Above: Singapore-based Chris Godfrey is the go-to architect for UHNW individuals around the globe, with his passionate enthusiasm providing an unmissable CG stamp on his innovative designs
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Above: Chris accepting his C-Suite Quarterly (CSQ) magazine Visionaries Award in Real Estate & Finance in 2018
owner at 29, just two years out of college. “SCAPE was good because it was pure and it was fresh”, says Chris. Work continued to unfold in an almost effortless way. His second project after the modest launch project was significant for Chris, and he tells the story with a subtle but unmistakable warmth. “Project number two was a kind of blueprint for everything I have done since…When I graduated from college, where I had designed, as part of my thesis project, a very large-scale urban building, I moved into a very small flat in London still grappling with a bunch of ideas from college.” Chris then “abstracted and scaled down” his thesis project into a coffee table made of only three pieces of timber — masterfully bringing together aspects of furniture, architecture, and scale. The table went on to feature in the Sunday Times magazine, attracting the attention of a Swiss–German couple who contacted Chris, requesting him to furnish their new London home. At the time, they were living in Tokyo and planned to retire in London. They had lived all over the world and had enjoyed fantastic careers, traveling endlessly, but consequently had never owned a home. “So, there I was, having recently graduated and at the bottom of the rung, designing a new home for 65-year-old first-time property owners. When I interviewed them, they said they wanted to have fun, which oddly represented this unexpected and simultaneous stepping out for both of us.” Chris met the pair in person a few months after they commissioned him, but after spending time in their storage units and forensically
cataloging their life — working his way through their life-long collection of valuables and creating a home for their past life — he started to feel a resonance with the idea of “working in a backwards way and making one’s background life their foreground”, a form of allowing the client’s subtleties and life to be the exhibit. SCAPE was operational for several years until it succumbed to the pressure of the global financial crisis in 2009. “There was literally an eight-week period where every single client disintegrated and suffered losses”, says Chris, who received many calls terminating projects already on the go. Chris later went on to work as creative director at 1508 London — an interior and architecture design studio, which he welcomed as an opportunity to prioritize his creative expression after 10 years of managing every business aspect of SCAPE. “1508 was a really successful period, which saw us take a team of four or five to a seventy-person company in about three years” — incredibly fast growth for a design company. Chris describes his more than four years at 1508 as “providing exposure to international clients and a really good springboard for testing my products on a wider context, a bigger scale, and a more extensive geographical reach”. Although the growth was immensely positive, Chris also reflects on what he learned about managing a large studio. He came to realize that the ideal workspace should have about 35 people — a number he has used to guide his leadership of Hirsch Bedner Associates (HBA) Residential, of which he is Principal. So how did the HBA Residential relationship come about? “While at 1508, I worked on a commission to design about 60 unique residences for the Four Seasons in southern India.” The hotel component was being designed by HBA, a leading hospitality design consultancy, whose team Chris interacted with over several years, culminating in an offer to join the firm and set up the residential arm of the business in the East — Singapore to be exact. So off he went, casting aside his London-based directorship so he could instead create a focused boutique under the umbrella of a well-established and highly regarded international operation. Chris describes the move as being “easy and natural”. “The transition to Singapore was good mainly, because I’ve always had a fascination with the East (having nearly moved here once or twice before), and I think coming over with HBA represented a good challenge at that stage of my life. I was up for it; I was up for challenging myself.” As Principal of HBA Residential, Chris considers himself chief client liaison and provocateur within the business,
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GLOBAL LIFE
IMAGE: Supplied
