Illicit cigarette consumption increased in Romania to 16.4% of total consumption, representing a total volume of 4.41 billion cigarettes last year, reveals a study conducted by KPMG for the British think-tank RUSI (Royal United Services Institute). That represents about 10 % out on 48 billion cigarettes smoked in the European Union. Therefore, Romania ranks sixth in the EU on volume of illicit cigarette, after France (8.96 bln), Poland (6.16 bln), UK (5.55 bln), Germany (4.8 bln) and Italy (4.43 bln).
The Project SUN: A Study of the illicit cigarette trade in the European Union, Norway and Switzerland study says that the illicit cigarette market in Romania (16.4%) is however the largest of the group of these six countries, reported to the total cigarette consumption, followed by Poland (15%), France (14.8%), UK (14.3%), Italy (5.8%) and Germany (5.2%).
The majority of C&C came from Illicit Whites brand flows and lower priced non-EU Eastern European countries such as Ukraine and Moldova. Illicit White brands are produced with limited legal distribution and typically have no country specific labeling. Illicit Whites brands were the main source of non-domestic inflows, contributing approximately 60% to the total volumes in 2016.
C&C increased by 9% driven primarily by increases in Illicit White brands with no country specific labelling and inflows with Ukrainian labeling.
„Illicit cigarettes cost the Romanian Government and tax payers millions of euros. This is why we’ll keep on fighting against cigarette smuggling, next to auhtorities,” said Ileana Dumitru, Legal and Foriegn Affairs manager at British American Tobacco Romania.
Total consumption increased by 1 billion cigarettes in Romania in 2016 as both domestic and non-domestic volumes increased against a backdrop of improving economic conditions and increasing personal disposable incomes, says the KPMG study.
The neighbouring lower-priced countries of Ukraine and Moldova, where cigarettes on average cost less than EUR 1, were the largest source countries for non-domestic volumes. Over 96% of cigarettes from Ukraine and 99% cigarettes from Moldova were smuggled cigarettes, while outflows were mainly to the more expensive Western European markets of UK and France.
Travellers are only permitted to bring two packs of cigarettes when crossing the border into Romania from Ukraine or Moldova, leading to small legal volumes from these countries as a proportion of the total inflow.
Perpetrators tend to be Romanian nationals, with many groups connected by familial links: few large foreign communities are based in the country. However, there is also evidence of significant cross-border cooperation, particularly with English-speaking groups, Spaniards, Turks, Bulgarians and Moldovans.
Romania forms an important transit point for C&C. Its often-unmonitored land borders offer particular opportunities for cigarette smuggling; Romania shares 1,877 km of its 3,149 km border with non-EU states – one of the longest EU external borders.
The country’s northeastern borders with Ukraine and Moldova pose particular challenges– both are major source countries, with crossings through terrain that is challenging to patrol. As a result, Romania’s northeast is most strongly affected by the illicit cigarettetrade, accounting for 42.9% of the total illicit market in March 2017, according to Novel Research.
They use similar methods to import C&C from Serbia, whether at Moravița, Naidăşor the Iron Gates bridges on the Danube. Illicit cigarettes have also been detected at Bucharest and Timișoara airports, and on international and freight trains bound for Iaşi, Dorneşti and Moravița.
C&C trafficked by sea typically arrives at Constanța harbour, often from Dubai and the far East. In March 2017 Romanian Customs seized a record 14 million cigarettes worth almost EUR 3 million, the largest volume since 12 million were exposed at Albita in 2012. From here, OCGs exploit Romania’s large haulage industry to move C&C on to foreign markets; Romanian lorry drivers are known to enter the UK, for example, with large volumes of C&C, alongside other illicit goods.
OCGs operating in Romania are highly inventive in their methods for concealing illicit cigarettes. Recent cases have uncovered C&C in consignments of cement, brown wrapping paper and Xerox paper. Smugglers are also known to use timber as a cover load: a recent case revealed thousands of cigarette cartons being transported in hollowed-out logs by freight train from Moldova to Romania.
A 2016 Eurobarometer survey found that over 83% of respondents had been offered illicit cigarettes in the street, compared to a 60% EU average. Other consignments are destined for foreign markets. Particularly near borders, OCGs are known to build warehouses to stockpile goods, ready for transportation to other countries.
lllegal factories have also been uncovered in Romania, with equipment, people, industrial power and machinery bought in from Russia, Czech Republic or Moldova. An estimated 20 such facilities have been raided and shut down in the past 5 years. Yet a lower rate of detection more recently may suggest that domestic production is in decline.
The study says that although the illicit cigarette trade is a growing priority for Romanian authorities, yet rising C&C implies persistent limitations to their responses. “For example, though authorities maintain a strong focus on the issue at the border, there is arguably less focus on ‘inland’, domestic investigations. Nor are lenient and inconsistently applied penalties an effective deterrent; law enforcement report seeing the same individuals returning to C&C smuggling again and again.”
Moreover the study warns that there is a broad social acceptability over the action of buying illicit cigarettes. “This is bolstered by a perceived political dimension to anti-illicit trade initiatives, which are seen as unfairly targeting some of Romania’s poorest citizens. Corruption is also a significant challenge; as well as facilitating C&C smuggling operations, this damages trust and hinders cooperation between agencies charged with responding. A final challenge relates to consumption of loose tobacco. This constitutes only a small share of the market, yet the majority is illicit.”