The government may have thought it could ride the storm caused by last year’s revelations about the citizenship scheme by announcing it would stop receiving any more applications from November but this is proving a gross miscalculation. Its reasoning that ending the programme would satisfy the European Commission, which had been expressing concerns about it long before the damning revelations by Al Jazeera, was deeply flawed.
There was no way the Commission would let the matter go away, given the termination of the programme was accompanied by the announcement that all pending applications – 1,413 in total – would be processed. How could this be construed as a termination of the programme by Brussels? It was not, as the terse statement issued on Wednesday saying that the Commission had decided to take further steps in the infringement procedures against Cyprus and Malta regarding their citizenship by investment schemes showed.
As Cyprus was continuing processing pending applications “the Commission decided to take the next step in the procedure against Cyprus by issuing a reasoned opinion,” the statement said adding that “the concerns set out in the letter of formal notice were not addressed by Cyprus.” Commissioner for Justice and Consumers Didier Reynders also weighed in, saying that “to this day our concerns have not been addressed by Cypriot authorities and further action is further required.”
It could not have been made any clearer, that the reason for the next step in the procedure, which could end up in the European Court of Justice with all that involves, was the continuing of the processing of applications. It was not just a few dozen that the Commission could have overlooked, but more than a thousand. This was in clear defiance of Brussels, considering the programme, in practice, was not ending as the government had claimed. Had the government seriously believed it would get the Commission off its back with this trick?
In fact, it reinforced Brussels’ fears by setting up an investigative committee, under a retired president of the supreme court, to look into the programme and report on unlawful decisions and irregular practices. The committee was set up because of domestic pressure and accusations of corruption against the president and the government, but it was also an official admission that the programme had been abused and that European citizenship had been granted to ineligible foreign nationals and their families.
This admission was validated by the investigative committee which reported last week that 53 per cent of the 6,779 citizenships granted were unlawful and of the remaining 47 per cent that were lawful one third did not satisfy all the criteria – that were considered inadequate in the first place and were eventually tightened last year – set by the government. The committee also reported that the council of ministers completely disregarded opinions issued in 2015 and 2016 by the attorney-general who believed the granting of citizenships to the families of investors was against the law. Some 3,600 of the naturalisations were given to family members. Even today, of the 1,413 applications pending 722 are for the dependents of investors. The law was amended in 2020 to include dependents, a move unlikely to have been welcomed by Brussels.
Who could claim, under the circumstances, that the Commission’s concerns were misplaced or exaggerated, when Cyprus’ own investigative committee found that the programme was systematically abused, the government disregarded the law and that EU citizenship was granted for money without any due diligence, which was only introduced in the last year or so? President Anastasiades fully endorsed the findings of the report, conceding the programme was marked by “shortfalls, weaknesses and illegalities,” that were “exploited by devious individuals.”
Despite all this the government appears determined to continue the processing of the pending applications. Its response to the Commission’s threat of further steps in the infringement procedure was that the matter was being handled by the state Legal Service, in cooperation with foreign legal experts, and it would respond within the two-month time frame. In other words, the processing of applications would continue, presumably because the government has taken the accountant’s approach to the matter – any procedure against Cyprus at the European Court of Justice could take years to complete and the fine would be significantly lower than the income that would be generated by approving the pending citizenships, that would be in excess of a billion euro.
There is a big danger, however, the accountant’s approach could turn out to be another gross miscalculation by a government that keeps getting things wrong. From this year the European Council has the power, on majority vote, to deny a member-state EU funding over rule of law violations. We hope it does not come to this as a result of Cyprus’ continuing defiance of the Commission but the government should also take this possibility into account when deciding its stance in the ongoing dispute with Brussels.