The European Commission has proposed suspending visa-free travel arrangements with Vanuatu due to concerns about the Pacific nation’s controversial “golden passports” scheme.
The proposed suspension, which still needs to be voted on by EU countries, would prevent all holders of passports issued from 25 May 2015 – when Vanuatu began issuing a large number of passports in exchange for investment – from traveling to the EU without a visa. .
Citizenship-by-investment (CBI) programs allow foreign nationals to purchase Vanuatu citizenship for $130,000 in a process that usually takes just over a month, without ever setting foot in the country.
One of the most attractive elements of the passport system is that it gives unrestricted and 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 tax, corporate or wealth tax.
The Commission – the executive branch of the European Union – believed that Vanuatu’s investor citizenship schemes “present serious shortcomings and security failures”, including “granting citizenship to applicants listed in Interpol’s databases”, and “the average application processing time is too short to Allowing comprehensive screening”, a “very low rejection rate” and some applicants coming from countries normally excluded from citizenship programs.
Last year, the Guardian revealed that of the more than 2,000 people Vanuatu had sold their citizenship to in 2020, they were businessmen and disgraced individuals wanted by police in countries around the world.
The list included a Syrian businessman with US sanctions against his business — his citizenship application was revoked after the Guardian report — a suspected North Korean politician, an Italian businessman accused of extorting the Vatican, a former member of a notorious Australian motorcycle gang, and the South African brothers accused of committing $3.6 billion worth of cryptocurrency stolen.
Vanuatu’s opposition leader, Ralph Regenvano, said the commission’s proposal was “inevitable”. “We have been warning the government about implementing recommended reforms to the program for nearly two years, but nothing has been done.”
Glenn Craig, a Vanuatu and New Zealand citizen who developed Vanuatu’s citizenship-by-investment program in 2012, said the impact of the announcement would have “enormous negative” effects on the economy.
Vanuatu is one of the poorest countries in the world, with the World Bank estimated per capita GDP at $2,780. The sale of passports is the largest source of revenue for the Vanuatu government, which an analysis by Investment Migration Insider found to represent 42% of total government revenue in 2020.
“The economy is very much supported by the program,” Craig said. “I am sad, to be honest. There will be a lot of people who will probably not have teachers, there will be no money to pay their salaries, the hospital system is already stretched and there will be no money for it. It is hard to watch.”
Craig acknowledged that the citizenship-by-investment program had room for improvement but questioned how fair the visa decision would be, when the wealthier countries running CBI programs did not have and raised serious questions the same visa-waiver suspension imposed on them.
“Vanuatu was the bullet that crossed the bow,” he said. “I think we were seen as an easy target…neither better nor worse than any program we’ve seen lately, but you have to ask, the European Union effectively cripple an economic country overnight, is that a fair punishment?”
The Vanuatu Citizenship Office and Commission have been contacted for comment.