Thursday, March 20, 2014

Afghanistan: Smuggling Threatens Legal Economy in Afghan Southeast

This article originally appeared in the Institute for War and Peace Reporting,
Smuggling Threatens Legal Economy in Afghan Southeast

Merchants in Khost province say contraband goods undermine legitimate trade with Pakistan. 

By Ahmad Shah - Afghanistan

Business leaders in the Khost province of southeast Afghanistan say their livelihoods are threatened by a thriving black market in smuggled goods brought across the border from Pakistan.

The mountainous province has a 180-kilometre border with Pakistan, providing rich opportunities for smuggling into Khost and onwards to the rest of Afghanistan.

Khost merchants say the trade has had severe consequences for their own businesses.

“These smuggled goods – which escape all custom duties and taxes – are equal in quality to our legally imported goods, so they supply the market at cheaper prices, and customers tend to buy from them rather than from us. We have piles of our goods unsold,” said Haji Din Wali, the head of the Khost province retail union.

He said that as smuggling had increased over the last three years, legal imports had declined.

“Just a year ago, I was bringing 2,000 cases of goods a month to Gardez [in neighbouring Paktia province], but now I’m bringing 200 cases,” he said.

Nasratullah Atal, a resident of Khost city, said the smuggling was conducted in broad daylight.

“First the smuggled goods are brought down from the mountains, then they are loaded onto different-sized vehicles to transport them to the city. Every day I see drivers handing out bribes at police checkpoints and taking their goods to Khost city unhindered,” he said.

Khan Jan Alokozai, deputy chairman of the Afghanistan Chamber of Commerce and Industries (ACCI), said he was extremely concerned about the illegal cross-border trade.

He said that while Afghanistan’s official trade with Pakistan was worth 2.5 billion dollars annually; smuggling added a further 1.5 billion. Unless action was taken to combat this, more merchants would turn to illegal-traded goods.

Alokozai said his organisation had shared its concerns with President Hamed Karzai and security officials on dozens of occasions, with little effect.

“You can see that we voice our concerns in the media every day to stop the illegal trade, but no one will listen to us,” he said. “Government officials are involved in this illegal trade. The profit flows into their pockets, so no one prevents it.”

Saifullah, a businessman in Khost, said corruption gave the smugglers an unfair advantage.

“We have to pay 700 dollars in custom duties, tax and other fees [per truckload], but the smugglers pay 30 dollars in bribes,” he said. “If smuggled goods on a truck are seized and taken to the custom house, the smugglers pay a bribe of 200 to 300 dollars to customs officers and their goods are released.”

Those involved in the illicit trade say they make a good living.

“We pay bribes to both the police and the frontier security forces so they will allow us to smuggle goods,” said Ajmal, who runs contraband across the Pakistani border into Khost province. “When we are transporting goods in a variety of vehicles from small to medium-sized and large, the bribe ranges from three to 20 dollars per vehicle, which we pay to the frontier forces.”

“I am very happy to be earning high profits with minimum capital,” continued Ajmal. He acknowledged that he was breaking the law, but argued that widespread corruption meant that tax revenues did not benefit anyone in any case.

“Who cares about the laws? A minister will own three or four luxury houses. The revenue doesn’t go into the national treasury; instead it flows into the pockets of individuals. Why I should pay taxes, and who should I pay them to?”

A shopkeeper in Khost city, who did not give his name, said that for the last three months he had been turning a healthy profit from buying and selling illegal imports.

“People come here and give me goods on credit,” he explained. “Their items are the same quality as the [legal] traders’, but the prices are very cheap. Besides, they don’t take the money from me all at once. I pay them a little bit every week.”

The customs service head for Khost province, Fazlullah Fazel, denied claims that officers were in league with the smugglers.

“I don’t know how things were in the past, but the level of corruption has dropped to zero since I came to office,” he told IWPR.

However, he acknowledged that customs officials were present on only six of the 30 routes to the Pakistani border. The remaining crossing-points were not under their control.

“The complicated geography of the Khost regions, security problems, and a shortage of customs personnel have led to a growth in smuggling,” he said, expressing disappointment that neither the national nor the border police forces were cooperating sufficiently to curb the trade.

“If we have an average [customs] take of one million dollars a month, the smugglers also make one million dollars a month. This means that we lose 50 per cent of our revenues every month,” Fazel said.

Although border police officials declined to speak to IWPR on this issue, a representative of the Afghan National Police (ANP) denied claims that they were lax on smuggling.

Yaqub Mandozai, chief of security at police headquarters in Khost, said customs officers were present at all ANP checkpoints in Khost.

“We patrol day and night together with custom officers. We have seized most smuggled goods and handed them over to customs. The claim that we have not cooperated is unacceptable,” he said, insisting that ANP staff did not accept bribes in return for allowing contraband to pass.

The director of the ACCI branch in Khost, Nawab Amirzai, said that one solution for the problem was the planned upgraded of the highway from Khost city to Ghulam Khan on the Pakistani border, which will turn it into an officially-recognised route for cross-border traffic. (See Afghan Traders Call for Fast-Tracked Transit Route.)

Work is now under way to develop the route, and Amirzai said this would focus the Kabul government’s attention on the problem of smuggling in Khost.

“Pressure will increase on the security forces, and smuggling will be prevented,” he said.

Sulaiman, a student of business administration in Khost, warned that the entire province’s economy would suffer unless action was taken to clamp down on contraband.

“If the situation stays as it is, traders will face financial problems to the extent that they’ll be forced to withdraw their investments from Khost,” he said.

Ahmad Shah is an IWPR-trained reporter in Khost province.