The day Malta became a De-MOCK-racy

Democracy is defined as “a system of government by the whole population or all the eligible members of a state, typically through elected representatives” – this is the classical definition given by the Oxford Dictionary. While the actual words change depending on which institution is giving the definition, the essence of the meaning does not change. In any democratic nation, a government has the responsibility to govern in the name of its constituents, the citizens of the nation. The ‘Citizenship for Sale’ issue that has dogged Maltese and International headlines over the past couple of weeks has reached its pinnacle with a recent non-binding vote at the European Parliament. Despite the overwhelming opposition to the sale of European citizenship, the Maltese government has chosen to ignore the calls of its constituents and of our European peers, thereby ushering a new era of demockracy.

While I had already compared the original Individual Investors Programme (IIP) on its publication, the programme had since been cosmetically revised. However, the citizenship for sale notion that many people had opposed still persists, sparking a European wide debate in the European Parliament.

The European Commission on Wednesday 15th Jan 2014 warned that European Union citizenship “must not be up for sale” following controversy over a Maltese initiative to grant passports to wealthy foreign investors. The European Parliament has since voted against the sale of European citizenship (Photo credit: CAPReform)

89% of Members of the European Parliament voted against the sale of European citizenship, a widespread consensus amongst the EPP, Socialist, Liberal (ALDE) and Green parliamentary groups. Despite this non-binding vote, the Maltese government has still decided to pursue this insane venture.

It is quite inconceivable that in 2014 any European government behaves so irresponsibly in the face of widespread concern. While the activists of the IIP argue that such programmes are already implemented in other EU member states (Portugal, Austria, Latvia, Portugal, Spain, Cyprus and the UK to name a few), it is a blatant lie. No other EU member state has put the actual sale of passports on the table, but they merely use long term residence or investment programmes that bind would be investors to the country through a long term ‘contract’. That is the only reason why Malta was mentioned during the European Parliamentary debate, because it is the first country pioneer to the idea.

Even though the government is now blaming the Opposition for slandering the name of Malta in a bid to divert attention from itself, it is highly illogical that the same party that got us into the EU will now work to destroy that country’s image.

From Turkey, to Ukraine to Malta?

2013 saw two incidents in two prospective EU member states that exposed their respective government’s authoritarian ways, both which were bitterly received by the foreign press.

From Left to Right: Turkish Prime Minister Recep Tayyip Erdogan, Ukrainian President Viktor Yanukovich, and  Maltese Prime Minister Joseph Muscat

Turkish Prime Minister Recep Tayyip Erdogan announced the development of a key park in Istanbul into a shopping complex. Demonstrators had held a four-day sit-in at Gezi Park, visibly angry at the plans to redevelop this area located in the proximity of Taksim Square. The situation escalated to shocking crowd control by Turkish riot police, which according to foreign news agencies highlighted a flawed political system with undemocratic undertones.

Ukrainian President Viktor Yanukovich failed to sign a landmark deal between Ukraine and the EU, sparking nation protests by citizens who felt cheated and ignored by their representative from a ‘future as Europeans’. The Ukrainian government has just passed a sweeping law to remove protestors from the streets, effectively removing the voice of opposition.

It is regrettable that the Maltese government is mimicking  the Yanukovich and Erdogan ideology of ignoring public calls for the cessation of this Citizenship for Sale scheme. If the government was serious about democracy, it would not ignore the will of the people that voted it in and that subsequently polled against this scheme (according to the MaltaToday survey, only 26% agree with the scheme, while 53% disagree).

Despite the fact that democracy thrives on a healthy and balanced debate on any issue, the government of Malta chooses to ignore this.

Just give us the bloody names at least

The ‘Citizenship for Sale’ scheme debate is close to boiling point with the latest address in the Maltese Parliament by the Opposition Leader Simon Busuttil. Despite the fact that people in Malta still cannot come to their own unbiased decision on the matter without wheeling out political party fanaticism, I am still perplexed as to how many cannot understand how awkward and shifty it is for the government to want to keep the names of would-be-investors a national secret.