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always agitating for the finest and most thoughtful expression of client solutions. “I find it very special that people can describe themselves as not being creative and take the step to trust me and ask me to be creative on their behalf. It’s a really unique position to occupy in one’s life and design journey.” It is this transaction of trust that Chris seems to thrive on, and which propels him to read between the briefs and descriptions of his ultra-elite clientele to interpret what their mind’s eye is really seeing, even when words don’t materialize. Chris is the go-to architect for UHNW individuals around the globe. “The most valuable commodity for clients is time, so it’s important to create a space that affords them time, ease, and comfort. A lot of our UHNW clients want very little in reality. Often they just want to be able to close the door and be with family.” For these people, security and privacy are additional concerns, along with context and culture. When meeting with clients, “we think about those conditions that are universal, the values of good space and light, one’s view — the inherent qualities of good design — and then the more personal stylistic desires”, which are tailored to reflect the unique pursuits and preferences of the particular client, whether it’s a cabinet to store baseball gloves or the perfect wall on which to hang a Picasso. “Working on people’s private residences is a very personal process. It is emotionally engaging.” But the key, Chris believes, is to remain open and receptive. “I see myself as a sort of conduit for others…my business has really got to the point where it is as much about understanding people, and also what I can do” — which Chris recognizes is a high level of skill that comes with decades of experience. But he has mastered this. “A large part of my time is spent traveling, sometimes up to six hours for a one-hour meeting, or even less, with a client.” The ability to decipher precisely what the client’s values and needs are and then translate them accurately to his teams in Singapore and London so they can deliver on clients’ high expectations is the stuff captains of industry are made of. Before describing his signature style, Chris takes a few moments to reflect on this and responds, rather, with an account of his approach to design more broadly, a reflection of the depth of thought and involvement with which he engages in his work. “What we do, effectively, is to try and distil all of the factors that affect the client (that is, their culture and aspects of the site — like where the sun comes in) and try to create a site-specific design solution that is absolutely unique to person, place, and time. This idea is embedded in our work, and the reward is creating a sort
of Zen-like purity that can take various guises stylistically but holds as our fundamental approach to style and design.” “I am afforded lots of outside time because of my travels; so, in a sense, I’m always looking in from the outside”, ensuring that the outsider view is maintained within the studio and further giving life to the notion of being a conduit. He is doing an excellent job: in 2018, Chris received a Visionaries Award in Real Estate & Finance from CSQ magazine in recognition of his unmatched, high-end residential design and work in real estate. He describes receiving the award as significant. He was “pleased to receive it because it’s a business award as opposed to a design award, so it’s a different type of recognition than what I’m accustomed to”. The concept of global citizenship is very much at play in Chris’s life. He is quick to describe his frequent traveling as a privilege, particularly “the cultural kicks and exposures” that his day job affords him. “I’m currently spending a bit of time in Moscow and it’s creeping under my skin more and more. I also love New York”, which is useful considering HBA Residential will be opening an office in the USA in 2020. Chris describes the pleasure he finds in being in London as a tourist coming in from the other side of the world. “I’m really enjoying the fresh perspective and seeking out cultural events that would pass you by as a local.” Barcelona, which Chris describes as “magical”, has also recently captured his attention, alongside cities such as Hong Kong and Shanghai. This Englishman is very much embracing all that Southeast Asia has to offer — apart from being convenient in terms of his travels and business needs, Chris finds the region incredibly stimulating culturally and enjoys the range of leisure options available. “Because I travel a lot, like my clients, I look for comfort when I’m back home, so Singapore is very suitable. It’s very peaceable and constant in terms of weather and how it operates. I like that. I find it very restful.” When he is not traveling, Chris enjoys time at home with his family, preparing a meal with his wife and his 10-year-old son as sous-chef. There are many factors that come together to produce the success that is so widely associated with Chris Godfrey’s name — top among them are surely his clear mind and the sincere way he approaches his work. “Design for me has to be about openness and receptiveness. You must have your eyes and ears open and your mouth less so. It is about absorbing, firstly — then having the willingness and conviction to pursue and not curtail your thinking.”
