They are called “illicit whites”, i.e. cigarettes produced legitimately in one country with the main purpose of placing them on the market illegally in another country. Produced mainly outside the European Community, these cigarettes are not subject to the quality controls required at European level or to taxes like legally sold cigarettes. A black market that, only in Italy according to the latest Kpmg report is worth the 5,6% of the total consumption, with a loss in terms of economic value of 770 million euros in lost excise duties. In addition clearly to the public health problems associated with the marketing of uncontrolled cigarettes.
An even greater problem if we consider that most of the illicit whites entering the European market come from a country which, despite all the doubts that still exist about its democratic stability, is also about to enter Europe: Belarus. Belarus, according to data from the World Customs Organization (WCO) collected on the basis of seizures made, is the second country of origin in the world for cigarette smuggling. Not only: over 6 billion illegal cigarettes consumed in Europe are produced in Belarus (there were 700 million in 2006, an increase equal to over 700%) not by any private company but by the Grodno Tobacco Factory Neman (GTFN), a public company wholly owned by the Belarusian Government.
An executive chaired for over 20 years (since 1994) by the controversial president Alexander Lukashenko, repeatedly accused by the EU itself and by the international community of violating fundamental civil and political rights, repressing any political opposition in the bud and keeping the death penalty in force. Circumstances confirmed by the latest OECD report and which clash quite a bit with the European spirit, except that Minsk is looking for those economic investments necessary to modernize an obsolete industrial system and that Europe, for its part, has an interest in strengthening political-economic relations with Belarus with a view to containing Russia, especially following the annexation of Crimea.
It is precisely following this logic that the European Union decided, last February, to remove some sanctions decided in 2004 against 170 Belarusian personalities, including the President himself. A few weeks ago Aleksandr Lukashenko, whose men are at the top of the Grodno Tobacco Factory Neman, he was also - almost without press silence - on an official visit to Italy and to the Vatican City, meeting the President of the Republic Sergio Mattarella and Pope Francis respectively. It's hard to imagine that they talked about, for example, that in terms of flows the Belarus is the first country of export of illicit cigarettes in Italy. Or the fact, again according to the latest KPMG report, that in Italy in 2014 almost 190 tons of cigarettes with GTFN brands were illegally marketed (there were 10 tons in 2009 alone, an increase of almost 20 times). Which meant 30 million euros in lost excise duties and VAT in 2014 alone. Or finally the fact that today in Europe 1 illegal cigarette out of 10 belongs to one of the brands of the Belarusian state company, for a loss in lost excise duties for European coffers of around 1 billion euros. For example, 2,9 billion cigarettes of the "Fest" brand have been sold in Europe, the most commercialized beyond the borders.
But how is this phenomenon possible? First of all thanks to a precise – albeit ambiguous – will of the Belarusian government: the Council of Ministers determines production quotas, supervises the market, holds the import monopoly through the Belarustorg state company. The production quotas destined for the domestic market, determined by the Council of Ministers, have exploded in recent years regardless of domestic consumption, going from 19 billion in 2004 to 30 billion cigarettes in 2015 (of which 23 produced by the state-owned company GTFN). If this were not enough, in recent years production has also consistently exceeded the quotas intended for the domestic market: only GTFN had a quota of surplus of almost 5 billion cigarettes in 2014, intended for export, having produced 27,8 billion cigarettes. The consequence was, citing official data from Belstat (National Statistical Institute), an 80% increase in cigarette exports between 2012 and 2014, from 6 to a total of 11 billion.
How do these products arrive in Europe? Cigarettes are sold close to the borders, evading controls, at an enormously lower price than on the legal market. For example, the Minsks, one of the most illicitly sold Grodno brands in Italy, come sold at 0,18 euro cents and then resold at 2,50 euro per packet in our country. Prices with which it is clearly impossible to compete, given that in the legal market in Italy taxation represents about 75% of the total cost of the package. Even if legal operators, who pay taxes, sold without profit, at zero margin, the price per pack of 20 cigarettes would still remain very far from the price of the illegal market: around 4 euros for a legal product, compared to 2,50 per a package of Minsk from Grodno, up to products available on the illegal channel even at 2,20. No fiscal or pricing strategy could ever be effective in the face of such a gap in favor of the illegal producer and distributor.
What is Europe doing to curb this illegal trade? In terms of the fight against the illegal market, the European institutions have launched numerous intervention plans, also in collaboration with the operators of the supply chain. However, any commitment made by the European Union will be useless if neighboring countries do not proceed in the same direction by making stringent commitments to fight the illicit market. Especially those countries, such as Belarus, with which Europe is strengthening its economic exchanges and which are currently among the main sources of illegally sold cigarettes.
An operation that risks being one of the many contradictions of the Brussels buildings, as well as a dangerous boomerang: how will citizens be explained why Europe and Italy should invest in a country where lack of controls lead to the export of cigarettes not subject to any standard with risks for consumers and enormous damage in terms of lost revenue for public coffers? Before hypothesizing investments in Belarus - also financed by taxes paid by the legal tobacco supply chain - would it not be appropriate for Europe to ask for guarantees?
