03 July 2012

The Strange Case of Cigarettes in Kosovo

Kosovo isn't even that smoky a country - but, for a few reasons, there are lots of cigarettes around.  Here, on one of the busy market streets in the heart of Pristina, a man sells cartons of cigarettes, some legal, some probably contraband, some possibly counterfeit.  The bars and restaurants of this capital don't have the tobacco-smog problem that places like Belgrade or Bucharest do (much less St. Petersburg, Andorra la Vella or Minsk), but that hasn't stopped a strangely frantic culture of lawbreaking around tobacco.
There is smuggling into and out of Kosovo, counterfeiting, tax dodging and a whole flurry of other activity.
The most unusual part of cigarette selling in Kosovo are the men who wander from cafe table to table with boxes of cigarettes, offering them to late-nigh patrons.  They move quickly and smoothly, stopping barely a moment or two to complete a sale.  They are always men or, in some cases, boys.  They bear almost no resemblance to the "cigarette girl" Americana image.  In Pristina, there are dozens of them.  In smaller cities, like Prizren, the four or five cigarette men make smaller tours, appearing every hour or so.  Many of them also sell phone cards.
The cigarettes these men sell are often contraband, smuggled in from outside Kosovo.  Often, they cost significantly more than ones bought at a newsstand.  Why would anyone buy cigarettes from outside the country if tobacco is so cheap here?
Kosovo's neighbors have trouble with cigarettes smuggled out of the country.  Two years ago, a Serbian Diplomat was arrested in Austria on charges that he had smuggled 25,000 cartons from Kosovo to Western Europe.  Although the taxes have risen recently, Kosovo's prices have historically been below those of Serbia's, Macedonia's, and Montenegro's (and way below those of more wealthy countries) making smuggling basically profitable.  Serbia, in particular, is plagued by organized-crime smuggling from its southern neighbor.  Often, the wholesale sellers at markets are providing small-scale smugglers or trying to lure smoke-tourists.  It's only an hour by bus between Skopje and Pristina; why not stock up on one side of the border and pay lower taxes?
But that doesn't explain why anyone would smuggle tobacco into Kosovo.
The answer is somewhat amusing.  According to balkaninsight.com, the cigarettes that are sold legally in Kosovo are of lower quality than those sold in EU countries - so people pay more for contraband smokes than they might at legal, tax-paying stores selling Kosovo-spec products.  Apparently, because of health concerns, "safer" EU smokes go for a few Euros more than in-country products.
This hasn't stopped smuggling in the other direction, of course - wherever there's a significant difference in price between two countries, there will be illegal trade.  A now-famous 1994 example, showed that, when Kosovo raised its excise tax on kilograms of cigarettes from €2 to €17, imports decreased by more than 50%.  Of course, nobody smoked less - smuggling just increased.  And, because Kosovars, in general, have less money and lower product-safety thresholds than other Europeans, the higher excise tax has also resulted in lower-quality cigarettes flooding the market at cheaper prices.
There's also counterfeiting, believe it or not.  Fake, name-brand cigarettes are apparently very common, part of a widespread problem in Southern and Easter Europe.  In 2003, as part of a crackdown, Police found and destroyed more than 20 million counterfeit cigarettes - or about half a pack for every resident of this little country.
On one corner of Pristina's bazaar district, five small vendors compete with each other based on some metric of price and quality.  It's hard for an outsider (who doesn't smoke) to distinguish what the parameters of this little market are, why a customer might chose one wooden box over another on a late, humid night.
It's always a concern of ours when we enter a new country - what will the smoking laws be like?  Will we be able to enjoy ourselves indoors or get forced, bleary eyed and coughing, out of every bar or restaurant we visit?  Smoking is generally permitted indoors in Kosovo, which is bad.  People don't smoke that much, though, which is good.  We've come to like the cigarette men, moving so smoothly through the darkness, and the fantastic displays of cartons and boxes that appear in every market.  Kosovo isn't a visibly corrupt or crime-ridden country, so it's sort of thrilling to know that so much of this activity is illegal - it's exciting and comforting to feel like you're in a lawless place with such low stakes.

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