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Pay attention to this news headline because it has a lot to do with today’s video:
(Sanctions Threaten UK's Position as Playground for Russian Oligarchs
First penalties on Russians [...] could hit what some call 'Moscow-on-Thames'.
WSJ)
But before we dive into this matter, Let me ask you a question: Do you know how many millionaires
there are in the world?
5 million?
10?
20 maybe?
No, we are talking about more than 50 million millionaires around the world today.
But perhaps the most impressive fact is that in the vast majority of these cases, we are
not talking about inherited wealth.
Three out of four millionaires today are self-made, that is, they created their wealth through
their own efforts.
But have you ever wondered where these people prefer to live?
What are the favorite destinations of the wealthiest people?
Well, I'm sure you already know where this is heading.
Because yes, the city with the most millionaires in the world is not New York, or Singapore,
or Dubai or even that little gem called Miami.
It's London!
The British capital has about 900,000 people whose net worth exceeds one million dollars.
In other words, if you go to London, approximately 1 out of every 10 people you see on the street
has more than one million dollars.
And that's not all.
London also ranks seventh on the list of cities in the world with the most billionaires, the
so-called mega-rich.
More than 60 of them live around the Thames.
Surprised?
No wonder, especially when we realize that London is not exactly a city famous for sun,
beaches and mojitos at sunset.
So the question is, what on earth is it about London that attracts so many millionaires?
Okay, the short answer would be something like, [host], it's obvious: That's precisely
where the money is!
And in a way, yes, it is true.
London is one of the world's two great financial centers.
The other, by the way, is New York.
We are talking about a place where investors from practically every corner of the world
converge.
If you are a government or a large company and you want to raise large amounts of funding,
you will probably be forced to visit the British capital.
Nearly 20% of all international bank lending and over 12% of all listed international bonds
originate in the UK.
In addition, London is also the derivatives capital of the world and the center of more
than 40% of all global foreign exchange trading.
We are talking about a huge hub for financial services of all kinds, a city which also houses
the European headquarters of hundreds of multinationals.
The so-called soft power, low taxes along with flexible and non-intrusive regulations
have positioned London as a world epicenter of financial activity.
In other words: London is a money-making rocket.
And people with money like places where they can make even more money while keeping their
fortunes safe at the same time.
Come on, I don’t think we are inventing the wheel here...
What we are talking about is black and white: Legal certainty.
The fundamental ingredient required for a country to prosper.
But, let's not get sidetracked.
In addition to all these factors that are the key behind the success of London and in
general of the United Kingdom, there is another reason that we can highlight and that many
of you may not know about: the so-called Tier 1 visa [Read: Tier-One], commonly known as
the golden visa.
A perhaps brilliant idea but like everything, one that has its positives and negatives.
And one that has currently been identified as one of the means of punishment against
Russia for the invasion of Ukraine.
Or rather, as one of the means of punishment against the oligarchs who support Vladimir
Putin.
(EU lawmakers to push for ban on new 'golden passports', visas for Russians.
Reuters)
(Johnson government ends 'golden visas' for Russian oligarchs.
El País)
(UK crackdown on Russian oligarchs may spell the end for 'Londongrad'.
Wealthy elites are being forced "to choose between their wealth, their luxury, their
future and supporting Vladimir Putin, "NBC News)
And so, VisualPolitik viewers, in this video we are going to tell you how the UK has been
trying hard to attract millionaires from all corners of the world and how this has now
become a huge headache because of the express visas granted to hundreds of Russian oligarchs.
Let’s get into it!
(THE VISA OF THE RICH)
First of all, an important note: golden visas are not exclusive to the United Kingdom.
In fact, there are 23 countries in the world that have such visas, each with their own
quirks.
Even countries such as Greece and Spain, which are not exactly known for being the most business-friendly
places on earth, have such visas linked to investment in assets such as real estate,
stocks or public debt.
For example, in Spain the model was implemented in 2013 with the aim of providing an outlet
for many of the empty properties that remained unsold when the real estate bubble began to
burst in 2008.
In this way, in Spain, you can "buy" your visa if you acquire properties worth at least
500,000 euros or US$547,000.
In fact, post-Brexit this has become a good business for Spain and for the Mediterranean
countries in general.
