The number of individuals who acquired citizenship through Cyprus’ investment scheme could be more than a third of all naturalisations, the European Commission has said, and is capable of undermining the mutual trust among member states as regards citizenship procedures.
The European Commission on Tuesday announced it was launching infringement procedures over Cyprus’ citizenship by investment programme. The full contents of the 10-page letter, which was seen by the Cyprus Mail on Wednesday, said the limited number of rejections against the number of applications, showed that citizenships were granted “systematically”.
“Based on Eurostat data, one can draw the conclusion that the number of naturalised investors made up a significant percentage of total citizenship acquisitions in Cyprus,” the commission said.
As a rule, the number of naturalised investors, without taking family members who were also granted citizenship into account, was around 15 per cent of total naturalisations each year.
The total may make over a third of the total, the commission said, calling on the government to furnish it with the number of people granted citizenship as part of the programme each year since 2013, including any dependants.
According to the data Cyprus supplied the commission, in the six years between 2014 and 2019, 3,616 applications were submitted. The government approved 2,612 and rejected 69.
Based on the latter data, the commission “thinks the programme implemented by Cyprus to grant citizenships to investors is capable of undermining – for the financial benefit of one member state only – the mutual trust between member states in the naturalisation procedures of the other member states.”
“Undermining this trust, Cyprus endangers the integrity of the EU citizenship and its smooth operation.”
The commission’s move came after Cypriot politicians, an MP, and the House president, were caught on camera by undercover Al Jazeera reporters offering to help a fictitious Chinese investor with a criminal record obtain a Cypriot passport.
Both men resigned their posts while the police launched an investigation into the possibility criminal offences had been committed.
The outcry forced the government to cancel its ‘golden passport scheme’ from November 1. The government said it was considering replacing it with a new and more carefully structured one.
It was the second expose by the broadcaster which used leaked documents in August to run a report saying Cyprus was granting citizenships to dubious individuals.
In its letter, the commission said each member state ought to make sure it was not endangering or undermining the substance, value and integrity of the EU citizenship.
A member state does not adhere to this obligation when it establishes a scheme through which it “systematically grants citizenships” without the investor having any real bond to the country, based only on a financial investment into the local economy or payments to the state.
“In other words, when it essentially grants citizenship for financial compensation,” the commission said.
While the investment created a financial bond between the investor and other economic factors in Cyprus, it cannot be considered a basis for a real citizenship bond as the one created when an individual is born in the country or naturalised after many years of real residency or family ties.
“In addition, the level of investment required … is among the highest of similar programmes globally, another indication that a clear monetary value is attached to the benefits the parties interested would gain from the EU citizenship and the internal market.”
Cyprus has two months to defend itself. If the EU is satisfied with the explanations and any measures put in place to rectify the situation then the case would be closed. If not, it may end up in court with a hefty fine in store footed by taxpayers.