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UN Diplomats Lived Large on Smuggled Tobacco

By: Yaël Ossowski - @YaelOss - Sep 21, 2016, 11:47 am
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Smuggled Tobacco (flickr)

Flashy BMWs, a pristine villa in downtown Geneva, United Nations diplomatic credentials and close to $2.4 million in profit. Welcome to the lucrative life of a UN cigarette smuggler.

Two employees on a diplomatic mission from Iraq to the United Nations in Geneva, Switzerland were caught abusing their diplomatic status last month by illegally funneling over 600,000 cigarettes into France.

The two employees had been allegedly making the transactions over the course of three years with the aim of making sales on the black market.

The plan involved using a German firm to acquire duty-free cigarettes, only to have them stored in a warehouse near the Geneva airport and eventually trucked to the Rennes region of France for sale on the street.

The accused were able to purchase duty-free cigarettes due to their diplomatic status on the Iraqi mission, according to the Swiss Federal Customs Administration, which first gave news of the incident in the Sonntags Zeitung newspaper. It was later confirmed by the Iraqi Embassy through a press release.

The two staff members were fined $170,000 and $120,000 for cigarette smuggling, a fraction of the $2.4 million in tax savings they were able to acquire.

Geneva, where the operation is said to have originated, is the seat of the World Health Organization, which has organized its own crusade of tobacco products.

The authorities say they were tipped off by local diplomatic officials from Hong Kong, who noticed large shipments of cigarettes purchased with their credentials without their knowledge.

The men are also reportedly accused of abusing the duty-free status of the embassies in Saudi Arabia, Oman, and Bahrain in order to order cigarettes.

The Iraqis were swift in condemning the employees accused of smuggling the cigarettes, but also saved criticism for media coverage, claiming news reports hurt the image of the country and weaken it amid struggles with ISIS.

“The published news in its current inaccurate form caused a severe pain for the people and the Iraqi government,” the Iraqi Embassy wrote on their website on August 25th, “in addition to the suffering of our people from the genocide and the destruction done by international terrorism, particularly as we gather our strength to expel Daesh gangs from our country.”

Smuggling would reportedly leap from 12 percent of all cigarettes consumed to a stunning 36 percent, a tripling of the smuggling rate to go with the tripling of the excise tax. Half of those smokes would come from casual smuggling and half from commercial smuggling.

What causes such a lucrative market for cigarette smugglers?

It’s all in the taxes, according to statistics pulled together by the Mackinac Center for Public Policy, a Michigan-based nonprofit public policy think tank.

In analyzing the effect of an additional excise tax on cigarettes currently on the referendum ballot in the American state of Colorado this November, the institution concluded that tripling the tax would ensure that smuggling would “leap from 12 percent of all cigarettes consumed to a stunning 36 percent.”

“Half of those smokes would come from casual smuggling and half from commercial smuggling,” they added in a guest column in the local Post Independent newspaper this week.

In India, which is set to host the seventh Conference of the Parties, the largest international gathering on the Framework Convention on Tobacco Control implemented by the World Health Organization, there have been claims that incessant warning label requirements have actively led to increased smuggling in the Indian market.

“Since smuggled cigarette packs will not carry the necessary health warnings, people can consider them safe leading to their widespread consumption,” said a spokesman from the Tobacco Institute of India, a representative body of tobacco makers.

Yogesh Deveshwar, the head of India’s largest tobacco company, has even accused U.S.-based NGOs of fueling cigarette smuggling in the country by proposing burdensome regulations, he told the International Business Times.

But regardless of the complaints from industry, various government bodies will be taking very differing stances of how to approach illicit trade.

The European Union partners with all major cigarette producers internationally to help combat cigarette smuggling and eradicate illicit tobacco. This past July, the EU let the first of these agreements to expire. And more could be on the way very soon.

Yaël Ossowski Yaël Ossowski

Yaël Ossowski is a journalist, informational entrepreneur, and Senior Development Officer for Students For Liberty. Born in Québec and raised in the southern United States, he currently lives in Vienna, Austria. Follow @YaelOss and on his website Yael.ca. Read his featured PanAm Post column, "Question the Narrative."

What Really Creates a Peaceful, Orderly, and Prosperous Society?

By: Guest Contributor - Sep 21, 2016, 10:06 am
self-government

By Robert Higgs The idea that genuine self-government—the system in which individuals contract for the type of governance they prefer—must fail because under such a system no one can make others obey the rules is stunningly misconceived. On any given day, even in a world pervaded by states and their dictates, nearly everything that people do or refrain from doing is so not because the state threatens them with violence for acting otherwise, but because they find conformity with rules—honesty, promise keeping, careful handling of goods, avoidance of opportunism, working hard and responsibly, refraining from shirking and malingering, and so forth—to be in their interest. The world does not run on the state’s threats of violence; it runs in spite of those threats. Notwithstanding the supercilious declaration that “you didn’t build that,” you actually did, and not because the state threatened to hurt you if you didn’t. Read more: US Congress Already Knew About DNC Hacks from Russia Many sanctions besides violence and threats of violence may be—and are even in the world in which we now live—effective incentives for adherence to law and order. Ostracization of dishonest dealers, for example, works wonders, and in the world of modern communications it can be more effective than ever. Many people conduct their affairs honorably and fairly in order to preserve an upstanding reputation and thereby to retain beneficial commercial and personal relations. Many people subscribe to religious or other moral codes that regulate their conduct and direct it into decent and productive channels. The state’s contribution to creating a successful world is, as a rule, to stand in the way and, all too often, to punish those who are trying to serve their fellow human beings in free markets and other peaceful, cooperative arrangements. googletag.cmd.push(function() { googletag.display('div-gpt-ad-1459522593195-0'); }); States don’t make our world peaceful, cooperative, and productive—to the extent that it is so. Insofar as the world works successfully, it does so in spite of the state’s characteristic bloodthirst, oppression, and plunder, not because of it. Upon real reflection, the puzzle is that anyone believes that the relationship is the other way around. People who think, work, create, invest, plan, and carry out productive projects make the world work. People who collect taxes, create mountains of unnecessary regulations, threatening violence against those who fail to comply with them, and devote vast amounts of extorted resources to wreaking senseless death and destruction at home and abroad also make the world work—but much, much for the worse. Read more: Clinton foundation hires cyber-security firm after suspected hacking So, to the extent that the state is necessary to make people obey the rules, chances are that the rules to which it compels obedience ought never to have been made in the first place. But don’t take my word for it: open up the U.S. Code, the Code of Federal Regulations, the Federal Register, and the corresponding legal documents for any of the state, county, and city governments in the USA and see for yourself. If you conclude that all of this legal outrage and the police who enforce it make economic or moral sense, you may be a unique person, indeed. This article was originally published on The Independent Institute's blog The Beacon. 

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