‘Risks posed by AI are real’: EU moves to beat the algorithms that ruin lives

Legitimate concerns about AI bias (which individual decision-makers have), also need to address “noise,” variability among decision-making by people for comparable cases:

It started with a single tweet in November 2019. David Heinemeier Hansson, a high-profile tech entrepreneur, lashed out at Apple’s newly launched credit card, calling it “sexist” for offering his wife a credit limit 20 times lower than his own.

The allegations spread like wildfire, with Hansson stressing that artificial intelligence – now widely used to make lending decisions – was to blame. “It does not matter what the intent of individual Apple reps are, it matters what THE ALGORITHM they’ve placed their complete faith in does. And what it does is discriminate. This is fucked up.”

While Apple and its underwriters Goldman Sachs were ultimately cleared by US regulators of violating fair lending rules last year, it rekindled a wider debate around AI use across public and private industries.

Politicians in the European Union are now planning to introduce the first comprehensive global template for regulating AI, as institutions increasingly automate routine tasks in an attempt to boost efficiency and ultimately cut costs.

That legislation, known as the Artificial Intelligence Act, will have consequences beyond EU borders, and like the EU’s General Data Protection Regulation, will apply to any institution, including UK banks, that serves EU customers. “The impact of the act, once adopted, cannot be overstated,” said Alexandru Circiumaru, European public policy lead at the Ada Lovelace Institute.

Depending on the EU’s final list of “high risk” uses, there is an impetus to introduce strict rules around how AI is used to filter job, university or welfare applications, or – in the case of lenders – assess the creditworthiness of potential borrowers.

EU officials hope that with extra oversight and restrictions on the type of AI models that can be used, the rules will curb the kind of machine-based discrimination that could influence life-altering decisions such as whether you can afford a home or a student loan.

“AI can be used to analyse your entire financial health including spending, saving, other debt, to arrive at a more holistic picture,” Sarah Kocianski, an independent financial technology consultant said. “If designed correctly, such systems can provide wider access to affordable credit.”

But one of the biggest dangers is unintentional bias, in which algorithms end up denying loans or accounts to certain groups including women, migrants or people of colour.

Part of the problem is that most AI models can only learn from historical data they have been fed, meaning they will learn which kind of customer has previously been lent to and which customers have been marked as unreliable. “There is a danger that they will be biased in terms of what a ‘good’ borrower looks like,” Kocianski said. “Notably, gender and ethnicity are often found to play a part in the AI’s decision-making processes based on the data it has been taught on: factors that are in no way relevant to a person’s ability to repay a loan.”

Furthermore, some models are designed to be blind to so-called protected characteristics, meaning they are not meant to consider the influence of gender, race, ethnicity or disability. But those AI models can still discriminate as a result of analysing other data points such as postcodes, which may correlate with historically disadvantaged groups that have never previously applied for, secured, or repaid loans or mortgages.

And in most cases, when an algorithm makes a decision, it is difficult for anyone to understand how it came to that conclusion, resulting in what is commonly referred to as “black-box” syndrome. It means that banks, for example, might struggle to explain what an applicant could have done differently to qualify for a loan or credit card, or whether changing an applicant’s gender from male to female might result in a different outcome.

Circiumaru said the AI act, which could come into effect in late 2024, would benefit tech companies that managed to develop what he called “trustworthy AI” models that are compliant with the new EU rules.

Darko Matovski, the chief executive and co-founder of London-headquartered AI startup causaLens, believes his firm is among them.

The startup, which publicly launched in January 2021, has already licensed its technology to the likes of asset manager Aviva, and quant trading firm Tibra, and says a number of retail banks are in the process of signing deals with the firm before the EU rules come into force.

The entrepreneur said causaLens offers a more advanced form of AI that avoids potential bias by accounting and controlling for discriminatory correlations in the data. “Correlation-based models are learning the injustices from the past and they’re just replaying it into the future,” Matovski said.

He believes the proliferation of so-called causal AI models like his own will lead to better outcomes for marginalised groups who may have missed out on educational and financial opportunities.

“It is really hard to understand the scale of the damage already caused, because we cannot really inspect this model,” he said. “We don’t know how many people haven’t gone to university because of a haywire algorithm. We don’t know how many people weren’t able to get their mortgage because of algorithm biases. We just don’t know.”

Matovski said the only way to protect against potential discrimination was to use protected characteristics such as disability, gender or race as an input but guarantee that regardless of those specific inputs, the decision did not change.

He said it was a matter of ensuring AI models reflected our current social values and avoided perpetuating any racist, ableist or misogynistic decision-making from the past. “Society thinks that we should treat everybody equal, no matter what gender, what their postcode is, what race they are. So then the algorithms must not only try to do it, but they must guarantee it,” he said.

