Malta’s golden passports scheme was always more about selling the right of free movement in the EU to third-country citizens rather than attracting investment. The cash flow of €1.5 billion over six years generated by the Individual Investor Programme has undoubtedly helped the country’s fiscal position. Still, it has raised concerns in many member states because of the security risks it poses.
The government, mainly by vociferous arguments made by the Citizenship Parliamentary Secretary, Alex Muscat, insists that issues relating to citizenship are a national matter and the Union has no right to impose conditions or sanctions on member states that exercise this right.
The European Commission, backed by the clout of primary member states like Germany and France, believes that EU citizenship is not a commodity. It is a shared value that must not be undermined by any member state monetising it. This dispute is likely to be settled by the European Court of Justice unless some compromise is found between Malta and the commission.
The European Parliament commissioned a working paper in which bureaucrats and politicians proposed five options that the commission could consider to resolve how EU citizenship disputes could be addressed through regulation rather than court action.
One suggestion is to “reduce incentives” for wealthy people to use the scheme by imposing an EU tax on applicants.
Parliamentary Secretary Muscat interpreted this development as a change of course by the commission on its views on the risks of golden passport schemes. He argues: “We have always been clear that every member state should retain full authority over citizenship and taxation, so we oppose an outright tax on every state. We won’t budge on these principles.”
Other member states would argue that they have the right to defend their people from security and financial crime risks embedded in EU citizenship schemes operated by other countries that monetise the free movement of all EU citizens within the union.
A commonly agreed set of regulations that impose strict conditions on granting EU citizenship by member states would be the ideal solution to the ongoing disputes between the commission and various member states. More than half of EU countries operate citizenship schemes even if the focus of the commission is presently on the risks of the schemes run by Malta, Cyprus and Bulgaria.
The government has for long justified the golden passports scheme on grounds that it has strengthened the country’s fiscal position. This was especially relevant when heavy demands were made on the Treasury for medical and business support during the pandemic. But the end rarely justifies the means – the rights of other member states have been impacted by decisions taken at the national level.
Malta is under probation after years of bad public governance. It must prove to international organisations that it is seriously addressing the public governance failures of the last few years. The culture that tolerates tax evasion, the lack of effective implementation of sensible anti-financial crime regulations and the protection of those who abuse power will not be eliminated by sanctimonious declarations made by politicians and policymakers.
The government must prove that it will not exploit the privileges of being part of the EU to the detriment of other member states.
Rather than insist on “principles”, it should actively work with other member states to strengthen shared values like EU citizenship.