Sources

How Contraband Cigarettes Came To Flourish In The Heart Of Europe

For years, the German government has steadily raised the price of cigarettes. But rather than rake in revenue, the tax policy has sparked a spike in cigarette smuggling. Jin Lings, snuck in from Russia, Moldavia and the Ukraine, are particularly popular.

A man smoking in Berlin (Onnola)
A man smoking in Berlin (Onnola)
Hans Evert

BERLIN -- One of the competitors of the global cigarette giant Imperial Tobacco is hanging out near a discount mart on Landsberger Allee. His clothing is torn. He's small and wiry; his eyes are mistrustful. He holds a plastic bag. "There's one of our friends, right there," says Bernd, spotting the Vietnamese man through the car window. As he gets out of the car and heads towards him, the man hurriedly moves away and disappears around the corner, mobile phone clamped to his ear. "Now the other guys know we‘re here," Bernd says, lighting a cigarette.

Bernd's describes himself as a bull. Bernd isn‘t his real name. And he's not a cop. At least not any more. He used to work for the German Federal Criminal Police. There, he learned his self-confident walk and his way of staring right through a person. He also picked up a lot of knowledge about organized crime. For this reason, Reemtsma, the German subsidiary of Imperial Tobacco, the fourth largest tobacco company in the world, was happy to hire him as head of security. Like every multinational cigarette maker, Reemtsma needs all the help it can get to keep its biggest competitors in check – and its biggest competitor isn't the Marlboro man. It's the black market man on the street corner.

In 2010, 22 billion untaxed cigarettes were smoked in Germany, according to the Deutscher Zigarettenverband (DZV), a German tobacco lobby. Nobody doubts the number, and because of it, the state lost more than 4 billion euros in tax revenue last year, and profits for companies like Reemtsma and Philip Morris (which owns Marlboro) were heavily impacted.

Vietnamese-run racket

Since the fall of the Berlin Wall, Vietnamese have been the main sellers of contraband smokes, as it's become an established form of criminality. Much like forced prostitution and drug dealing, this racket is extremely difficult to crush, despite the best efforts of customs officials and the millions invested by the tobacco industry.

According to DZV estimates, taxes on more than 40% of all cigarettes smoked in Berlin are unpaid. That figure rises to 60% near the border with Poland. In Bavaria, nearly every third cigarette is smuggled, while in northern Germany it's more than one in 10. Customs agents say those estimates are conservative.

Bernd, the former police officer, has organized a little tour of Berlin for Ole Peschl, Reemtsma's Berlin sales manager, so he can check out the company's toughest competition for himself. One of Peschl's customers has a tobacco store on Anton Saefkow Platz in the Lichtenberg quarter. "Do you want to see where they stash their supplies?" the woman behind the counter asks. She waves her hand in the direction of a supermarket. "Behind their sign. I see the sellers reaching behind it all day long."Asked if she‘d called the police, she replied: "And what, make my life even more complicated?"

In front of the market stands a Vietnamese man, plastic bag in hand. He has only five cartons in the bag -- not enough to count if the police take him in. Sellers keep what they have on them at any one time under the limit, and find a place nearby to stash supplies. Bernd goes up to the man, who gives him a suspicious look: he's apparently been kept in the loop by the guy who was phoning from Landsberger Allee. But by this time, the sellers seem to have decided that the small Reemtsma group didn't represent a threat. "What have you got," Bernd asks. The man reaches into the bag and takes out a carton of Jin Lings. "Good cigarettes," he says.

Bernd buys a pack for 2.20 euros. He takes a cigarette out, crumbles the tobacco up between his fingers and examines it. "The white stuff, that's not tobacco," he says. "But at least there aren't any shredded CDs or mouse droppings." He looks at the package: it hasn't been put together straight, and in lousy English claims that Jin Ling is produced under license from Philip Morris – which of course is not true. These are fakes of a brand that itself has not been approved for sale in Germany.

And yet, Jin Ling is now the most smoked cigarette in Germany. The box is reminiscent of the old Camel package, except that instead of a camel there's a ram. Jin Lings are made in three factories -- in Kaliningrad (Russia), Moldavia, and the Ukraine. In Russia, however, hardly anyone has ever heard of them: they are mainly made to be smuggled into Western Europe. It's said that the factory price for a carton of 10 packs is 2 euros. Here, the seller is asking 22 euros – a profit margin of 1,100% less the cost of smuggling. "More lucrative than hashish," Bernd says.

So it's no wonder that for that kind of money, smuggling is big business. According to customs officials, the way the business is organized is that Eastern Europeans manufacture, purchase and smuggle the merchandise. In Germany, Vietnamese gangs take over. Sales areas are divided up among gang members -- and they no longer sell fake Marlboros the way they did 15 years ago. Instead, they hawk Jin Lings, Classics, or packs with Cyrillic writing on them. That way, nobody gets nabbed for trademark violation.

The Vietnamese street hawkers aren't getting rich. Police and customs officials are assuming that most of them have been trafficked, and that they're paying down what they owe for their passage to Europe. In some places, like the Eastgate mall, there are three of them in a row, barely 100 meters apart.

