The present prime minister and his predecessor appear to believe that, in politics, the end always justifies the means. They are proud that, through the sale of Maltese passports to often dubious individuals, they have found the Midas touch with which to resolve Malta’s fiscal challenges.
They believe that the risks posed by the golden passports scheme, which can potentially give criminals free movement rights in the EU, are not Malta’s problem.
The EU has a very different understanding of the risks of golden passport schemes as promoted by Malta, Cyprus and Bulgaria. European Commission president Ursula von der Leyen last month raised the alarm about such schemes, saying that “European values are not for sale”.
It has been some time in coming – Malta’s scheme was first introduced in 2014 – but now the inevitable has happened. Perhaps prompted by a climate of increased scrutiny of cross-border crime, tax evasion and money laundering and under new leadership, the commission has begun legal action against Cyprus and Malta over their controversial golden passport schemes for foreign investors.
At a time when Malta is trying to convince international anti-financial crime watchdogs like Moneyval that it is doing all it can to restore its reputation, this development is most unwelcome.
Eka Rostomashvili, advocacy and campaigns coordinator of Transparency International, argues: “We see that these schemes allow corrupt people – sometimes people who have looted the treasuries of their countries – a safe haven in the EU. They also risk corrupting the member states themselves.”
This assessment has a ring of truthfulness for those who are honest enough to acknowledge the abuse of power by some of our top government politicians.
Prime Minister Robert Abela was expected to bring about the much-needed change in public governance to restore Malta’s reputation. However, he has so far failed to commit his government against the continuation of the cash-for-passports scheme. Instead, he just ordered a revamp of the old scheme, replacing it with a similar programme that does little to reduce the risk of passport abuse by criminals.
The Financial Times has revealed that “EU officials are now concerned that Cyprus may follow the same route as Malta, which, earlier this year, announced the scrapping of its previous golden passports programme – only to create a new one in its place”.
The prime minister is increasingly giving the impression that he is not all that different from his predecessor in addressing the issues that tainted Malta’s reputation. Acting like a man put in a corner, he lashes out and blames the opposition MEPs for the action being taken by the European Commission against Malta.
Put simply, he does not appear to have what it takes to move out of his comfort zone and convince the international community that Malta has changed course towards becoming, once again, a respected jurisdiction that inspires confidence in investors.
The latest EY Malta attractiveness survey confirms that Malta is losing ground as a desirable destination for foreign direct investment. A lack of stability in the political environment has gone from once being a leading factor in drawing investors to the island to now being viewed as a drawback. Other critical success factors, such as the skills level of local labour and transport and logistics, are by no means impressive.
Joseph Muscat was proud of being described as a salesman specialising in selling EU citizenship for hard cash.
Abela now needs to prove that he can do better than that, by embedding high educational achievement, stability and transparency in the political, legal and regulatory environment in his economic strategy.