Tobacco Kills In More Ways Than One – OpEd
By Cole Baker
Despite widespread knowledge of the health risks involved, tobacco use remains entrenched in societies around the globe. What is less well-known, however, is that the dangers of tobacco extend beyond the realm of medical science. Cigarettes are the most widely smuggled legal consumer product in the world, with one third of the tobacco products sold each year ending up as contraband. Revenues from tobacco smuggling fund transnational criminal gangs and terrorist organizations, contributing to violent conflict around the world. The sheer scale of the problem makes it difficult for governments and international organizations to tackle on their own. Accordingly, the private sector must be called on to take more meaningful action to address the scourge of tobacco smuggling.
Tobacco smuggling is one of the most important sources of revenue for criminal syndicates, violent extremist organizations, and rogue states, yet it is consistently overlooked by governments around the world. This lack of public attention is understandable, as other illicit activities, such as drug-smuggling and hostage-taking, are more likely to grab headlines. Still, the dearth of government and private sector resources devoted to the issue is glaring. As of 2017, the U.S. Bureau of Alcohol, Tobacco, and Firearms (ATF) had only four of its 2,600 agents devoted to the prevention of tobacco smuggling. Criminal penalties for tobacco smuggling are rarely enforced, and when they are, punishments tend to be light.
The problem is made worse by well-intentioned government intervention. In many jurisdictions, authorities have attempted to dissuade tobacco consumption by levying high taxes on tobacco products. This is a rational policy from a public health standpoint: tobacco use is the leading cause of preventable death in the United States. But heavy taxation creates opportunities for tobacco smuggling. Smugglers buy tobacco products in low-tax or no-tax jurisdictions and then smuggle them across state and international borders. Because smugglers avoid paying the appropriate taxes or tariffs, they can undercut the legal sale price of tobacco in the higher-tax jurisdiction and make a hefty profit at the same time. According to David Luna, a former chair of the OECD Task Force on Countering Illicit Trade, a shipping container of tobacco products can be bought for $100,000 and then resold at 20 times the cost. While the profit-making potential is great, the risks of tobacco smuggling are relatively low. Tobacco is often transported along the same smuggling routes used to move drugs, weapons, and victims of human trafficking, but the legal consequences faced by tobacco smugglers are minor compared to these other offenses.
Due to its high profit margin and low risk, violent extremists and paramilitary groups like the Real Irish Republican Army and the Taliban use tobacco smuggling to generate revenue. An ATF analyst estimated that over a five-year period, groups affiliated with the Real IRA raised $100 million in revenue from cigarette smuggling. Meanwhile, cigarette smuggling is now only second to heroin as a source of funding for the Taliban. Some terrorist operatives become so involved in tobacco diversion that they receive monikers related to the practice. The founder of the militant Jihadist group al-Mulathamun, Mokhtar Belmokhtar, was given the alias “Mr. Marlboro” because of his ability to raise funds through his prolific involvement in cigarette smuggling. Tobacco smuggling is so profitable that even some governments, like North Korea, reportedly engage in the practice as a means of evading international sanctions.
To combat tobacco smuggling, governments have established partnerships and created laws aimed at cracking down on the illicit trade in tobacco. International organizations such as Interpol, Europol, and the World Customs Organization have contributed to efforts to seize illegal product, eradicate smuggling routes, and prosecute the individuals who engage in smuggling. There are also several treaties in place that aim to tackle tobacco smuggling, including the United Nations Convention on Transnational Organized Crime; the International Convention for the Suppression of the Financing of Terrorism (Terrorist Financing Convention); and the Agreement on Trade-Related Aspects of Intellectual Property Rights.
However, there is still room for growth. Governments could employ tax harmonization to decrease the contrast between low-tax jurisdictions and high-tax jurisdictions or require detailed stamps on packaging to better track the transport and sale of tobacco products. Additional laws could also be enacted that increase the penalties for tobacco smuggling, while existing laws could be more strictly enforced. To be sure, these solutions would entail high costs, particularly the creation of state, inter-agency, and international partnerships necessary for implementation. Additionally, tobacco smuggling is likely too pervasive for even governments and international organizations to combat alone. To truly curb the phenomenon, the private sector must become an active partner in confronting tobacco smuggling—or at the very least, it must address its own complicity.
Historically, many tobacco companies tacitly allowed smuggling to occur or even actively engaged in the practice. In the late 1990s, the tobacco industry was found to be intentionally engaging in tobacco smuggling as a means of increasing their profit. As smuggled tobacco is not subject to government taxes, it is cheaper for the consumer. Accordingly, tobacco smuggling allowed tobacco companies—via distributors—to sell to markets that otherwise could not afford their product. The incentive was clear: smuggled tobacco increased demand.
Tobacco companies now claim to have ceased such activities and present themselves instead as victims of the ongoing practice. Yet, data shows that most illicit tobacco is manufactured legally before ending up on the black market. Accordingly, if big tobacco really wants to be part of the solution rather than part of the problem, it must first secure its own supply chain. By only selling to reliable buyers in reliable markets and by tracking their products after they are sold, companies could remove a significant source of illicit tobacco.
Tobacco companies also have a habit of oversupplying markets with more products than can be legally sold, knowing that a portion of this supply will end up on the black market, potentially benefiting extremist groups. If companies cannot voluntarily regulate their production, they should be forced to do so by governments. Moreover, the tobacco industry, specifically the more established brands, can work to make their packaging harder to forge or replicate. Many smuggled cigarettes, including cigarettes from North Korea, are often disguised as legal brand-name products.
Lastly, major tobacco companies can and should embrace the role of a watchdog. Company representatives have a global presence, with manufacturing facilities and trade representatives in multiple countries around the world. Their expansive international presence and in-depth understanding of local markets positions these companies well to identify and report suspicious behavior.
From election influencing to the spreading of propaganda, the last few years have seen the private sector being used by third parties to sow chaos and contribute to the degradation of international security. This unfortunate practice has raised an important question for governments around the world: what is the role of the private sector in combating practices that are to the detriment of public safety? While this is certainly a layered question, in the context of the tobacco industry, the answer is simple. If our society means to seriously confront a global source of instability, international tobacco companies must take more responsibility for policing their product and curbing smuggling. Until they do, tobacco will continue to be a source not only of preventable illness, but of violent conflict around the world.
The views expressed in this article belongs to the author alone and does not necessarily reflect those of any institutions with which the author is associated with or Geopoliticalmonitor.com.