While the EU’s new rules are likely to be a big step in curbing machine-based bias, some experts, including those at the Ada Lovelace Institute, are pushing for consumers to have the right to complain and seek redress if they think they have been put at a disadvantage.

“The risks posed by AI, especially when applied in certain specific circumstances, are real, significant and already present,” Circiumaru said.

“AI regulation should ensure that individuals will be appropriately protected from harm by approving or not approving uses of AI and have remedies available where approved AI systems malfunction or result in harms. We cannot pretend approved AI systems will always function perfectly and fail to prepare for the instances when they won’t.”

Source: ‘Risks posed by AI are real’: EU moves to beat the algorithms that ruin lives

Commodification of EU citizenship: Will the EU ban ‘golden passports’?

More on EU debates and tightening:

Europe is not quite the same since Russia’s invasion of Ukraine. European reaction to the war is in many ways strengthening the old seams of the EU project and, since its outbreak, one of the moral contradictions facing EU member states in recent years, the sale of citizenship, is now being tackled with much greater consensus.

Following the 2008 financial crisis, which hit southern European economies particularly hard, a number of countries, such as Portugal in 2012 and Spain in 2013, decided to set up schemes to enable the purchase of residence visas for “international investors”, that is, third-country nationals with sufficient purchasing power to secure the right to reside in the EU against payment, providing them with the key to full European citizenship within just a few years. Greece, Ireland, Italy, Malta and Cyprus soon went down the same route. They were followed not long after by the Netherlands, Bulgaria, Estonia, Latvia and even Luxembourg.

In countries such as Bulgaria, Malta and Cyprus, these ‘golden visa’ programmes, technically known as ‘residence by investment’ schemes (RBI), were accompanied by the so-called ‘golden passport’ programmes, which speed up the whole process and offer direct access to ‘citizenship by investment’ (CBI). After years of pressure from Brussels, Bulgaria and Cyprus have committed to ending CBI. Malta, however, has not, so it is still possible to buy an EU passport within a matter of a year.

“The main beneficiaries of both systems have been Chinese oligarchs and Russian oligarchs,” Spanish MEP and former justice minister Juan Fernando López Aguilar, who chairs the European Parliament’s Committee on Civil Liberties, Justice and Home Affairs, tells Equal Times. In many cases, he insists, “they are mafiosi and corrupt individuals who launder the wealth, illicitly acquired in their countries of origin, by buying the privilege of residing in Europe and acquiring property in Europe, which has nothing to do with investment, and much less with creating jobs – all they have to do is buy mansions, yachts and real estate, which is what they do.”

RBI programmes were defended at the time as a way of attracting investments into countries such as Spain and Portugal.

“In both cases they were adopted at the time of conservative governments, which [against a backdrop of economic crisis] introduced legislative measures to, in practice, make money from granting residence rights, even though they are not linked to any actual investment and there are no checks on that investment. So we are clearly faced with issues that impact on European money laundering legislation,” the MEP summarises.

In October 2020, at the request of the European Parliament, the European Commission referred Malta and Cyprus to the European Court of Justice, alleging that their CBI programmes violated several fundamental articles of EU law.

The European Parliament also called on the Commission in March 2022 to prepare legislation banning ‘golden passports’ (CBI) across the EU and to set very strict conditions on ‘golden visa’ (RBI) schemes, with “stringent background checks” on applicants. And, adds López Aguilar, “with mandatory checks against all the databases shared by the EU-LISA agency, which reports regularly to the committee I chair, so that not only people who acquire this residence permit, but also all their direct first-degree relatives can be examined, and with the express obligation to consult and notify all member states, so that they can raise objections [on a case-by-case basis] to any person seeking residence in another member state.”

Investment migration and due diligence

These schemes are not, however, a European invention. There is a whole network of companies specialising in advising wealthy individuals interested in paying for a visa or residence permit in the 30 or so countries around the world that offer them, from small island nations in the Caribbean to economic giants such as the US, the UK and Canada, where the first such programmes were launched in 1986.

It is from Canada that Eric Major, the ‘father’ of the Malta Individual Investor Programme originally hails. Now a founding member and CEO of one of these firms – Latitude RCBI Consultancy – he assured Equal Times that these CBI schemes are a very useful tool for small or economically distressed countries, and that it would be senseless to disregard that.

Major defends the Maltese CBI scheme as an example of how best to regulate so-called “migration by investment”, a global market that generated 21.4 billion euros between 2011 and 2019 through CBI and RBI schemes.

