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The major events that can impact the industry

Stephane Tajick

Last updated: June 12, 2019

The major events that can impact the investment migration industry in the coming years


We have discussed in depth about the impact the EU has on the industry in the present and will have in the near future. Many RCBI schemes are becoming more transparent and due diligence standards have been made stricter due to EU pressure. There are other changes that we can clearly expect such as real estate RCBI schemes becoming more restrictive in certain areas suffering from surging property prices, such as Barcelona or Lisbon. I will skip the obvious talks of aging population and low birth rates in the developed world. There are some events that most of us are not expecting yet or have not thought of the impacts they will have on the industry. Events that can impact significantly our industry in the short distance. Anticipation of these events can lead RCBI players to come out stronger; to not do so may lead them to suffer.


The world economy rotates around the U.S. economy and a recession in the U.S. tends to have an impact around the world. Every decade or so, the U.S. experiences a recession; it’s a sort of natural economic cycle of expansion phase and recession phase. In the last 40 years, every recession has happened under the governance of the Republican party, and we are currently in the largest expansion phase of our area. That expansion period was preceded by the 2008 financial crisis and trillions  of dollars in government money was subsequently dumped into the economy as part of the economic stimulus package. The U.S. severely indebted itself in order to jump-start its economy back to life. While the economy had potential during the early term, President Trump enacted a bizarre economic policy of cutting corporate tax cold-turkey by half.


The U.S. corporate tax rate was the world’s highest and the rate had a certain amount of negative impact and was due for cuts. The decision itself was not baffling, but to cut it cold-turkey instead of phasing it out over several years wiped out most of the economic benefits attributed to such changes. To understand why such drastic changes are recommended when you want to choc the economy as to jump-start one in recession, for example.

When the economy is already at full potential and unemployment is low, there is not much margin to grow. It doesn’t make economic sense to make further investment in staff and plants when the economy is at potential and if you don’t think demand is going to grow in proportion; that’s just not how an economy works. Instead the U.S. government has been left with expected loss of earnings in corporate tax revenue in the trillions for the years to come, with very little economic growth to justify it. Stockholders have become richer, but to create real growth, it’s the mass population that needs to become richer in order to increase consumption. Furthermore, significant tax cuts could have been useful option when the actual recession hits to give a new life to the struggling economy. That option is now off the table.

Rising property price

Which brings us to our second point. In the last few years the economy has thrived, and low interest rates have facilitated access to capital. This has translated in many investing their newfound money in real estate instead of riskier ventures such as the stock market. In Canada we have seen record after record of multiple property ownership with real estate prices increasing to new heights. This was exacerbated by government policy: Between 2008 and 2012, the Conservative government progressively shortened the maximum amortization period — or the length of time over which homeowners can spread out their mortgage payments — from 35 years to 25. The policy was made to reduce debt of Canadian households, but its main consequence was that monthly mortgage payments were amortized on 25 years instead of 30 or 35 years, effectively increasing them by more than 20 percent. In consequence, property owners started increasing their rent to keep their head above water. This has led Canada to have the highest rent increase of all OECD countries

Source: OECD Economic Outlook, Volume 2017

Canada is far from a unique case; currently every global city is suffering from housing unaffordability. Growing prices of property and rent at a rate far outpacing wage equates to a higher proportion of income being used on housing, which means that the average person has less money remaining in their pocket to spend on other consumption. Less consumption means demand for goods and services goes down.

Rise in costs of doing business

On the supply side, significant surge in property prices means higher rent, and higher wages need to be paid in order to retain and attract talent. This is especially true when unemployment rate is low, which forces wage up. This can be a good thing for the average worker, but the private sector sees its costs going up and will have to increase its prices in consequence in order to remain profitable. If its products or services do not gain value and benefit in relation to the price increase, it might lose competitiveness in the global marketplace. Any way you see it, a strong surge in the property markets has a negative effect on the local economy, and that effect is even worse when the property market is already unaffordable and unemployment is low.

A decade ago, the financial crisis was preceded by the bursting of the housing bubble and oil prices surging to record heights. It doesn’t take Nostradamus to know that a recession is ahead in the close future; the debate rests on its timeline and its intensity. Trump inherited a thriving economy, but many of his erratic and irrational moves are causing pessimism in the world economy. His 20th-century vision of a zero-sum economy in the 21st century has left the specter of a recession looming towards the end of his term.


A global financial crisis is never good for our client investors. Second passports and residence are investments made when you have money laying around. The economies of third countries are much more volatile than developed ones. They grow at a faster rate and investors take significantly more risk in their investment, which leaves them more vulnerable in periods of financial crisis. Some of them might even pull out investments already made to stay afloat.

On the other side, many countries will be left with weakened economies and will turn to any means to attract investments and capital to gear their economy back to life. Supply of RCBI will increase during or following such periods. Ticket price will be reduced in consequence, and in the long run might even enable the industry to reach a new growth stage. It will rest on the RCBI industry to find the right formula to satisfy the needs of those Western countries. In every financial crisis, the weakest gets wiped out and the strongest becomes stronger.

Read also : Understanding the US Tax reform(Opens in a new browser tab)

Major War

The U.S. is also the center of this topic as they have been in armed conflict with another country pretty much constantly since WWII. The U.S. has taken an aggressive stance against Venezuela and Iran that could explode into a conflict that could seen millions displaced and destabilize their respective regions even more. Pakistan and India are on the brink of war, although the conflict and military actions might be limited to the Kashmir. Escalation of the conflict could lead to millions being also displaced, albeit more locally.   

