Golden Passports, the EU against the sale of Albanian citizenship

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Autor: Zylyftar BREGU

 

The European Union asked the Albanian government to abandon the project to sell Albanian citizenship. The opposition insists that the application of this scheme would harm national security, while independent economic experts think that this scheme can be used by real estate market investors in Albania, and in this way the state budget will benefit very little from the investment, because the largest part will go into private pockets.

In November 2019, Prime Minister Edi Rama presented the “Citizenship through Investment” project to the London elite. During the World Conference on Citizenship, in London, Rama reminded the attendees that Albania is a candidate country for the EU , while he was promised exemption from taxes for a period of 10 years and many other fiscal benefits.

Duško Marković , was also present at this event, who promised that Montenegro would offer 2,000 “golden passports”.

Aware of the debates that accompany this program, Rama stated: “I strongly believe that this is the right way and that this is what we should do. Of course, there are risks, but we cannot deny the extraordinary potential of this program to our country and our future”.

Three years later, Albania has taken small steps in this direction. While Montenegro started selling golden passports in 2020, Albania is still thinking about it. In 2020, a new Law “On Citizenship” was approved and in 2022, two decisions were approved that define the criteria for obtaining Albanian citizenship for the contribution made in the field of education, science, sports, art and culture, but not yet the green light has been given to the sale of citizenship through investment.

The “Citizenship through Investment” program has alarmed the EU, which demands its cancellation. The European Parliament in the middle of May 2022 in the Resolution on the Progress of Reforms in Albania, point 32, requests: “To give up the scheme “Citizenship through investment”, which can pose a serious risk to security, money laundering, corruption and fiscal evasion”.

Two weeks after the publication of the resolution, the European Commission addressed a letter to the Minister of the Interior and again requested the immediate termination of the “Citizenship through Investment” scheme. However, one month after the submission of the letter, the office of the EU Delegation in Tirana confirms that it has not received any response from the Albanian Minister of the Interior regarding this request.

 

EC warning: We will punish you!

“We would like to reiterate our concern about the prospects of Albania’s creation of a special program for obtaining citizenship through investments and the recent steps taken by your government to continue with the implementation of such a scheme.”

Thus, begins the letter of the European Commission, dated May 30 of this year. The EC expresses concern about this initiative, placing it in the “bed” of the latest developments of Russian aggression against Ukraine.

As written in this letter, based on these developments, on March 28 of this year, the European Commission has recommended to the EU member states, which apply the citizenship benefit scheme through investments, to close them immediately, even begin investigations for the “investors”, who had benefited from the respective citizenship.

“The Commission urged member states to carry out an assessment to determine whether citizenship, previously granted to Russian or Belarusian citizens who are subject to sanctions or who significantly support the war in Ukraine, should be revoked, revoking the decision to grant it”, – is written on the letter.

Then in the letter, the European Commission reminds the Minister of the Interior that it has been asking Albania to withdraw from this initiative for a long time. The firm position against Albania’s initiative to sell its passport has been presented to the government and parliament since the time when the Law “On Citizenship” was still a draft (October 2019). At that time, the Commission warned Tirana about the inherent dangers and possible consequences, but the government approved the law in 2020, “ignoring” the position of the President of the Republic, who did not decree it.

In the letter addressed to the Minister of the Interior, the clear recommendations of the annual reports for Albania, both for the year 2020 and for the year 2021, are underlined, as not to continue this project. The European Commission states that it recognizes Albania’s sovereignty to decide on naturalization procedures, but adds that “the citizenship by investment scheme may present security risks for the EU and its member states, which are not in accordance with the principles and conditions on the basis of visa exemption”.

There are four risks that are listed in the paper: Infiltration of organized crime; Money laundering; Fiscal evasion and corruption.

“The risks for the EU and the member states are particularly worrying in the context of citizenship schemes through investments developed by candidate and potential candidate states, that in the future the beneficiaries through these schemes may acquire EU citizenship”.