“The US is still the country that approves the most ‘golden visas’ at around 10,000 people a year, while Portugal approved about 1,500 last year, Spain about 1,000,” says Major. “Depending on the size of the family being considered, the cost (of Maltese citizenship) will typically range between €900,000 at the low end, and €1.2 to €1.3 million.” It is “an injection to the National Development and Social Fund,” he adds, which finances “schools, roads and hospitals”. Malta, he explains, receives some 400 applications a year, of which around 250 are approved. “That is around 250 families; that means less than 1,000 people a year. And in the grand scheme of things, that’s 1,000 people who give on average a million euros each. So, you have an island nation that receives €200 million a year with this programme and that is particularly transformative for a small country, and all the more so in a post-Covid world.”

For Major, whose views are fairly representative of those of the Investment Migration Council, what MEPs are raising “are absolutely acceptable issues and need to be addressed”, as “some countries are doing better than others”. He argues that Malta offers an example of what could be satisfactory controls, which were inspired by practices in the banking sector. He refers to this as “four-tier due diligence”, whereby the state has to verify the good moral character of the applicants and the provenance of the funds provided through recourse to international banking databases, the law enforcement agencies of the countries in which they have resided and reports from firms specialising in data verification and risk analysis – all paid for by each applicant as part of the conditions of the programme.

For the European Parliament, however, this is not enough. “Malta and Cyprus keep in place these tools that are supposed to attract foreign investment but [they] have inevitably led to corruption and the laundering of illicitly obtained capital, without the slightest doubt,” says López Aguilar, who hopes that the ECJ will ultimately invalidate these programmes “based on their incompatibility with European law.”

For citizenship scholar Dimitry Kochenov, professor at the Institute of Democracy at the Central European University (CEU) in Budapest, the possibility of such a ruling is not so clear. As he explains to Equal Times, in Europe “citizenship has always been regulated, by default, at the national level, and there is no legal basis for regulating it at the supranational level”, so he does not believe that CBI programmes could be banned. “With residence, it is different, because there is a legitimate legal basis in the treaties by which the EU can legislate to harmonise residence rules and laws in the member states.”

Kochenov, himself a Dutch citizen of Russian origin, fears that the European Parliament’s measures against Russian beneficiaries of these programmes may be counterproductive. “The majority of the oligarchs on the sanctions list did not receive their European passports by investment, because there are plenty of other fully lawful ways,” he explains, as seen with Roman Abramovich, who became Portuguese based on his descent from the Sephardic diaspora. And then there are those who “have acquired citizenship in Europe, or the Caribbean, or elsewhere, because they wanted to escape Putin’s regime rather than support it,” such as Pavel Durov, the creator of the messaging app Telegram, who after refusing to collaborate with the FSB was able to flee Russia by buying citizenship of the Caribbean micro-state of Saint Kitts & Nevis. In 2021, he also acquired Emirati and French citizenship.

“To say that every person who comes from Russia and naturalises in the EU is potentially suspect ignores the simple fact that Russia is not a democracy” and that “many of the people who flee the country need to naturalise elsewhere because there is simply no other way”, so “naturalisation precisely enables their fight with the regime and their opposition to the war in Ukraine”, insists Kochenov.

López Aguilar believes that “this has to be filtered on a case-by-case basis, with all the guarantees required,” so that no one can make wrongful claims. The European Parliament’s intention is not to act against legitimate migration, but to close the door to international criminals and corrupt individuals who have been exploiting these schemes in the EU. And the war is acting as “an accelerant” in this regard, prompting the European Commission to strongly defend and adopt the EP’s proposals to strictly regulate ‘migration by investment’. “If we want to hurt Putin, we have to hurt the Russian oligarchs,” he concludes. “And if we want to hurt the Russian oligarchs, we have to put an end to this.”

Source: Commodification of EU citizenship: Will the EU ban ‘golden passports’?

Bulgaria ends controversial ‘golden passports’ scheme

EU Parliament having an impact:

Bulgaria has abolished its controversial “golden passports” scheme offering citizenship of the EU member state in return for substantial investment, which had been criticised by Brussels.

The scheme made it possible for foreigners to acquire residency when they invested a minimum of 500,000 euros ($550,000) in Bulgaria, and citizenship when they invested one million euros ($1.1m).

The beneficiaries were primarily from Russia, China and the Middle East.

Bulgaria’s new government, which has made fighting corruption a key priority, had already urged parliament to discontinue the granting of such passports in January.

The decision by Bulgarian MPS on Thursday comes after the awarding of “golden passports” was again condemned by the European Parliament in the light of Western sanctions targetting Russian oligarchs over Moscow’s invasion of Ukraine.

Earlier this month, MEPs repeated their call on Bulgaria, Malta and Cyprus to scrap both “golden passports” and “golden visas”.

The European Commission has repeatedly called for the abolition of such schemes because they create an incentive for corruption and money laundering.

