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EUROPEAN UNION

‘Shady characters’: Will EU countries now put an end to ‘golden passport’ schemes?

Since Russia's invasion of Ukraine European countries are coming under pressure to end backdoor routes to EU citizenship which are deemed to be unfair and "shady". This week MEPs in the European parliament made their opinions on the scheme clear.

'Shady characters': Will EU countries now put an end to 'golden passport' schemes?
A picture taken on February 14 , 2022 shows national flags of European Union's member countries at the European Parliament in Strasbourg, France. (Photo by FREDERICK FLORIN / AFP)

The European Parliament on Wednesday called for the phasing out of citizenship by investment programmes operated by some EU countries and for EU-wide regulation on so-called ‘golden visas’ offered to wealthy individuals. 

Such schemes pose a threat to European security and democracy as they can be used “as a backdoor” to the EU for “dirty money”, MEPs argued during the debate.

Members of the European Parliament have been calling for the termination of ‘golden passport’ schemes since 2014, but the issue has become more prominent in the context of Russia’s invasion of Ukraine, because of the number of Russian citizens acquiring rights in EU countries through this route in recent years. 

The resolution passed by the parliament with 595 votes to 12 and 74 abstentions says golden passports should be phased out fully. 

The background…

The market of golden passports and visas developed rapidly since the 2008 financial crisis, as countries have sought to incentivise foreign investment

Three EU countries – Bulgaria, Cyprus and Malta – offer citizenship in exchange for a financial investment. Currently, however, Bulgaria is considering a government proposal to end the scheme, Cyprus is only processing applications submitted before November 2020, and Malta has just suspended the processing of applications from Russian citizens.

In addition, 12 EU countries (Cyprus, Estonia, Greece, Spain, Hungary, Ireland, Italy, Latvia, Luxembourg, Malta, the Netherlands and Portugal) grant residence permits on the basis of investments, the so-called ‘golden visas’. 

Each national scheme has different rules regarding minimum investment requirements, which range between €60,000 in Latvia and €1.25 million in the Netherlands. These can be through property ownership or contributions to public projects. 

A European parliament study estimates that, from 2011 to 2019, the total investment associated to these schemes has been of €21.4 billion. 42,180 citizenship or residence applications have been approved under such programmes and more than 132,000 people have benefited, including family members of applicants. 

Dutch MEP Sophie IN’t Veld, the European parliament rapporteur, said that “when governments are selling passports or visas, what is actually bringing in the cash is… the little blue and yellow logo on them” – in other words, the EU flag.

‘They are designed for shady business, shady money and shady characters’

Getting citizenship of one EU country of course means the freedom to live and work in all 27 member states, so one country’s passport policy affects everyone in the Bloc. 

Benefits include the right to move to other EU countries, exercise economic activities in the single market, vote and stand as candidates in local and European elections, receive consular protection outside the EU and travel visa-free in many other states around the world. 

Residence also ensures economic rights and the possibility to be joined by family members. 

All this bypassing standard citizenship requirements, which typically involve a period of residence and a “genuine connection” to the country, such as family links, or integration conditions, such as speaking the language and knowing the culture. 

“Passports and golden visa schemes are not about attracting any meaningful legitimate investment in the real economy of Europe. They are designed for shady business, shady money and shady characters,” Sophie IN’t Veld said during the debate.

A picture taken on March 8, 2022 shows European Union’s and Ukrainian flags fluttering outside the European Parliament in Strasbourg, eastern France. (Photo by Frederick FLORIN / AFP)

Security risks

In an earlier analysis, the European Commission found that such programmes pose risks regarding security, money laundering, tax evasion and corruption due to weak vetting procedures. 

For instance, EU countries offering citizenship by investment usually request clean criminal records from applicants or their country of origin, which are difficult to verify especially in case of a conflict. But Malta can waive the requirement “where the competent authority considers such a certificate impossible to obtain”. 

Cyprus, which is not part of the border-free Schengen area, is not connected to the Schengen Information System that allows member countries to share security information.

