EU suspends visa free-travel with Vanuatu

Experts say the European Union's suspension of its visa waiver programme with Vanuatu will have a devastating impact on the Pacific nation's economy.

Passport sales account for more than a quarter of Vanuatu's government revenue—they made up 35 percent of its revenue in 2020—but the EU has criticised the scheme for its lack of due diligence, including the granting of citizenship to criminals.

An EU proposal to suspend the visa waiver agreement was finalised last week.

Vanuatu Business Resilience Council chair Glen Craig said he estimated the golden passports scheme, which allows people to buy passports for $US130,000, could drop in sales by 80 to 90%.

He added that the loss of income for Vanuatu could impact education and health services.

"The EU certainly didn't take anything into account our needs."

In the EU's announcement of the suspension last week, it said the move will only affect Vanuatu citizens with passports issued since 2015.

It cited concerns including the low rejection rate of applicants, lack of residency requirements, short processing times, a lack of information exchange with applicants' home countries and the granting of citizenship to applicants listed in Interpol databases.

The decision will now be gazetted by the EU, before coming into force after a two-month period.

But according to one passport sales agency, the blow to Vanuatu's passport sales scheme could be softened by the COVID-19 pandemic, which has decreased buyers' interest in travel in favour of migrating to and setting up business investments in Vanuatu.

"There may have to be some rebalancing in relation to pricing. And there will certainly have to be some rebalancing and reformulation from a marketing perspective about what those key points are. But citizenship programmes are about substantially more than simply a passport," said Dean Kolthek, the chief executive of Vanuatu Investment Citizenship, a firm based in Sydney and Port Vila.