Full review

As part of the decision, MPs also authorised a full review of all passports granted since the scheme was launched in 2013.

According to the justice ministry, about 100 such passports have been awarded to date.

The previous interim administration had last year flagged concerns about possible irregularities in 47 cases.

Despite the decision, there will still be the option of acquiring a residence permit under the scheme.

Malta has also said it would suspend granting “golden passports” to Russians and Belarusians until further notice following the invasion of Ukraine.

According to the European Parliament, at least 130,000 people obtained a “golden passport” or a “golden visa” in the bloc between 2011 and 2019, generating 21.8 billion euros ($23.9bn) for the countries concerned.

Source: Bulgaria ends controversial ‘golden passports’ scheme

EU parliament demands end to ‘golden passports’ for Russians

Long overdue, not just for Russians:

The European Parliament has voted overwhelmingly to end the practice of EU countries selling citizenship and visas to rich individuals.

It comes in the wake of Russia’s invasion of Ukraine with many wealthy Russians having received EU passports in exchange for significant investments.

Members of the European Parliament in Strasbourg on Wednesday voted 595 for, 12 against and with 74 abstentions to end the so called ‘golden passport’ schemes.

They are calling for an all out ban on the purchase of citizenship by 2025 but want significantly increased background checks to come into force immediately.

The vote is however not binding. It is now up to the European Commission to outline a detailed proposal of how to end the schemes and then the EU’s national government will have the final say on the matter.

“The system of golden passports and visas carries with it inherent risks of tax evasion, corruption and money laundering.” said Saskia Bricmont MEP, a Green MEP from Belgium. “For too long oligarchs, criminals and corrupt politicians have had the ability to buy their way into Europe and launder their cash, image and identities.”

Malta, Cyprus and Bulgaria are the EU countries which have run the most lucrative golden passportschemes.

It is estimated that in the eight-year period until 2019, over €20 billion of investments came into EU countries in this manner.

“The time of asking national governments nicely is over,” said Dutch MEP Sophie In’t Veldt during the European Parliament debate. “[We need] the total complete abolition of this procedure, not simply to reduce it but to completely eliminate it.”

Members of the European Parliament accepted in the report that the move would lead to shortfalls in national budgets and allowed for a phased out approach.

Values for sale

The report into the golden passports has been moving through the European Parliament for a while but came into focus when the schemes were specifically mentioned in a joint EU statement alongside the leaders of France, Germany, Italy, the United Kingdom, Canada, and the United States, in the immediate hours after Russian invaded in Ukraine.

It is unknown exactly how many Russian citizens have received an EU passports through the schemes, but in April 2021 a leak of documents suggested Malta was giving out passports in exhange for investments of around €910,000 ($1 million) and that the income amounted to €432 million the country’s 2018 budget.

When that leak came out, European Commission President Ursula von der Leyen said “European values are not for sale.”

Gaining an EU passport allows the bearer to travel freely within the EU’s border-free Schengen area, to access healthcare in all EU member states, to live and work anywhere, and also to enjoy the tax situation in that country’s jurisdiction.

Damage done

Last minute amendments to the European Parliament’s report saw EU lawmakers demand an immediate end of the schemes for Russians – other nationalities who profit from them like Saudis and Chinese would be included in the phase out.

Many experts warn that while the move comes alongside the cutting sanctions against Russian President Vladimir Putin and the oligarchs who prop him up, those who already have the passports cannot be kicked out.

“The damage is done” Jacob Kirkegaard said senior fellow at the German Marshall Fund told DW. “But at least the war finally may have shamed the relevant national governments into ending this corrupt practice”

EU Commissioner Didier Reynders believes the EU’s position against selling passports is clear

The European Commission, which drafts EU law, rejects the need for new rules to end the golden passport schemes, believing the current legal position in the EU against them is clear.

EU Justice Commission Didier Reynders told the house in Strasbourg that country’s should check the passports which have already been issued and pointed to legal proceedings which were started against Malta and Cyprus in 2020 as evidence that Brussels was already acting to end the schemes.

Source: EU parliament demands end to ‘golden passports’ for Russians

EU Targets Golden Visas in Clampdown on Dirty Money

Long overdue:

European Union lawmakers voted to limit so-called golden visas, as countries across the region clamp down on cash-for-passport programs.

Wednesday’s European parliament vote, which passed with a 595 to 12 majority, aims to ban “golden passports” and set up EU-level regulation on visas that includes stronger background checks on applicants and the source of their wealth. After the vote, the parliament expects the European Commission to propose legislation to standardize programs across the common area.

“The commission has a duty now to act,” MEP Sophie In’t Veld said during a press conference in Strasbourg ahead of the vote. “The whole situation with the war in Ukraine has again put spotlight on the problem of people buying passports, buying residency, buying access to the EU.”

