The island nation of Malta lures millions of tourists every year with its dramatic Mediterranean scenery and historic sights, but increasingly it seems rich Russian visitors are attracted by something they can take with them when they leave — Maltese citizenship.
Malta has just published a list of its newest citizens, and it's striking for the number of wealthy Russians on it. The list contains the names of the owners of Russia's biggest information technology companies, distilleries, real estate conglomerates and banks — more than 730 Russians in all.
All of them, it appears, paid the equivalent of $1.2 million Cdn to Malta's government to obtain Maltese citizenship, thereby also becoming a citizen of the European Union and gaining the visa-free travel to more than 160 countries that comes with it.
In fact, under Malta's Individual Investor Program, you don't even need to set foot on the island to qualify — a simple international bank transfer will suffice.
Maltese officials claim the controversial policy is designed to attract wealthy investors and has brought billions into the treasury, while many critics argue it has instead lured tax-cheats from other countries and facilitated money laundering.
Among the prominent names signing up with Malta are Arkady Volozh, who owns Yandex, the Russian equivalent of Google, and Alexey De-Monderik, the co-founder of the international computer security firm Kaspersky Lab.
There's no suggestion of anything illegal or improper about the citizenship purchases. Rather, Russian critics argue, it amounts to a sad commentary on the confidence Russia's business elite is showing in President Vladimir Putin's economic leadership.
"They would like to find a quiet haven for their families and relatives, and buying a second passport is a chance to hedge their personal risk," said Ilya Shumanov, the Russian head of Transparency International, a European group that tracks the international flow of capital.
With a new round of U.S. economic sanctions about to hit Russia's business community, Shumanov says Maltese citizenship may also be a potential shield against their stinging bite.
"You are now a Maltese citizen and not a Russian one — the sanctions could avoid you," he said.
"They (the wealthy Russians) could cancel their Russian residence at any time. Sanctions will be imposed only on Russian oligarchs. Not on Maltese oligarchs."
The Russian president has been trying to encourage more of the country's richest citizens to bring their billions parked in overseas bank accounts back to Russia, though Shumanov says the results have been lacklustre.
"We now are seeing no one wants to return money to Russia. The capital has been leaving for many years — now they are trying to evacuate their families and relatives."
Russia's economy was expected to finally start growing again in 2018 after several years of decline following the imposition of economic sanctions from the US, EU and Canada in 2014.
The western sanctions were initially triggered by Russia's takeover of Crimea and support for separatists in Eastern Ukraine, but the Obama administration expanded them following allegations of Russian meddling in the 2016 presidential election.
The measures are aimed specifically at punishing the Kremlin leadership and going after the people and money closest to Putin's inner circle.
Another round of U.S. economic penalties could be imposed as early as the end of January, and Russia's richest individuals are especially worried about the impact on them personally.
Under a sweeping law passed by Congress and signed into law by President Donald Trump last year, the U.S. government will have the power to impose personal sanctions on Russians conducting extensive business with their government or Russian state-owned corporations, as well as prohibiting U.S. companies from dealing with them.
No one knows for sure which names will be on the list released by the U.S. Congress — Forbes counts close to 100 Russian billionaires — but the goal appears to make some of Russia's richest citizens radioactive.
"It is not the intention of the U.S. to make this list as broad as possible but to focus on a small group of people, who are close proponents of the current regime in Moscow," said Ilya Rachkov, a prominent international law professor and lawyer based in Moscow.
"But the problem is, even if someone is not put on this list, the overall effect of doing business with Russians will become more difficult."
Rachkov says the sanctions will make it even harder to get loans from western banks or conduct business with suppliers based outside Russia.
"I think it means everyone will be cautious about doing business with them. It's a clear signal you'd better step back from a proposed business venture."
Rachov says Russians started buying up Maltese citizenship even before the sanctions kicked in so he's not convinced the main purpose now is to get around them.
Instead, he says it's more likely rich Russians simply see Malta as a safe, tax-friendly haven for their money.
Either way, having so many titans of industry with one foot halfway out the door may not be a ringing endorsement of Russia's economic leadership.