YUGOSLAVIA: Still the Cigarette Smugglers’ Paradise

By Vesna Peric Zimonjic Reprint | | Print |

Vesna Peric-Zimonjic

BELGRADE, Mar 10 1996 (IPS) - “I can’t afford to travel to the West… at least I can afford foreign cigarettes” said a middle-aged citizen of this capital purchasing his favourite American brand from a street dealer here the other day.

For the past four years, because of the imposition of international sanctions against Serbia, Belgrade was been a haven for cigarette vending. That area of the grey economy still thrives today although sanctions have been lifted.

Hundreds of vendors gather on the strets here every day to take full advantage of demand for a the commodity. Their imported wares are sold at prices higher than those for Yugoslav-made brands, production of which has been restricted because spare parts and inputs are in short supply.

Cigarettes have joined gasolene as among the most profitable black market enterprises. Some journalists say the trade makes so much money – and for so many people – the authorities have turned a blind eye to the trucks. They say customs officials and international monitors at the borders of former Yugoslav seem to be part of the connivance.

Smoking ranks high among the vices of Balkan nations, Serbia in particular. The latest statistics show that only Greeks and Turks in Europe smoke more than the Serbs.

About 20 million cigarettes a day are smoked in Belgrade alone.

Last year, during negotiations which ended the conflict in the disputed former republic of Bosnia-Hercegovina, the Wright- Patterson Air Force base at Dayton, Ohio, USA, where the talks were held temporarily suspended a longstanding rule and allowed Serb delegates to indulge in their passion to inhale.

“Yugoslavia has become one of the biggest black markets for cigarettes in the world,” the independent Belgrade weekly “NIN” wrote in a recent analysis. It noted that though sanctions against rump Yugoslavia were suspended last November and imports and exports are regular, cigarette smuggling remains as strong as ever.

And the pro-government daily “Politika” ran an analysis of its own calling for an end to an operation that “deprives the impoverished budget of the country of necessary funds”. It noted that “no taxes on smuggled cigarettes are ever paid and the huge profit goes into private hands.”

For most analysts here, the appearance of such a commentary in Politika was a sign that action would soon be taken to combat the grey economy — in line with President Slobodan Milosevic’s own policy objectives.

Official statistics from the Yugoslav Association of Tobacco Producers (better known as the “Tobacco Fund”) show the state is losing some 206 million US dollars annually in unpaid taxes for smuggled cigarettes. That sum amounts to 18 percent of the budget for rump Yugoslavia, projected for 1996 at 5.89 billion dinars (1.24 billion US dollars).

Svetozar Zlatkovic, manager of Tobacco Fund, says the amount of smuggled foreign cigarettes sold on the black market is roughly double sales of domestically produced ones. In December 1995, about 625 tonnes of domestic cigarettes were sold through legal channels while some 1,482 tonnes of cigarettes reached the black market.

“The state got 38.9 million dinars (eight million us dollars) from tobacco taxes in December,” says Zlatkovic. “At the same time, the state was deprived of 92.8 million dinars (19.09 million US dollars) due to the taxes that were never paid, from the smuggled cigarettes.”

“The big illegal business deprives the people of better health care or higher pensions, funded both from the state budget” Politika admitted. “Yet, due to the tobacco smoke, the tip of the cigarette smuggling pyramid is barely seen.”

Independent newspapers here say the smuggling of 1,482 tonnes of cigarettes into rump Yugoslavia in December last year meant about 74 million packages went into the black market (a tonne has exactly 50,000 packs of cigarettes).

Each pack is sold at 4.5 dinars (little less than a dollar) in the streets. NIN estimates that the monthly turnover in smuggled cigarettes alone amounts to 68 million US dollars. Net profit for key smugglers is about 1.47 US dollars a pack, or 34 dollars per tonne.

Statistics from the Tobacco Fund show that the domestic tobacco industry is working with 60 percent capacity and 1,500 workers lost their jobs in 1995. At the same time, NIN writes, several neighbouring countries have been ensnared into a “Tobacco road” that leads to Serbia.

It says the “tobacco mafia” is a synchronised operation involving Serb operators and counterparts from Romania, Bulgaria and Macedonia. “A whole tobacco factory in Prilep, Macedonia, was dismantled and moved to a place in Albania, close to the Serbian border, so that production costs would be lowered,” the weekly notes.

“The enormous amounts of money that flow directly into the pockets of the tobacco mafia would disturb any normal state in the world,” NIN said. “Only this state remains indifferent to the fact that its budget lacks necessary funds for schools, health system, pensions…”

A former head of the market inspection authorities of rumy Yugoslavia said: “There is no such thing as government sponsored smuggling of cigarettes But, it does not mean that certain personalities from the top do not participate in it.”

“It is very hard to imagine that trucks carrying average 40 tonnes of cigarettes a day into Yugoslavia cannot be seen,” NIN commented. Officials of the Yugoslav Customs Service declined comment.