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Greece

Capital Athens
Time Zone EET (GMT+2)
Country Code 30
Mobile Codes 690,693,694,695,697,698,699
ccTLD .gr
Currency Euro
Land Area 131,990 sq km
Population 11.3 million
Language Greek
Major Religion Orthodox Christianity

Tobacco Smuggling in Greece: an Overview

By Ioannis Michaletos

Over the past decade, contraband tobacco sales and facilitation of transnational tobacco smuggling in Greece have flourished, due to a combination of factors. Although not considered as a particularly ‘sexy’ sector of organized crime, compared to narcotics or arms dealing, tobacco smuggling still represents a threat to state security, in that it empowers organized crime rings engaged in multi-level activities, and drains the state coffers of considerable tax revenue.

Key Factors in the Increase of the Contraband Tobacco Trade

The substantial increase in taxation which made one of Greeks’ favorite pastime, smoking, an expensive hobby is the primary factor behind the increase of a contraband market. The economic downturn due to the ongoing crisis further fuels a willingness of locals to invest and work in contraband networks. Thirdly, the increase in tobacco smuggling relates with the overall merging of operational capabilities of regional Balkan criminal groups with Greek ones, and especially those of Bulgaria, along with more distant interests, such as Georgian outfits.

The trend all across the EU of increase in the demand for contraband (and cheaper) tobacco has further boosted the phenomenon and the use of Greece as a peripheral hub for that purpose. The multilayered threats in terms of organized crime and terrorism, which need to be combated by the local authorities, have however put confronting this kind of smuggling on a lower priority in the security agenda than other pressing responsibilities.

A final factor here is the decrease in profitability of the so-called ‘hard drugs,’ such as heroin, due to the tremendous current oversupply from Afghanistan. This situation has led narcotics dealers and traders to shift towards tobacco by using and facilitating their business through existing logistics infrastructure, such as vessels, trucks, warehouses and other facilities.

Throughout the European Union, it is estimated that national budgets lose at least 17 billion euros annually due to contraband tobacco products. In Greece alone, the number stands at 750 million euros minimum, and is still growing. There are several types of tobacco smuggling operations that must be outlined so as to get a clearer picture.

Major Operators; Buy Low, Sell High; Dangerous Knock-offs

First and foremost is the large-scale contraband traffic, which involves significant shipments. This is generally done via large vessels and involves high-profile criminals and mafias of various ethnicities. Corruption in customs, police and the coast guard is paramount for this kind of commodity trafficking.

Moreover, the use of auxiliary service professionals such as attorneys, accountants, transport company owners and front companies is also important. In most cases shipments are of a value above one million euros per shipment and involve many intermediates. In the case of Greece most shipments originate from Odessa, Ukraine and from East Asia, using the UAE as an intermediate stop and re-distribution center.

A second feature is the so called “ant smuggling” tactic, involving small groups of individuals buying cigarettes from a country of low taxation and selling them to another of a higher one, reaping a profit in between. In the case of Greece this is a method used mostly with Bulgarian groups.

The selling of fake tobacco products is another form of contraband and one with potentially disastrous health consequences for consumers, since it involves tobacco produced according to low industrial standards. In this case shipments mostly come via merchant vessels from ex-Soviet states, China and India. Greece is used both as a hub and a destination market.

Tobacco Smuggling Networks: Conditions for Success

In order for an organized crime network to be systematically involved in this kind of trade, there are five basic conditions that need to be met.

Firstly, the network should have the capacity for transporting the merchandise either via vessels or trucks. This requires having the necessary recruitment abilities for the personnel working in such transportation companies.

Secondly, the vast majority of cigarettes currently sought by consumers illegally are those of well-known brands such as Marlboro. Thus a top smuggling network should be able to obtain and supply the markets with such well-known brands, which enjoy consumer loyalty and can be easily resold.

Thirdly, the network should be able to have its fair share of interpersonal connections with law enforcement agencies and customs personnel, so as to be able to ship and move bulks of illegal tobacco cargo across borders without fearing confiscation. In contrast to the narcotics trade, tobacco needs to be sold in big quantities in order to offer a considerable return on investment, and thus also requires larger (and slower) infrastructure and transport to be profitable than does the drugs trade. Thus any international tobacco smuggling operation that manages to operate for long periods without being disbanded has assumedly retained its own people inside customs operations in order to evade detection.

Fourth, an international smuggling group should be able to operate within a range of local markets in which there may be high differences in taxation rates. Further, they must be flexible enough to adapt to market changes and price fluctuations. That means maintenance of a local network of representatives, and lots of intermediates.