The Commission warns that “it will take strong action against citizenship schemes through investments inside and outside the EU, which it considers in violation of EU laws”.

The European Union has a precedent in this respect. On March 3^rd of this year, the EU partially removed the right to visa-free movement in the Schengen area of citizens of the island of Vanuatu (an island in the Pacific Ocean east of Australia and west of Fiji). All citizens of this country, who had a passport issued after May 25, 2015, which is also the date when the investment-based citizenship scheme started, are not allowed to enter EU countries without visas.

The office of the EU Delegation in Tirana, in response to the interest of INA MEDIA, if it has received any response after the submitted letter, confirmed that it has not received any response.

In response to the question about the motives and reasons that compel the EU to insist on giving up this scheme, the Office of the EU Delegation in Tirana clarified that “the European Commission has approved a report in 2019, according to which the scheme of the citizenship through investments in third countries with visa-free access to the EU can be used to bypass the regular EU short-stay visa procedure”.

 

“Citizenship through investment” or golden passports

Until July 2020, the law recognized only the President of the Republic as the only institution that had the right to grant Albanian citizenship to all foreign citizens. The procedure was long and passed through the filters of many law enforcement institutions.

Reliable sources of the Presidency also provide statistics on the granting of Albanian citizenship in recent years, according to the table below.

As can be seen from the data, there is an increase in the number of foreign citizens who have an Albanian passport. Despite the fact that the institution of the Presidency does not have a division of the “origin” of foreign citizens who have requested Albanian citizenship, it is unofficially asserted that the majority are citizens from Kosovo. However, on July 29, 2020, the Assembly of Albania approved the Law “On Citizenship” . This law removed from the institution of the Presidency the “monopoly” of granting citizenship, and even sanctioned a new scheme for obtaining the Albanian passport, by purchasing it, according to the “Citizenship based on investment” scheme.

Article 9 of the new Law on Citizenship is entitled “Special cases of obtaining Albanian citizenship”. According to this article, Albanian citizenship can be acquired by a foreign citizen who has reached the age of 18 (eighteen), when he does not pose a threat to public order and national security of the Republic of Albania, and in cases where the Republic of Albania has a national interest or interest in the field of education, science, art, culture, economy and sport.

In the second item of this article it is written: “For the design of special programs, the determination of the specific rules of the special control of the security and purity of the image at the highest standards and monitoring their implementation, a special, state agency is created depending on the minister. The organization and operation of the agency is approved by decision of the Council of Ministers”.

While item 3 determines that the criteria for obtaining citizenship, according to special programs, the application procedures, the rules for carrying out the necessary verification and controls are approved by decision of the Council of Ministers, with a joint proposal of the responsible ministers, according to the field of their responsibility.

For Ervin Salianj, deputy of the Democratic Party, member of the Parliamentary Committee for National Security, the law was deliberately approved while the opposition was not in parliament. According to him, the citizenship scheme based on investment undermines national security and turns Albania into a country for money laundering.

Ervin Salianji, opposition MP

Based on this article, the Council of Ministers, on November 25, 2020, approved decision no. 1008, “On the creation, organization and operation of the Agency for Drafting Special Citizenship Programs” . The established agency is part of the Ministry of Interior. Despite the fact that the agency was created at the end of 2020, the practice of acquiring Albanian citizenship has continued according to the old law, even for 2021.

“The legal basis (decisions of the Council of Ministers, which make the law enforceable) had not yet been created to start the new practice”, – explains a source of the Presidency of the Republic.

More than a year after the creation of the Agency for Drafting Special Citizenship Programs, at the beginning of 2022, with the proposal of the Minister of the Interior and the Minister of Education and Sports, the Council of Ministers approved the decision to define the criteria for obtaining citizenship Albanian for special contribution in the field of education, science and sports, as well as decision no. 151, dated 11.3.2022 for determining the criteria and procedures for obtaining Albanian citizenship for special contribution in the field of art and culture.