Parliament wants the Commission to come up with a legislative proposal that will ban golden passports, phasing them out by 2025 while regulating golden visas to ensure that investments flow into the real economy. Lawmakers are also asking for stringent background checks, including on family members and on the origin of funds. In addition, the parliament called on the EU Commission to ban Russian nationals who are subject to EU sanctions from all so-called residence-by-investment schemes.

European lawmakers also want to put pressure on third countries, such as Panama or Saint Kitts & Nevis, to abolish visa schemes that allow people who receive the documents to travel freely across the EU.

Thirteen member states currently have programs that allow citizens of non-EU countries to acquire an EU passport or residency permit in exchange for an investment such as real estate or bonds. Without any European-wide rules in place, the eligibility requirements vary greatly across the region, with the minimum investment ranging from 127,000 euros ($140,000) in Bulgaria to 1.2 million euros in the Netherlands. The golden visa programs have attracted about 3.5 billion euros per year from 2016 to 2019, according to European Parliament research.

In 2020, the European Commission opened legal action against Cyprus and Malta for their cash-for-passports schemes which grant EU citizenship to investors “without a genuine link” to the country.  Bulgaria, which also has a citizenship-by-investment scheme, has tabled a draft bill to end it.

Member states including Portugal, Greece and the Czech Republic have halted the issuance of visas to Russian nationals in light of the war in Ukraine. Last month, the U.K. scrapped its investor visa scheme to crack down on money laundering. Bulgaria also moved in that direction with a bill to drop golden passports altogether.

“We consider that operating investor citizenship schemes that systematically offer citizenship in exchange for pre-determined payments and investments, without a genuine link with the Member States concerned, violates EU law,” the commission said in a statement.

Source: EU Targets Golden Visas in Clampdown on Dirty Money

EU looks to suspend Vanuatu from visa-free travel list over ‘citizenship for sale’ scheme

Of note. Welcome belated crackdown:

The European Commission on Wednesday proposed suspending visa-free travel between the bloc and the South Pacific nation of Vanuatu. The move, which would be a global first, is aimed at curbing the practice of offering “golden passports.”

In Vanuatu, foreigners can obtain citizenship and a passport in exchange for a minimum investment of $130,000 in the country. This in turn grants them easier access to other nations, including the 27 countries that make up the European Union.

The European Commission had issued a warning that it would take this step if Vanuatu did not alter its investment-for-citizenship program. The proposal now goes to individual EU member states for approval.

If the Commission proposal is adopted, it would end visa-free travel for anyone who has acquired Vanuatu citizenship since 2015. The ban will be dropped if the government amends the rules, the Commission said.

In the proposal, the EU executive pointed to the extremely risky nature of the scheme, arguing that it accepted essentially all applicants without sufficient screening, despite some appearing in Interpol’s security databases.

Cyprus, Malta also in hot water

The Commission said it is currently monitoring similar programs or planned schemes in several other countries, including Caribbean islands and the eastern European nations of Albania, Moldova, and Montenegro.

Similar programs in Cyprus and Malta, both EU members, are currently facing legal challenges from Brussels.

Source: EU looks to suspend Vanuatu from visa-free travel list over ‘citizenship for sale’ scheme

Poland Gets Support From Europe on Tough Borders

Good example of “weaponization” of refugees:

The migration crisis of 2015, when millions of migrants and asylum seekers surged over Europe’s borders, nearly tore apart the European Union. Many members offered asylum to the refugees; others, like Poland and Hungary, wanted no part of it.

Six years later, the current standoff at the border of Poland and Belarus has echoes of that crisis, but this time, European officials insist that member states are united when it comes to defending Europe’s borders and that uncontrolled immigration is over.

What is different, the Europeans say, is that this crisis is entirely manufactured by the dictator of Belarus, Aleksandr G. Lukashenko, as a response to sanctions that the Europeans imposed on his country in the face of a stolen election and a vicious repression of domestic dissent.

“This area between the Poland and Belarus borders is not a migration issue, but part of the aggression of Lukashenko toward Poland, Lithuania and Latvia, with the aim to destabilize the E.U.,” Ylva Johansson, the European commissioner for home affairs, said in an interview over the summer.

The crisis began in late August, when growing groups of migrants, mostly from the Middle East, began massing at the borders of Poland, Latvia and Lithuania, shepherded there by Belarus. That movement has now become much larger, with at least 4,000 or more men, women and children trapped in the freezing cold, without proper shelter or toilets, between Belarus and its neighbors.

Both Poland and Lithuania declared states of emergency and fortified their borders, while Belarusian forces have in some cases aided the migrants in breaking through. The border regions have been shut to journalists and aid workers, but upsetting videos and pictures of the migrants facing barbed wire have been distributed, often by Belarus itself.

