The Maltese government is pledging to set up an Individual Investor Programme that essentially means eligible people have the ability to buy Maltese citizenship at a cost of €650,000. Such a concept is not new to the world, nor to the European Union. However, there are some very stark differences between foreign cases and the one in Malta, which make the latter quite disengaged from the proposed guarantee that these ‘investors’ will be contributing to the economic development of Malta.
Unfortunately, I cannot construct such a post without directly quoting a brilliant thesis by Jelena Džankić who has already approached the matter on a broader international scale. In a nut shell, this is what everyone in the local Maltese media (no surprises there) have failed to tell you:
A number of countries facilitate the naturalisation of wealthy individuals who invest in their economy. This practice is called ‘investor citizenship’, ‘citizenship by investment’, or ‘economic citizenship’. Investor citizenship can be obtained either at the authorities’ discretion, or through specific programs which lay out in detail the amount of the investment and other criteria for naturalisation. In addition, citizenship by investment can be acquired with or without residence.
Such a practice is observed in countries such as the USA, Australia, Canada, Singapore, Caribbean countries such as Antigua and Barbuda, St Kitts and Nevis, Dominica and even members of the EU (UK, Austria, Belgium, Cyprus and Portugal).
As Dr Džankić argues , the biggest issue with such programmes is that they are unfair and quite discriminatory against those individuals who cannot afford the face value sum or who opt to obtain citizenship by traditional means (marriage, lengthy periods of residence etc).
But how do such programmes work in the aforementioned countries? Taking the case of Cyprus (the Labour Party’s favourite EU comparison) and Austria (an EU country that is generally overlooked given its stability).
The Cypriot Government offers direct passport and citizenship to high net worth investors that have the ability to make considerable investments in Cyprus. These are either €5 million in Real Estate, €3 million in bank deposits or other options which can be found here.
However, given the recent economic troubles in the country, in April 2013 the Cypriot government had to relax citizenship requirements, including those for investors (mainly Russian) who lost large amounts of money in the controversial EU-IMF deal. This was done in a bid to avoid losing these investors.
So does this mean that Cyprus has the risk of being overrun by foreign investors as a result of a combination of an economically desperate government and relaxed citizenship laws? Can we envision this as a possible future scenario for Malta?
The Austrian government offers business investors the possibility to obtain citizenship and an EU passport immediately without prior residence requirements on the basis of an investment in the country. The conditions include a minimum of €3 million as a charity donation to the Austrian economy or €10 million+ minimum direct investment in the Austrian economy.
However, a controversial case arose in Austria which saw a Carinthian Freedom Party (FPK) politician Uwe Scheuch, allegedly promising to facilitate the granting of Austrian citizenship to a Russian investor in return for a €5 million investment in the Austrian state of Carinthia and a 5 to 10 per cent donation of this amount to his political party, the FPK. Scheuch was trialed and given an 18 month prison sentence suspended for 12 months, but he has recently been acquitted on procedural grounds.
Am I the only one in thinking that such a scenario can easily be observed in Malta should this investor scheme be launched? How many politicians from the Labour party (since they’re currently in power) will manage to swindle money from potential investors in return for citizenship?
Currently, Malta has indirect citizenship program for investors where these need to apply for a residency in the country and after 6 years of residence they are able to apply for citizenship and a passport. In order to qualify, investors need to a minimum value of property situated in Malta at €275,000, with some other criteria which may be found here.
The newly proposed direct investment will only cost investors 1/6th of what it would cost them to invest in either Cyprus or Austria. So I am assuming that this government will take the ‘quantity over quality‘ measure, since the proposed €30 million generated annually will be a result of 46 investors as opposed to the 10 investors through the programmes used by Cyprus and Austria.
I think we have ‘already missed the bus’ on this one, as the whole point of such programmes is to target the wealthy and not the considerably rich – investments of €650,000 mean squat when these are dwarfed by the Austrian requirements of €10 million+. It will be easier for people to buy Maltese citizenship than any other EU country, and this will dramatically reduce our economic credibility.
Statistics so far?
Austrian citizenship is the most difficult to obtain in the EU. In fact, it has been reported that no one was naturalized in 2012 in return for investment in Austria, according to the national statistics office in Austria. In 2011, 23 people made use of the extraordinary paragraph 10, section 6 of the Citizenship Act.
In most of the other EU countries (e.g.Spain, Portugal, Ireland prior to 2001, Hungary and currently Malta), you would need to purchase property, government bonds etc and then wait fr a period of time before you are granted citizenship. What is the big rush now Malta?
In her work Dr Džankić indicates that in Austria, if a person wishes to invest or donate ‘only’ 100,000 Euros in Austria, he or she will be bound to reside in the country for ten years before becoming an Austrian citizen and to comply with other naturalisation conditions. Austria has a very strict single citizenship policy, so such people would need to relinquish their original citizenship. However, if a person intends invest somewhere in the millions, he or she may be granted citizenship by investment, without having to reside in the country, know its language or culture. The same person will not be asked to give up his or her citizenship of origin, thus constituting a major source of inequality.
I for one would like to have a very clear understanding of how such a programme plans to be carried out. Nonetheless, I find it disgusting at how lightly and cheaply the government is willing to sell our national identity for. It is too questionable as to why such a low threshold has been (so far) placed for these direct investments. If the government was serious about economic development, it would push to attract investors that have the ability to make a difference, not simply individuals who are willing to buy a passport for just over half a million Euros. This is why other EU countries set such high thresholds, in order to ensure the right people apply for such schemes,
Furthermore, this move also poses an undeniable hypocrisy from a government who threatened ‘push-backs’ of asylum seekers in a bid to fight irregular immigration. The government is indirectly implying that he would much rather chose rich immigrants than poor ones – so much for the grand UN speech of love, peace and harmony. Such acts seem to be a far cry from the pre-election promises of equality and the removal of socio-economic boundaries.