Last November​ Joseph Muscat, the prime minister of Malta, flew to Miami to convince several hundred lawyers, accountants and wealth managers of the virtues of a Maltese passport. New legislation, Muscat and his advisers said, would allow carefully screened foreigners to obtain fast-tracked, no-strings-attached Maltese citizenship in exchange for an investment of 650,000 euros. The parliament in Valletta was due to approve the plan once a few details had been ironed out. In the meantime, interested parties should speak to Henley & Partners, the firm that had organised the conference and would be administering the passport programme.

‘Citizenship by investment’, as it’s known, is a lucrative business. Demand for citizenship of a second (or third) country has soared among the very rich: in unstable times the passports serve at once as visa-free travel documents, insurance policies, tax-avoidance tools and an investment in the future of the children of those who hold them. Most existing programmes are offered by tiny Caribbean countries – St Kitts, Dominica, Antigua – which, despite their best efforts, can’t seem to dispel the taint of loucheness that tends to be associated with tropical tax havens. A Maltese passport sounds more respectable: Malta has a safe banking sector, easy access to major airports, good infrastructure, nice views and, besides, the scheme offers a first-class ticket to the EU.

But not everyone is keen on the idea of selling citizenship. There’s a widespread fear that criminals will take advantage of these programmes to evade the law in their own countries. Unsavoury stories are told: the Indian lawyer, fleeing justice, who absconded to Dominica with his seven-year-old son; the Iranian nickel trader who got himself a diplomatic St Kitts passport, and on being asked about his credentials at Toronto airport, demanded to speak to the prime minister. Such episodes might well lead other countries to decide on security grounds to require travellers to get visas if they come from states that hawk passports. For would-be citizens from Russia, the Middle East or China, that would considerably diminish a passport’s value. And the politics are fraught. A head of state has to deflect accusations that his or her country is prostituting itself: an image nationalist politicians are quick to invoke. Like the Antiguans and Kittitians before him, Muscat tried to dignify the scheme, but his political rivals weren’t persuaded and many Maltese complained loudly about the programme in the local press. Muscat’s case was further complicated by Malta’s EU membership.

Muscat is a 40-year-old former journalist whose Labour Party took power last March. In Miami he told me he believes it’s inevitable that citizenship will eventually be bought and sold more freely. As he sees it, international borders will gradually open, following the model of the EU’s Schengen Agreement, but until that happens, he would like Malta to take the lead in developing novel ways to attract talent (it’s always talent, never money). ‘We want people who can bring jobs and investment, but it’s also about ideas,’ he said. ‘This is the next big thing in getting the right people. We want high-net-worth individuals, and highly networked individuals – people who can get things done with a phone call rather than going through bureaucratic processes.’

Christian Kalin of Henley & Partners, which describes itself as ‘the global leader in residence and citizenship planning’, agrees that the market will grow but sees states becoming more closed, more unequal, and more concerned with restricting people’s movement. ‘Why do we have borders? It’s to keep people where they are,’ he said. ‘It’s like in the Middle Ages, but more sophisticated.’ Kalin, a Swiss-German, made a name for himself popularising St Kitts’s citizenship-by-investment programme. The scheme was launched in the 1980s, but was largely dormant until Henley began bringing in clients, and marketing it at junkets in London, Hong Kong and Dubai four or five years ago. Kalin and his colleagues have since advised Antigua, Canada, Cyprus and many other countries on citizenship by investment and its close cousin, the investor visa. Virtually every Western democracy offers an investor visa, which comes with a residence permit in exchange for the purchase of government bonds or investments in local businesses. (A UK investor visa requires an initial investment of £1 million for a stay of three years and four months; holders can go on to apply for UK citizenship through normal channels.) Henley publishes a yearly ranking of the best and worst citizenships to have based on how freely their passports allow people to travel; last year Finland, Sweden and the UK tied for first place. Afghanistan came last, after Iraq, Somalia and Pakistan. Henley’s rivals accuse the firm of parachuting into countries where it sniffs an opportunity and strong-arming politicians into adopting schemes like the one Malta is considering.

In November, Muscat told me he was ready for criticism: ‘I believe pioneers have always encountered resistance.’ The Maltese parliament was certainly furious. MPs resented the €650,000 price tag. (It’s one thing to be a prostitute, another to be a cheap one.) They were unhappy that there was no residence requirement: you could become Maltese without needing to live on the island at all. They feared that too many people would apply, and disapproved of the arrangement with Henley: the company would at once charge clients for its services, review due diligence reports, and administer the programme on Malta’s behalf, pocketing a 4 per cent fee on every approved application. ‘It is as if a teacher who corrects examination papers were told: “I’ll give you 26,000 euros for each student who passes,”’ Jason Azzopardi, a member of the Maltese parliament, said in the local press. Nuri Katz, the CEO of Apex Capital, a rival of Henley’s, was more blunt: ‘The conflict is mind-boggling,’ he told me. ‘They’ve crossed the line – it was a tactical mistake.’

The Times of Malta has reported that hundreds of people – including a Formula One champion, a football player, a pop star and a Chinese billionaire – have already expressed interest. The second passport business tends to attract people with strong persecution complexes who subscribe to a paranoid libertarianism: during my time in Miami, I was told of the imminent downfall of the US Federal Reserve; strongly advised to invest in gold; praised for my failsafe collection of nationalities (Swiss, Canadian, Iranian); and told never, ever to become a US citizen if I wanted to cling to any semblance of personal freedom.

The Maltese opposition didn’t have enough votes in parliament to prevent the passing of the legislation, but they began to negotiate amendments. They made Maltese citizenship almost twice as expensive by adding real estate and bond purchase requirements. Under the revised bill, which still awaits final approval, the number of applicants may be capped at 1800 heads of household. (Malta’s population is 420,000.) A residence requirement has been added, though it is only for a year and applicants won’t have to be physically present the whole time. The opposition also successfully pushed for a list of these new ‘economic’ citizens, as they’re called, to be published. Matthew Ledvina, a tax lawyer in Zurich who handles many expatriations, told me this would be unpopular: ‘Our clients, very wealthy individuals, are asking every day: “How do I protect myself better and more secretly?” So they won’t get behind having their names out there. It’s a shame that it might be sunk. It would have been a nice programme for the right kind of client.’

Brussels wasn’t impressed by Malta’s actions either. After weeks of heated private meetings, the European Commission met on 15 January to discuss whether citizenship by investment ‘undermines the very concept of European citizenship’. (The answer was a resounding yes.) The next day, representatives voted on a motion opposing the sale of citizenship in the EU by a margin of 560 to 22, with 44 abstentions. ‘It is legitimate to question whether EU citizenship rights should merely depend on the size of someone’s wallet or bank account,’ Viviane Reding, the EU justice commissioner, said. But it’s entirely up to sovereign states to decide who they let in, and who they keep out. EC votes are non-binding, and while the EU has regulatory powers over trade and currency, it has no control over member states’ immigration policies, which are a relic of Europe’s Westphalian past. Besides, it wouldn’t be hard to argue that the EU should be happy for its member states to raise money and avoid bankruptcy.

Now that states compete for manufacturing contracts, company headquarters and tax dollars, why wouldn’t they compete for citizens too? The involvement of the private sector is only a logical next step. ‘It’s not about selling citizenship,’ Muscat told me. ‘We’re looking at it as strategic partnership with new citizens. In ten years’ time people will look at this programme as something that was so obvious and that needed to be done, so we’re glad we’re first. It’s part of the equation that we get criticised. Very soon, we’ll get followed.’

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