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Property
A
mid recent news that the Australian stock market has reached its highest share price in more than a decade, it is no surprise that Perth’s property market is enjoying an upswing. The western seaboard city is enjoying steadfast growth in popularity not least thanks to its stunning beaches, abundant sunshine, numerous wineries, and a buzzing gourmet food scene. Premium accommodation in Perth is generally not easy to come by,
which is why the construction of a promising development in Rivervale will be most pleasing to individuals wanting to invest in the Western Australia capital. Across the Swan River from Perth’s CBD is Rivervale, a picturesque modern suburb that will soon flaunt 11 new three-story landed town houses, once Infinity 8 Property Group’s Rowe Avenue development is complete. Rowe Avenue’s contemporary town houses are designed with
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8 Rowe Avenue • Perth
IMAGE: Infinity 8
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luxury in mind. Boasting a variety of levels, they maximize living space while maintaining good interior flow. The development’s overall design is sleek and modern both inside and out by virtue of neutral colors, large blind windows, and open floor plan living areas. Upper floors offer roomy outdoor balconies with views of Perth’s city skyline, the spectacular Swan River, and Crown casino complex. All homes will be furnished with Bosch kitchen appliances and stone benchtops and bathroom spaces will be tiled from floor to ceiling with high-quality ceramics. The professional finishes on these units is what will distinguish them from the classic city apartment, designed to be elegant yet spacious for its occupants. The total living space per town house ranges from 179 m2 to 324 m 2 depending on the selected layout. The units can accommodate parents, children, and grandparents in a single three-tier home, which will appeal to family-oriented investors. Alternatively, owners can choose to rent out each floor separately through multi-key arrangements or opt to live on one floor while renting out the other apartments for supplementary income. Security at Rowe Avenue is taken care of by internal alarms, smoke detection, and fencing on the side and rear
boundaries of each property that is almost 2 m high, together with a remote controlled security gate to the carpark giving you peace of mind. Location is key for any development, and it is no accident that Rowe Avenue is as perfectly situated for business as it is for pleasure. Being within walking distance of public transport and the Crown casino entertainment complex with its restaurants and nightlife, and within easy driving distance of the CBD and Perth International Airport, both local and international visitors will find Rivervale a pleasure to navigate. The nearby Elizabeth Quay has been revamped for billions, covering more than 10 hectares with beautiful private and commercial riverfront expansions. For families with young adults who will soon be transitioning to tertiary education, two top-class institutions are close by — the Curtin University of Technology and the University of Western Australia. Infinity 8 Property Group is a luxury property designer with an impressive portfolio of past projects in the Western Australia area. Rowe Avenue will be particularly attractive to foreign nationals interested in acquiring Australian Permanent Residence through an investment in property development.
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Marco Polo
N
estled between the city and the West End is London’s Holborn district, a precinct brimming with history and culture. It is also where you will find one of the world’s most prestigious hotels — the Rosewood London. The 1914 original of this spectacular Edwardian residence was refurbished for a cool GBP 85 million, masterfully bringing early 20 th -century extravagance into our contemporary era. The Rosewood London has retained the demeanor of a royal residence right out of the belle époque. As you walk through the doors of this palatial hotel, you will see the grand Pavonazzo staircase, a marble monolith that leads skyward to the distinctive cupola.
