Union citizenship put back on track

The ‘sale’ of Maltese passports (Golden Passports) was big news years back but, over time, the issue had disappeared below the radar of public attention. Until last April, that is. The mills of justice might grind slowly, but they grind.

The landmark judgment of the European Court of Justice delivered against Malta’s 2020 Investor Citizenship Scheme last April has finally buffered the true and original concept of Union citizenship. It was a judgment that in no time at all hit the headlines of global media houses, ranging from ABC News, Italpress, Transparency International EU, Financial Times, The Washington Post, to Bloomberg.

That judgment clearly laid down that the acquisition of Union citizenship cannot result from a commercial transaction. In other words, European values are not for sale!

The question of granting nationality and long-term residence involves profound social, political, economic and moral issues.

Prior to all this, however, our government was resting on the opinion of Advocate General Collins of 4 October 2024, whereby he urged the rejection of the European Commission’s challenge to Malta’s 2020 Naturalisation for Investment Scheme.

The Commission’s challenge rested on a single, solid premise that there is a requirement under EU law and, to a lesser extent, under international law, that, in order to preserve the integrity of EU citizenship, there must be a ‘genuine link’ between a Member State and its nationals.

But Collins rejected that idea in very strong terms, considering it would upset the carefully crafted balance between national and EU citizenship in the treaties and constitute a wholly unlawful erosion of member states’ competence in a highly sensitive field which they have clearly decided to retain under their exclusive control.

From the outset, it was evident that Advocate General Collins failed to recognise that the true threat to institutional balance under the treaties is the sale of EU citizenship. His lopsided analysis failed to recognise that it is, in fact, the sale of EU citizenship to third-country nationals who lack any genuine link to that state which would upset the treaties’ carefully crafted balance between national and EU citizenship.

Those newly minted EU citizens would hold rights which, under EU law, override the sovereignty that member states are otherwise free to exercise over them. It is the consequences of selling EU citizenship, rather than Maltese citizenship, which had raised serious concern in civil society.

We were selling Maltese citizenship by the dozens, and, automatically, these new Maltese citizens, ipso facto and ipso jure, became European citizens enjoying all the rights and duties which attach to such.

This citizenship sale carried four major risks with it.

Our investor citizenship and residence schemes were organised in such a way that they did not take into consideration any security risks.

Neither did they take into account the potential risks of money laundering linked to investor citizenship and residence schemes, more so in light of the EU anti-money laundering rules.

They also circumvented EU rules, notably where licensing requirements include a nationality requirement.

Finally, there was also the issue of tax evasion, linking the risks from both schemes.

In the aftermath of the ECJ judgment, Prime Minister Robert Abela stated that he intends to update citizenship rules to abide by EU laws.

To my mind, the best option would be to avail ourselves of Article 20 of the consolidated version of the Treaty on European Union (TFEU), which does not preclude a member state from retaining or adopting a nationality scheme under which some of its nationals do not have EU citizenship.

Indeed, the Declaration on nationality of a Member State annexed to the Final Act of the TEU provides that the state may declare, for information, who are to be considered its nationals for Community purposes.

This option for member states, which Advocate General Collins did not address, means that Malta can choose to declare that citizens under its 2022 scheme are not its nationals for Union purposes. It may thus exercise its sovereign power to operate an investor citizenship scheme under which persons with no genuine link to Malta become Maltese citizens but without thereby acquiring EU citizenship.

While it is true that the concept of a “genuine link” is not defined in EU law or international conventions, Article 20, referred to above, cannot but be interpreted as precluding Malta from adopting laws which permit the granting of national citizenship in circumstances where doing so confers Union citizenship to third country nationals who have no genuine link with Malta.

The fact that the ECJ upheld the Commission’s challenge does not deprive Malta of the power to confer Maltese citizenship. Instead, it builds on settled jurisprudence that EU law constrains national rules conferring EU citizenship and follows the longstanding direction of travel of the Court’s jurisprudence, which has already overcome objections that it is too radical.

This latest judgment continues to develop the concept of Union citizenship in a manner which balances the sovereignty of each Member State in determining its own nationality law against the collective interest of all Member States as to who may have the extensive rights of EU citizenship which encroach on their sovereignty.

At the end of the day, the condemnable and unforgivable fact remains that a Labour government had exploited for wrongful purposes one of the benefits of EU membership which a Nationalist government successfully obtained after a hard-fought campaign.