Let's just say that many British people are considering buying property in order to obtain
a visa to be able to do business and to be able to come and go from countries like Spain
without further limitations.
(Britons Now Choose EU Countries' Golden Visa Schemes to Win Back Their Travel Rights – Schengenvisainfo)
Which is exactly the same thing that many Russians have also done.
Just take a look at the Mediterranean coastline in southern Spain.
So, at this point, the question many of you may be wondering is, why are they only focusing
on the UK's golden visa?
Well, you see, the truth is that few countries have had both as much success and as much
controversy with this type of program as the United Kingdom.
Since its implementation in 2008, more than 12,000 millionaires and their families have
seen the British doors flung open wide for them thanks to the Tier 1 visa.
Currently, and after several modifications and tightening of the requirements, at least
two million pounds – slightly more than $2.5 million dollars – must be invested
in companies registered in the country or in bonds.
In addition, with this type of visa you can apply for permanent residency within a certain
number of years, a period which is shortened as the amount of money invested increases.
Yes, in a way it's kind of like buying a visa and "jumping the queue" on the application
list.
That's essentially the idea.
If you bring money and investment to the UK, they open the doors wide open for you.
The question that comes up is, what kind of impact do these schemes have on the general
economic life.
Is this Tier 1 visa beneficial to the country or not?
Well, according to the British government itself, the purpose of this type of visa is
to increase investment and capitalization of companies registered in the United Kingdom.
In this way, the economy becomes more competitive and job creation increases.
This also benefits the middle and working classes.
The more companies there are and the more robust they are, the better for everyone.
As a result, the British golden visa can be considered as a dynamizing element for the
economy.
We are talking about a tool that has managed to attract tens and tens of billions of pounds
of productive investment to the United Kingdom.
Sounds good, doesn't it?
Of course, these types of schemes also have their weaknesses.
Many detractors criticize them for being a kind of safe-conduct for large fortunes whose
wealth may have been obtained, shall we say, not very "cleanly" – to say the least – in
countries where the rule of law and controls are conspicuous by their absence.
On the other hand, they can also act as a refuge for many people who, thanks to these
visas, are able to escape from tyrants of all kinds.
Be that as it may, the question that concerns us most today is another one: Guess who have
been the investors most favored by the UK Tier 1 visas?
3, 2,1....
Exactly!
The Chinese and the Russians.
Especially the Russians.
The latter have in fact become quite a headache for Downing Street.
Have you ever heard of Londongrad?
Well, let’s take a closer look!
(WELCOME TO LONDONGRAD!)
In 2015, the Russian television channel STS launched "Londongrad."
A TV sitcom about an agency specializing in solving problems for Russian millionaires
living in London.
A plot that, as random as it may seem to us, is not really random at all.
Perhaps its story lines are not completely far-fetched.
You see, of the approximately 12,000 holders of British golden visas, around 20% of them
are Russians.
Obviously, there’s an explanation for this, and for that you have to go back to the period
2008-2015.
This was a period known as "blind faith".
Let's say that, back then, the program had few requirements and above all there were
hardly any checks in place to know who the beneficiaries of the golden visas really were
and where their fortune came from.
And of course, if we mix these three ingredients in the same shaker: Russians, millionaires
and few checks, what do we get?
Exactly!
The Oligarchs.
Suddenly the British Tier 1 visa model became a magnet for Russian fortunes.
So much so that, in the seven years between 2008 and 2015, 85% of all golden visas were
granted to Russian investors.
But of course, when the requirements were tightened, the flow of arrivals from the Russian
Motherland slowed down a lot.
Since 2015 Russians "only" account for 15% of the visas granted.
It's still a huge percentage but it's not so crazy anymore.
I'm sure you're not surprised.
It's as if many of the Russian millionaires looking to invest and live in the UK were
not very happy to have their affairs snooped into.
I don't know why, but it doesn't surprise me.
The fact is that there was a moment when the British government realized that something
was going wrong, very, very wrong, basically because the country was filling up with Vladimir
Putin-friendly oligarchs.
And with them, the influence of Russian investments linked to the Kremlin government in the British
economy was also increasing.