Each of the seven stories of the Rosewood London can be accessed via this central staircase, leading outward into space exquisitely crafted by internationally acclaimed architects and designers, such as Martin Brudnizki (who is responsible for the styling of a number of leading hotels, private clubs, and restaurants worldwide) and Taiwan-born New York-based Tony Chi (whose expertise is also on display at Rosewood Hong Kong). The Rosewood London has 262 rooms, 44 suites, and 9 houses. Each room, suite, and house is designed expressly for the comfort of guests. Rosewood’s houses are signature suites that are built to perfection, evoking the grandeur of the European past while remaining
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IMAGE: Rosewood London
Rosewood London • London
IMAGES: Rosewood London
IMAGE: Rosewood London
GLOBAL LIFE
true to modern sensibilities. Garden House private residence offers views of sprawling London from its picturesque open-air courtyard on the top story. Perhaps the most exclusive suite of all is the Grand Manor House suite, a separate-entrance residence boasting its own postal code. In 2016, the Manor House was voted the Best Hotel Suite at the European Hospitality Awards. The Holborn Dining Room is the main restaurant at Rosewood London. Born of the talent of executive head chef Calum Franklin (an expert pie baker with 80,000 Instagram followers), its menu offers a classic British experience of distinctive idiosyncrasy — every dish (and drink) brings out the best in seasonal local ingredients. Chef Franklin is well known for his repertoire of pastry dishes, including a pork, sage, and chestnut Wellington, cheesy dauphinoise and caramelized onion pie, and his signature pâté en croûte. The specialized Gin Bar at the Holborn Dining Room stocks more than 500 variants of the juniper-based liquor. There are also 30 tonics on offer, including an exclusive house-brand tonic available only at the Gin Bar. For a change of pace, guests can enjoy a stylish afternoon tea in the Mirror Room, a tribute to Van Gogh that delights the senses with impressionist interpretations of traditional tea-time confectionery. For lunch and dinner, the Terrace is a delightful al fresco dining experience. Landscape designer Luciano Giubbilei has transformed it into a traditional English garden, presenting seasonal flowers and classic topiary. Guests can escape city life and surrender to relaxation in the haven that is the Rosewood Sense Spa, thanks to the variety of calming treatments. The revolutionary Face Place Signature Treatment from Sense is a rejuvenating facial, now available for the first time outside the USA, only at the Rosewood. In addition, the spa offers a variety of hair treatments from celebrity stylist Matthew Curtis, whose private styling room at the hotel was launched in 2018. There is, too, the option to have Curtis and his team style your hair in your room. Scarfe’s Bar can challenge any of the nightlife London has to offer. Decorated wall to wall with the work of British artist Gerald Scarfe, this bar is an entertainment lounge like no other. Hosting live jazz daily, it is a vivacious club that also hosts live cabaret in autumn and winter. With the City of London just a stone’s throw away, culture-hungry guests are encouraged to venture out to the British Museum or spend an evening at the Royal Opera House.
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Culinaria
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omewhere along the cobbled streets of the historic city of Modena, Italy, you will find a bronze placard that reads Osteria Francescana. While it may seem just like any other building on the block, this humble façade is in fact the entrance to the highest-rated restaurant in the world — for two consecutive years. This premium dining experience boasts the iconic triple-Michelin-star rating, and it is the cornerstone of success for chef Massimo Bottura. Bottura praises his mother, aunt, and grandmother for his early inspiration; he watched them attentively in the kitchen as a young man. From this humble interest, Bottura went to work under esteemed chefs Georges Coigny and Alain Ducasse before venturing off to open his very first establishment: the Osteria Francescana. Today, Bottura has more than 30 years of experience in the industry, having built other world-class establishments such as Franceschetta 58 and Gucci Osteria da Massimo Bottura at the Gucci Garden in Florence. His vision is filled with bright natural colors and rich flavors, and each of his dishes is crafted with intent. By sourcing ingredients from the surrounding countryside, Osteria Francescana’s à la carte menu celebrates Modena and a wide range of Italian cuisine. On the menu we find hazelnuts from Piedmont, cherries from Vignola, almonds from Noto, and the classic Villa Manodori balsamic vinegar. The menu presents guests
with a mouthwatering selection of Boturra’s signature dishes, such as rice as if it were a bouillabaisse, ox rib eye in red wine sauce, lobster in a double sauce, and ravioli of leeks, foie gras, and truffle. Choosing can be difficult, but with a 12-course tasting menu there is no need to miss out. One particularly striking dish shows off the superb talents that Bottura has for transforming the ordinary into the fantastic: five ages of Parmigiano Reggiano in different textures and temperatures. As with many of Bottura’s dishes, we are invited to enjoy a simple ingredient, here Parmigiano Reggiano, from new perspectives. We experience a traditional taste as if for the first time, in a foam or a caramel lattice. Bottura creates an exclusive dining experience — a chance to linger, broaden our tastes, and enrich our understanding of food. Bottura does not only create masterpieces on the plate: he is also the celebrated author of five books. His latest writing includes Never Trust a Skinny Italian Chef (2014), which brought him international recognition for his interest in the social impact of food production. Bread is Gold: Extraordinary Meals with Ordinary Ingredients (2017) is his most recent work, which gives a helping hand to readers across the globe to become resourceful chefs using the hidden potential of surplus ingredients in their own kitchens.
