Montenegro has decided to extend its controversial scheme, which offers citizenship in return for a major investment, despite strong criticism of such programs by the European Commission and civic organisations.

Montenegro Extends ‘Golden Passport’ Program Despite EU Criticism

Montenegrin government session in Podgorica. Photo: Government of Montenegro

Montenegro’s government on Thursday extended its economic citizenship program until December 2022, despite warnings from the European Commission and civic organizations that it could harm the country’s progress towards EU membership. The government said the program now has stricter conditions for gaining economic citizenship.

“In the next month, all investors that already requested citizenship must submit to the Government a bank guarantee – in the amount of 50 per cent of the investments prescribed by the program. All new applicants must pay 100,000 euros to the state budget and another 100,000 for regional development,” the government said in a press release.

In 2010, the former government under Milo Djukanovic started three “economic citizenship” schemes, initially selling passports to “renowned businessmen of credible reputation” if they invested at least half a million euros.

The most recent program for foreign investors was launched in January 2019, when the government offered passports to investors who invested at least 250,000 euros in undeveloped regions in the north of the country or 450,000 euros in more developed regions in the centre and south.

According to gtovernment data,108 foreign citizens, mostly from Russia and China, have so far obtained Montenegrin passports by buying apartments in condo hotels in coastal and mountain towns or by donating money to underdeveloped areas.

On March 31, the new government which came to power after the electoral defeat of Djukanovic’s Democratic Party of Socialists DPS announced that the economic citizenship program will be terminated by the end of 2021 because it could slow Montenegro’s accession to the European Union.

But on December 30, Minister of Economic Development Jako Milatovic said the the program of economic citizenship was helping the country’s development.

“It will make Montenegro a regional leader in allocating money for innovation. By developing tourism, we strongly support the development of innovation – as the foundation of accelerated economic development,” Milatovic posted on Twitter.

While media reported that the Interior Minister, Sergej Sekulovic, and Foreign Minister, Djordje Radulovic, voted against extending the program, civic organizations warned that the decision could endanger the country’s EU path.

“European institutions are not in favor of such programs for obtaining citizenship and attracting investments, due to the impact they may have on the financial integrity of the Member States and candidate countries,” said the Centre for Civic Freedom, CEGAS, an NGO, in a press release.

The sale of citizenships to foreign investors was also criticized by the European Commission, which raised concerns that it could be used for tax avoidance, money-laundering or dodging prosecution in other jurisdictions. This year’s progress report by the European Commission said that Montenegro should effectively phase out this investor citizenship scheme.

It is also trying to get Malta and Cyprus to terminate their own “golden passport” schemes. About 19 other EU states run similar schemes that offer permanent residency rights, but not passports, to investors.

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