Consequences to our foreign policies

The latest (ongoing) European refugee crisis has highlighted that one-third of all refugees came from Syria, Afghanistan, and Iraq, three of the top five countries of origin of refugees. Another third were coming from Africa via the failed state of Libya. It suddenly hit us that our foreign policies have come back to bite us in the ass. The countries we invade or destabilise create a mass afflux of migrants that will come look for a safe haven. There is also a domino effect: The civil war in Syria has led millions of refugees to go to neighboring Turkey.  Turkey has itself become destabilized in consequence and the Erdogan government narrowly escaped a coup, leading to civil rights and liberties in Turkey to be rolled back. The repeated assaults on the Middle East have created a lot of stress in the region…which leads us to Iran, the second-most populated country in the MENA region and home to 80 million people.

War in Iran

It’s not a secret that the U.S. national security adviser John Bolton made it his mission to down the Iran regime by the end of 2018.  It nearly happened with the U.S. unilaterally pulling out of the Iran nuclear deal and imposing economic sanctions that led to a severe financial crisis in Iran and civil unrest. The Iranian regime survived but the near future looks gloomy for Iran as the trifecta of the U.S., Israel and Saudi Arabia are actively looking for the country to collapse in one way or another. The European Union is pushing to save the Iran deal and trying to shield Iran as much as possible. They know they cannot afford millions of Iranian refugees descending on the Union. To put it in perspective, Iran is more populated than Syria, Iraq, and Afghanistan put together, and a lasting conflict in Iran could displace tens of millions of people. It unlikely that any country would welcome Trump’s America, Israel and the Saudis as liberators, never mind the Iranians. Any conflicts or civil unrest could be brutal and long-lasting for many reasons that we don’t have time to go into. Another refugee crisis on top of the current one would put too much stress on the current moderate regimes still influencing European politics such as France and Germany. The values placed on human rights and refugees’ rights will be seriously tested with millions of Iranians descending into Europe. Merkel and Macron know that this scenario could lead to the rise of the Far Right in their respective countries, and a step back in the development of social progress. Protecting Iran has become a vital interest for Europe and one that puts them in direct conflict with the U.S. administration, Israel and the Saudis.

War in Venezuela

The U.S. might already be shooting itself in the foot if the crisis in Venezuela leads to years of civil war, as all the neighboring countries will be destabilized and millions of migrants will start heading to the U.S. Colombia would be the most affected as it could lead to instability and surges of violence in the country, which is not equipped to host and integrate millions of refugees. The political struggle could be relatively bloodless, but as history has shown in Latin America in regard to the Left fighting the Right, it has been everything but bloodless. If large flow of Venezuelan refugees were to travel north on foot towards the U.S., it could also impact significantly the small countries in Central America, already suffering from insecurity. In that context, the Border Wall requested by Trump suddenly makes a lot more sense.



Well, the immigration industry feasts on instability, so expect more demand from Iranians and Venezuelans for RCBI products. That being said, those that have the means are probably long gone by now and those that remain have their cash in hand seriously reduced by sanctions and currency devaluation. Serious conflict in those countries will also in time destabilize neighbouring countries, which in turn should increase demand from them, as we have seen with Turkey. On the receiver end, things do not look good. Iran and Venezuela are massive countries; the flow of migrants into the U.S. and Europe will have repercussions in the politics of those states.  Drastic measures will be taken to try to repeal these flows of refugees, and openness to migrants will reach an even lower point than what we see today. This will impact negatively in the immigration policies. A larger flow of refugees will lead to more budget and resources attributed to refugees. Third nationals migrating via economic paths will be impacted much more than EU nationals in Europe. Expect longer processing times for applications for residence and regular naturalisation.

Rise on the far-right

In continuation of our previous point, the aggravation of the refugee crisis could certainly lead to an even further rise of the Far Right in Europe. Many of our Western values of compassion and tolerance towards foreigners are based on things going well for us, and their quality of immigrants in terms of human capita and how many of them are coming. When all three are not what we would like, our compassion and tolerance take a hit and many start championing drastic measures. These drastic measures look somehow impossible in reality, or a far cry from those of a civilized society: let them drown, build a wall, shoot them if they try to enter illegally, let them starve in the streets, etc. These drastic solutions, if implemented, can have the desired effects of scaring refugees off your lands. It would also scare off pretty much everyone in the rest of world and would erode the human rights that are the backbone of Western modern societies. Of course, we look for our leaders to find better solutions than those that bring us closer to barbary. But when moderate leaders are not able to find adequate solutions to seemingly unsurmountable problems, the numbers of those looking for an easy fix whatever the cost swell.



The impact would depend on the economy of the country. As Italy has shown, the Far-Right government in power pushed for an RBI due to the country’s ailing economy. We can expect the same in Europe: where the economic need exists, the country will be open to third-countries nationals with money.

On the other hand, if the economy is doing relatively well, don’t expect any openness towards foreigners. A closed-minded Europe will impact the industry severely as the continent has fuelled most of the growth in the industry and it could eventually lead to contraction. It will also damage the European products as a whole if the countries are viewed as racist. Major illegal refugee waves that are not taken care of and integrated lead to increased poverty and crime. Far-Right governments usually translate into increased social division, inequality and crime. Quality of life is bound to drop, affecting the overall product the industry sells. Another consequence of Far-Right politics is harder paths towards permanent residence and citizenship. We mean harder language and integration tests, more years of residence, and very likely longer processing times.

In  conclusion

The probability of these events happening exists but by no means are written in stone. Other events can lead to a bettering and worsening of future scenarios. The next recession could be more distant and milder. Iran might survive the remaining two years of the Trump administration and the transition in Venezuela could be with limited bloodshed. Peace and economic sense might prevail and usher in a new era in which investment migration plays an important role.

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