When governments get broke, governments get desperate. They look for ways to bring in money with no immediate obvious cost. So you get a residents permit for Greece if you buy property valued at over €250,000. You can get Portuguese citizenship after a mere six years if you spend €500,000 on a holiday house. And in Cyprus, €1m usually does the job.
Even the UK is in on the game. Invest £1m in a UK firm, or if you can’t be bothered with that, into UK gilts, and spend six months a year in the country for five years, and you have permanent residency in the bag (and eventually a passport) – wherever you come from.
But Malta has taken the whole selling residency thing to a new level. The state – which is part of the EU – has just announced that it will effectively sell you a passport for €650,000. You have to one way or another prove that you aren’t actually a terrorist or a dedicated money launderer. But that aside there are no strings attached – you don’t even need to have visited Malta in the past, let alone have any kind of connection to it.
Hand over the cash and bingo, you are a citizen of an EU state and have bought all the benefits that come with. That includes the right to come and go as you please across all 28 member nations. And if you like your new ID you can then buy more for your family at a mere €25,000 a pop.
Is this a problem? Depends how you look at it. A good many people have come out to say that it is a threat to national security all over the EU – after all, the Schengen area is based on trust and this rather undermines that. Like all unions the EU is only as strong as its weakest link.
However, for the UK it presents another problem: it undercuts our price. We charge £1m and you don’t get a passport. Malta charges €650,000 and you do.
You could argue that at least investors will get some of their £1m back if they invest in gilts, so the deal could end up cheaper, but we strongly suspect that most people looking to buy safe-haven residency are in a hurry. Immediacy is worth a huge premium over a five-year wait.
So what next? Our best guess is a passport price race to the bottom, and a nasty argument about whether the free movement of people between EU states is something our politicians really want.