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EU fights flow of contraband cigarettes from east

(BUCHAREST) - On the eastern border of the European Union, the fight against cigarette smuggling from Ukraine, Russia or Moldova is intensifying as traffickers cash in on the lucrative trade.

"Is smuggling to the European Union on the increase? Unfortunately, yes," Austin Rowan, head of the task group cigarettes from the European Anti-Fraud Office (OLAF) told AFP.

"Why? Because the profits are so enormous," he added.

"There is a huge difference in the prices between Ukraine and the European Union for example", he added.

While a pack of cigarettes costs more than eight euros in Ireland and more than five in France, it can be bought for between 30 euro-cents and one euro in Ukraine, which sits on the eastern border of the EU.

Seizures of contraband cigarettes exploded in the European Union from 4.4 billion units in 2005 to 5.2 billion in 2008, according to the latest figures from OLAF.

Most of those cigarettes, whether counterfeit or genuine -- but smuggled into the EU without taxes being paid -- come from China, Ukraine and Russia.

The loss of duties prevented by the seizures is a little over a billion euros, said Rowan.

"At best 10 percent is seized, so you are talking about approximately nine billion euros' prejudice annually for the budget of Member states," he added.

After putting a liaison officer in China last year, the European Anti-Fraud office is hoping to appoint three more in other "tobacco hotspots": Moscow, Kiev and the Egyptian capital Cairo.

On the frontline of this struggle are the EU countries that border Ukraine: Hungary, Poland, Romania and Slovakia.

Seizures of contraband cigarettes in the four countries increased by almost 50 million in one year: from 843 million in 2008 to 891.5 million in 2009, according to their own official figures.

"If you're going to bring cigarettes from Ukraine, then you will use the Eastern borders," said Rowan.

"But if you are going to bring cigarettes from Dubai or from China, then the EU ports are interesting -- like Dublin, Antwerpen, Rotterdam."

Poland and Romania had also become "countries of destination" for smuggled cigarettes, having previously only been used by smugglers to get their goods to western Europe.

A 2009 increase in excise duties in Romania helped bring that about.

Tobacco company Philip Morris in Romania told the financial daily Ziarul Financiar it was stopping production at its Bucharest factory for two weeks because of the flood of contraband that had hit its sales.

Romanian customs and border police have stepped up their efforts.

"About 21 million illegal cigarettes have been confiscated since the beginning of 2010," Dorel Fronea, deputy director of Romania's border surveillance division for the Customs service, told AFP.

"This is a record in Romania,"

But the smugglers were never short of ideas to beat the checks.

"We found cigarettes hidden among pizzas or hamburgers transported in refrigerated trucks," Marin Turica, head of the unit combating transborder crime at the Romanian border police told AFP.

"We found them in lorries carrying wheat, in road tankers or even in wheel rims."

Smugglers from Ukraine also used locals in the mountain regions to carry the goods on their back accross the "green border" between Ukraine and Romania, he explained.

They would be paid a mere 35 to 50 euros for each crossing.

Romania has stepped up the penalties for anyone caught smuggler in a bid to stub out he phenomenon, authorising the confiscation of vehicles used for smuggling.

"This is an endless fight," Fronea said.

"We cannot eliminate 100 percent of the smuggling but we want to at least reduce it to a minimum level," he added.

OLAF - the European Anti-Fraud Office

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