Is the European Commission really concerned with security?

The European Commission has enough credibility issues to cope with, without creating another non-level playing field

Cartoon by Mikiel Galea
Cartoon by Mikiel Galea

European Commissioner for Justice Věra Jourová announced her intention to bring forward a report on citizenship-by-investment by Autumn, which will seek to issue new, more stringent guidelines in the belief that the granting of EU citizenship poses ‘a serious security risk’.

The Commissioner said Brussels was preparing to crack down on EU governments, including Malta and Cyprus, that award citizenships to rich people from outside the bloc, over concerns of so-called dirty money from Russia.

Jourova said eight member states will come under tougher scrutiny from Brussels as part of a wider drive against money laundering and corruption.

But the Investment Migration Council, a lobby acting for countries involved in the lucrative sale of citizenship and ‘golden visas’, has defended Malta’s Individual Investor Programme’s reputation.

IMC CEO Bruno L’Ecuyer said that the IMC shares and understands the Commissioner’s concerns in respect of the security of EU citizens, but insisted that the governance, due diligence and transparency of applicants under the Citizenship-by-Investment provisions in Austria, Malta and Cyprus – the three most active countries in the EU in this field – “are not a security threat to the EU, given that very strict due diligence procedures and background checks on applicants are in place in those countries”.

Jourova also mentioned her worries about the origins of the wealth of Russian applicants for Maltese citizenship. “In cases of any doubt, a person should not have the privilege of citizenship,” Jourova told the Financial Times. “We have no power to ban such a practice but we have an obligation to put high requirements on the member states to be careful. They are granting citizenship for the whole of Europe.”

Around 700 to 1,000 passports are sold by EU member states every year to so called ‘high net worth individuals’. The IMC says this represents 0.1% of the 994,800 people who obtained an EU citizenship in 2016.

It is imperative that the Commission understand and recognise that citizenship-by-investment schemes - whether one is in favour or against them in principle - have become a crucial source of revenue in many EU border countries.

In countries like Malta, which lack a large industrial and manufacturing base, this service economy is responding to demand and the reality of the economic situation.

It is easy for Jourova to claim these schemes could pose a serious security risk without offering viable alternatives to countries that are already offering them, often with more than adequate due diligence and governance. It is also ironic that the Commission would limit its security concerns only to citizenship schemes, when for the vast majority of EU’s naturalised citizens - 99.9%, in fact – the due diligence conducted is of a far lower standard.

While Malta sells passports to the global rich, it applies a very strict approach to acquiring a Maltese passport in any other way. Unlike most EU member states, one’s simple presence in the country for a number of years is insufficient to render one eligible for citizenship. Germany, France, Belgium and others all make it possible for long-term residents to become naturalised citizens; and all countries – Mata included – extend that process to naturalisation through marriage.

The statistics show that these are by far the main routes leading to the acquisition of European passports by third country nationals; and while the due diligence process varies from country to country, it is not always subject to the same rigorous structures as a citizenship-by-investment programme.

On a separate level, the Commission may be overstepping its remit by proposing direct intervention in local affairs. The sale of passports undeniably has implications for the EU as a whole; but it is still a matter for member states’ competence.

The EC has no direct jurisdiction on migration and therefore cannot interfere in Malta’s - and other countries’ - citizenship for investment schemes. And if it is to offer guidelines and common criteria, it should do so with respect to the member states’ jurisdiction of the matter.

The EC is, however, welcome to offer guidelines;  but guidelines exist to guide, not to punish. The Commission should not adopt a punitive approach to countries like Malta, which have successfully implemented the citizenship for investment scheme under some of the strictest rules of due diligence.

Jourova and the EC should also be careful not to single out a particular demographic for criticism. Malta should not lose on the IIP revenue on the strength of an attack on one such particular demographic: ‘Russian oligarchs’. This only fuels racial stereotypes, and feeds the fire of rightwing xenophobic populism that holds ‘the foreigner’ as the sole cause of all evil.

Likewise, the Commission would be unwise to single out only a few countries over ‘security threats’, when a much larger security issue is created by virtually all EU states, by dishing out citizenship to almost a million people a year. One is forced to question whether the Commission is indeed concerned with ‘security’; or whether it is more concerned with the success of Malta’s scheme, that is harming its competitors in the rest of Europe.

The European Commission has enough credibility issues to cope with, without creating another non-level playing field.