Wed. May 25th, 2022

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Golden passports and investor schemes for wealthy Russians to obtain citizenship or permanent residency in the EU have long been a thorn in the European Commission’s side. Now with over 30 oligarchs sanctioned in connection with the war in Ukraine, Brussels is renewing its calls on EU capitals to crack down on the schemes and even revoke the passports or residency permits of those on the sanctions list.

The move is part of a broader attempt by western allies to close loopholes, with the US warning sanctioned Russians that their transactions are being monitoredincluding those of friends and family members who aren’t listed.

Meanwhile, Russia has announced it will impose travel restrictions on western passport holders, including on scientists and exchange students.

And the war in Ukraine is also changing the discourse when it comes to the classification of green investmentswith a new possible category, amber, put forward by an advisory group of the commission.

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Golden, no longer

The European Commission has had a long struggle with countries selling passports or offering permanent residency to wealthy investors in the country. Malta, Cyprus and Bulgaria in particular have come in the crosshairs during the past decade, though all of them have scrapped (or, in the case of Malta, suspended) the schemes by now.

Still, the commission yesterday issued a recommendation urging countries to fully abolish these regimes and even look into ways to revoke the citizenship or residency granted to the 30-odd Russian oligarchs who have been sanctioned by the EU in connection with Putin’s war in Ukraine, write Valentina Pop in Brussels, Eleni Varvitsioti in Athens and Peter Wise in Lisbon.

EU justice commissioner Didier Reynders said the schemes were in breach of the bloc’s treaties and posed security risks, as well as opened possibilities for corruption, money laundering and tax avoidance.

“All member states concerned should end their investor citizenship schemes immediately,” Reynders said. “In addition, they should assess whether they should revoke any ‘golden passports’ already granted to sanctioned individuals and others significantly supporting Putin’s war.”

In Cyprus, authorities confirmed that one sanctioned oligarch had previously acquired Cypriot nationality via its now defunct golden passport scheme that applied to people investing over € 2mn in the country.

Russian agriculture billionaire Vadim Moshkovich, sanctioned by the EU and reportedly a beneficiary of the Cyprus golden passport scheme, fits the profile, but Cypriot authorities refused to confirm his name on privacy grounds. Moshkovich’s name was revealed in an Al Jazeera investigation in 2020 that obtained the records of the Cyprus golden visa scheme and led to street protests, high-level resignations and the abolition of the scheme.

When asked yesterday whether authorities would revoke the person’s passport, Cyprus President Nicos Anastasiades said “we will see”.

“Up until this point, Cyprus has fully supported [the sanctions regime based on] international law. Be sure that we will continue in the same direction, ”Anastasiades said.

In Portugal, authorities are separately in the process of reviewing the naturalization process of Russian billionaire Roman Abramovich, who has also been placed on the EU asset freeze and travel ban list because of his connections to the Kremlin.

Wealthy investors buying property in Portugal can be granted permanent residency in the country – and thus travel visa-free in the EU – but Abramovich acquired his Portuguese passport last year via a different process that enables the descendants of Sephardic Jews expelled from Portugal in the late 15th century to become citizens. He could still be stripped of it if the investigations disclose any wrongdoing.

Earlier this month, the Lisbon government altered its nationality legislation in relation to the descendants of Sephardic Jews, making it a requirement to demonstrate “a strong and lasting contemporary link to Portugal” in addition to Sephardic ancestry. This was “to prevent a generous and just law from being perverted by manipulation”, said Augusto Santos Silva, foreign minister in the outgoing government.

As a Portuguese passport holder, Abramovich cannot be prevented from entering the country, Santos Silva said. But he added that he was “very unlikely to do so” as EU sanctions meant he would be stripped not only of any assets he was found to own in Portugal, but also those he carried with him.

On its so-called golden visa scheme, Portugal has said that it only uncovered one pending application from someone in the sanctions list and suspended it. The residency scheme has been tightened and Portuguese authorities no longer issue those permits for Russian citizens. Of the roughly 430 Russian nationals who had already obtained permanent residency, none were on the sanctions list, according to Portuguese authorities.

In Sofia, the Bulgarian government is currently reviewing the roughly 200 golden passports already granted before the scheme was scrapped. “The sanctioned Russians are a clear case in point, I think their passports will be revoked faster,” said a Bulgarian official familiar with the matter.

And in Malta, a spokesman for the government yesterday said that no sanctioned Russian or Belarusian nationals had acquired Maltese citizenship under its currently suspended scheme.

Brussels’ renewed efforts to crack down on golden passports was welcomed in the north, with Sweden’s minister for integration and migration, Anders Ygeman, saying his government “has pushed for this” and that “people from outside the EU should not be able to buy civil rights in an EU country in exchange for money ”.

