Why Cyprus really wants to join the Schengen Area
Can Cyprus be a Schengen member state?
The Cypriot Minister of Foreign Affairs, Nikos Christodoulides, has just announced that the government has applied to become part of the Schengen Area, meaning that the European Union will start the evaluation process anytime soon.
While Bulgaria, Croatia and Romania already having completed the five-stage evaluation process and are waiting for admission, Cyprus so far has been unable to join the Schengen area. Cyprus joined the European Union in 2004 and adopted the Euro in 2008, but becoming a member of the Schengen area proved difficult due to the territorial division of the country since the coup attempt of 1974.
Cypriot 'Passport by Investment' scheme under attack
But the Cypriot application to become a Schengen Member did not come by chance. The application was submitted already in September and announced on November 5th of this year.
Throughout the summer, Malta received severe criticism by other member states over its 'citizenship by investment' scheme, allowing foreigners to obtain citizenship after investing a specific amount of money into the country. In return, investors receive a Maltese European Union passport, giving them full access to any other European member state. After Malta, also Bulgaria and Cyprus, offering similar schemes to foreign investors, were hardly criticized, also because their schemes don't require the physical obligation of residing in the country. In a move to counter criticism, Cyprus has quickly revoked passports of 29 applicants, mainly from Russia and the Middle-East. Fears among critics are not only that Russian spies may take advantage of these schemes and travel through Europe "under the radar" or that criminals will use it to whitewash their money by investing in Maltese or Cypriot businesses or funds, or purchase Real Estate on strategic important positions (recently, a wealthy Russian businessman holding a Maltese passport caused uproar by buying private Finnish Islands just off the Finish coastlines and close to naval bases).
From "passport by investment" towards "residence by investment"
Official announcements from the government in Cyprus state that the application to join the Schengen area was joined by a request to evaluate stage 1 of the application process as soon as possible and awaiting further political developments on the island. This would give Cyprus the possibility for more thorough background checks on applicants and immediate rejection in case the applicant is already red-flagged in any of the other member states. Access to EU inside information would make the application process for the "passport by investment" program faster and more secure at the same time.
But the real reason for the Cyprus government pushing forward the Schengen application process may well be another one: the 'passport by residence' scheme will remain under pressure from other European countries and government opposition alike in Cyprus and Malta. Also, local popular opinion trends to be against such schemes. But while this scheme may not last much longer due to political pressure, it also may become obsolete - if only Cyprus could be a member state of the Schengen Area. This would automatically move its current citizenship scheme to a "residence by investment" scheme. A residence permit for a Schengen country will avoid the "selling" of something culturally as vulnerable as a nationality. With a residence permit of a member of the Schengen area, access to all member states and doing business in these states is allowed, but this time controlled by European Immigration and Labour laws.
Without the Turkish occupation of the North being resolved, full Schengen membership will remain a challenge. But Cyprus has recognized that attracting foreign investment is possible without "selling" passports. Schengen membership would enable Cyprus to launch their "residence by investment" program, already very popular and lucrative in Portugal and Spain, without loosing on advantages offered to potential quality investors: the freedom of residency and conducting business in any of the Schengen member states. Attracting these investments has been a successful power line to economic recovery in many Mediterranean countries and should not be obstructed. Contact us for more information about the potential Cyprus has to offer.
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