Based on the two approved decisions of the government, the first Albanian passports were issued. On May 28, the Minister of the Interior, Bledi Çuçi, published on his Facebook page photos from the ceremony of granting the passport to Lara Colturi
, the Italian who has promised to compete with the colors of the Albanian flag in skiing.

Sources from the Presidency of the Republic inform that President Ilir Meta has not signed all the proposals received so far from the Agency for the Drafting of Special Citizenship Programs, but officially the Presidency refused to make comments.

The third in line to be approved is the decision of the Council of Ministers, which aims to
grant citizenship through investments, i.e. sell the Albanian passport.

The scheme for citizenship based on investments is not new and unknown. Many other countries, members of the European Union, but also our neighbors in the region, apply this way of granting citizenship. It is one of the easiest ways to increase direct foreign investment in the country that applies it. The online portal , best-citizenship, has listed 12 countries that apply this practice along with the corresponding years. The countries of the region, which apply this scheme, are North Macedonia and Montenegro.

Montenegro launched the citizenship by investment program at the beginning of 2019 with a 3-year deadline, setting the deadline for closing applications on December 31, 2021. But, for a number of reasons (among which the problems caused due to the pandemic, COVID-19 ), the program has been postponed for another year and is expected to end on December 31, 2022.

Experts say that compared to North Macedonia, the scheme used by Montenegro has been more efficient. According to experts, efficiency is also related to the fact that the scheme used by Montenegro looks more transparent, simpler and provides more security. Meanwhile, the North Macedonian scheme seems more complex, more closed off and not properly marketed.

In Montenegro, the minimum required transaction in real estate is 250,000 euros for objects located in the central or northern part of the country, excluding Podgorica, and a minimum of 450,000 euros for objects located in Podgorica or in the coastal area.

According to sources, in the first two years, Montenegro received 131 applications for citizenship through investment. By March 2021, it had issued passports to the families of 37 investors and rejected 12 applications.

The program of citizenship through investment in North Macedonia does not include investments in real estate, with the argument that this sector does not need foreign, direct financing and is not considered a sector that produces employment in the long term.

However, the transformation of citizenships as a whole and especially European ones into a form of “marketable commodity” has ignited fierce debates and normative, legal processes to control or curb it.

In a long and thorough investigation, the prestigious newspaper, The Guardian , wrote that the super-rich Russians, Chinese and Saudis have secured unlimited access to the EU through the Maltese “passport sales” scheme.

 

“Costs” of the Albanian passport

Experts in the field say that the attraction of foreign and wealthy citizens to obtain Albanian citizenship depends mostly on the power of the passport of the Albanian state, while the power of the passport is demonstrated mostly by the number of countries that can be visited visa-free or with a visa at the border. In this ranking, Albanian passport holders can travel to 111 destinations without a visa. The first place in terms of passport power in this ranking is jointly shared by Japan and Singapore , which travel without visas to a total of 192 countries, while the last is Afghanistan with only 26 destinations. A US passport provides visa-free or visa-on-arrival access to 172 countries or territories.

Albania is currently discussing the practice, methodology and price that will be set for the Albanian passport, according to the citizenship by investment scheme.

An expert, who asks not to be identified, says that Albania targets four types of individuals, interested in getting the Albanian passport, by investing.

First, there are wealthy individuals from countries that are not allowed to move without visas in the Schengen zone and other popular destinations, for example Asia, Eastern Europe, Kosovo, etc.

Second, there are wealthy individuals from countries with an insecure situation, who are looking for a safer place for their family and ease of travel.

The third category, who can apply for this citizenship program, are wealthy individuals from EU countries, the United States of America, who are looking for a more favorable fiscal regime and spending level.

The last category are wealthy individuals with affective ties or family origins with Albania, for example couples, where one of the spouses is not Albanian.

It is anticipated that the investment by foreign citizens, who want an Albanian passport, will be in several forms. First, they can invest in real estate. At this point, they should invest 250,000 to 450,000 euros, depending on the investment area. Second, they can open business or production activities. In this case, an investment limit of 300,000 to 500,000 euros is needed, but there will also be other additional criteria, such as the number of engaged workers.

