Granting citizenship may have risks, but Malta isn’t the problem | Alex Muscat

Alex Muscat is parliamentary secretary for citizenship

The benefits of Malta’s citizenship-by-investment policy are being seen across the country, especially through multi-million euro investment projects.

Such investments include the €50 million social housing plan, with 500 new social housing units at 22 different sites, the €10 million project for the upgrading of eight health centres and 54 clinics, the €950,000 investment in Mater Dei Hospital’s Cardiology Department for the upgrading of its two catheterisation suites, and €5 million to Puttinu Cares for the construction of new apartments to house cancer patients and their families in London.

The European Commission says the citizenship schemes of Malta and some other countries could help foreign-organised crime groups infiltrate the 27 member bloc and increase the risk of money laundering, corruption and tax evasion.

These are serious concerns, but how valid are they?

The Commission’s approach has many flaws. Countries like Malta and Cyprus are being singled out for criticism however other countries much bigger than us, have an established practice of granting citizenship by investment since 1986. The reality is that many European Union member states have similar provisions in law. In fact, the member states granting the majority of citizenships to investors are never mentioned by these critics, whereas Malta, with its highly transparent procedures, is constantly singled out. Does that add up?

On average, 700,000 grants of citizenship take place in the EU every year, of which up to 1,000 are citizenship by investment.

In other words, citizenship by investment represents approximately 0.1% of the total new EU citizenry per year.

And this tiny fraction is highly vetted. Each applicant goes through an intrusive and detailed process where their identity and source of funds are verified by multiple parties, including police and intelligence agencies.

If these critics were really concerned about security, they would be asking questions about the 99.9% who are subject to screening processes much more limited or non-existent because, while Malta is busy carrying out due diligence on each applicant for its scheme, citizenship by other means is being granted to people originating from high-risk countries such as Afghanistan, Iraq and Iran.

And these critics’ credibility problem doesn’t end there. One must point out that the EU actually welcomes outsiders to Europe, to travel freely within its borders, through its Blue Card scheme. While a Blue Card offers only a work and residence permit in the country concerned, the holder can actually travel to and between most EU countries. It’s not hard to see how this might offer opportunities for wealthy individuals, or criminal organisations, to create an employment contract with a pro-forma employer, for instance through the creation of a letter-box company with its seat and tax domicile in a given EU country, for the issuing of a Blue Card.

When all is said and done, the fact is the right and the power to award citizenship or residence authorisation rests with the state concerned. This is part of the sovereign powers of a state. As a democracy, we welcome scrutiny and are always willing to improve our procedures. However, we know that our citizenship scheme is honest, fair and, ultimately, benefits all Maltese.

One thing we have learnt from the COVID-19 crisis is that economic fortunes can change overnight. We now see there was great foresight when the Individual Investor Programme was set up. Does anyone doubt that it was a good idea to establish a National Development and Social Fund to invest for the future before this crisis reduced government tax revenues? Does anyone doubt it was a good idea to spend millions on upgrading health facilities in recent years?

Malta, like other countries, will have to rebuild in the months and years ahead. The revenue from this initiative means we are in a stronger position than we would have been.

Malta will continue to engage with the European Union to persuade it that its concerns are misplaced and we don’t rule out making changes that would enhance our scheme. We will continue to say merħba to new citizens and new talent while taking care to say no to applicants who cannot pass stringent tests. The best thing we can do is act responsibly, and that’s exactly what we will do.