L: Doug, a lot of our readers have asked about getting a second passport. I realize this is a large and complex issue – several issues, actually – but would you care to go over the basics of where to go and what to do? And for those not already thinking about this, why?
Doug: Sure. We’ve talked quite a bit about the increasing urgency of getting some of your assets out of your home country, especially if it’s the United States. We’ve talked about having stores of precious metals in safe places abroad, and setting up bank and brokerage accounts abroad as well. I’ve said that safest way to store wealth abroad is to buy property, which can’t be seized by your home country without an act of war. The purchase of real estate solves several issues all at once.
But that’s all about protecting assets; to protect yourself, getting a second passport is unfortunately very important.
L: Why unfortunately?
Doug: Because you shouldn’t have to need government papers to live as you please. It used to be that a passport was a document that a ruler of one country would give to a traveler to ask the rulers of other countries to assist him in his travels. Now, instead of a convenience, it’s become a required permit for travel. It’s degrading and actually runs counter to the whole idea of the thing. The original purpose of a passport has been turned upside down.
L: Passports are becoming a world ID card – and they will be, once the governments all link up their databases.
Doug: That’s exactly what they are, and I’m sure it’s going to get worse. It’s funny the way people treat these things like some sort of holy relic, or magical object – they are nothing but another government ID. But since they are necessary in today’s world, you ought to have several of them, for your own convenience. If nothing else, it prevents any one government from basically placing you under house arrest by taking your passport away from you.
L: Do you really think of it mostly in terms of convenience? Or do you sometimes think about the potential for physical danger, should you find yourself in an Achille Lauro-type situation in which violent people who hate Americans select U.S. passport holders for abuse?
Doug: That’s definitely a good reason for Americans to have a second passport, and increasingly for others, now that the war with Islam is under way. If you ever get caught in harm’s way, it helps that nobody starts by shooting all the people from countries they’ve never heard of.
L: Round up all the Uruguayans!
Doug: Right – that just doesn’t happen. Another reason – certainly if you’re an American – is that nobody any where in the world wants to open a bank account or a brokerage account for you. It ranges from impossible to hard and inconvenient. It’s a subtle and indirect form of exchange control that the U.S. has already imposed. I have no doubt controls will become much more formal and serious in the near future.
L: Are you saying that if I go to Switzerland, and I look and sound like an American, but have a Mexican passport, they’ll open a bank account for me?
Doug: It depends. Here in Uruguay, where I’m still hanging out on the beach, I went with a friend from South Africa to open a bank account, using her South African passport. I didn’t say a word, so I could have been a South African too, for all they knew. Still, the bank officer asked her: “Are you also a U.S. citizen?” and “Are you resident in the U.S.?”
L: The long arm of Uncle Sam keeps getting longer.
Doug: It really is getting harder and harder. Banks really don’t want the aggravations that come with dealing with “U.S. persons” and their bullying government. Of course, it’s all going to eventually backfire on the U.S., but in the meantime it’s going to get worse.
L: So, how have you dealt with this problem?
Doug: Well, when I first started on this, I got a travel document from the World Service Authority in Washington D.C. That organization was started by a guy named Gary Davis, who was a bomber pilot for the U.S. during World War II. He got so fed up with war and governments that he renounced his U.S. citizenship while in Paris after the war. That was a big deal, because he was also the son of Myer Davis, who was a famous band leader during the war.
Anyway, after he renounced his citizenship, he found he couldn’t leave France, because he had no passport. So he created the World Service Authority and printed up a very nice-looking passport that looked a great deal like the UN passport. It was the same color, has a globe on the front (though a bit different from the UN’s globe), was printed in some five languages, and quotations from the appropriate parts of the UN charter.
I have one that I got directly from Gary, himself, back in the ‘70s, and have had some very interesting adventures with it. I’ve used mine successfully in Iceland, French Polynesia, Honduras, Costa Rica and Peru. It worked in some other places as well, but I’d have to look at the stamps to list them all.
L: Are those still available?
