There is no sacrilege in flogging EU passports

19th December, 2013

Citizenship auctions are just the ticket for those who lose in the lottery of life, writes Tim Harford

‘UK ministers are under growing pressure to intervene against plans by the island of Malta to sell EU passports for €650,000, allowing buyers immediate rights of residency in all member states.’ – Financial Times, December 9

That’s outrageous!

I know. There has to be a cheaper deal out there. You can get Portuguese residency with €500,000 in your pocket – and you don’t even have to give the money away. You just have to buy a pad in Portugal.

No, it’s outrageous that Malta is selling passports.

Oh. Well, granted, there is an issue here. Given EU rules on freedom of movement, Malta is in effect selling EU citizenship but pocketing the cash. But this sort of problem is in the nature of the EU. Member states will either have to tolerate it or develop some sort of centralised regulator – just as the European Central Bank regulates the shared currency. That has been a tremendous success.

So in your view the main problem is that the sale of EU passports should be centrally administered?

That would be more logical. Since EU passports are close substitutes for each other, we can’t allow member states to pocket the gains of selling passports but impose the costs on each other.

And what are the costs?

Well, if you’re selling passports at €650,000 a pop, the costs have got to be very close to zero. Not many people will be able to afford that – a few hundred applications are reported to be in process – and those that can are unlikely to be a drain on the state. If the price was 50p and a pound of grapes, there would be a very large number of takers and one might reasonably start to ask whether Malta should really be selling the right to move to Paris.

But isn’t there a security risk?

I am not convinced al-Qaeda has been held at bay by an inability to pick up a Maltese passport for €650,000. As for some Russian mobster buying the right to live in Berlin – that is more distasteful than dangerous.

Distastefulness is important, though. Aren’t we cheapening citizenship?

I hardly think that €650,000 cheapens the EU passport. For the typical British citizen, the message Malta is sending is that the passport in your pocket is worth more than your house and your pension pot put together. Which may not be far wrong: take a typical UK citizen, dump her in Calcutta or Dar es Salaam and see how she gets on. EU citizenship is more valuable than most EU citizens realise.

‘Cheapens’ was the wrong word, perhaps. I should have said ‘commoditises’. Don’t you think there are some things that money shouldn’t be able to buy?

I do indeed – but that leaves open the question of whether citizenship is one of them. Malta’s undisguised flogging of EU passports is viewed with outrage, while “investor” programmes elsewhere – including the UK and the US – attract less opprobrium. That suggests we’re willing to exchange citizenship for cash provided the transaction is disguised as something else. This is hypocrisy.

You’d be happy to sell EU citizenship, then?

I would. I’m with Gary Becker, an economist and Nobel memorial prize winner, who has argued for as long as I can remember for the US to auction off the much-in-demand right to be a citizen. The idea has various frills – including rent-to-buy deals and a sort of student-loan system to allow poor immigrants to buy citizenship on the never-never – but is basically sound. Citizenship is being given away in arbitrary and bureaucratic ways, leaving most would-be immigrants disappointed and many existing citizens resentful. An auction system would streamline the process, be more likely to give citizenship to those best able to take advantage, and would raise cash and thus reduce anti-immigrant sentiment.

This is close to sacrilege, if you ask me.

That’s a strong word to use in defence of our global border control system. We wring our hands about inequality, but the biggest determinant of your income is your country of birth. Our closed borders entrench that unfairness. The system can be defended on pragmatic grounds, but if you’re going to suggest it’s sacred, I’m happy to be profane.

What next, then? Will Goldman Sachs or Google buy some Caribbean island and start selling corporate citizenship? How much for an Amazon Prime residency? Will we get silver, gold and platinum passports?

Portugal is way ahead of them; their “golden residence” programme was launched last year.

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