Porous borders, poor cooperation fuel smuggling

The Messenger, Georgia
March 7 2005

Conference examines issues of smuggling and officials reveal two
cases of smuggled radioactive goods in 2004
By Christina Tashkevich

Smuggling remains an acute problem for Georgia destroying internal
markets and healthy competition, analysts concluded at a recent
conference addressing how to address the issue.

The Georgia Enterprise Growth Initiative, a project funded by USAID
and implemented by BearingPoint, organized the conference on
contraband and organized corruption together with the Georgian
Federation of Businessmen and the Association of Petrol Products
Importers ‘Nia’ on Friday in the Tbilisi Marriott Hotel.

According to the Head of the Budgetary-Financial Committee of
Parliament, MP Roman Gotsiridze, the latest budget revenues show that
the scale of contraband reduced in Georgia. He warns, however, that
while a large decrease of smuggling was noticeable in first several
months after the Rose Revolution, it has rebounded in resent months.

“There are two sources of smuggling: uncontrolled territories and
corruption,” Gotsiridze said on Friday. A large source for smuggling
in recent years was the Ergneti market on the border of South Ossetia
which analysts state had an annual turnover of USD 120 million.
According to Gotsiridze, Ossetians, Russian peacekeepers as well as
Georgians participated in smuggling via that now closed market.

On Friday, Gotsiridze said that smuggled goods still come from South
Ossetia but following the closure of Ergneti, the level of smuggling
in the region fell by nearly 80 percent.

The deputy head of the Georgian Border Guard Department Korneli Salia
presented a list on Friday of what he said here the main sources of
smuggled goods. “Tobacco, scrap metals, oil products come to Georgia
from Abkhazia, radioactive products and timber go in both directions
from Armenia to Georgia and back… and drugs from Turkey,” he said.

He also named the major elements that facilitate smuggling, including
the existence of markets near border checkpoints at the Red Bridge
and Sadakhlo, the large amount of smuggling roads, a poor information
exchange between countries and services inside Georgia, and
underdevelopment of border structures. Salia lamented that money his
department receives from gets from the state budget is too little.

Discussing what can be changed, Salia said the government could
develop interstate cooperation plans, allot enough money to buy
proper equipment and transport, reinforce the border guards and make
business registration more accurate.

He also said that border checkpoints must be modernized to eliminate
weaknesses like vehicle scales that lack the capacity to weight large
multi-ton trucks.

“When there is no coordination between services, it’s very hard to
fight with contraband,” Salia said at the conference. He department
also claimed success in 2004, nothing that the amount of fines
collected on smuggled goods exceeded GEL 2 million in the past year.

The first deputy head of the Customs Department, Nugzar Kevlishvili,
pointed to some major improvements underway in 2005. In March the new
Red Bridge customs facility constructed with U.S. assistance will be
opened. In the Tbilisi airport and at the Sarpi checkpoint with
Turkey, the department has also activated red and green corridors to
ease Custom’s procedures.

According to the Georgian Border Guard Department, it recorded more
than 60 cases of smuggling in 2004, including 40 facts of diesel
smuggling and 2 facts of smuggling radioactive goods. The department
also recorded intercepting 14 foreign ships carrying contraband and
confiscated 150 tons of contraband fish.

The smuggling of oil products and tobacco prompted the most
discussion at Friday’s conference. The head of the Association of
Petrol Products Importers, Giorgi Kotrikadze, appealed to the
government to consider decreasing the excise tax on diesel.

“Petrol quality and standards are another issues of concern,” he
said. Georgia still adheres to former Soviet fuel standards and
Kotrikadze hoped that at the end of the summer the country could
transfer to EU standards.

The Founder of the Eliz tobacco company, Tamaz Elizbarashvili, also
expressed concern about smuggling in the tobacco industry. He stated
that if the government does not combat smuggling, tobacco companies
in Georgia will be threatened with closure.

“The government closed markets for cigarettes, but now how can you
fight contraband when the smugglers go underground,” he pleaded on
Friday.

Also participating in the conference, the presidential representative
to Shida Kartli Mikheil Kareli described problems that contribute to
a losing fight with smuggling in his region.

“In our region, 12 employees in the Financial Police are not enough
to control the border,” he said. Kareli also mentioned it is
difficult to monitor the border in South Ossetia because Ossetian
criminal groups are located in the area.

Loose borders were one explanation MP Roman Gotsiridze offered for
the increase of car-theft. “The presence of this business means that
there is no control at the borders,” he said during the conference.

The MP also stated that the recent increase in excise taxes on
tobacco, alcohol and oil products has decreased local production and
in turn increased the amount of smuggled goods. “I cannot say it was
the right decision or not, but at this stage the negative effects are
more than the positive ones,” he said.

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