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IMAGES: Osteria Francescana
Osteria Francescana • Modena
Medicus
Prof. Dr. Dr. med. Thomas Rosemann
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IMAGE: CSS Versicherung
IMAGES: Osteria Francescana
GLOBAL LIFE
s Director of the Institute for Primary Care at the University of Zurich, Thomas Johannes Rosemann is a staunch advocate for revitalizing general practice or ‘family medicine’, a field that Swiss medical students have lost interest in recently to such an extent that the country has a shortage of primary care doctors. Rosemann is the first director of the Institute for Primary Care, which was founded in 2008 with the aims of exposing medical students to the work of primary-care practitioners and enabling them to conduct research in the area. In a 2008 interview with Neue Zürcher Zeitung, Rosemann said that familiarization, along with creative and interactive teaching methods, could make a marked difference in promoting student interest in general practice. While he acknowledges that general practice has not traditionally been associated with research opportunities, Rosemann argues that there is much opportunity for research. Owing to the family doctor’s unique and intimate knowledge of the patient’s lifestyle, family history, and individual physical condition, he says general practitioners can tailor treatment to the individual patient, promoting an optimal quality of life. One of the benefits of being a family doctor, according to Rosemann, is that the work is highly varied — being free from the pressures and hierarchies of hospitals offers far more control over working hours and treatments offered. Rosemann was born in Bavaria in July 1969. Publishing prolifically and rising rapidly through the medical academic ranks, he began his career studying dentistry at the Ludwig Maximilian University of Munich. After graduating in medicine in 1996, he served a general, vascular, and thoracic surgery internship at the Rosenheim Hospital from 1996 to 2000. He completed a dissertation
in 2001 before concluding an internship in internal medicine at St. Georg Clinic in his hometown of Bad Aibling. In 2003, Rosemann moved to the University Hospital Heidelberg, where he studied general medicine and care research. In 2007, he took up the position of senior physician after giving his habilitation treatise on the subject of chronic joint disease. He received a second PhD from the University of Nijmegen in Holland in 2008, prior to being named associate professor of family medicine at the University of Zurich and director of the Institute for Primary Care at the University Hospital Zurich in the same year. In 2014, Rosemann was promoted to full professor in the field of family medicine. Asked in 2018 about the impact that technology will have on primary care or family medicine, Rosemann explained that genetic data and the personalized and precise care it enables is advantageous for the general practitioner because it removes much of the trial and error associated with pharmacotherapy, especially in oncology and immunology. However, although these tools are useful, they are unlikely, in his opinion, to replace the family doctor, serving instead as diagnostic and therapeutic aids. Personalized medicine is nothing new, he says — genetic data simply allows for greater accuracy. In a world where patients seek medical advice online at the first symptom so they can diagnose themselves, Rosemann feels confident that general practitioners, once a dying breed, will make a comeback. Far from believing that web-facilitated self-diagnosis will replace primarycare providers, he says “the new diagnostic apps tend to make people feel insecure rather than providing any real benefit…it’s precisely here that there’s an urgent need for family doctors to reassure anxious patients”.
