Uzbek tariffs profit smugglers
By Elizabeth Whitman
UZBEK and KYRGYZ BORDER - During the day,
when Uzbek border guards patrol its streets,
Mingdon is a sleepy Ferghana Valley town. After
night falls, this home to 10,000 people on
Uzbekistan's frontier with Kyrgyzstan, turns into
a smugglers' paradise.
come bundles of Chinese clothing, crates of
electric Chinese appliances and an endless parade
of Chinese comestibles. From Uzbekistan, smugglers
ship fresh fruits and vegetables into Kyrgyzstan
by the truckload.
The smugglers are
dodging the most restrictive trade regime in
Central Asia. Uzbekistan's protectionist tariffs
are designed to shield domestic manufacturers
(which are state-affiliated) from
consumer goods, including food, clothing,
appliances, and motor vehicles, are taxed at rates
ranging from 40% to 100%.
smuggling, Tashkent has in recent years built
miles of barbed-wire fences and has even dug
trenches in many places. Armed guards often shoot
smugglers. Last month, border guards from
Uzbekistan and Kyrgyzstan shot at each other,
leaving one dead on each side.
believes Uzbek-state controlled media,
anti-smuggling efforts have been largely
successful. According to an early-July state
television broadcast, the Uzbek customs service
responded to 29,000 violations of the Uzbek
customs law, initiated close to 900 criminal cases
against smugglers, and confiscated illicit goods
worth approximately 110 billion sums (US$$60
million) in 2011. "Our borders are tightly
controlled, and all violators are punished
accordingly," said the broadcast.
evidence from small towns such as Mingdon shows
that efforts to secure the border are failing.
Mingdon is on a section of the border that is not
fully delimited by Tashkent and Bishkek. Smugglers
rely on hidden paths around town (some run through
private yards) to move goods.
practically impossible for authorities to control
illicit trade. The border is like a sieve," said a
Mingdon state-paid employee who himself admits to
smuggling clothing and small appliances at night.
There are no reliable figures on the
volume of smuggled goods. In June, Muradyl
Mademinov, a Kyrgyz MP, told local media outlets
that he estimates fruit and vegetables worth US$90
million are smuggled from Uzbekistan into
Kyrgyzstan annually. According to a 2011 study by
Bishkek-based Central Asian Free Market Institute,
goods that are illegally smuggled into Uzbekistan
are primarily made in China, and consist of
clothing and shoes (68%), kitchenware (19%) and
electronic appliances (13%). Locals say the
proportion of foodstuffs is growing each year.
According to Zarif, a small-business owner
from Mingdon, huge profits are driving the trade.
"On average, a smuggler can make $300 a
day, which is higher than the monthly salary of
some state employees," he said, adding that half
of Mingdon's residents moonlight as smugglers.
Large mafia-style syndicates employing
hundreds of people are involved, said a farmer
from Marhamat, a town of 60,000 just across the
border from Kyrgyzstan's Aravan. Like most of the
sources for this story, the farmer, who sells his
produce to smugglers, was too afraid of reprisals
to give his name.
officials and border guards have gotten very rich
because of bribes [given by smugglers]. Border
guards often look the other way while smugglers do
their business. For the right price, they will
also help smugglers transport goods," said the
farmer. Uzbekistan ranked 177 out of 183 countries
surveyed in Transparency International's most
recent Corruption Perceptions Index.
According to local residents, for years
towns such as Mingdon and Marhamat suffered from
economic decline. Now, thanks to illicit trade,
the local economies are thriving.
estate prices are booming. Prices for houses
immediately at the border [which are often used as
storehouses] are the highest," said a high school
teacher in Mingdon. "We no longer have to send our
children to work in Russia" - where they are
employed as seasonal labor.
Tashkent are aware of local governments' lax
approach to smuggling, said a Tashkent-based
journalist who covers agricultural issues for a
"The SNB [security
services, formerly the KGB] conducts systematic
raids in border regions, arresting smugglers and
officials who are involved in illicit trade," but
the those that are arrested "tend to bribe their
way out", said the journalist. "It is no surprise
to anyone - even the SNB is not clean anymore."
Economists in Tashkent privately say the
government should reconsider its draconian
approach, liberalize trade and delegate more
authority to local officials. But officials in the
capital seem more interested in centralization and
tightening control. "The SNB and border guards
have orders to shoot at anyone who is involved in
smuggling," said the government
employee-cum-smuggler from Mingdon. "But the risks
do little to deter smugglers."