Tuesday

1st Dec 2020

EU declares war on Malta and Cyprus passport sales

  • Valetta castle: Maltese prime minister Robert Abela defended golden passports on Monday (Photo: consilium.europa.eu)

Cyprus and Malta are breaking EU law and facilitating crime by selling 'golden passports' to wealthy foreigners, the European Commission has said.

It cited chapter and verse of EU treaties on "sincere cooperation" and on the "integrity of EU citizenship" on Tuesday (21 October), while announcing legal action that could lead to fines.

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"Granting citizenship for investment or other payments without a genuine link to the member state concerned undermines the essence of EU citizenship," commission spokesman Christian Wiegand said.

It posed risks "in particular to security, money laundering, tax evasion, and corruption," the commission also said.

"There cannot be a weak link in EU efforts to curb corruption and money laundering," EU values commissioner Věra Jourová added.

"European values are not for sale," justice commissioner Didier Reynders said.

For its part, Malta has sold 1,800 EU passports for about €1.1m each for the main passport holders, raking in €800m since 2014.

Cyprus has been selling them for some €2m each, pocketing over €7bn since 2013.

Many of the passports went to Russian and Arab businessmen, some of whom were politically sensitive or who had been implicated in financial crimes.

The former Maltese prime minister's chief-of-staff, Keith Schembri, was charged with taking kick-backs on passport decisions last month.

The Cypriot parliament speaker, Demetris Syllouri, also resigned last week after being filmed in a passport-corruption sting by the Al Jazeera news agency.

The EU legal action begins with a "letter of formal notice" sent to Nicosia and Valetta on Tuesday.

It goes on, two months later, with a more detailed objection called a "reasoned opinion".

If Malta and Cyprus still do not come to heel, the commission could initiate proceedings at the EU court in Luxembourg, which could levy fines, in a process that normally takes about two years.

U-turn on 2013

Meanwhile, Tuesday's action represented a U-turn in the commission's legal analysis.

Back in 2013, when Malta was launching its scheme, Michele Cercone, the then commission spokesman, told press: "Member states have full sovereignty to decide to whom and how they grant their nationality".

The EU court had "confirmed" in "several" cases that it was "for each member state to lay down the conditions for granting citizenship," Cercone said.

And whether or not Cyprus or Malta decided to revoke individual buyers' passports after reviewing their eligibility still remained up to them, Wiegand noted on Tuesday.

"Whether people are stripped of their passports after such a screening remains for the competent national authorities to address", Wiegand said.

For its part, Malta recently laid down new conditions, requiring future applicants to live on the island for at least one year before they can buy an EU passport.

But it rejected the commission's legal arguments in a statement on Tuesday.

"The government reiterates that citizenship is a member state competence, whereby every European country decides on its own who are the individuals which it believes should receive citizenship," Malta said.

Some of the €800m had been spent on "social housing, healthcare equipment, and upgrading of health centres," it added.

"The programme has also supported the Maltese economy during the Covid-19 pandemic, saving both lives and jobs," Malta said.

Cyprus did not immediately react.

It suspended its passport scheme after the Al Jazeera revelations, but it is expected to reinstate the programme with a few legal tweaks before long.

Serving corruption?

Buying an EU passport does not make the holder immune from EU visa-bans or asset-freezes, should they arise.

But it does give people the right to live in and more easily move their money into banks in any of the 27 EU states.

"There is overwhelming evidence that ... Cyprus and Malta have been serving corrupt interests, not the common good. For years, the governments of both countries have ignored public outrage," Laure Brillaud, from the Brussels-based NGO Transparency International, said on Tuesday.

"The European Commission should present a plan for phasing out the ... schemes, as the next step," he added.

'Golden Passports': Malta takes 67 days to respond to EU

The European Commission exchanged 24 letters with Bulgaria, Cyprus and Malta over their 'Golden Passports' schemes between October 2019 and October 2020. Malta took 67 days to respond to the commission's first letter, followed by Cyprus (42) then Bulgaria.

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