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Europe's Citizenship Sham

Natalie Duffy

KleptoCast 3: KI’s Natalie Duffy talks to Harry Cooper of Politico Europe about Malta’s Individual Investor Program

Thanks to Malta’s Individual Investor Program (IIP), European Union citizenship is up for sale.

The Mediterranean nation has recently come under scrutiny for the program that grants citizenship—and an EU passport—to any individuals willing to invest above a certain threshold in Malta.

Since 2014, over 700 applicants have succeeded in obtaining a citizenship that not only grants them access to the Schengen zone, but also visa-free travel to 69 countries worldwide, including the United States. Malta has already brought in upwards of €310 million from the controversial program; this is only a fraction of the €1 billion target that was set by Malta at the onset.

While the program’s guidelines state that applicants from countries where international sanctions are applied will not be accepted, the program has to date mainly targeted individuals from Russia, former members of the Soviet Union, and the Middle East, despite several of these countries having many individuals and companies that fall under EU sanctions. The program allows applicants to hold dual citizenship, and Maltese language or citizenship tests are not required. For main applicants, a contribution of €650,000 is required, and an additional contribution of €25,000 is required for a spouse and for each child, along with due diligence and passport fees.

Not only can Maltese passports be purchased for a nominal fee, but the IIP information page provides a list of phone numbers and emails of ‘Accredited Agents’ who are available to assist applicants in the process. A global citizenship and advisory firm based out of Jersey, UK, has exclusive rights to process applicants to the program and collects large fees from the process.

Maltese Prime Minister Joseph Muscat at a 2014 seminar at the Maltese High Commission in London, stated: “We believe the concept of citizenship is fast evolving, and we want to be at the forefront of this innovation. That is why we came out with the groundbreaking IIP.” Yet critics argue that this program is merely a backdoor. “They come twice, once to get a residency card and once to get a passport,” said Mark George Hyzler, an immigration lawyer at a firm in Malta. Politico Europe journalist Harry Cooper explained in an interview with the Kleptocracy Initiative, “This really gets down to the core of why the idea of the Schengen area is great, but the reality is a very difficult thing to enforce.”

Despite condemnation by MEPs, especially concerning a weak residency requirement, Cooper explained, “It’s actually quite obvious why [Malta] decided to go for this—it’s made them a lot of money.”

The UK’s Tier I investor visa program is similar, though with more hoops to jump through—the UK program requires a hefty sum of £1,000,000 of investment, £10,000,000 to be held in the UK, and permanent residence of two years prior to applying. Despite greater barriers to entry, London remains a beacon for Russian oligarchs and Chinese magnates looking to move their assets into the West.

Another scheme has transpired in Hungary under anti-immigration President Viktor Orban. The scheme, which Cooper described as “horrifyingly hilarious,” is “marketed as the least expensive of the resident permit schemes in Europe. You can get the Hungarian residence permit at the Hungarian embassy in your own country, you never even have to go to Hungary, and you loan the [Hungarian] government 300,000 euros that the government essentially pays back after 5 years.”

Citizenship and residency programs have begun to face some pushback—polls show that 53 percent of Maltese are in opposition to the program, and opposition parties in Hungary have called for an end to the residency program. “The sale of citizenship without any tangible connection to a member state is something that is of concern,” said European Parliament member Roberta Metsola. “European citizenship confers certain rights which should simply never just be put up for sale.”

Other critics believe that the program not only provides a backdoor into the European Union, which poses a unique set of security threats, but also undermines the very concept of European citizenship at its core by allowing individuals to associate themselves with Malta and the EU.

So what can the EU do? “Citizenship is a Member State competence, so the EU institutions are not able to get really that involved into states that are offering this scheme; there’s an interesting loophole here,” explained Cooper. “You have governments who are politicizing institutions, the lack of oversight both within countries and by the European Union, and it is an absolutely valid question to ask ‘what are the security implications?’”

Citizenship is a fundamental pillar of Western democracy. If we fail to value and protect it, kleptocrats will continue to see it as just another commodity to be bought, stolen, and abused.

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