The economic crisis in Latvia gave impetus to the emergence of an investor program
As the BBC notes, the saga of residency permits in exchange for investments began almost ten years ago, when an economic crisis swept through Latvia, shrinking the country's GDP by 18% in one year. This forced the government to seek emergency measures to save at least some sectors of the economy. That was when the story of the fragile relationship between Latvian politicians and, mainly, Russian migrants began – the so-called "investor program."
Foreigners living outside the European Union were offered a temporary residence permit in Latvia in exchange for investments in the local economy. Investments could be made in real estate purchases, starting a business, or bank deposits. It was enough to buy an apartment for just over 140,000 euros to get a residence permit in an EU country with the right to move freely within it. Plus a relatively inexpensive apartment near the sea.
Almost immediately it became clear that the program was gaining mass traction: at its peak in 2014, about six thousand people received residence permits in Latvia. The volume of investments in the first four years exceeded one billion euros.
A house by the sea
Brokers, builders, consultants – everyone involved in the development of related economic sectors – were happy. The Russians moving to Latvia (the majority of arrivals were Russian citizens) were also happy. Some bought "summer houses" on the Baltic coast while keeping their main residence in their homeland. Others brought their families and started a new life in a new country.
"I moved with my family in 2012, my daughter had just been born," Pavel Pereverzev, now a Latvian entrepreneur, tells the BBC. "So the issue of safety became very important – at least at the level of interaction with the police. We realized that there is a different level of common sense in life here, a different quality of life. And we are not oligarchs at all: we sold something in Russia to buy something here. Over time, we built our business here."
The national question
As the number of Russians moving to Latvia grew, so did the discontent of nationalist politicians. The peak of the investor program's popularity came in 2014 – the beginning of the Ukrainian crisis. It was because of this that representatives of the nationalist party "National Alliance" several times proposed banning Russian citizens from obtaining residence permits under this program.
"One of the main tenets of Russia's foreign policy is the protection of its citizens in the near abroad. At the same time, by increasing the number of Russian citizens here, we expose Latvia to greater danger," former parliament deputy Dzintars Rasnačs (National Alliance) told the BBC at the time.
Under pressure from the geopolitical component, the ruling coalition began to wind down the program. In 2014, the minimum real estate price was increased: from 140,000 euros to 250,000. The number of program participants immediately decreased: while in 2014 there were almost six thousand people, in 2015 there were just over a thousand.
But for money – it's possible
Then, in 2016, the fight against the investor program moved from the ideological to the economic sphere. Deputies decided that those foreigners who had already moved to Latvia under this program should pay 5,000 euros for the extension of their temporary residence permit. The money was to be directed to support young families. For many investors, the 5,000 euro fee was a blow.
"We immediately founded the society 'New Latvians,' which included people who moved to Latvia from CIS countries," continues Pavel Pereverzev, who still heads this society. "Then we appealed to the president [of Latvia, Raimonds Vējonis]. The president heard us and rejected the amendments. Then we held a series of meetings with deputies."
In the end, a compromise was found: all those who joined the program before September 2014 were exempted from paying the 5,000 euros for the extension of their residence permit. And that was the majority of investors.
You can also not pay
However, another year passed, and the investor program practically stopped working: in the first half of 2017, the Office of Citizenship and Migration Affairs received only 64 requests for residence permits from "investors." And then politicians decided to intervene again.
At the initiative of the government, the compromise reached a year earlier was canceled, and all "investors," many of whom had already learned Latvian and put down roots in their new place, were required to pay 5,000 euros for the extension of their residence permit.
"These amendments are related to two issues. First, equal treatment for everyone who received a residence permit. Everyone must pay the same amount. Until now, there were groups that paid these 5,000 euros and those who did not," says Latvian Minister of Economics Arvils Ašeradens. "Second, these resources finance the program to support young families in purchasing housing."
The amendments were adopted in the budget package, which is why President Raimonds Vējonis is unlikely to return them for reconsideration – as he did a year earlier. 4,357 people were affected. True, the politicians found a compromise: it is not necessary to pay all 5,000 at once. You can pay 1,000 euros per year.
"I know families for whom this is an economic blow, and even more so – a matter of principle. They are thinking [of moving]," says Pavel Pereverzev. "We declare our readiness to appeal to the Constitutional Court, and following that, to the European Court of Human Rights."
The Latvian government, in turn, declares its readiness to receive millions of euros as additional revenue to the state budget. According to calculations by the Ministry of Economics, the adopted amendments will bring Latvia from 3.7 to 5.1 million euros next year alone.
True, investors have a chance to avoid expenses: after living in Latvia for five years, they can take a Latvian language exam and obtain a permanent residence permit instead of a temporary one. They do not need to pay 5,000 euros for it.