In addition, EU member states consult on applications for short-stay visas issued to citizens from certain third countries, but they do not consult for citizenship by investment programmes and do not inform each other of rejected applications, the Commission noted.

Media investigations also highlighted how the schemes have been linked to corruption and crime. Journalist Daphne Caruana Galizia was murdered in Malta in 2017 following her investigations into corrupt politicians and money laundering through the citizenship by investment programme, MEPs reminded. 

Brexit-backing billionaire Christopher Chandler, born in New Zealand, was reported to have acquired EU citizenship using the Maltese scheme in 2016.

In 2021 Cyprus revoked the citizenship of 39 foreign investors and 6 members of their families, after it emerged that insufficient background checks had been carried out for over half of the 6,779 passports issued under the scheme between 2007 and 2020. 

‘It is not fair to Ukrainians at this point’

The parliament said on Wednesday that these schemes are “discriminatory and lack fairness” as they contrast “dramatically with the obstacles to seeking international protection, legally migrating or seeking naturalisation through conventional channels”. 

MEPs also called on the European Commission to propose, in 2022, EU-wide regulation on residence by investment schemes. These should include stricter background checks on applicants, their family members and the sources of their funds, minimum residence requirements, investments that truly benefit the economy of the country, and proper scrutiny of intermediaries helping people acquiring rights trough these channels.

“It should not be enough to just buy a house or a villa. The investment must be in the real economy and in line with the climate and social objectives of the Union,” said Sophie IN’t Veld. 

It is “very difficult for small countries whose revenue streams depend on this… I understand it is painful but it is not fair to European citizens, and Ukrainians at this point,” the rapporteur said.

Despite the vote in the European parliament EU powers on this issue remain limited because the rules on the acquisition of citizenship are defined at national level rather than in Brussels. 

The European Commission, however, has already launched a legal action at the European Court of Justice against Cyprus and Malta because “the granting of EU citizenship for pre-determined payments or investments without any genuine link with the member states concerned undermines the essence of EU citizenship”.

What about Russian nationals obtaining golden status?

Russian nationals account for 45 percent of those who have acquired citizenship in EU countries using this route, followed by Chinese nationals and people from the Middle East (15 percent for each group). Chinese investors account for over half of residence permits issued in this way.  

In consideration of Russia’s invasion of Ukraine, the European Parliament also appealed EU countries to stop operating citizenship and residency by investment schemes for Russian nationals with immediate effect and to re-assess whether those who benefited in the past have links to the Putin regime. 

In the first round of sanctions against Russia, the leaders of the European Commission, France, Germany, Italy, the United Kingdom, Canada and the United States committed to “limit the sale of citizenship… that let wealthy Russians connected to the Russian government become citizens… of our countries and gain access to our financial systems.”

This article is published in cooperation with Europe Street News, a news outlet about citizens’ rights in the EU and the UK. 

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IMMIGRATION

How Europe’s population is changing and what the EU is doing about it

The populations of countries across Europe are changing, with some increasing whilst others are falling. Populations are also ageing meaning the EU is having to react to changing demographics.

How Europe's population is changing and what the EU is doing about it

After decades of growth, the population of the European Union decreased over the past two years mostly due to the hundreds of thousands of deaths caused by the Covid-19 pandemic.

The latest data from the EU statistical office Eurostat show that the EU population was 446.8 million on 1 January 2022, 172,000 fewer than the previous year. On 1 January 2020, the EU had a population of 447.3 million.

This trend is because, in 2020 and 2021 the two years marked by the crippling pandemic, there have been more deaths than births and the negative natural change has been more significant than the positive net migration.

But there are major differences across countries. For example, in numerical terms, Italy is the country where the population has decreased the most, while France has recorded the largest increase.

What is happening and how is the EU reacting?

In which countries is the population growing?

In 2021, there were almost 4.1 million births and 5.3 million deaths in the EU, so the natural change was negative by 1.2 million (more broadly, there were 113,000 more deaths in 2021 than in 2020 and 531,000 more deaths in 2020 than in 2019, while the number of births remained almost the same).

