When Hungarian Prime Minister Viktor Orbán talks about migrants, he doesn’t usually mince words — unless, that is, they have money.
Orbán has made fighting migration his signature policy stance, calling a referendum on the EU’s controversial quota scheme for the relocation of refugees and demanding “total control” over the bloc’s external borders as well as the creation of a “giant refugee city” in Libya to process asylum claims.
At the same time, Budapest has been quietly offering residence permits to non-EU nationals, providing successful applicants and their families visa-free access to the EU’s Schengen area in exchange for €300,000 spent on specially designed Hungarian government bonds.
Under the program that began in 2013, Hungary has granted 3,649 residence permits, entitling holders to “a visa-free entry and stay for a maximum of 90 days in the territory of the Schengen Member States,” according to a spokeswoman for the cabinet office of the prime minister. Permit holders are not required to enter the European Union through Hungary or spend any time in the country.
An applicant’s spouse, dependent children and dependent parents also receive a residence permit, entitling them to the same Schengen travel rights. The cabinet office spokeswoman declined to confirm the number of family members who also received residence permits.
Residency Bond Program, a company helping applicants obtain residence, states that in total, 9,735 permits have been granted to applicants and their family members.
“This is the cheapest offer in Europe,” the company says on its website, adding that it takes less than two months to process an application. “Hungary stands out from the crowd with its easy, fast, safe program,”said Laszlo Gaal, managing director of Residency Bond Program on the company website.
On July 1, the Hungarian government lifted the requirement for applicants to have a fixed address in the country. After six months, the successful applicant can obtain a permanent residence permit, valid for the lifetime of its holder.
The Hungarian residence permit scheme is being marketed by authorized companies in countries including China, Russia, Turkey, Iran, Saudi Arabia and the Gulf States. “Europe has never been so accessible!”said the promotional materials of VolDan, the company authorized to sell the residency bonds in the Balkans and former Soviet countries.
A growing market
Hungary isn’t the only country that sells residence permits to non-EU nationals. Cyprus, Ireland, Greece, Latvia, Malta, Bulgaria, Austria, the United Kingdom, Portugal and Spain offer similar permits in exchange for some kind of investment, usually in real estate.
What makes the Hungarian program different is that the investment is an interest-free government bond that is fully repaid after a period of five years. The cost for applicants is the processing fee paid to the companies selling the bonds, which can be up to €60,000, according to the Residency Bond Program.
“If you buy a real estate in a foreign country, you can never be sure about the current or the future value of the property,” said Gaal in an online interview. “If you invest in government bonds, you see the future pretty clearly.”
The Hungarian program — and its competitors — take advantage of a loophole in EU immigration law, which regulates the entry conditions for individuals coming into the Schengen area for short periods of time, but leaves decisions about granting residence or citizenship to member countries.
For the companies selling and marketing the residence permits, the market is booming. “From both sides, the demand and the supply is growing globally,” said Armand Arton, CEO of Arton Capital, one of the major companies facilitating citizenship and residence applications.
Arton estimates that between 5,000 and 8,000 individuals apply each year for the residence schemes offered in Europe.
“It is the best thing that allows me to travel around the EU,” said a Bangladeshi businessman contacted by POLITICO through Arton Capital. He said the attraction was the ability to travel to Europe without the hassle of visa applications. “Normally they hold men and women up from Bangladesh,” said the businessman, speaking on condition of anonymity.
According to the cabinet office spokeswoman, 3,659 people have requested residence permits since the launch of the scheme, and, of those, 3,649 permits have been granted. The top three countries of origin were China (3,090), Russia (228) and Iran (35).
“The Chinese are mainly doing it for mobility and status,” said Arton. “They’d like to have their options for travelling, to be able to go without the hassle of visas which the Chinese are often subject to.”
‘Convenient backdoor’
The Hungarian program, and others like it, have drawn the ire of politicians in Brussels, where a contentious debate is being held over the possibility of providing citizens of Turkey, Kosovo, Ukraine and Georgia with visa-free access to the Schengen area.
Residence permits provide a “convenient backdoor” for the global rich, said Dutch Liberal MEP Sophie in ‘t Veld, who sits on the European Parliament’s Home Affairs Committee. “If you’re a Russian oligarch involved in shady business you just pay some money and enter the EU.”
Others contrast Orbán’s rhetoric on refugees and on national control over who can enter an EU country with the fact that his government is providing those who purchase residence permits with unchecked access to the entire Schengen zone.
“They’re saying to people living in small towns and in the countryside that the migrants are taking away your jobs, they will rape your daughters, the same time they’re selling these [permits],” says Péter Niedermüller, an MEP from the Democratic Coalition, a Hungarian opposition party.
MEPs have also expressed concerns about the security implications of such schemes, voicing doubts about the reliability of criminal background checks provided by the applicants’ country of residence or origin.
Earlier this month, Hungarian media reported that a Russian convicted of tax fraud obtained a permit after submitting background checks from the Caribbean island of St Kitts and Nevis.
“These schemes undermine the integrity of the Schengen system,” said Ana Gomes, a Socialist MEP from Portugal, who also sits on the Home Affairs Committee.
At least one firm helping rich individuals obtain EU residence permits and citizenships, Henley & Partners, has declined to be involved with the Hungarian program. “We select those [programs] we believe have a good value proposition for our clients and those that pass our own very strict due diligence,” said a company spokesperson.
György Schöpflin, an MEP from Fidesz, Orbán’s party, dismissed criticisms of the program, arguing that the number of permits granted was insignificant compared to larger immigration flows.
“It’s a totally minor program, and it’s following the European mainstream, such as Latvia, Malta,” he said. “I would say if I were your news editor that it’s a chickens–t issue.”