Malta’s Economic Citizenship Flop

If you keep up with the latest on internationalization you have likely heard about Malta's proposed €650,000 economic citizenship program.

The proposal generated a lot of excitement (at least from those who could afford it), because a Maltese passport is a superb travel document. With visa-free travel to more than 160 countries, it would make for a great second passport for many. Plus, Malta is a member of the EU, and Maltese passport holders have the legal right to live and work in any of the other 27 member countries.

Personally, I think it's a great thing that there is an increasing number of economic citizenship programs available. The more options to dilute the control your home government wields over you, the merrier.

Unfortunately, the hopes for this program appear to have ultimately been misplaced.

Despite having been passed by the parliament and signed by the president, the program has been hit by a series of setbacks.

First, the government rolled back a provision that would have preserved the confidentiality of those participating in the program. The government had sought to keep the names secret, because it was thought it would bring in more money. However, the government withdrew the secrecy clause ''after listening to the people.''

Then, under intensifying popular opposition, the Maltese government buckled and "indefinitely postponed" the program. This is likely a diplomatic way of saying that Malta's economic citizenship program is now dead in the water.

I had been observing the political situation in Malta for some time, and to me, this announcement did not come as a huge surprise. In fact, I was expecting something like it.

From the beginning, the proposal was politically controversial and deeply unpopular with the nationalist opposition. They even went so far as to promise, once they return to power, to not only repeal the economic citizenship program, but to also revoke any citizenship granted.

They may not even have to wait that long. Some opposition lawmakers are considering launching a petition drive to force a referendum that would definitively kill the law.

Unless you can drop hundreds of thousands (or millions) of dollars without batting an eye, I believe it is essential to assess the political dynamics of a country that offers economic citizenship.

This is because, ultimately, when push comes to shove, any government has the ability to revoke the passport and/or citizenship of any of its citizens at anytime for any real or made up reason. This is especially true when the political winds shift and the government finds a new enemy du jour.

Germany stripped Jews of their citizenship in the 1930s, and the Soviet Union did the same to its perceived internal enemies.

For a recent example, look at how the Dominican Republic stripped tens of thousands of people of their citizenship with no due process in September. Or how the US government revoked Edward Snowden's passport at the drop of a hat.

Protecting yourself against such arbitrary actions is just one of many reasons why it's crucial to obtain the political diversification benefits that a second passport offers.

The point here is that there are many instances throughout history and modern times that prove that you don't own your own passport or citizenship—the government does.

Knowing this fact, it seems rather foolish to me that anyone would seriously consider economic citizenship in Malta, where there is not only such staunch opposition to the idea, but major politicians have openly stated their intent to revoke any citizenships granted. I personally would not want to bet €650,000 that it’s an empty threat.

I believe that serious economic citizenship programs need to have established credibility, and that comes in part from a history of domestic political acceptance.

In my view, there are only a small handful of economic citizenship programs in the world that have enough established credibility to be worth dropping five or six figures. And of that handful there are only a couple that have stood the test of time (decades) and been used by thousands of people.

The rest are either shady grey market scams or legit programs that haven't established enough credibility to merit a serious investment.

We separate the wheat from the chaff and outline the best economic citizenship programs, as well as our other suggested paths to a second passport here.

Nick Giambruno

Nick is Doug Casey’s globetrotting companion and is the Senior Editor of Casey Research’s International Man. He writes about economics, offshore banking, second passports, value investing in crisis markets, geopolitics, and surviving a financial collapse, among other topics. He is a CFA charterholder. In short, Nick’s work helps people make the most of their personal freedom and financial opportunity around the world. To get his free video crash course, click here.

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