Net migration, the number of people arriving in the EU minus those leaving, was 1.1 million, not enough to compensate.

A population growth, however, was recorded in 17 countries. Nine (Belgium, Denmark, Ireland, France, Cyprus, Luxembourg, Malta, Netherlands and Sweden) had both a natural increase and positive net migration.

READ ALSO: IN NUMBERS: Five things to know about Germany’s foreign population

In eight EU countries (the Czech Republic, Germany, Estonia, Spain, Lithuania, Austria, Portugal and Finland), the population increased because of positive net migration, while the natural change was negative.

The largest increase in absolute terms was in France (+185,900). The highest natural increase was in Ireland (5.0 per 1,000 persons), while the biggest growth rate relative to the existing population was recorded in Luxembourg, Ireland, Cyprus and Malta (all above 8.0 per 1,000 persons).

In total, 22 EU Member States had positive net migration, with Luxembourg (13.2 per 1 000 persons), Lithuania (12.4) and Portugal (9.6) topping the list.

Births and deaths in the EU from 1961 to 2021 (Eurostat)

Where is the population declining?

On the other hand, 18 EU countries had negative rates of natural change, with deaths outnumbering births in 2021.

Ten of these recorded a population decline. In Bulgaria, Italy, Hungary, Poland, and Slovenia population declined due to a negative natural change, while net migration was slightly positive.

In Croatia, Greece, Latvia, Romania and Slovakia, the decrease was both by negative natural change and negative net migration.

READ ALSO: Italian class sizes set to shrink as population falls further

The largest fall in population was reported in Italy, which lost over a quarter of a million (-253,100).

The most significant negative natural change was in Bulgaria (-13.1 per 1,000 persons), Latvia (-9.1), Lithuania (-8.7) and Romania (-8.2). On a proportional basis, Croatia and Bulgaria recorded the biggest population decline (-33.1 per 1,000 persons).

How is the EU responding to demographic change?

From 354.5 million in 1960, the EU population grew to 446.8 million on 1 January 2022, an increase of 92.3 million. If the growth was about 3 million persons per year in the 1960s, it slowed to about 0.7 million per year on average between 2005 and 2022, according to Eurostat.

The natural change was positive until 2011 and turned negative in 2012 when net migration became the key factor for population growth. However, in 2020 and 2021, this no longer compensated for natural change and led to a decline.

READ ALSO: IN NUMBERS: One in four Austrian residents now of foreign origin

Over time, says Eurostat, the negative natural change is expected to continue given the ageing of the population if the fertility rate (total number of children born to each woman) remains low.

This poses questions for the future of the labour market and social security services, such as pensions and healthcare.

The European Commission estimates that by 2070, 30.3 per cent of the EU population will be 65 or over compared to 20.3 per cent in 2019, and 13.2 per cent is projected to be 80 or older compared to 5.8 per cent in 2019.

The number of people needing long-term care is expected to increase from 19.5 million in 2016 to 23.6 million in 2030 and 30.5 million in 2050.

READ ALSO: How foreigners are changing Switzerland

However, demographic change impacts different countries and often regions within the same country differently.

When she took on the Presidency of the European Commission, Ursula von der Leyen appointed Dubravka Šuica, a Croatian politician, as Commissioner for Democracy and Demography to deal with these changes.

Among measures in the discussion, in January 2021, the Commission launched a debate on Europe’s ageing society, suggesting steps for higher labour market participation, including more equality between women and men and longer working lives.

In April, the Commission proposed measures to make Europe more attractive for foreign workers, including simplifying rules for non-EU nationals who live on a long-term basis in the EU. These will have to be approved by the European Parliament and the EU Council.

In the fourth quarter of this year, the Commission also plans to present a communication on dealing with ‘brain drain’ and mitigate the challenges associated with population decline in regions with low birth rates and high net emigration.

This article is published in cooperation with Europe Street News, a news outlet about citizens’ rights in the EU and the UK.

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