Editor’s Note: For more information about the contrband tobacco-terror relationship, please see CRE’s in-depth analysis of transnational tobacco trafficking and regulatory policy, Weaponizing Poverty.
From: Business Day
Tobacco companies and health lobbyists never see eye-to-eye, but on one issue they make strange bedfellows: the issue of smuggling. Both parties, indeed all parties including anti-tobacco advocates and journalists, agree that the smuggling of cigarettes needs to be stamped out in order to protect public health, government revenues and commercial investments. These days there is an even more urgent incentive to stem smuggling – terrorism.
Before addressing the link between terrorism and illicit trade in tobacco, there are a few fixed facts we should remind ourselves of. First, smuggling is not a thing of today. The practice has existed for centuries and as long as there are porous borders and corruption, it is likely to continue. Alcohol and tobacco, arguably the most lucrative legal products for smugglers, have been sneaked in and out of countries around the world for well over five hundred years.
Secondly, smugglers are not charitable; they do it for profit. So as long as an item remains profitable, they will continue to supply it clandestinely. Conversely, once an item becomes unprofitable to smuggle, they will move on to other, more profitable things.
One of the most fundamental principles of economics revolves around supply, demand and price. In very basic terms, the higher the demand, the higher the price. Once the legal supply of a product is cut off, demand for contraband versions of the product will rise. This will lead to a profitable jamboree for smugglers, who will control the supply and thus manipulate the price and their profit margins. It seems quite obvious that legislating legal producers out of existence will leave the supply of cigarettes in the hands of smugglers, which will lead to current levels of smuggling escalating out of control.