Chart of the day: Hunger games

Bar chart of Exports, as a% of GDP showing Conflict will damage Russia and Ukraine's regional trade partners

The war in Ukraine threatens to cause lasting damage to low- and middle-income countries, pushing millions of people into poverty and tipping dozens of states into a debt crisis, the World Bank has warned. (More here)

No spring break in Russia

Europeans tempted to visit or study in Russia may soon find themselves on no-fly lists, as Moscow is preparing to introduce travel restrictions on citizens of “unfriendly” states, writes Polina Ivanova in London.

“A new presidential decree is being drafted on visa-related measures in response to the unfriendly actions of some foreign governments,” said foreign minister Sergei Lavrov yesterday. “This decree will introduce a whole string of restrictions on entry to Russia,” he added during a party meeting on international co-operation and the Russian diaspora.

Russia maintains an official list of “unfriendly” states, which includes the US, Canada, EU countries, the UK, Ukraine, Japan and Australia, among others.

Lavrov also said that authorities should work on measures to entice Russians living abroad to return to Russia.

Tens of thousands of Russians have fled the country since the outbreak of the war in late February owing to their opposition to the conflict. So far, Moscow has imposed no restrictions on Russians who leave the country.

Yevgeny Primakov, head of Rossotrudnichestvo, a Russian government agency involved in international co-operation projects and deals with diaspora issues, defended the planned moves.

“We can not afford to teach people who hate Russia and harm it, at Russia’s expense. We must not invite them to visit at the expense of our country, ”he said, adding that the restrictions would probably apply to researchers and student exchanges.

“I do not want to draw parallels with any blacklists, but we are making lists of such people and organizations,” said Primakov.

Amber investments

European Commission advisers have weighed in on one of the most controversial aspects of the EU’s recent green policy moves: the inclusion of gas and nuclear power in its classification scheme for sustainable finance, writes Alice Hancock in London.

Unlike the commission, which on New Year’s Eve suggested that gas and nuclear power should be labeled as “green” activities, experts from the Platform on Sustainable Finance said a new “amber” category should be introduced to define investments that were between being “significantly harmful” to the environment and helping a transition to more sustainable pursuits.

The report, published yesterday, also suggested a category of “low environmental impact” activities that were neither red, amber or green but were essentially neutral to the environment such as childcare or accounting.

The commission’s move to call nuclear and gas “green” through a delegated act in the quiet period after Christmas prompted outcry from businesses and member states. Austria and Luxembourg have threatened to sue the commission over the rules, while Anders Schelde, chief investment officer at AkademikerPension, one of Denmark’s largest pension funds, told Europe Express that including gas and nuclear was “a mistake” that should be rectified.

Parliamentarians, who are due to vote on the commission’s proposal in July, were also incensed that they were not consulted.

Yet the dynamic has changed in Brussels since Ukraine was prompted a rush to secure long-term gas supplies that aren’t Russian.

The advisory group says that the taxonomy, which currently covers industries generating around 80 per cent of the EU greenhouse gas emissions, should be extended to the whole EU economy initially on a voluntary basis to make it a more coherent way of benchmarking the environmental impact of different businesses.

Sebastien Godinot, senior economist at the Europe office of the WWF – an environmental campaigner – and a contributor to the report, said that when it came to the taxonomy “one piece of a jigsaw does not give a full picture”. Comparing the taxonomy to the EU energy efficiency labeling system, he said it needed to “contain different categories and cover all key sectors to clarify where we are now and accelerate the transition to a sustainable economy.”

Some criticism came from the European parliament yesterday, where center-right German MEP Markus Ferber advised the commission to keep its advisers “on a much shorter leash”.

“By now, the platform seems to try to impose their own moral code to society by dividing the entire world into good and bad. What the platform proposes is bordering on socialism and will only amount to red tape, ”Ferber added.

What to watch today

  1. US Deputy Treasury Secretary Wally Adeyemo holds joint press briefing with EU financial services commissioner Mairead McGuinness

  2. EU home affairs commissioner Ylva Johansson speaks to a European parliament committee on the situation of women fleeing Ukraine

  3. EU foreign policy chief Josep Borrell speaks at an ECFR event

Notable, Quotable

  • Abramovich, poisoned: Roman Abramovich, the sanctioned Russian billionaire, and two Ukrainian officials suffered poisoning symptoms, including loss of vision, in Kyiv in early March after peace talks with Russia, according to three people familiar with the matter. They have recovered their eyesight since.

  • Switzerland compliance: US lawmakers have requested that Credit Suisse share details on its handling of sanctions against Russian oligarchs after the FT reported that the bank asked investors to destroy documents related to its richest clients’ private jets and yachts.

  • Taiwan copycats: Volodymyr Zelensky’s role in leading Ukraine’s resistance against the Russian invasion has inspired Taiwan to adjust its own defense plans against a potential attack from China. Officials told the FT that Taiwan needs its president to emulate Zelensky if China invades.

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