‘War in Ukraine’ is only one reason to stop selling passports

After years of controversy, it seems that the curtain is finally coming down on Malta’s so-called ‘Golden Passport’ scheme.

MEPs are now debating a report by Dutch MEP Sophie In’t Veld that calls for a gradual phasing-out of all citizenship-by-investment scheme by 2025.

“The time to ask national governments nicely is over,” In’t Veld told Didier Reynders, the EU’s Commissioner for Justice. “CBIs must disappear, structurally, as the outcome of an EU law. The Commission has the power to do this in the interests of European citizens.”

Apart from the power, the Commission also has the will to act on this report. On her last visit to Malta, EC President Ursula von der Leyen herself made it clear that “putting a halt to the sale of Malta’s golden passports scheme is of utmost importance.”

To be fair, the war in Ukraine has already resulted in a partial stoppage of this scheme. Last week, government announced that Malta’s citizenship-by-investment scheme would suspend all applications from Russian and Belarusian nationals, due to the ongoing conflict.

But given that Prime Minister Robert Abela had been under pressure to take that decision for some time, one can only wonder why the scheme was only halted for Russians and Belarusians… and even then, only because ‘the war made it difficult to screen applications’.

Clearly, government has yet to fully comprehend exactly why this scheme is considered so noxious, by other European states. As Sophie in ‘t Veld herself commented, last February:  such schemes are “objectionable from an ethical, legal and economic point of view, and pose several serious security risks”.

Moreover, she added that: “Citizenship is a right, not a commodity to be bought and sold.” From this perspective, it follows that EU member states which sell citizenship, are actually selling something – European citizenship - that is not theirs to sell: thus exploiting the reputation of the EU for profit.

Nonetheless, it must also be conceded that Malta’s IIP has been the source of a much-needed windfall during the COVID pandemic: contributing to a budgetary surplus that enabled the country to weather the storm more effectively.

But there are limits to how far the Maltese government can push that argument, at the European level. And with the aforementioned ‘security risks’ multiplying exponentially, with the outbreak of hostilities in Europe: it can no longer realistically be accepted as a justification.

Here, government must also face up to its own responsibilities, by allowing the scheme to be administered in a totally non-transparent way. The original programme, designed by Henley & Partners, was intended to keep secret the acquirers’ identities. Moreover, the initial requirements were less than satisfactory: with the Labour administration only adding a residency requirement later.

Two months after the citizenship bill was voted into law, a clause was added for applicants to provide proof of residence before being granted the certificate of naturalisation. But by this time, some damage had already been done.

MaltaToday had initially reported on the residency shortcomings in June 2016, revealing how wealthy IIP applicants were renting out cheap apartments, purely as a box-ticking exercise. Chinese billionaire Liu Zhongtian, for instance, had been renting a Naxxar maisonette on Triq il-Forga; while an Qawra holiday apartment was supposed to be housing Russian entrepreneur Vjacheslav Solvyev.

Proving “genuine links to Malta” was another pretence in the IIP’s operations. Documents from the Henley & Partners cache, published in the Passport Papers, revealed a scoring system that was developed by Identity Malta, allowing applicants to bypass the residency requirement by instead purchasing yachts or handing out donations to local charities.

Applicants were spending just an average number of 16 days in Malta prior to receiving their passport.

Even the mandatory publication of new Maltese citizens also turned out to be humbug. A confidentiality clause was initially added to the IIP whereby names of new citizens purchasing their passport through the scheme would remain secret. Louis Grech, the deputy prime minister at the time, said that this clause was added on the advice of citizenship experts who argued that confidentiality was important for high net-worth individuals.

Instead, government opted publish the annual list of naturalised citizens in a manner that made it close to impossible for readers to identify big-name applicants who purchased citizenship under the golden passports scheme.

The IIP applicants were meshed into the annual list of naturalised citizens, but instead they were listed alphabetically by name, and not by surname as before, to make it difficult to draw connections between big-name citizens.

In the end, it has to be the advent of war in Ukraine, to hasten an EU-wide response which will close the door to the sale of EU citizenship to rich elites, who could represent a systemic risk inside Europe.

Such a prospect might have not been on the minds of those who devised the IIP back in 2014, as a fast-track way of generating millions for Malta’s coffers. But while war seems to be bringing an expiry date closer for Malta’s own war chest: the truth is that Malta should have put a stop to this practice years ago.