The European Commission has proposed suspending a visa-free travel arrangement with Vanuatu over concerns over the country’s controversial “golden passports” system.
The proposed suspension, which has yet to be voted on by EU member states, would prevent all holders of passports issued from 25 May 2015 – when Vanuatu started issuing a significant number of passports in return for investment – from entering the EU without a visa. to travel .
Citizenship by Investment (CBI) programs allow foreigners to purchase Vanuatu citizenship for $130,000 in a process that typically takes a little over a month, without ever setting foot in the country.
One of the most appealing elements of the passport system is that it grants unfettered, visa-free access to 130 countries, including the UK and EU countries, allowing passport holders to travel there for 90 days without a visa. Vanuatu also operates as a tax haven, with no income, corporate or wealth tax.
The commission – the executive branch of the EU – found that Vanuatu’s investor citizenship schemes “have serious shortcomings and security concerns”, including “granting citizenship to applicants listed in Interpol’s databases”, “an average processing time of applications too short to undergo thorough screening”, “very low rejection rate” and some applicants come from countries typically excluded from citizenship schemes.
Last year, The Guardian revealed that among the more than 2,000 people to whom Vanuatu sold citizenship in 2020, disgraced businessmen and individuals were wanted by police in countries around the world.
The list included a Syrian businessman with US sanctions against his companies — whose citizenship application was withdrawn after the Guardian coverage — a suspected North Korean politician, an Italian businessman accused of extortion from the Vatican, a former member of a notorious Australian biker gang, and South African brothers accused of $3.6 billion cryptocurrency heist.
Vanuatu’s opposition leader, Ralph Regenvanu, said the committee’s proposal was “inevitable”. “We have been warning the government for nearly two years to implement the recommended reforms in the program, but nothing has been done.”
Glen Craig, a Vanuatu-New Zealand citizen who developed Vanuatu’s CBI program in 2012, said the impact of the announcement would have “huge negative” effects on the economy.
Vanuatu is one of the poorest countries in the world and the World Bank estimates GDP per capita at $2,780. Passport sales are the largest source of revenue for the Vanuatu government, with analysis by Investment Migration Insider showing that it accounted for 42% of all government revenue in 2020.
“The economy is pretty much supported by the program,” Craig said. “I’m sad, to be honest. There will be many people who will probably not have teachers, there will be no money to pay them, the hospital system is already quite stretched and there will be no money for that. It’s hard to watch.”
Craig acknowledged that the CBI program could be improved, but questioned the fairness of the visa decision, as wealthier countries that run CBI programs and ask serious questions have not received the same visa waiver suspension.
“Vanuatu was ahead of the curve,” he said. “I think we have been seen as an easy target… We are no better and no worse than any program we have seen lately, but you have to ask if the EU is economically crippling a country overnight is that a fair punishment?”
The Vanuatu Citizenship Office and Commission has been contacted for comment.