On Wednesday, the German foreign minister, Heiko Maas, called Mr. Lukashenko’s tactics a “cynical power play” and said that blackmail must not be allowed to succeed. In Washington the president of the European Commission, Ursula von der Leyen, met President Biden and emerged to say that what was transpiring on the Belarus border is “a hybrid attack, not a migration crisis.”

Source: Poland Gets Support From Europe on Tough Borders

Immigration and natives’ exposure to COVID-related risks in the EU | VOX, CEPR Policy Portal

Interesting assessment that immigrant workers in EU countries helped non-migrants avoid COVID-related risks given that immigrant workers filled the more difficult and dangerous jobs and that native workers were more able to shift to jobs that could be filled from home:

In recent years, immigration policy has been at the forefront of political debates in high-income destination countries. The UK completed its withdrawal from the EU on 31 January 2020, due in part to the desire to have more control over its immigration policies and to limit migrant flows. Intense political debates and polarisation on immigration helped fuel the rise of right-wing parties in Europe and political controversies over the border wall and the Dream Act in the US.

Despite these high-profile examples of the popular and political backlash against immigration, the academic literature provides evidence that immigrant workers often fill difficult and dangerous jobs that locals are not willing to undertake (Orrenius and Zavodny 2009 and 2013, Sparber and Zavodny 2020).

The recent COVID-19 shock exerted unforeseen and sudden pressures on labour markets across the world. While the negative effects of the pandemic were widespread, some categories of workers were hit much harder than others due to their occupations (Adams-Prassl et al. 2020a and 2020b, Dingel and Neiman 2020, Garrote-Sanchez et al. 2020, Gottlieb et al. 2021). Migrant workers, in particular, have been more exposed to the negative impacts of COVID-19 (Basso et al. 2020, Borjas and Casidi 2020, Fasani and Mazza 2020 and 2021). Another strand of the migration literature shows that in response to immigration, native workers reallocate to different occupations in which they have a comparative advantage (Peri and Sparber 2009).

Against this backdrop, a question of interest is whether immigration contributed to reducing locals’ exposure to the COVID-19 pandemic. In a recent paper (Bossavie et al. 2020), we explore how the prevalence of immigration in a labour market affects different types of workers’ exposure to COVID-19 related risks. We provide evidence that not only were immigrant workers more exposed to the economic and health-related shocks of the pandemic; they also served as a protective shield for native workers. By selecting into higher-risk occupations prior to the pandemic, immigrants enabled native workers to move into jobs that could be undertaken from the safety of their homes or with lower face-to-face interaction with customers and co-workers during the pandemic.

To assess the exposure of immigrant and native workers to the economic and health risks posed by the pandemic, we construct various measures of vulnerability. We look at three main dimensions of occupational vulnerability in the context of COVID-19: whether an occupation can be carried out from home, whether it has been categorised as essential by governments in the context of COVID-19, and whether it is exposed to COVID-19 health risks. In general, lower-skilled occupations such as machine operators, waiters, and day laborers tend to be less amenable to work from home than professional and managerial occupations. Essential jobs are concentrated in key sectors such as healthcare or agriculture. The higher health risks are found in essential occupations that require intensive face-to-face interactions such as doctors, personal care workers, or bus drivers.

We focus on destination countries in Western Europe, including the 15 countries that were the initial members of the EU (prior to the 2004 enlargement), Norway, and Switzerland. This region is the destination for an estimated 60 million of some 272 million immigrants worldwide. The analysis is based on a harmonised labour force dataset (EU Labor Force Survey) that contains detailed information on personal characteristics (such as age, education, occupation, and sector) of native workers and labour migrants in hundreds of local labour markets in subregions within European countries.1 The distribution of occupations by type of exposure to COVID-19 and by migrant status in the EU is reported in Figure 1.

Figure 1 Relative size of telework, essential, and non-face-to-face jobs in the EU

Source: Own calculation based on EU-LFS 2018 data, following EC directive (2020) and Fasani and Mazza (2020).

We first find that immigrants are generally employed in occupations that are more vulnerable to COVID-19-related risks (Fasani and Mazza 2021 report similar findings). Our estimates show that only 27% of employed migrants in the EU15 have a job amenable to telework, compared to 41% of native workers (Figure 2). On the other hand, migrants are slightly more likely to be in essential occupations. Combining those two categorisations of job vulnerabilities, migrants are more than 10% less likely than natives to hold jobs that are shielded from negative income shocks associated with the COVID-19 pandemic. Furthermore, migrants are also more likely to have jobs that are exposed to health risks, though we report significant heterogeneity in exposure among immigrant groups. The higher vulnerability of migrants is common across skill levels but varies depending on country of origin, with Eastern European migrants being the most exposed to income risks while migrants from Western Europe or North America have a similar risk profile to natives. Recent Eurostat statistics show that the higher vulnerability of migrants to the COVID-19 shock in Western Europe resulted in higher employment losses in 2020 (4% drop vis-à-vis 2019, compared to 0.8% fall for natives during the same period).

