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| Transportation, Smuggling and Organized Crime
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Discussion
Sofia Hotel Balkan
October 14, 2004
Introductory Remarks by Dr. Ognian Shentov, Chairman of the Center for the Study of Democracy at the discussion
1. Since 1998, the Center for the Study of Democracy has taken special interest in defining the role of the Bulgarian borders in trans-border crime. The main reason behind that interest is the significance of Bulgaria’s national borders. It is well-known that Bulgaria has a small but open economy allowing between 60% and 70% of its gross national product to pass through the country’s borders. CSD expert analysis show that as a result during the last fifteen years the borders have become a mechanism for redistribution of national wealth on a scale comparable only to the privatization process.
2. The study presented to your attention today was prepared with the contribution of government experts, and private sector and academia representatives. In the six years since 1998, we have constantly cooperated with the authorities in charge of border controls—the Bulgarian Customs Agency, the National Service for Combating Organized Crime, and the National Border Police Service.
3. Previous CSD reports have drawn on a number of approaches: from analysis of mirror statistics of trade between Bulgaria and the EU member states, to comparisons between regular customs statistics and marketing research data. The present report aims to examine smuggling and organized crime structures through an analysis of transportation and transportation infrastructure.
4. It must be noted that a variety of recent EU studies also reveal that the transport sector is one of the areas of highest concern in wider Europe. Transport and forwarding companies, particularly the small and medium-sized ones, tend to be under most intense pressure from organized crime, and therefore are frequently involved in different gray and black practices.
5. What are the specific conditions in Bulgaria that have been created in the last fifteen years which the present report analyses? Starting from the pervasive goods smuggling during the periods of goods shortages in the early nineties, through the embargo over Yugoslavia, the multitude of trans-border smuggling channels (of drugs, human beings, cigarettes, and etc.) established an infrastructure exploited by both Bulgarian and trans-national organized crime. Such cross-border criminal networks employ numerous strategies and take advantage of opportunities such as the traffic jams at some of the land border crossings or the lack of any traffic at some airports during certain months.
Apart from the transport infrastructure described in the report, special focus is placed on the social networks that make possible both—the gray economy and the black economy hidden at its core. They encompass numerous drivers, seamen, forwarders, and, even, accountants and lawyers. The various law-enforcement officers should also be included: customs officials, policemen, and magistrates.
6. While one talks about the development of the criminal infrastructure, the achievements of the government should not be forgotten. The so called “outright smuggling” has been ever harder to conduct since 1999 (for instance, nowadays it is extremely rare for a customs or border police officer, or a group of law-enforcement officers to let trailer-trucks or containers cross the border without any inspection). This is due to the improvement of the customs information system as part of the overall customs administration reform, as well as to the modernization of the border crossing equipment such as the installation of scores of surveillance cameras at border crossing points. This is why Bulgaria might be described as a country in a black-to-gray transition. Bringing risks to a minimum has become one of the criminals’ main goals. Thus, control on the part of law-enforcement bodies is even more difficult to exercise and calls for extra resources.
7. An example of how the state loses revenues by a totally legitimate business is the debated case of duty-free shops. Through them much of the gray import of certain excise goods into Bulgaria is performed, which incurs budget losses and creates unfair competition. More than a year ago, in May 2003, at the Round Table Targeting the Economy of Crime: How to Infuse Momentum in Anti-Corruption Reforms I pointed out that the solution to this problem would be a public test of whether the balance of power has shifted to the competent public authorities, rather than the lobbyists of the gray-and-black economy. Presently, the outcome of this public test—of who has won the power struggle, is clear. There have been no new developments and the state continues to be deprived from excise tax revenues amounting between 200-300 million levs per year. This example leads to the question whether the window of opportunity for duty-free shops will be ultimately shut in 2007, or whether it will remain open as a result of the adaptability of certain interested political and economic groups.
8. One final point - I would like to comment briefly on Bulgaria’s European prospects. We know today that Bulgaria’s borders will in all probability become EU’s external borders on 1 January 2007. However, trans-national crime networks are directing their efforts precisely at the new EU members and the new border states such as Bulgaria, because there organized crime’s “transaction costs” are much lower.
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