The Court of Justice of the EU (CJEU) has handed down a landmark ruling to end the selling of “golden passports”, the practice of member states such as Malta and Cyprus that have turned European citizenship into a commercial transaction.
On Tuesday 29 April the CJEU issued a judgment of condemnation against Malta. This landmark ruling was met with restraint by the Cypriot government, which hopes that its own thousands of golden passports – the Citizenship for Investment Programme (CIP) – will not end up in the CJEU.
“Τhe Republic of Cyprus as a member state of the EU, fully respects and implements the decisions of the CJEU”, government spokesman Konstantinos Letymbiotis told Cyprus’ Investigative Reporting Network (CIReN), adding quickly that “Cyprus has abolished its own citizenship for investment programme” back in November 2020. Malta refused to do so, based on the now outdated argument that granting citizenship is an exclusive competence of member states. But this was also the belief of the Cypriot government during the 10-year presidency of Nicos Anastasiades, when it exploited European citizenship as much as anyone. However, the CJEU ruled that Malta had introduced a procedure that “essentially amounts to rendering the acquisition of nationality a mere commercial transaction”.
State-citizen bond / ‘Commercialisation of EU citizenship’
The CJEU has held that the commercialisation “does not make it possible to establish the necessary bond of solidarity and good faith between a Member State and its citizens, or to ensure mutual trust between the Member States and thus constitutes a breach of the principle of sincere cooperation”
Former Supreme Court President Myron Nicolatos, who was head of the Investigative Committee on Cyprus’ “golden passports”, told CIReΝ: “I agree with the judgment of the CJEU, EU law does not allow for the effective commercialisation of European citizenship,”. Nicolatos’ (7/6/2021) finding highlighted that “more than half of naturalisations (53%) were illegal or irregular”, raising “serious problems of transparency and accountability”.
Comparisons
For years Cyprus and Malta have come under intense criticism amid revealing reports of corruption, political interference at the highest levels and lack of supervision. Individuals with criminal records, fugitives, fraudsters, oligarchs and others, have been put in the spotlight by international journalists and courageous local media. The two governments brazenly responded to the criticisms by making similar arguments: protecting the national interest and benefiting the people! “Countless cases have shown how these programmes have provided a safe haven for corrupt people from all over the world”, Transparency International said.
Since 2014 the Maltese government has approved “golden passports” for 5300 individuals and their relatives. The equivalent Cypriot CIP programme was implemented from 2007 to 2020, but most of the golden passports, around 7000, were approved by the Anastasiades government.
Cypriot manoeuvres
The more adamant Malta appears, the more relieved Cyprus feels. The Cypriots have proven to be very competent in avoiding both the responsibilities at the highest political level and the consequences from the EU. The government misled and skyrocketed its golden passports with a turnover of €10 billion. In 2019, Anastasiades did not hesitate in making accusations against the European Commission that it “targets Cyprus for the known reasons…” which he never justified. A plethora of lobbyists with influence in the media disparaged the journalistic revelations: “you will damage our economy”, they used to say. In October 2020, following an Al Jazeera exposé, Anastasiades made threats: “Don’t mention Al Jazeera to me, so the devil will not take you,” he told reporters at one point.
The European Commission sent a warning letter to Cyprus on 20 October 2020. Thousands have acquired Cypriot citizenship, an undetermined number are unknown, disappeared and without any physical link to Cyprus, but as European citizens they move around the world. Amidst outcry, the Anastasiades government announced the abolition of the CIP from 1 November 2020; but inventively, it continued to process hundreds of applications pending until July 2021, to the satisfaction of the powerful lobbies of land developers and brokers.
The final end of the CIP coincided with the European Commission’s decision on 9 June 2021 to issue a reasoned opinion, one step before it reached the CJEU. Defensively, Anastasiades admitted that the programme “had weaknesses and was exploited by a small number of people”.
On 7 June 2021, the Committee of Inquiry under M. Nicolatos issued its verdict, confirming the flimsiness of the Cyprus CIP. It developed a list of 280 cases of high-risk investors and recommended a procedure to revoke passports. Since then, the Cypriot Government has been implementing an extremely lengthy and opaque procedure. “The Ministry of Interior implements ongoing screening checks on all individuals that acquired the Cypriot citizenship via the CIP and in cases where the requirements of the relevant national legislation for the loss of citizenship are met, it proceeds with the deprivation of the Cypriot citizenship, in accordance with the national legal framework” Letymbiotis told CIReN. He declined to answer more specific questions, such as which and how many cases involve the existence or not of a natural bond, out of the total number of citizenships or those that were revoked.
According to Nicolatos’ findings, the Cypriot ploy was that the CIP did not provide for a minimum period of residence – in the EU it is 12 months – and therefore a physical bond between the applicant and Cyprus before applying for citizenship.
Nicolatos stresses that “in order to acquire the citizenship of a Member State, one must have strong bonds with the country, either by blood, birth or years of residence”.
By January 2023, it became known that the Cypriot authorities decided to revoke 222 passports, while by November 2024, this number had reached 286. It was never revealed how many revocations were finally decided in an appellate court, where the affected persons appeal and whether the passports were actually revoked. These, according to CIReN’s sources, may not even exceed 100.
M. Nicolatos believes that “the revocation (of a passport) is not a simple matter because legal rights may have been created in favour of their holders” and adds: “The revocation of an act, even an illegal one, involves difficulties because the person concerned may have relied on it legally…”
Costas Paraskevas, an associate professor at the University of Cyprus Law Department, has a more drastic view: “the revocation of this type of passports, despite any legal problems it might cause, would be a move that would lead to a reversal of the climate of suspicion that has been created”. “It would contribute”, he added, “to strengthening the mutual recognition of decisions relating to the citizenship of a Member State which has de facto been eroded”. Mr Paraskevas also incorporates the issue of political credibility: “it should not be forgotten that the Republic of Cyprus had fought legal battles in order to be admitted to the EU, due to the unresolved Cyprus problem. Now, it has been exposed in a case involving the commercialisation of EU citizenship”.
The article is published simultaneously in the newspaper “Politis” in Cyprus and in the “Journal of Editors” (Ef.Syn) in Greece