EU commission prepares legal challenge on Malta passport sales

But lawyers for justice commissioner Viviane Reding are looking to file potential infringement proceedings on the basis of article 4.3 of the EU treaty, which also says member states must act “pursuant to the principle of sincere co-operation.”

The logic is that if Malta sells nationality to, say, a Russian oligarch, they are, in fact, selling the right to live in all 28 EU countries, putting fellow member states at risk if Maltese due diligence fails to weed out criminals.

EU officials have dug up two files - the Micheletti case of 1990 and the Rottman case of 2008 - in which the EU court in Luxembourg ruled that citizenship decisions must be made with due regard to wider EU law.

They note that the commission cited article 4.3 in recent infringement proceedings on tax reform in Hungary, in which Hungary backed down instead of going to court.

They also note that a ruling by the International Court of Justice in The Hague - the Nottebohm case of 1955 - says that citizenship should only be granted to people who can demonstrate a real bond with their new country, for instance, by living there for a few years before they get their papers.

But Malta is to sell the EU passports after a vetting process of just six months, with no obligation to ever live on the group of Mediterranean islands.

A Reding spokeswoman told EUobserver on Wednesday (22 January) the commission is currently in talks with Malta to settle the dispute in a friendly way.

“She’s not asking to extend the legal power of the commission on who grants citizenship to whom,” the spokeswoman said.

“But we think it’s important to remind member states of the principles that should be taken into account when granting citizenship, which gives you access to full EU citizenship rights,” the spokeswoman added.

The Maltese government could not be reached for a comment on Thursday.

EU sources said it has "indicated a willingness" to discuss the issue with Brussels.

But Maltese MEPs from the ruling centre-left Labour Party in Strasbourg last week criticised what they see as an attempt to bully their tiny country, which stands to make €1 billion from the sell-off.

“This attack on Maltese sovereignty is not right. Malta is no longer a colony,” the party’s Marlene Mizzi said at the time.

Meanwhile, the government is ploughing ahead with the scheme despite its “technical-level” talks with Reding’s people.

It published the legal application forms last Friday and potential new EU citizens have begun dropping in to Valletta.

It is also giving special treatment to the wealthy applicants, who are to pay €650,000 in cash and to buy another €150,000 of Maltese stocks or bonds to get their EU perks.

When Maltese media tried to film a Chinese applicant at Malta International Airport this week, security staff let him into a zone normally reserved for "VVIPs," such as government ministers from other countries, to escape scrutiny.

“The question is: If the government is really going to discuss this with the [EU] commission, then why is it already going forward with the scheme? … The mind boggles,” Jason Azzopardi, an MP from the opposition centre-right Nationalist Party, told this website.