Foreigner’s Golden Ticket to the EU – high level secrecy included Photo credit: MaltaToday

I had already written about this scheme almost a month ago, where I compared this proposed move to those currently used in Austria and Cyprus. I reiterate my position as being against it and in favour of the alternative that is actually used by other EU countries and which has the potential to contribute to the growth of Malta. While I am sure many people will accuse me of being against economic development, I just fail to grasp the idea of how €650,000 (minus commission by Henley and Partners etc etc) will be of any benefit in the long term when compared to a scheme which binds would-be-applicants to long term investment over a fixed period of time.

In any case, I have often pondered about the government’s intent to keep the identity of these investors secret. When foreigners apply and receive Maltese citizenship either through marriage or naturalisation, their names are published in the Government Gazette. An  example of this can be found here –> Government Gazette, October 23, 2009 where one may scroll down to page 8 and find a list of applicants up until the date of publication. This has been common practice for years and required by law under the Maltese Citizenship Act (unless this will be now updated).

Personally, the only reason people keep secrets in any situation is because they want to hide something. This is something which I attribute to real life situations and is arbitrary to issues of politics, economy and partisanism. Everyone has kept something hidden from their family, friends or better halves from fear of retribution or being reprimanded.

At the end of the day, the majority of people (71% of respondents and 72% of Labour supporters according to a MaltaToday survey) want to know who these investors are. Why is the government so determined to not give the majority of people what they want – transparency?

Environmental concerns of sale of Maltese citizenship

The soon to be legally implemented ‘Citizenship by Investment’ programme, or ‘Direct Citizenship purchasing’ programme, will provide an unknown influx of immigrants to our country. While opposing factions continue their debate on whether this move by the government is justifiable or not, I ponder on the possible environmental repercussions (if any) that this scheme may have.

The scheme has just been reported to expect an annual netting of beneficiaries ‘in the low hundreds’, with no cap actually instated to limit the amount of passports being sold. For the sake of it, let us estimate that our population will be increasing by 125 individuals per year. Given the fact that the Opposition has advocated to do its utmost to remove this scheme and possibly even withdraw  purchased citizenship from beneficiaries, we can estimate that under the current Labour government there will be around 600 individuals being added to the Maltese population over a course of five years (up until the next election).

Photo credit: dailymail.co.uk

What is the relevance of these 600 individuals on the Maltese environment? With the highest population density in Europe, the addition of such a seemingly small number of people will have a long lasting impact on local environmental services. We need to envision these people as not simply tourists or temporary visitors, which generate waste, use water sources and pollute the air and sea over a short period of time. These 600 people will for the majority become permanent residents, which means that their daily environment footprint will be added to that of Malta. Furthermore, these individuals will require their own property, as well as their own vehicles and in some cases possibly maritime vehicles.

The newly approved development at Mistra Village, a recent decision that will continue to destroy the Maltese Landscape (Photo credit: TimesofMalta.com)

Despite the fact that the following may sound excessively cynical and judgmental, I highly doubt that people who can afford to buy into this scheme will want to live in an already existing flat or house amongst us commoners. I would forecast these individuals as building their own properties in some quite and undisturbed place at the expense of virgin Maltese land. Should this not be the case, and these brand new Maltese citizens purchase existing property, there needs to be new property being built to replace the shortfall for others who intend to buy into the market.

As such, I expect an increasing amount of development to accommodate for these new citizens which means diminishing untouched land for Maltese born or naturalised citizens to enjoy. I wonder if any revenue generated from this scheme will be directed towards proper environmental protection? Wishful thinking perhaps.

Commodification of a national identity

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).

Cyprus

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.

Photo credit: telegraph.co.uk

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?

Austria

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?

Malta

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?

Possible pitfalls?

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.