In politics, perceptions are often just as important as reality, especially when politicians’ commitment to abiding by international rules cannot be taken for granted.
The European Union’s sanctions against Russia, that were imposed after the invasion of Ukraine, are a moral stand against aggression. They are meant to reinforce the Union’s commitment to respecting the rule of law in international matters. Such was the moral imperative that the sanctions were agreed upon even if many member states, including Malta, suffer adverse economic effects because of them.
According to the popular online news portal Politico, Europe has become the place for wealthy Russians, especially from Vladimir Putin’s entourage, to invest, make big deals and relax with their villas, yachts and luxury cars. Politico claims that 90 per cent of Russian overseas assets are concentrated in EU countries.
The news agency Reuters last week quoted an EU spokesperson saying that Malta and Greece did not appear to be doing enough to enforce sanctions against Russia in the wake of the invasion of Ukraine.
Malta has frozen €222,000 worth of Russian assets, the lowest amount in the EU.
This unimpressive figure has apparently failed to convince the EU that Malta is indeed committed to abiding by the Union-approved sanctions.
The EU official told Reuters: “Either they don’t have much, or they are not doing their job. Or they have done something but not communicated to us even though they had chances.”
These comments were reproduced in most international financial and business media, reinforcing the perception that Malta is again bending the rules to protect its controversial golden passports scheme for wealthy investors, including Russians.
The government will argue that this is just an unfair perception and that no one should doubt Malta’s commitment to abide by EU regulations. A government spokesperson said that, besides the €222,000 frozen Russian assets mentioned by Reuters, Malta had “found millions more located overseas. Malta has been proactively assisting other member states in identifying problematic assets”.
While Malta’s business links with Russia are much weaker than those of some other EU countries, it sounds counterintuitive to argue that the amount of Russian assets frozen is commensurate with the amount of business transacted between the two countries.
The government needs to be more forthright in publishing information on the extent of Russian citizens’ and business connections with Malta. It needs to answer some questions.
How many passports have been issued to Russian citizens in the past 10 years? Are any of these citizens among the 1,300 people on the EU blacklist? Are any of the 120 Russian entities on the EU blacklist operating in Malta? What is the value of Russian assets in Malta?
Luxembourg, another EU financial centre affected by the sanctions against Russia, has published similar information to convince the EU that it is strictly abiding by the sanctions. According to the ministry of finance of Luxembourg, €5.5 billion of Russian assets owned by 90 individuals and 1,100 legal entities have been blocked in the Grand Duchy. These are mainly bank assets, securities and income from real estate transactions.
Malta’s reputation as a respectable jurisdiction has been battered too often. The country needs to do much more to dispel the impression out there that it is exploiting EU membership by selling European citizenship to dubious wealthy individuals, without regard for the bloc’s values and the risks to its security and law and order.