Figure 2 Share of workers by region of origin and risk type

Source: Own calculation based on EU-LFS 2018 data, following EC directive (2020) and Fasani and Mazza (2020).

We then examine whether the presence of immigrants in local labour markets has a causal impact on the vulnerability of native workers in the same geographic areas. Our empirical analysis is motivated by a general equilibrium model of comparative advantages in task performance between immigrant and native workers (Peri and Sparber 2009). In the model, native workers reallocate to other occupations in response to an influx of immigrant workers. In the empirical analysis, we use an instrumental variable approach to account for the non-random location choices of migrant responses to local job opportunities, which is based on past migration presence in the same region. Because of information, networks, and preferences, there is a strong positive association between current and past immigrant presence across European regions, as immigrants tend to move to the same locations where previous immigrants from the same country already live.

We find that native-born workers in those European subregions with a higher share of immigrants are significantly less likely to be exposed to various dimensions of occupational vulnerability associated with COVID-19. This association is especially strong when looking at the likelihood of being employed in teleworkable occupations (Figure 3), and the results get stronger once the endogeneity of immigrants’ location choices is taken into account. Immigration thus had a causal impact in reducing the exposure of native workers to some labour markets risks associated with the COVID-19 pandemic.

Figure 3 The relationship between share of immigrants in the working-age population and share of natives employed in jobs amenable to work from home in European regions

Source: Authors’ calculations using the EU Labor Force Survey 2018.
Note: The sample includes NUTS-2 regions from the EU-15 as well as Switzerland and Norway.

We also find heterogeneous effects depending on the characteristics of native workers. The effects of immigration on job safety are stronger for highly (i.e. tertiary) educated native workers, who benefit from the presence of both high-skilled and low-skilled migrants. By contrast, the effects are smaller and statistically insignificant for less (i.e. non-tertiary) educated native workers. We also assess whether these compositional effects on employment of certain types of native workers are accompanied by overall changes in total employment and wages. We find no evidence of wage or employment impacts among native workers, suggesting that the increase in job safety among native workers is driven purely by their reallocation from vulnerable jobs to safer jobs.

In short, we find that immigration to Western Europe reduced the economic exposure of natives to COVID-19 related labour market shocks by pushing them towards occupations that are more amenable to work from home. Our paper thus provides another example of immigrant workers in effect ‘protecting’ native workers by taking on the riskiest jobs during the pandemic.

Source: Immigration and natives’ exposure to COVID-related risks in the EU | VOX, CEPR Policy Portal

IMC Defends Sovereign and Societal Value Creation of Investment Migration Programs [citizenship-by-investment]

Of note. The international lobby group for citizenship-by-investment programs argues (unconvincingly) its case. No Canadian firms that I recognized:

The two-month deadline set by the European Commission for the governments of Cyprus and Malta to reply to the letters of formal notice regarding their citizenship-by-investment pathways is approaching. In advance of this date, the Investment Migration Council (IMC) wishes to engage with all relevant stakeholders and remind them of a number of salient points.

The legal case

The right to assign citizenship is very clearly the sole competence of a sovereign state. This analysis of the European Commission’s legal case has nothing to do with whether one agrees with the concept of citizenship by investment. The vast majority of EU legal experts argue that the Commission has no legal right to become involved in how sovereign states define citizenship law.

The IMC has sought the opinions of several legal scholars, including Professor Dr Daniel Sarmiento, a leading specialist in EU competence law, and Professor Dr Carl Baudenbacher, the former president of the EFTA court. The conclusion is clear: The EU has no competence in the area of citizenship. Moreover, the concept of ‘genuine link’ that was invoked by the EU is both vague and arbitrary. The European Court of Justice already found in earlier decisions that it is not relevant.

It is therefore unlikely that the European Court of Justice would rule in favour in the matter at hand, as this could have very serious secondary consequences, and could open the way for the EU to encroach on the power of granting nationality, which is reserved, in EU Law, for Member States.

As rightly noted by the European Parliament, “Nationality is defined according to the national laws of that State.”