Regardless of the form chosen, it is predicted that in the first two years of the application, Albania can benefit from around 100 million euros, which are an “injection” that will directly affect the country’s economy, but at this point begin the discussions that ” knock down” the optimism and arguments of the Albanian government.

Genti Beqiri, economic expert, says that the government should clearly define that investments should not be asset purchases from private investors in Albania, but should be in investments in the production sectors, because, based on the amount of investment required (500 thousand euros), foreigners will target the real estate market in Albania. So, people can buy any villa on the coast.

Gent Beqiri, Economic Expert

The orientation of the investment scheme in the real estate market brings income to the pocket of strategic investors on the coast.

“The state earns only that tax on the sale of the apartment or villa. So, 15 or 20 percent”, says Beqiri.

So, from the 50 million, which can be the turnover portfolio, only 5 or 10 million euros will arrive in the state budget per year, at best. In fact, Beqiri does not hesitate to say that this scheme can be sponsored by investors of the local real estate market.

“Or it can be best used by these investors”, – says the economic expert, Beqiri.

At this point, it seems that his opinion converges with the opposition deputy, Salianji. According to him, the Albanian state has no interest in jeopardizing its relations with the European Union for such modest figures.

“Foreign investments have nothing to do with citizenship. International companies and serious companies invest anywhere in the world, without having to be Albanian citizens. For foreign investments in Albania, there must be a favorable business climate. There must be strengthening of the justice system, an independent judiciary; there should be low taxes and legal security”, says MP Salianji.

Ilir Kulla, Security expert, seems to be “friendlier” to the project of the passport scheme through investment.

“Granting citizenship in exchange for investment is a well-known practice in EU countries. The methodology and verification of these subjects is important and necessary. Of course, EU standards should also be used by Albania”, says Kulla. He adds that checks may be necessary before, during and after the granting of citizenship.

The economic expert, Beqiri, also comments on the recommendation, according to which the Albanian government will entrust the procedure of application, control and filtering of applicants to a foreign company with experience in this field.

“No foreign, private organization can take over, it does not have the capacity, it does not have the economic motivation to do a full scan of the citizenship practice. This should remain the responsibility of the state”, – concludes Beqiri.

Ilir Kulla says that in terms of security, if Albania applies the European criteria and the EU database, we are at risk, as much as every EU country that applies this scheme is at risk.

The Director of the Information Agency, Endri Fuga, did not answer the question, whether the Albanian government has reflected, after being acquainted with these two documents [EU Delegation letters], until the moment of publication of this article, while the employees of this agency recommended that the question should be addressed to the Ministry of Internal Affairs, but this institution did not comment on this problem either.

 

The Indians, can history repeat itself

More than three years ago, Albanian institutions were involved in a scandal, after the President of the Republic provided two Indian brothers, Nitin Jayantilal Sandesara and Chetankumar Jayantilal Sandesara, with Albanian passports. The brothers were wanted internationally for tax evasion, while they had come to Albania with investor status. In fact, one of them, Nitin Sandesara, in parallel with the procedure of obtaining an Albanian passport, had also received the status of Honorary Consul of Albania in Nigeria from the Albanian Ministry of Foreign Affairs.

But, in a press statement, the President’s spokesperson passed the responsibility to the Minister of Tourism and Environment, Blendi Klosi, stating that “The legal procedures have been implemented based on
item 7 of article 9 of Law no. 8389, dated 05.08.1998 “On Albanian citizenship”, amended, with the proposal of the Ministry of Tourism and Environment, because of the experience in investments and the history of successful enterprises outside the Republic of Albania and because of their commitment to the realization of important, elite investments in our country”.

The President stated that he had made the relevant verification by the law enforcement agency, which did not result in any problematic data for the granting of Albanian citizenship.

The Prosecutor’s Office of Tirana launched an investigation regarding the procedure of how the Indian brothers, declared internationally wanted, managed to obtain Albanian passports, but the investigations were ceased.

 

This article is published by “Investigative Network Albania”