STORY: SMUGGLING TO SURVIVE Print this page  |  Email this page   
By Theresa Freese

One month after the November 2003 Rose Revolution, Georgia’s new government began what became a massive anti-contraband campaign against breakaway South Ossetia. The aim was simple: return South Ossetia to Georgian control by cutting off the territory’s separatist leadership from its economic lifeline – the millions of dollars in contraband goods that flowed, unimpeded, from its territory into Shida Kartli and other Georgian regions.

At the time, to Shida Kartli officials, the South Ossetian campaign seemed like a simple task. Roads linking the breakaway territory to Shida Kartli were blown up; the interior ministry beefed up troops and contraband checkpoints in and around South Ossetia. Local authorities claim that the crackdown has decreased contraband trade with South Ossetia by 80 percent since Mikheil Saakashvili came to power in January 2004. But many political analysts and citizens now blame Saakashvili’s anti-contraband crusade for unleashing more problems than it solved.

The most immediate effect on locals? Loss of jobs and income. Conflict zone residents say that the anti-smuggling campaign destroyed their livelihoods, and that last June’s closure of the Georgian section of Ergneti, a huge contraband market that straddled both Georgian and Ossetian-controlled territory, destroyed friendly ties between Georgians and Ossetians who both relied on the market’s custom.

Analysts fear that Georgia’s implementation of the crackdown may have in fact pushed South Ossetians further away from Georgia. The trouble started in spring 2004 when Georgia began sparring with Russian peacekeepers in the territory over the legality of new checkpoints. Tensions ratcheted up another notch in early July when interior ministry troops seized a delivery of Russian missiles en route to South Ossetia. By August, Georgia had been brought to the brink of war with the breakaway territory. The situation defused only when Saakashvili ordered the withdrawal of Georgian troops on August 19, 2004.

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Shortly thereafter, locals say, the contraband trade, temporarily disrupted by the conflict with Georgia, picked up again. At the same time, note analysts, in response to the crackdown, Russia began to weaken Saakashvili’s campaign by filling government coffers and launching “humanitarian assistance” programs that propped up Ossetian authorities

One central government official, who requested anonymity for fear of losing his job, was direct: “After the anti-contraband fight, South Ossetia is more linked to Russia—now 80 percent of their economy is linked. Before, it was dependent on Ergneti and Georgia.” The official called the anti-contraband campaign an “unwise” decision and asked, “How can you tell people to fight contraband when they live on it?” He blamed the new government for poor management, planning, coordination, and execution of the campaign, and for a subsequent lack of accountability.

Meanwhile, thanks to a maze of secondary roads linking Shida Kartli with South Ossetia, smuggling in the region continues. In March 2005, a contraband ring was uncovered that involved top Shida Kartli law enforcement officials, including Shida Kartli’s chief of police; the incident led to a string of arrests and an overhauling of the entire regional police force. Some locals argue that a February 2005 car bombing that targeted police headquarters in Gori, Shida Kartli’s administrative center, was meant as retaliation for local officials having merely pushed out old contraband ringleaders and replaced them with friends and family. Officials have denied the charges.

While, at the time, Saakashvili declared that Ergneti’s closure had wiped out contraband in the region, conflict zone residents say that they “have no choice” but to carry on with the trade. Most villagers near Ergneti had been linked to the market in one way or another, one shopkeeper said, and worked there as taxi drivers, traders or loading and unloading trucks. Now, she said, “[t]hey don’t have jobs.”

As major contraband roads were shut down, smugglers turned to underground storage areas and transported products by smaller roads, or on foot, and usually under cover of darkness. Meanwhile, anti-contraband activities led to tit-for-tat detentions of people and confiscation of vehicles.

The economics of the trade – and the constraints imposed by the ban – are straightforward. “If I want a sack of flour, in Gori it costs 30 lari, plus one lari for transport. On the Ossetian side, it costs 21 lari,” said one woman working in a roadside kiosk. “For me, it is better to buy flour in the [Ossetian section of the] Ergneti market. . . This 10 lari is something.”

“I don’t think Saakashvili has correct information,” the clerk added. “They tell him lies because when he makes his speeches he says contraband does not exist at all. And this is not true.” She said that locals take contraband to Gori shops and sell it there. “Transport to Tbilisi is expensive. To sell it to Russia is impossible because of visa and transport fees.”

In Gori, unmarked Russian and Azerbaijani products, such as cooking oil and flour, can still be found in markets. Sellers themselves call the items “contraband.” A shopkeeper shouted after a EurasiaNet correspondent leaving her store that “If you want to buy contraband flour, look for Makta.”

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Nor does this trade exist in isolation from Georgia’s capital city. “To stop contraband,” one woman suggested, “They should close the storage areas in Tbilisi.” She and other shopkeepers explained that numerous products are bought from Tbilisi storage. Contraband, she said, is smuggled into Georgia not just from Russia, but from Azerbaijan and other countries.

At the same time, locals say, they are losing income to Ossetians. Since Georgian goods are not considered “contraband,” residents report that Ossetians are free to visit Georgian villages to buy apples and other agricultural or dairy products, and sell them to the north in Russia or the South Ossetian capital, Tskhinvali. While the income from these sales allows Georgians to survive, they complain that Ossetians are earning an income that could have been theirs if safe passage to Russia via South Ossetia were an option.

Goods from South Ossetia are similarly off-limits. The Tkviavi checkpoint, 10 kilometers south of Ergneti, poses one key obstacle. As a result, locals often resort to discreet smuggling, hiding “contraband” items such as cigarettes – sometimes as many as five cartons -- under their clothing. “Sometimes they are checked. Sometimes they get through. Sometimes they don’t. It’s a huge problem,” said one shopkeeper.

Recently increased excise taxes on cigarettes and a ban on kiosk and street sales of cigarettes and alcohol promise to only add to the problem by increasing demand for smuggled items. Smugglers can make up to a 20 percent profit on cigarette sales, according to the Georgian government official, and one truckload could yield sales revenue of up to $30,000. But the ban appears to be unevenly enforced. While Tbilisi kiosks openly sell cigarettes, kiosk owners in the conflict zone hide their products under the windows. “If I sell cigarettes or alcohol I will be fined,” one Ergneti shopowner said. “They might close my shop.”

Residents, and officials alike, stress that in addition to better government planning a better approach towards South Ossetia would have been to attract Ossetians to Georgia through economic development programs rather than an anti-contraband campaign that destroyed jobs and friendships.

“They should leave contraband alone a while and work on integration,” the anonymous official concluded. “Contraband is better to buy because it is cheaper. If it’s not South Ossetia there will be another source,” he explained. “They should not link fighting contraband with conflict resolution. They can use contraband as a tool, but they must shift conflict resolution to another level—a political one.”

Editor’s Note: Theresa Freese, a graduate of The Johns Hopkins University School of Advanced International Studies, is a freelance journalist and political analyst who has been conducting research on unresolved conflicts in the South Caucasus since 2003.

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