Ruling Against EU CIPs Unlikely, Would Have “Very Serious Secondary Consequences” Says IMC

In a widely disseminated statement released yesterday, the Investment Migration Council (IMC) warned that any European Court of Justice (ECJ) ruling in favor of the European Commission against Malta and Cyprus on the matter of citizenship by investment programs was unlikely, would have “very serious secondary consequences, and could open the way for the EU to encroach on the power of granting nationality, which is reserved, in EU Law, for Member States.”

The statement, in essence, underlined what scholars on EU law have consistently maintained; National competence over matters of citizenship is a foundational brick in the EU structure that cannot be removed without jeopardizing the entire edifice.

“The right to assign citizenship,” wrote the IMC, “is very clearly the sole competence of a sovereign state. This analysis of the European Commission’s legal case has nothing to do with whether one agrees with the concept of citizenship by investment.”

The IMC pointed out that a preponderance of experts on Union law – several of whom the organization had consulted, including including Dr Daniel Sarmiento, who specializes in EU competence law, and former EFTA-court president Dr Carl Baudenbacher – agreed categorically that citizenship questions remained firmly beyond the remit of the Commission.

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Last week, Greens MEP Sven Giegold, chided European Commission President Ursula von der Leyen for sparing countries with residence by investment programs the same infringement procedures she had launched against citizenship by investment jurisdictions.

Risks exaggerated
The “genuine links” argument, added the statement, was both “vague and arbitrary”. The purported risks related to the sector, furthermore, had been the subject of “significant exaggeration” and were, according to an analysis produced by Oxford Analytica, “primarily theoretical in nature,” a view the IMC said was largely shared by the intelligence, security, and law enforcement communities.

“Potentially nefarious activity is a negligible percentage and compares very favourably to other legal migration pathways.”

The IMC nonetheless acknowledged the industry had room for improvement, particularly in the domains of information sharing and common standards, and said it hoped to be able to take part in the crafting of market regulations modeled on those applied to other financial and professional services, but that the rules could not be founded on “scare stories and rumors”.

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