Doug: Yes, they are, but with all these governments linking up and sharing data – prompted mainly by the U.S. government – it doesn’t work nearly as well as in the past. Unfamiliarity used to be your friend. Now, if you go to a country and the immigration officer doesn’t recognize your passport, he’ll look it up on a list. But even in the old days, it didn’t always work. A Swiss border guard got very affronted with me over it. When I used it in Rhodesia, during the war, I got sent to the back of the line and got a big lecture. When I used it in Egypt, it meant an hour in the back office, because someone had used one the week before when he assassinated their ambassador to Malta. In Senegal, 30 years ago – a place so backward you’d think they wouldn’t even know – but they laughed good naturedly and said it was out of the question.
The most interesting adventure was in Morocco, where the officer immediately called for a supervisor, and the supervisor had me taken to a back office – something worth being a little nervous about back then – and maybe even more nervous about now. At the time, my French was still pretty competent, and I was feeling my oats that day, so I was hanging tough and arguing with the guy in French. In the end, I said to him: “Okay, so what am I supposed to do?” He replied with an absolutely perfect Gallic shrug. He could have been an actor in a movie. So, I took out my U.S. passport and he took me back to the front of the line.
L: [Laughs] David’s right. You must be missing the gene for fear. Most people wouldn’t even have tried such a thing back then, and most who did, probably gave up after wetting their pants in the first encounter you call an adventure.
[Ed. Note: The “David” reference is to David Galland, Casey Research Managing Partner.]
Doug: Perhaps so, and now the point may be moot. But even with all these governments linking together, it’s still worth getting a World Service Authority travel document, because in some countries you have to turn in your passport at hotels and other places.
L: Yes – I don’t like it when they ask for my passport at hotels, and I hate it when they say they have to keep it.
Doug: As well you should, for all kinds of reasons. You never know how good the security at the hotel is, and the inconvenience of a lost or stolen passport is substantial. I’d say a second one is a good thing to have, just on principle. An alternative would be to get documents from some of those people trying to set up new countries, like Sealand, the WWII gun platform off the coast of England taken over by Roy Bates and recognized by three countries. I spent an afternoon with him once, but foolishly never signed up as a citizen. Oh well… Other outfits sell reproduction passports of defunct or renamed countries like Rhodesia and British Honduras.
L: I shudder to think of what “inconvenience” means to a man who finds it amusing to argue with immigration officials in back rooms in flyspeck countries… But at any rate, mentioning purveyors of passports from defunct countries underscores the importance of telling our readers that there are a lot of scams out there, and that it pays to be very skeptical of web sites that claim to be able to set you up with documents, corporations, and bank accounts overseas. There are free-lance thieves to worry about, and worse – governments trying to entrap so-called tax evaders and money launderers. There’s no need to take such risks when you can go to any of the many countries that encourage immigration and permanent residency, and acquire government-issued documents legally.
Doug: Yes, these are indeed shark-infested waters. You really have to do things in a totally correct and proper way. For instance, there always seem to be people running around who have passports stolen from the issuing agency, and some fools buy them, not realizing they’ll not only lose their money, but might wind up in jail besides. But, even among perfectly legitimate documents, not all passports are created equal.
L: Why would that be?
Doug: The defining characteristic of a “good” passport is how much visa-free travel it allows. And by that I really mean visas that have to be applied for, and approved, before the trip begins, as opposed to those issued at the border. Avoiding those is the real key value.
In spite of its reputation, a U.S. passport is by no means the best one to have. First, if you have one, you’re a U.S. taxpayer, which is very inconvenient, but it also means you need visas for a lot more countries than you would with some other passport. Argentina, Chile, and Brazil, for instance, all charge Americans about $150 to issue a visa. It’s a perverse form of reciprocity, as that’s what the U.S. Government charges their citizens. It ‘s the same kind of thinking that starts trade wars, and I expect more of it in the years to come – but that’s another subject.
Speaking of South America, two passports that are relatively quick and easy to get are those from Uruguay and Paraguay. Both countries are members of the Mercosur group of South American countries, which offers some additional advantages to their nationals.
One of the best, I’m given to understand – and this is constantly changing – is a Singapore passport. I also understand that Singapore has a number of ways to become a citizen in a relatively short period of time.
L: What are some of the shortcuts to second citizenship?
Doug: One of the best is if you have parents or grandparents from a country that will give you citizenship on that basis. Ireland and Italy are known for this. It’s true, under some circumstances, for the UK as well. Saint Kitts is a relatively easy place to get a passport quite quickly, but it involves a significant investment that adds up to a couple hundred thousand dollars. Selling IDs is a significant source of income for the island.
