Fifth Column for Ukrainian Producer
On the night of May 3, a Mohyliv-Podilsky border security squad apprehended a group of smugglers, who were trying to illegally bring into Ukraine a large lot of chicken drumsticks. The Day was told at the State Border Security Committee press service that the offenders, who were making a detour, ignored the border guards’ warnings until the latter resorted to weapons.
As a whole, according to the committee, in spite of all precautions, the amount of goods illegally crossing the Ukrainian border increased by almost one and a half times last year over the previous one. Operatives point out that, although most contraband goods are household items, the illegal activity itself is becoming more and more organized. This is evidenced by the increasing number of attempts to smuggle in large lots of goods. In addition, smugglers resort to more and more aggressive actions and sometimes, according to Hennady Shvydkov, chair of the contraband and customs irregularities department at the State Customs Service, even resort to armed resistance. The State Customs Service that criminal and civil actions have been instituted in the past three months conceruing breaching the customs regulations and smuggling in goods worth about UAH 262 million. Moreover, compared with the past year, the cost of each such case lhas risen by an average 14%. Indeed, Ukrainian budget revenues lost as a result of the increasing contraband can only be compared with the losses inflicted by natural disasters. In addition, the price of smuggled goods is considerably lower than that of their legally and domestically produced counterparts “thanks to exemption from the customs duty and VAT.” Thus, the domestic producer has to wage a competitive struggle that takes place outside our excessively intricate economic legislation. Experience shows that what interests the consumer first of all is quality and price, not the legality, of the item being purchased. In other words, consumers themselves also indirectly promote the Ukrainian market being taken over by contraband.
According to experts, Ukrainian entrepreneurs are practically defenseless against their smuggler competitors. The main problem here lies not only in corruption among customs officers. To quote Mr. Shvydkov, “The customs authorities themselves successfully deal with some isolated and quite infrequent instances of dereliction of duty by checkpoint chief customs officers.” Which does not apply to the quite complicated procedure of proving the very fact of smuggling. To open a case under Article 70 of the Criminal Code (CC), one must prove the very process of the “illegal passage” of goods across the state border. Mr. Shvydkov maintains, “Out of the 16,787 cases on customs violations opened in the first quarter of this year, we managed to classify only 115 cases under the article mentioned. On whole, out of over 14,000 cases taken to court, only 839 involved forfeiture.”
Hence it is far easier to mete out punishment for handling smuggled goods in Ukraine under Article 148 of the CC on tax evasion. This article automatically reduces conviction to a two- year imprisonment or a fine, while Article 70 provides for a three to seven year sentence.
The situation is further complicated by the fact that, as border guards and customs officers admit, they are severely deficient in manpower to combat smuggling. Meanwhile, about 80% of offenders use precisely the so-called green border (outside the checkpoint) to smuggle their items. According to the State Customs Service press center, on Ukraine’s northeastern border alone there are only 350 customs officers to control more than 1000 detour roads. The situation can be handled with the aid of sixty additional border security posts to be deployed in this region this year as well as by conducting joint interdepartmental and international operations. This kind of measures proved effective during the last year’s operations Nicotine, Border, and Filter, as well as the Shield 2000 large-scale international operation.
Ukraine’s Russian and Moldovan borders remain the most sensitive areas in terms of smuggling. For example, the former accounts for 37% of all seizures and 40% of the value of the withdrawn goods. Most popular among Russian smugglers, according to the State Border Security Committee information and analysis center, are cigarettes, fuels and lubricants, books, sugar, and grain. These preferences of smugglers are determined primarily by the current price situation on the Ukrainian and Russian markets, as well as by other states’ customs law, for example, Russia’s raising its export duty on fuel. Also telling is that the grain that was as a rule taken out of Ukraine before 2000 is today in catastrophic shortage even on the domestic market. Thus grain is not only the object of import but also that of closer scrutiny by smugglers. Yet, as Anatoly Samarchenko, State Border Security Committee press officer, told The Day, it was not difficult to foresee the surge of unlawful activities in this border segment and to take appropriate measures. As a result, the smugglers’ arrests have risen 1.7 times since 1999.