Strong governance and due diligence

The IMC however understands and shares the concerns of both the EU and wider stakeholders around the question of proper due diligence on applicants to such programs. This is why it has developed, in cooperation with international anti financial crime firms BDO, Exiger and Refinitiv, a common best practice framework and developed a blueprint for good governance through due diligence standards to uphold the highest levels of integrity and transparency. [Download the ‘Due Diligence in Investment Migration: Best Approach and Minimum Standard Recommendations’ Report]

Nevertheless, the IMC suggests that there has been a significant exaggeration of the risks. Working in partnership with Oxford Analytica, the leading geopolitical risk analysis and advisory firm, it has identified that for all the publicly voiced concerns, the due diligence and governance in place already acts as a powerful deterrent. [Download the ‘Due Diligence in Investment Migration: Current Applications and Trends’ Report and the ‘Citizenship by Investment Programmes: An EU Risk Assessment’ Report]

Oxford Analytica found that the operational reality is that investment migration risks are primarily theoretical in nature. This assessment is broadly shared with the intelligence, security, and law enforcement professionals involved in managing investment migration. Potentially nefarious activity is a negligible percentage and compares very favourably to other legal migration pathways.

There are, of course, enhancements that should be made at corporate, sovereign state, and intragovernmental information sharing levels. The IMC and its membership community are committed to the highest of standards. We want to work in partnership with the relevant stakeholders to devise a formal regulatory system that mirrors those of financial and professional services providers and that will ensure the necessary protection. That system should be based on an objective and knowledgeable analysis of the reality of investment migration, not one that is based on scare stories and rumour.

A creator of societal and sovereign value

Investment migration is a vital lever for sovereign nations to raise debt-free capital, attract talented individuals, and deliver benefits to society as a whole. In Malta, to mention but one example, the Individual Investor Programme attracted EUR 1.4 billion directly into the island nation’s economy following the damaging Euro crisis. This liquidity has had profoundly positive consequences. There has been significant employment creation across all levels of society, and the Maltese government has greater autonomy to invest in vital infrastructure projects, some of which involve critical care for cancer patients.

Bruno L’Ecuyer, CEO of the IMC commented: “Investment migration pathways are now a well-established, normalised wealth management advisory practice. As is the case with other established financial and professional services practitioners, we want to work in partnership with all relevant stakeholders to ensure that sovereign and societal value can be maximised through prudent, responsible, and objective regulation.”

For this to happen, all investment migration advisors must run operations to the highest possible standards and be prepared to face the consequences if they are found wanting. Equally, stakeholders must understand that the privilege of granting citizenship and residence rights is solely the domain of a sovereign state, and that significant sovereign and societal value can be created through investment migration, particularly in the Covid era, which moreover in many instances is aligned with the UNs Sustainable Development Goals.


About the Investment Migration Council

The Investment Migration Council (IMC) is the worldwide association for Investment Migration, bringing together the leading stakeholders in the field and giving the industry a voice.

The IMC sets the standards on a global level and interacts with other professional associations, governments, and international organisations in relation to investment migration.

The IMC helps to improve public understanding of the issues faced by clients and governments in this area and promotes education and high professional standards among its members.

The IMC is constituted as a not-for-profit association under Swiss law. Based in Geneva, it has representative offices in New York, London and the Cayman Islands. Managed by a Secretariat under the direction of a Governing Board, the IMC also has a non-executive Advisory Committee, in which the most important industry stakeholders are represented. The IMC is funded by membership fees, donors and income from activities such as events, education, training, and publications.

(Membership list can be found here: https://investmentmigration.org/members-directory/ )

Source: IMC Defends Sovereign and Societal Value Creation of Investment Migration Programs

There’s a social pandemic poisoning Europe: hatred of Muslims

Of note:

Rarely does the EU act so swiftly. Less than four months since the killing of George Floyd in police custody and the Black Lives Matter campaign that spilled into Europe and galvanised continent-wide protests, the EU is appointing its first ever anti-racism coordinator.This brilliant idea will make little sense, however, if anti-Muslim hatred is not part of their portfolio. Because instead of building a “truly anti-racist union”, as the president of the European commission, Ursula von der Leyen, would wish, we have so far built an anti-Muslim one.

Prejudice against Muslims exists in every corner of Europe. Not only do we collectively devalue and discriminate against Europeans who follow Islam, but the incidence of violence against Muslims is increasing.

We have known since the refugee and migration crisis of 2015 and the jihadist terrorist attacks in France, Spain and Germany that Muslims suffer from an exceptionally bad reputation in our societies. In 2019, research conducted for the Bertelsmann Stiftung’s Religion Monitor yet again confirmed widespread mistrust towards Muslims across Europe. In Germany and Switzerland, every second respondent said they perceived Islam as a threat. In the UK, two in five share this perception. In Spain and France, about 60% think Islam is incompatible with the “west”. In Austria, one in three doesn’t want to have Muslim neighbours.

Source: There’s a social pandemic poisoning Europe: hatred of Muslims