Brussels shines light on shady borders Financial_Times - 2008/7/8
All is quiet in the singlestorey huts that serve as duty-free stores on the Bulgarian-Serbian border. The shop salesmen look bored standing in front of shelves of alcohol and cigarettes.

Suddenly, a Bulgarian coach pulls up and its passengers stream in to buy some of Europe's cheapest tobacco and spirits: cartons of Marlboro cigarettes at 9.50, Johnnie Walker whisky for 8.

In a few minutes, the travellers are gone and the duty-free salesmen settle down to wait for the next busload.

These were the last days of this seemingly innocent activity. After intense pressure from the European Commission, all such stores on the country's land borders were due to be closed this week on government orders.

Brussels turned the stores into the latest target of its campaign to press Sofia to fight harder against organised crime and corruption. The Commission branded the shops "a focal point for local corruption and organised crime" after examining numerous reports of duty-free goods - including large volumes of fuel - being shipped briefly across the border and then channelled back into Bulgaria, sometimes with the complicity of corrupt border and customs officials. It also saw evidence of duty-free products going directly into the domestic market, including an estimated 30 per cent of the country's petrol and diesel.

Sergey Stanishev, the prime minister, says: "Once we heard. . . speculation that that this money, that these duty-free shops, were being used for the black economy and for corruption, immediately action was undertaken."

The Commission is acting under the mandate it was given when Bulgaria and Romania joined the EU in January 2007 to monitor the two countries until 2009, to make sure they raise their standards of justice and home affairs.

An interim report in February criticised both states for corruption and singled out Bulgaria over organised crime. Brussels is now working on a final report, due later this month, in which it could recommend sanctions, notably asking other EU members to stop recognising court decisions. EU diplomats do not expect the Commission to go this far, but the balance of praise and criticism will be crucial.

Sofia is, separately, under pressure to improve supervision of public funds after the Commission suspended the payment of some pre-accession aid after finding possible irregularities and after the head of the highways agency resigned in a financial scandal.

Brussels is now auditing the aid flows, while Sofia is putting in place new checks, including the appointment of Meglena Plugchieva, a former ambassador to Germany, as a new deputy prime minister in charge of EU funds.

Mr Stanishev's government has adopted a string of reforms and created an investigation unit to deal with serious crimes, including high-level corruption, called the State Agency for National Security. New laws on public procurement and conflict of interest are on the way after a wave of senior officials lost their jobs.

Mr Stanishev insists Bulgaria has made rapid progress. Statistics show a considerable decline in crime, including homicides, which have dropped from an average of nearly 6 per 100,000 of the population in the mid-1990s to around 2. Contract killings are also down from 26 in 2003 to 12 in each of 2006 and 2007.

The Center for the Study of Democracy, a Sofia think tank, estimates the incidence of small-scale corruption, such as patients' payments to doctors, has dropped by more than 50 per cent since 2000. The government has also tried to suppress the untaxed "grey" economy by cutting taxes and increasing transparency.

There is still a long way to go. First, even though contract killings are down, the fact that very few have been solved is a black mark against Bulgarian justice.

Second, according to Transparency International, the anti-corruption group, Bulgaria is near the bottom of EU states ranked by levels of perceived corruption.

Finally, perhaps Bulgaria's biggest challenge is the economic power of criminal groups that flourished in the 1990s, often running protection rackets and smuggling schemes. Some of these now want to legitimise their status by investing in clean businesses, notably property.

Kamen Sitnilski, the deputy chief prosecutor, says: "This is a process which transforms criminal capital into legitimate business and allows criminals to behave more openly and not stay in hiding."



Author: Stefan Wagstyl

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