Vanuatu and Australia agree to distinguish citizenship-by-investment from other routes in a new deal

Vanuatu has committed to put in place mechanisms to distinguish citizenship by investment (CBI) from other routes to citizenship. The wording is set out in Article 6 of the Nakalmal Agreement—a decade-long pact between Vanuatu and Australia.

The agreement was signed in Canberra on Monday by Vanuatu Prime Minister Yotam Napat and Australia Prime Minister Anthony Albanese.

What the deal covers: mobility for visitors and a “separation” of CBI

Under the document, Australia agrees to provide “enhanced mobility arrangements” for visitors from Vanuatu arriving in Australia. In return, Vanuatu undertakes to “develop effective mechanisms to distinguish citizenship by investment from other forms of citizenship”.

Additionally, a third clause sets out an annual review of the mobility terms by both sides.

At the same time, the text does not specify what exactly is meant by “enhanced mobility”: there is no reference to a particular visa category or any specific visa-free arrangement. The only concrete commitment is an annual review.

Why the visa question still has no clear answer

According to Vanuatu Daily Post, the agreement did not deliver the visa-free status that Napat had been pushing for.

Last July, the Vanuatu prime minister refused to sign the pact unless Australia agreed to visa-free travel. At the time, he stressed that the deal should “work” in the interests of both countries.

Australia, for its part, has been slow to loosen entry rules for citizens of Pacific island nations—concerned about a rise in overstays. That caution was compounded by the specifics of Vanuatu’s citizenship-by-investment programs, which heightened scrutiny.

Context: additional quotas tied to the Pacific Engagement Visa

Beyond the agreement text, Australia reportedly assured Vanuatu that it will return to the Pacific Engagement Visa vote for 2026–2027, with 150 places. Australia had previously been removed from the list of participating countries, but the decision is now expected to be reviewed.

Applications for permanent residency under this selection, the outlet reports, will open on 1 July.

The change Vanuatu tried to make: moving away from “special” interpretations

For much of the previous decade, Vanuatu was moving in the opposite direction. In April 2019, the country removed the word “honorary” from the descriptions of citizenship issued under the Development Support Program.

Backers of the reform said the goal was to remove the impression that investor citizenship is a separate category—one that could create a risk of future discrimination.

In 2020, there was also discussion of issuing passports for “economic citizens” in a different color, but it faced objections and went nowhere. Now, Article 6 effectively locks in an obligation to create the “separation” that the country had previously tried to move away from.

Mobility under pressure: Schengen and the UK tighten rules

In December 2024, the European Union removed Vanuatu from the list of countries eligible for visa-free entry into Schengen. This was the first time the EU removed a third country from its visa exemption, citing security and migration risks associated with citizenship-by-investment programs.

Earlier, in July 2023, the UK introduced visa requirements for all Vanuatu citizens on similar grounds.

Meanwhile, CBI programs continue to generate revenue: the minimum contribution for a single applicant is US$130,000. According to the program information, all three of Vanuatu’s CBI programs process applications within several weeks.

What “distinguish” in Article 6 really means

The agreement requires Vanuatu to be able to distinguish citizenship categories within its own system. However, it does not state how Australia will interpret those categories at the border.

Lawyers and practitioners read the gaps differently. Rosalind Cox, Director at Stanford Knight & Partners, links her interpretation to discussions with Vanuatu representatives. In her view, Article 6 is less about creating separate classes of citizenship and more about strengthening arrangements for all Vanuatu citizens.

Cox also warns against misreading the word “differentiate” (“distinguish”). She says it is not about treating citizens differently at the border. The point is for Vanuatu to be able to maintain accurate internal records and differentiate citizenship by the origin of status: indigenous, naturalized, and investor-based.

In the expert’s view, this is essentially a records- and database-keeping obligation, not an exclusion mechanism.

Distinguishing may also be needed for security-related answers, Cox notes: in her reading, Australia must ensure border security not only in general, but also in relation to citizens.

From clients’ perspective, the outcome could be “more likely positive,” she adds, because most CBI applicants submit documents in good faith and meet the “good character” requirements. A system that helps Vanuatu respond faster reduces friction and helps applications move forward with fewer delays.

Criticism: a “dangerous precedent” and disputes over the idea of “categories”

On the other hand, Manprit Katheria, Managing Director at Alpha Immigration Associates, calls the approach a “dangerous and regressive precedent”. In his view, separating citizenship based on how status is obtained undermines the principle that citizenship should be absolute and indivisible.

Katheria argues that it weakens the legal integrity of the citizenship-by-investment model.

He also suggests not to focus solely on mobility. “Mobility is changeable,” he says, noting that Vanuatu has already lost access to both Schengen and the UK regime. For investors, he advises prioritizing capital preservation, security, and a real sovereign Plan B instead of relying on hopes for visa-free privileges.

When the agreement takes effect and what the first test will be

The agreement will not enter into force until both sides exchange diplomatic notes confirming that their internal procedures have been completed.

The first annual review will be the first practical test of how “enhanced mobility” and the obligation to “distinguish” citizenship-by-investment will be interpreted in real-world decisions.

If you’re considering citizenship by investment (CBI) and want to understand how countries are tightening rules and differentiating CBI from other pathways, keep an eye on evolving international agreements. Digital Nomad will help you interpret these changes and choose the right route. Learn more: https://digital-nomad.gr/en/goldenvisa

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