Simultaneously, Moldovan smugglers prefer liquor and tobacco items. This segment accounts for more than 80% of the alcohol seized at the border last year. A no less important factor responsible for the increased number of goods smuggled into Ukraine, as The Day was told at the State Border Security Committee press service, is unemployment and economic hardships of the people residing in border areas. This makes it obvious that prohibitive and strong-arm methods alone will not be adequate to overcome the existing situation. In their commentaries to The Day, experts speak about more effective ways of combating the smuggling of goods and protection of the Ukrainian market from contraband.
Colonel General Borys OLEKSIYENKO, Chairman, State Border Security Committee; Commanding Officer, Border Security Force of Ukraine:
“Statistics say that smuggling into and out of Ukraine remains a serious problem. Besides, contraband increases with each passing year and, while a few years ago such goods were smuggled mostly in small quantities, now our border guards often encounter large and well organized groups of smugglers. Thus we are taking measures to tighten control both on the so-called green border and at checkpoints. Yet, I want to emphasize again that by so doing we aren’t fencing ourselves off from our neighbors; we are in this way only trying to thwart attempts to smuggle contraband in and out of this country. To strengthen resistance to illegal migration and to protect the state’s economic interests at the border, the State Border Security Committee in conjunction with the Security Service, Ministry of Internal Affairs, State Customs Service, State Tax Administration, Ministry of Transport, Ministry for Education and Research, and the State Committee for Youth Policies, Sports, and Tourism of Ukraine, has planned and launched, for the first time in Ukraine, a strategic large scale operation code-named Border 2001 which also includes a series of targeted, operational, preventive, administrative, and passport-control measures.
“To make the operation more effective, the State Border Security Committee leadership has requested the official bodies of such adjacent states as the Russian Federation, Belarus, Moldova, Poland, Slovakia, and Hungary to have their border security agencies deploy certain forces of their own.
“The operation concept calls for the first time for simultaneous active measures from the eastern to the western border of Ukraine. It is intended to conduct searches and seizures within the limits of the whole pre-arranged corridor. This means constructive measures to combat smuggling are already being taken on the international level.”
Yuri SOLOVKOV, Chairman, State Customs Service:
“This is undoubtedly a complex problem to be solved through the efforts of not only law enforcement bodies. We will only be able to say that our domestic market is protected from contraband when the state has a streamlined system making it impossible to handle smuggled goods. This will be possible only if responsibility is borne by both the seller and the buyer: the point is that, as a rule, consumers never check the item they buy. Today, you can find in any store a product which was not legally cleared by customs. Moreover, an entrepreneur can only be brought to account if these irregularities have been detected by tax authorities. But in this case this will not be classified as smuggling, and no case will be opened under Article 70. In general, large-lot contraband is being smuggled in precisely because it is relatively easy to sell on our market.
“As to customs officers, we have the right to work only in the customs-control zones. All these zones are clearly defined by law. No customs officer is authorized to appear at the importer’s or exporter’s firm and make any demands. Nor can he come into a store or a warehouse to see whether or not goods of non-Ukrainian origin have been legalized. We’ve been requesting for a very long time to be granted this right. Now the latter has been included in the new draft Customs Code. But, naturally, some people’s deputies are resisting the passage of this bill.”
Editors’ note. The problem of smuggling also becomes all the more acute owing to the adverse epidemiological situation in many countries. In this situation, public opinion in Ukraine is likely to favor tough measures and a speedy solution of the problem. Also evident is the necessity of certain steps to improve legislation to effectively combat smuggling, according to expert commentaries for The Day. However, in this country, where citizens, including bureaucrats, lack not only legal knowledge but also factors of moral self-limitation, any toughened standards could also have a negative effect. Obviously, there can be but one way out: more effective actions by the competent authorities should be complemented with the search for and improvement of non-governmental mechanisms to exercise oversight over them. The Day invites experts to express their relevant opinions on the newspaper’s pages.
