An EU passport is one of the most coveted documents that many non-EU citizens aspire to. Ordinary people from third countries who have modest wealth find it challenging to qualify for EU citizenship. But non-European plutocrats find it much easier thanks to the sale of golden passports by countries like Malta.
Malta’s golden passport scheme, introduced in 2014, has helped significantly to repair the country’s stressed public finances. But this came with substantial risks. Malta’s passport scheme, like that of Cyprus, has been plagued by allegations of corruption.
The European Commission has been warning Malta, together with other countries, that passports and visas are not a commodity. Some MEPs argue that “Malta and Cyprus give shelter to criminals and the corrupt along with their wealth”. They say this practice endangers internal security in Europe.
When, last October, the EU launched legal action against Malta to stop its ‘scandal-ridden golden passports’ scheme, the government revised the scheme. However, European Justice Commissioner Didier Reynders has just told Times of Malta that the commission is “not convinced” about the recent reforms.
While acknowledging the improvements introduced in granting golden passports, Reynders’s stand is that the commission does not want European values to be on sale and certainly not citizenship.
This comment echoes the commission’s argument that “the effect of investor citizenship schemes are neither limited to the members states operating them nor are they neutral with regard to other member states and the EU as a whole”.
The government relies heavily on the current legal position that prevents the EU from banning passports sales. Deciding who is and is not a citizen is a jealously guarded right of EU member states. Practically all member states issue passports for reasons beyond the standard naturalisation. Some do it to curry favour with diasporas, or create new voters, or atone for past wrongs.
While banning the sale of passports would be popular with most EU citizens, it is no simple solution. As Reynders remarked, the dispute the commission has with Malta is likely to be decided in the European Court of Justice.
The fact that the first ever EU rule-of-law report identified “deep corruption patterns” in Malta should persuade the government to refrain from ignoring the public outrage over the risks that the golden passports scheme poses to the EU.
Some MEPs have criticised Commission President Ursula von der Leyen for not doing enough to support her mantra that “European values are not for sale”. But the commission’s pressures to curb the sale of passports and visas are unlikely to abate.
This is particularly relevant in the context of Malta’s poor reputation in the fight against political corruption, money laundering and lack of respect for the rule of law.
Recent improvements in managing these issues will be used to try and persuade international anti-money laundering watchdogs to take a more positive view of Malta. It will take a fair amount of convincing. If Malta fails to entirely overhaul the golden-passports scheme, the EU may adopt what the influential The Economist labels as the ‘Al Capone approach’.
Rather than stop member states from selling passports outright, the EU could pursue them with money laundering legislation and make life difficult for the dodgier newcomers.
There are already clear indications that the European Central Bank may be using this tactic to make sure local banks adhere to almost draconian anti-money laundering processes.