Finally, the smugglers should have first-person contact with street vendors and small market stores that function dependably as the last chain of operations, before the cigarettes find their way to the consumer.

Infrastructure Issues and Tobacco Smuggling Regions

The sheer volume of road and marine traffic in Greece, as well as the opening up of new motorway corridors with Bulgaria and especially with Turkey, have greatly benefited smugglers- not only those involved with tobacco, but also those involved with illegal immigrants and counterfeit products contraband. Penalties for cigarette smugglers are in essence much lower than for any other type of criminal activity, and police and security cooperation amongst Balkan countries for this issue is at a low level.

The focal points in Greece for such activities are the ports of Piraeus and Thessaloniki, when large shipments are concerned. Also, the southern part of the Peloponnese is a hotspot when it comes to mid-scale contraband; here, fishing boats unload the product offshore to smugglers, who then carry it onwards to the mainland. Local corrupted networks greatly facilitate such trade by alerting smugglers to police and coast guard patrols.

In addition, western Greece (from Igoumenitsa’s port southwards to that of Patras) is a major hub of activities concerning transfers to Italy via small boats, and also for storing the tobacco in large quantities.

Some Statistics on Contraband Tobacco Confiscation by Greek Law Enforcement

In 2011, some 417 shipments were confiscated by Greek authorities. However, in the following year this number exploded, with confiscations reaching 1,151 shipments.

Between 2008 and 2013 the consumption of contraband tobacco products of all kinds in Greece increased by 400%. For 2014 it can be estimated that more than 25% of local tobacco consumption will be of an untaxed, that is, illegal, nature.

Chinese Triads are now very active in Greece’s tobacco contraband, according to police sources, and they seem to have formed ties with local and regional ethnic groups. One of the most popular counterfeit brands in the country currently is ‘Gold Mount,’ one of the Illicit ‘Whites’ type, costing 25% of the price of a Marlboro pack at today’s prices.

In 2012, local authorities confiscated 28 million cigarettes of that brand, along with 34 million of the ‘Kingdom’ brand, 25 million of TS, 19 million of Vertus, 16 million of Rubi, 14 million of Eros, 12 million of Palace, 35 million of Tabaccus, 51 million of Raquel and 54 million of Cleopatra. Chinese Triads greatly facilitate the distribution of the above brands, reaping an estimated 30 million euros annually from the Athenian black market alone.

In the first nine months of 2013, the Greek authorities and particularly the special tax service (SDOE) confiscated 130 million cigarettes, nine tons of tobacco, 18 trucks, seven private vehicles and four merchant ships. They also raided more than 300 premises. The numbers for the current year are expected to show increases of 20 percent across the board, while illicit consumption seems to be rising in parallel.

Illegal Migration and Distribution Network Facilitation

The large number of illegal immigrants in Greece, and especially in the metropolitan centers, many of whom are unemployed and endure grim living conditions, provides ample human resources to deal tobacco contraband on the street level with regularity, thus facilitating distribution on a significant scale.

Destitute migrants are also a market of consumption of counterfeit, low-quality brands (those costing 0.5 euros per pack), whereas an established legal brand costs 4 euros, with 85% of this price being due to state taxation.

Economic and Crime Ramifications of Tobacco Smuggling

The effects of the illegal contraband on the legitimate economy have already been felt. More than eight factories have shut down, 8,000 kiosks and small shops have closed, 150 distribution centers have been bankrupted and around 25,000 jobs have been lost in this sector. At the same time organized crime is thriving and amassing considerable amounts of cash, thus being able to penetrate social and business networks and acquiring steadily and forcefully a major role in economic life, while at the same time fueli0ng further investments in other interrelated criminal activities such as drugs, human trafficking, weapons smuggling and counterfeit products shipments.

Although the issue has been perceived for a long time as a trivial one by local authorities, it is becoming more and more obvious that tobacco smuggling is indeed a major domestic security threat and a peril for the further empowerment of criminal kingpins and their assorted networks.

Although a decrease in taxation would surely help address the problem, the need for a steady flow of capital to the state budget and the EU dictates high cigarette prices in general, preventing the Greek ministry of economy from lowering taxes.

Nevertheless, if the projection of illicit consumption continues to increase, by 2016-2017 more than 50% of it would derive from contraband commodity, with the proceeds going directly to local mafia heads and their international partners. Considering the likelihood of such an increase, creating strategies to decrease tobacco smuggling would seem to be an essential national security goal for Greece- and something that would no doubt enjoy the enthusiastic support of the legitimate tobacco producers and retailers.