And of course, in a number of countries you can obtain citizenship, and hence documents, relatively easily by marrying a national. Brazil is one, and a Brazilian passport is not a bad one to have.
There’s information on this out there, but there have been scam reports done on this subject and many other sources that are simply unreliable, so watch out. I don’t think there’s ever been a truly definitive study done on all the ways, in all the 200 or so countries in the world. I believe my book The International Man was the first to really explore the ground – but it’s long out of date. Even if there were a current book, it would have to be updated monthly to be of real value – governments are always changing their rules. And when it comes down to the particulars of a given situation, you’ll want to hire a tax attorney and maybe an immigration one as well, to make sure everything is done correctly. That said, our team did put together a special report for people considering expatriation, called Going Global (click here for details).
It’s generally better not to try for short cuts, but to move to a place you like living in, at least part of the year. Operating through the established, legally recognized channels, you can get a passport in two to five years.
L: Okay. And, to be clear, the U.S. allows second citizenships?
Doug: Yes. Many countries don’t, and are strict about it. Others don’t, but look the other way. You may feel you want to keep your U.S. documents for various practical reasons, but remember that keeping your U.S. citizenship means remaining a U.S. taxpayer, which is most undesirable.
L: I read that if your income is less than $100,000 per year and you live abroad, it’s not taxed, so maybe the tax issue is less important to people who earn less than you?
Doug: That’s true, but that exemption only applies only on income earned outside the U.S. You still pay capital gains taxes, and taxes on U.S.-sourced income. I also understand that under current law, until 2013, there’s a $5 million exemption on appreciated expatriated assets. That means there’s a window closing soon on some of the benefits of getting rid of your U.S. citizenship.
[Ed. Note: Readers should consult with a tax attorney before acting on anything mentioned regarding taxes in this interview.]
L: Any reasons other than taxes you’d want to get rid of your U.S. citizenship? If I was young enough, I’d worry about conscription, for example.
Doug: That’s a very good reason. More generally, as long as you’re a citizen of a country, that country’s government is going to treat you like its property. So, if you are going to be a citizen of any place, which is unfortunately necessary, it’s better to be a citizen of a small and backward country, or one that just doesn’t have the ability or interest to monitor all of its citizens like prison inmates, as the U.S. does.
L: I hear that. It’s such a pity that America the beautiful has turned into the United State and is rapidly marching down the road to serfdom… I really loved America.
Doug: Nothing lasts forever, Lobo. It’s suicidal to let sentimentality blind you to reality. But, eternal optimist that I am, it’s always good to look at one of the major bright sides of the ongoing financial and economic collapse. Namely that the governments of most advanced nation-states are bankrupt. There’s a chance that some of them will be forced to cut back on their most noisome activities. There’s even a chance that one or two will be completely hollowed out and will exist mostly in theory, like Rome in the late 5th century.
It’s very hard to predict what will happen, so it’s best to have a Plan B. And a Plan C. Unfortunately, most people have a medieval serf mentality – although they don’t know it, and probably wouldn’t admit it even if they did – and have no plan at all, because they think everything is fine.
L: I agree. And you know I’m diversifying out of the U.S. as well. Any other essential points?
Doug: Yes, remember that getting a second passport is just part of a larger “permanent traveler” strategy. The ideal is to live in one place, have your citizenship in another, your banks and brokers in other jurisdictions, and your business dealings in yet others. That makes it very inconvenient for any one government to control you. You don’t want all your eggs in one basket – that just makes it easier for them to grab them all. I understand it may not be easy for most people to structure their affairs that way. That’s exactly why most serfs stayed serfs; it was hard and scary to think of anything other than what they were told they should do.
L: Understood. Thanks for the guidance.
Doug: You’re welcome. Maybe we should talk about Obama’s state of the Union address next week, but that means I’d have to actually listen to the thing, and that would be painful.
L: Ugh. Maybe Mr. Market will provide us with something more entertaining to talk about. Well, we’ll see. Buenas noches, Tatich.
[Doug has much more to say about internationalizing your wealth (and yourself) in his article “Making the Chicken Run,” in the current edition of The Casey Report. Try it today – with 3-month full money-back guarantee. More here.]