The European Commission has proposed suspending a visa-free travel agreement with Vanuatu’s Pacific archipelago over the country’s plan to issue passports to wealthy foreigners.
Most important points:
- The scheme allows foreigners to obtain Vanuatu citizenship and, in turn, visa-free entry into the EU
- The European Commission warns that the deal could pose security and money laundering risks
- The commission has proposed to suspend visa-free travel for all new Vanuatu passport holders
The proposal was announced local time on Wednesday. If backed by EU countries, it will be the first time the EU has imposed sanctions on a country for carrying out “golden passport” schemes.
The committee has repeatedly warned that the scheme could entail security and money laundering risks.
Under the scheme, foreigners can obtain Vanuatu citizenship and a passport in exchange for a minimum investment of $130,000 ($178,000).
That, in turn, gives them visa-free access to the EU under a visa waiver agreement the country has with the 27-nation bloc.
The lucrative “cash for passports” scheme helped prop up Vanuatu’s economy as the pandemic hit and the country’s tourism industry fell to its knees.
In 2020, the citizenship program accounted for 35 percent of government revenue.
Authorized Vanuatu Citizenship Agent Catherine Boudier said suspending visa-free travel to the EU would have a huge impact on citizenship sales.
“Many of the [citizenship] questions and why the customers contact us is to be able to travel in Europe,” Ms Boudier told the ABC.
“Personally, I think it’s very serious.”
Glen Craig, chairman of the Vanuatu Business Resilience Council, said the effects on Vanuatu’s economy would be “immediate” and “drastic”.
“Especially in COVID times, Vanuatu’s economy is being propped up almost exclusively by the citizenship program,” Craig said.
“When the EU looks at such a suspension now, in a vulnerable, small country in the South Pacific, on the basis of what they have given, we think it’s pretty bad shape.”
Craig said suspending the visa-free travel regime would affect local services such as health, education and governance.
“If I was in the government’s finance and economics department, I would now be very stressed about how we can afford to pay doctors and nurses and keep hospitals open,” he said.
The committee has proposed to suspend visa-free travel for all Vanuatu passport holders released since May 2015, when the investor program began to work in earnest in the country.
The moratorium would be lifted if the program was properly amended.
The EU executive said the plan was risky because it essentially accepted all applicants and failed to adequately screen them, despite some appearing in Interpol’s security databases.
Tess Newton-Cain, the Pacific Hub project leader for the Griffith Asia Institute, said one issue the committee had raised was that citizens from countries that had not been granted a visa to the EU were given a Vanuatu passport instead. used to get in.
“They seem concerned that these passports, the Vanuatu passports, allow people to end a process that they would otherwise fall into,” said Dr. Newton Cain.
The Vanuatu embassy in Brussels was not immediately available for comment.
The commission said it monitored countries with visa-free access to the EU that were actually operating or planning to set up investor and citizenship schemes, including Caribbean and Pacific islands and the eastern European states of Montenegro, Albania and Moldova.
Most EU countries have their own schemes offering passports or visas to wealthy foreigners, but the commission considers most of them to be in line with EU rules, with the exception of programs set up by Cyprus and Malta.
Both states face legal challenges from Brussels, requiring them to change or discontinue programs to avoid the risk of a fine.