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Books
The Invention of the Passport: Surveillance, Citizenship, and the State John Torpey
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early four decades have passed since the late Prof. Aristide Zolberg advocated for centering the state in the theorization of international migration. Our understanding of the politics of immigration policy-making has since improved considerably. However, the bureaucratic infrastructure of migration control, and especially how the contemporary passport and visa systems work, remains relatively undertheorized. The publication of the second edition of The Invention of the Passport: Surveillance, Citizenship, and the State is therefore timely. Originally published in 2000, this groundbreaking book directed our attention to the key infrastructural condition of the modern interstate system, in other words, the contested process through which regulating movement came to constitute “an essential aspect of the ‘state-ness’ of states”. Paraphrasing Max Weber’s classic definition of the state, John Torpey asks: under what conditions can the modern state operate as an organization that claims a monopoly to the “legitimate means of movement”? The answer lies in the révolution identificatoire, as historian Gérard Noriel called it — “the stimulation of the worldwide development of techniques for uniquely and unambiguously identifying each and every person on the face of the globe, from birth to death; the construction of bureaucracies designed to implement this regime of identification and to scrutinize persons and documents in order to verify identities; and the creation of a body of legal norms designed to adjudicate claims by individuals to entry into particular spaces and territories”. Neo-Weberian historical sociologists Charles Tilly and Michael Mann, among others who “brought the state
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back in” to scholarly investigation, focused on the territoriality of the state. Torpey, along with Rogers Brubaker, reminds us that the modern nation-state is not only a territorial organization but also a membership one. Torpey, however, moves Brubaker’s insight into the exclusive nature of citizenship in a different direction by highlighting the documentary underpinning of citizenship-based social closure and nationhood: “Beyond simply enunciating definitions and categories concerning identity, states must implement these distinctions, and they require documents in order to do so in individual cases.” Torpey further notes that “the notion of national communities must be codified in documents rather than merely ‘imagined’”, thereby both alluding to Benedict Anderson’s much celebrated definition of the nation and anticipating the “material turn” in social science in the decade following. The Invention of the Passport traces the long-term and uneven historical processes through which documenting identity and controlling borders became essential qualities, if not the universal reality, of modern statehood, focusing largely on developments in Europe and North America in the 19th and 20 th centuries. While the first edition ends with decolonization and ethnic unmixing in the postwar era, the second edition includes a new chapter on the development of new surveillance techniques after 9/11, demonstrating the book’s prescience and its continuing relevance to the era of immigration securitization that we live in today. Reviewed by Jaeeun Kim, Associate Professor, Department of Sociology, University of Michigan, USA
IMAGE: Cambridge University Press
Cambridge University Press
The Coming of the Third Reich Richard J. Evans Penguin
IMAGES: Penguin; St. Martin’s Press; Bloomsbury; Oxford University Press
IMAGE: Cambridge University Press
GLOBAL LIFE
Historical accounts of the Second World War are no strangers to bestseller lists, but rarely does a book set a new benchmark for the genre. Richard J. Evans’s The Coming of the Third Reich did exactly this when it was published in 2004, presenting an account that refuses to rush headlong into the exhilaration of gunfire and military stratagem — unlike many of its contemporaries. Through a careful and thoroughly researched analysis, Evans broadens the scope on the most important questions we should be asking about the nature of democracy, global economics, and society itself. This definitive volume about the roots of the Third Reich’s power is key to understanding how democracy fell and tyranny soared in Germany. The Regius Professor of History at the University of Cambridge until his retirement in 2014, Evans reliably reconstructs the many elements that lead to one of history’s most steadfast nations becoming totally destabilized.
Age of Discovery: Navigating the Risks and Rewards of Our New Renaissance
The Populist Temptation: Economic Grievance and Political Reaction in the Modern Era
Ian Goldin and Chris Kutarna
Barry Eichengreen
St. Martin’s Press and Bloomsbury
Oxford University Press
Individual insecurity is the defining state of our modern era, with artificial intelligence and machine learning about to revolutionize every industry imaginable. However, Ian Goldin and Chris Kutarna’s Age of Discovery: Navigating the Risks and Rewards of Our New Renaissance suggests that we are not in such unfamiliar territory after all — in fact, we have been in this place before. The authors argue that looking forward to even newer technologies for the answers will not dissolve our angst. We should instead look to the past: to the first Renaissance, to be precise. As the most disruptive movement in science, art, and philosophy that the world has yet felt, the first Renaissance saw the rise of monumental figures such as Da Vinci, Descartes, Michelangelo, and Shakespeare. In Age of Discovery, Goldin and Kutarna guide us through the complex history of the first Renaissance to pull out the common threads that we can recognize in our own existential predicament.