For example, according to the organization, Transparency International, since 2016 more
than 1.5 billion pounds, that’s $1.64 billion worth of real estate assets have been bought
in the country by high-ranking Russian officials and oligarchs linked to the Kremlin.
And, what is certain, is that the true figure, taking into account the opacity with which
these people operate, could be much, much higher.
And of course this is just one example.
So you can believe us when we tell you that this, from a geostrategic point of view, is
not the best idea in the world.
Not to mention that many of these people are used to doing and undoing things as they please
not only related their own affairs but also other people's.
For them, things like the rule of law, competition or free business, well, what can I say, they
sound like imperfections resulting from Western softness.
It’s a culture that is not exactly good for the general business climate.
There are even reports that many of these oligarchs have tried to influence British
politics, that is, the same thing they do in Russia itself.
Old habits die hard you know.
So in 2015, the British authorities began to change and tighten access conditions while
improving checks.
A retroactive investigation was even initiated on more than 6,000 golden visas.
Yes, that’s not a mistake, about half of all those issued have been or are being reviewed
and their holders are being investigated.
There is, for example, the case of Roman Abramovich.
Abramovich is a well-known Russian oligarch and owner of the Chelsea soccer club, who
in 2018 withdrew his application for renewal of this visa because he was being increasingly
investigated for his business dealings.
In the end he opted for Israeli citizenship.
We also have the case of Alexander Perepilichnyy, a Russian millionaire who entered the UK through
his wife, and was then granted a golden visa despite the fact that he was being investigated
by Interpol at the time for fraud, money laundering and abuse of power.
But not only Russians can be found on this controversial list...
We also have characters such as India's Nirav Modi, a billionaire who is in the midst of
extradition proceedings for money laundering and for allegedly perpetrating a $2 billion
fraud against the Indian bank PNB.
Or a bunch of Kazakh, Ukrainian and even Bangladeshi millionaires, politicians and oligarchs.
Come on, only the finest from around the globe.
The one thing all of them have in common is having received their visa during the "blind
faith period".
Now, the heightened vigilance, the investigation of Russian millionaires in the UK has become
even tougher since 2018.
Does anyone remember what happened in the UK that year?
Look at this.
(Wealthy Russians in Britain face new visa crackdown after Salisbury – The Guardian)
Exactly.
In 2018 there was the case of the poisoning of former Russian spy, Sergey Skripal, and
his daughter, both poisoned with Novichok by two Russian agents.
Novichok, for those of you who don't know, is a Russian poison developed during the Soviet
era.
By the way, we’ve left you a link in the description to a video where we give you all
the details about how this poison is used in modern Russia.
The point is that the United Kingdom realized that the presence of Russian oligarchs close
to President Putin could end up becoming a national security problem.
(London's status as a playground for Kremlin-linked oligarchs undermines Britain's tough-on-Russia
stance – Washington Post
Britain isn't the only country in which oligarchs store money, nor are Russians the only ones
who park illicit money abroad.
But the Ukraine crisis has led the British government to try to square the contradictions
between its foreign policy and London's loose oversight)
The United Kingdom was decisive in imposing sanctions on Russia, however, it was not so
nimble with the oligarchs.
This is something that has even been denounced by the conservative newspaper The Times.
See for yourselves.
(3 March 2022: The UK's dilatory progress with sanctions, is beginning to be a source
of embarrassment and a matter of political concern.
– The Times)
Remember that the money of the great Russian oligarchs linked to the Kremlin has enriched,
among many others, law firms, bankers, architects and entrepreneurs in the hospitality and luxury
goods sectors.
Genuine economic dopamine that slows down difficult decisions.
Be that as it may, it is clear that this time everything is different.
And that the British and generally European playground of the great Russian fortunes may
be coming to an end.
("There is no place for dirty money in the UK . . . those backing Putin have been put
on notice: there will be nowhere to hide your ill-gotten gains," Boris Johnson, Prime Minister
of the United Kingdom)
But now it’s over to you.
Do you think a golden visa system would be beneficial for your country?
Should recipients be carefully filtered or should such schemes be open to any investor?
Leave us your opinion below, in the comments.
And now if you liked this video, don't forget to like and subscribe to VisualPolitik, as
well as hitting the little bell so you receive notifications and don’t miss any of our
videos.
All the best and see you next time.