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Kyrgyzstan Review, 10 years ago

[05.08.23] Kyrgyzstan Struggles to Stem Smuggling

Uzbekistan, Kazakhstan and Kyrgyzstan agreed on August 1 to improve coordination of border enforcement as a way to lessen the threat of terrorist incursions. However, the countries have made little headway on efforts to fight smuggling. Those engaged in illicit trade in the region are reportedly embracing new techniques for smuggling commodities, particularly gasoline, liquor, medicine and tobacco.
Official efforts to combat smuggling have struggled to keep pace with the changing methods of smugglers, whose increased efficiency has been able to drive contraband costs steadily lower. Smuggling thus continues to cost regional governments millions in lost revenue.
Kyrgyzstan's response to smuggling underscores the problems. The Kyrgyz government has taken a multi-track approach in trying to combat illicit trade. In April, for example, excise taxes on legally imported gasoline and diesel fuel fell by 50 percent and 37.5 percent respectively, making the state-regulated prices more competitive. The moves came at about the same time parliament approved anti-smuggling legislation that mandated longer jail terms for convicted offenders.
In addition to showing smugglers a stick, President Askar Akayev hinted at extending a carrot to get smugglers to change their ways. "We are convinced that it is impossible to do away with the shadow economy by employing forceful methods, therefore it is necessary to make the shadow economy transparent," Akayev said during a conference of entrepreneurs last spring.
In some areas, the initial results of these moves have been encouraging. The government reported in late May that the amount of legally imported gasoline and diesel had more than tripled during the first full month the new rates were in effect. In other areas, such as alcohol consumption, the situation is more ambiguous. The Interfax news agency reported that domestic vodka production increased 34 percent during the first quarter of 2003 - the first such increase in several years. At the same time, Interfax, citing figures compiled by the National Statistics Committee, reported that nearly half the wine and beer and 38 percent of the vodka bought by Kyrgyzstani citizens in 2002 came via illegal imports.
Ultimately, stemming the flow of smuggled goods would seem to require a regional coordination. Since the Soviet collapse in 1991, however, a lack of cooperation among Central Asian states has helped smuggling to flourish. MPs in Bishkek indicate that domestic anti-smuggling legislation stands only a limited chance for success unless ways are found to stop production at illicit liquor facilities in neighboring Kazakhstan. Currently, Kyrgyz authorities suggest that their Kazakhstani counterparts, knowing that virtually all illegal liquor ends up across the border, do not interfere with illegal production.
Rampant corruption among customs officials is also a daunting problem. Anecdotal evidence indicates that customs officers can receive as much as a 30 percent cut of a smugglers' profits to refrain from action that impedes the flow of contraband.
At the same time, shifts in smuggling methods are making it harder for authorities to apprehend smuggling kingpins. Many big-time smugglers reportedly hire couriers who live in frontier areas to transport commodities including gas, liquor and medicines across borders in relatively small quantities. Many of these couriers are unable to find other jobs and thus are willing to assume great risks in return for what is a relatively large payout. Very often, the couriers do not even know the name of the smuggler ultimately responsible for their payment, a fact designed to limit the officials' ability to smash an entire smuggling network.
Vyacheslav Goncharov,
Eurasianet, August 05, 2003

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