Bernd goes up to another man and asks what he has in his bag. Jin Lings, of course, and another brand called Classic. "Don't you have some of these," Bernd asks, pointing to the pack the man has in his shirt pocket. "No, no, mine," says the Vietnamese, laughing. It's a legal pack of John Player Specials.

Read the original article in German

Photo - Onnola

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Geopolitics

Iran-Saudi Arabia Rivalry May Be Set To Ease, Or Get Much Worse

The Saudis may be awaiting the outcome of Iran's nuclear talks with the West, to see whether Tehran will moderate its regional policies, or lash out like never before.

Military parade in Tehran, Iran, on Oct. 3

-Analysis-

LONDON — The Iranian Foreign Ministry spokesman Saeed Khatibzadeh said earlier this month that Iranian and Saudi negotiators had so far had four rounds of "continuous" talks, though both sides had agreed to keep them private. The talks are to ease fraught relations between Iran's radical Shia regime and the Saudi kingdom, a key Western ally in the Middle East.

Iran's Foreign Minister Hossein Amirabdollahian has said that the talks were going in the right direction, while an Iranian trade official was recently hopeful these might even allow trade opportunities for Iranian businessmen in Saudi Arabia. As the broadcaster France 24 observed separately, it will take more than positive signals to heal a five-year-rift and decades of mutual suspicions.


Agence France-Presse news agency, meanwhile, has cited an unnamed French diplomat as saying that Saudi Arabia wants to end its costly discord with Tehran. The sides may already have agreed to reopen consular offices. For Saudi Arabia, the costs include its war on Iran-backed Houthis rebels fighting an UN-recognized government in next-door Yemen.

The role of the nuclear pact

Bilateral relations were severed in January 2016, after regime militiamen stormed the Saudi embassy in Tehran. Amirabdollahian was then the deputy foreign minister for Arab affairs. In 2019, he told the website Iranian Diplomacy that Saudi Arabia had taken measures vis-a-vis Iran's nuclear pact with the world powers.

It's unlikely Ali Khamenei will tolerate the Saudi kingdom's rising power in the region.

He said "the Saudis' insane conduct toward [the pact] led them to conclude that they must prevent [its implementation] in a peaceful environment ... I think the Saudis are quite deluded, and their delusion consists in thinking that Trump is an opportunity for them to place themselves on the path of conflict with the Islamic Republic while relying on Trump." He meant the administration led by the U.S. President Donald J.Trump, which was hostile to Iran's regime. This, he said, "is not how we view Saudi Arabia. I think Yemen should have been a big lesson for the Saudis."

The minister was effectively admitting the Houthis were the Islamic Republic's tool for getting back at Saudi Arabia.

Yet in the past two years, both sides have taken steps to improve relations, without firm results as yet. Nor is the situation likely to change this time.

Photo of Iranian Supreme Leader Ali Khamenei in 2020

Iranian Supreme Leader Ali Khamenei in 2020

commons.wikimedia.org

Riyadh's warming relations with Israel

Iran's former ambassador in Lebanon, Ahmad Dastmalchian, told the ILNA news agency in Tehran that Saudi Arabia is doing Israel's bidding in the region, and has "entrusted its national security, and life and death to Tel Aviv." Riyadh, he said, had been financing a good many "security and political projects in the region," or acting as a "logistical supplier."

The United States, said Dastmalchian, has "in turn tried to provide intelligence and security backing, while Israel has simply followed its own interests in all this."

Furthermore, it seems unlikely Iran's Supreme Leader Ali Khamenei will tolerate, even in this weak period of his leadership, the kingdom's rising power in the region and beyond, and especially its financial clout. He is usually disparaging when he speaks of Riyadh's princely rulers. In 2017, he compared them to "dairy cows," saying, "the idiots think that by giving money and aid, they can attract the goodwill of Islam's enemies."

Iranian regime officials are hopeful of moving toward better diplomatic ties and a reopening of embassies. Yet the balance of power between the sides began to change in Riyadh's favor years ago. For the kingdom's power has shifted from relying mostly on arms, to economic and political clout. The countries might have had peaceful relations before in considerably quieter, and more equitable, conditions than today's acute clash of interests.

If nuclear talks break down, Iran's regime may become more aggressive.

Beyond this, the Abraham Accord or reconciliation of Arab states and Israel has been possible thanks to the green light that the Saudis gave their regional partners, and it is a considerable political and ideological defeat for the Islamic Republic.

Assuming all Houthis follow Tehran's instructions — and they may not — improved ties may curb attacks on Saudi interests and aid its economy. Tehran will also benefit from no longer having to support them. Unlike Iran's regime, the Saudis are not pressed for cash or resources and could even offer the Houthis a better deal. Presently, they may consider it more convenient to keep the softer approach toward Tehran.

For if nuclear talks with the West break down, Iran's regime may become more aggressive, and as experience has shown, tensions often prompt a renewal of missile or drone attacks on the Saudis, on tankers and on foreign shipping. Riyadh must have a way of keeping the Tehran regime quiet, in a distinctly unquiet time.

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