Reducing Cigarette Smuggling in Lithuania

Did You Know: Lithuania is among the top consumers of illicit cigarettes in Europe?

After intensive efforts to improve border enforcement, the inflow of illegal cigarettes dropped by 40% between 2009–2015, and their share in the Lithuanian market dropped from 28.3% to 18.7% in 2014–2015 alone.

While headlines highlight large-scale smugglers, small-scale smuggling plays an important role in border communities. Cheaper goods outside Lithuania provide income and goods that are difficult to afford at home. In a 2013 survey by the Lithuanian Free Market Institute, nearly two thirds of Lithuanians agreed that purchasing smuggled goods was justifiable due to economic hardship.

Cheaper goods from Kaliningrad, sometimes for illegal resale, have been an important part of life in Kybartai, Lithuania, a struggling town on the Russian border.

According to a local construction worker: “Ten years ago half of Kybartai was going to the Kaliningrad side, to buy cheaper fuel and cigarettes…Now Belarus is the main market for smuggled products. I have seen smuggled goods for sale in my neighbor’s garage…”

In Belarus, a major source of cigarettes smuggled into Lithuania, the government is reluctant to provoke public unrest by cracking down. In recent years it has eased regulations on the manufacture of tobacco products, making the Neman Factory in Grodno one of the main suppliers of contraband cigarettes in Europe.

In the words of a nurse from Taurage: “Look at the markets in Taurage or in Klaipeda. All the cigarettes there have Belarusian stamps.”

Smuggling becomes attractive when money is tight. It may be unrealistic to expect stronger controls from Belarus, but higher wages and economic development in Lithuania’s border areas could go a long way to reduce the market for smuggled goods.