Donald Trump’s inauguration as the 45 th President of the USA in 2016 marked a clear turning point in the global political landscape. Across the world, people are increasingly frustrated with government establishments, red tape, and elite leadership and its disconnection from the working class. Barry Eichengreen’s The Populist Temptation is a timely counterpoint to this trend. He investigates matters of economy and policy to remind us that populism has been seen many times before. Drawing on more than a century of examples, Eichengreen presents a convincing argument that populism emanates from particular economic conditions. He also walks us down the dark paths that come from nourishing a distrust of authority and a fear of outsiders. The Populist Temptation incontrovertibly places modern political problems in their historical contexts, suggesting ways to establish working democracies in the long term.
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Reflections
Archimedes of Syracuse
which he lived. His war machines were used extensively during the Punic wars when the Romans had besieged Syracuse, then a Greek colony and Archimedes’ hometown. Though there is no absolute proof, there is a legend that Archimedes’ system of mirrors was placed around Syracuse harbor; they concentrated sunlight on a fleet of ships led by the Roman general Marcellus, causing them to ignite and burn. In modern times, a similar system of ‘burning glass’ mirrors was successful in setting alight a ship. A steam-powered cannon, the Architonnerre, appears in the 15th-century writings of Leonardo da Vinci, who describes it as “a machine of fine copper, which throws balls with a loud report and great force”. Da Vinci credits Archimedes with the invention of this weapon, which may have enabled Sicily to stop the Romans from entering the port city of Syracuse for two years. According to some sources, when the Romans finally took Syracuse, Marcellus asked soldiers to bring Archimedes to him alive, but they mistakenly killed him — the soldier sent to seize him thought the inventor and engineer was resisting arrest, but he was simply engrossed in his calculations. Arguably, Archimedes’ most renowned and practical invention is the Archimedes screw, which was used to lift water from low-lying rivers to higher levels to irrigate crops and for drainage. It is also sometimes used to transfer grain, ash, and sand. Testifying to the ongoing value of his engineering ability, this invention is still in use today.
Give me a place to stand and I can move the earth.
IMAGE: adoc-photos/Corbis
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rchimedes was well known in ancient times (he was born around 287 BCE and died about 212 BCE) and is still esteemed as one of the greatest engineers of all time. However, we know little about his life. His friend Heracleides wrote a biography of him, but this has been lost. Plutarch wrote that Archimedes, whose father was an astronomer, was related to the King of Syracuse, Hiero II. Scholars believe Archimedes may have studied in Alexandria and learned about the teachings of Euclid. Plutarch drew on the work of Polybius who wrote about 70 years after Archimedes’ death, but he focused more on his machines of defense than on the man himself. We know most about Archimedes from three documents, one dating from 1311 CE, another from 1550 CE, and the most notable one: the Archimedes Palimpsest, a copy of his works from the 10 th century CE. Examining this parchment of goatskin in 1906, the Danish professor Johan Ludvig Heiberg found beneath the visible text of 13th-century prayers much older works. Scholars identified the earlier works as being previously unknown writings by Archimedes — a great discovery. Archimedes worked in the fields of astronomy, geometry, logic, mathematics, and physics. Most noted for his law of hydrostatics, he also described the principle of the lever, and academics believe he invented the compound pulley. Despite his scholarly background, he seems to have quite enjoyed soldiering — he put his bestknown inventions to good use in the unsettled times in
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IMAGE: adoc-photos/Corbis
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OPINIONS | Global Passports and the Dilution of Citizenship
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