1. Corruption and Smuggling Center for the Study of Democracy 2002

2. Origins and Development of Smuggling Channels  The smuggling channels were controlled by former State Security  Arms smuggling  Trafficking in human beings  Smuggling of technology (restricted by COCOM )  “ Privatization” of smuggling channels  Consumer goods  Embargo goods for Yugoslavia

3. Corruption and Smuggling: Parallel Classification Type of traffickingForms of corruptionMethods and effects Small-scale trafficking (“suitcase trade”) Corruption deals are at low level administrative and are between individual participants “Suitcase trade” is a huge part of illegal import and export of goods in Balkan countries Smuggling channels Corruption network; administration officials at middle and high level; Complicated chain of corruption deals, including reallocation of the received bribe Illegal trafficking supported by government officials Grand corruption; politicians and senior administration officials are involved Interaction between traffickers and state officials is guaranteed by a political “umbrella”

4. Marketing research Expert evaluations Mirror statistics Measuring the informal economy Monitoring of Illegal Trafficking Four levels

5. Size of informal economy (per cent of GDP) Physical input (electricity consumption) method Informal Economy Estimates Bulgaria 32-35% Macedonia 43-45% Romania 29-31% Slovenia 22-24% Croatia 35-39%

6. Analysis of Informal Economy Elements: Mirror statistics (import and export) BulgariaEU Total Difference USD 858 million Difference USD 375 million Difference USD 483 million Export Import Export

7. Size of Consumer Goods Markets: Market size vs. legal imports

8. Size of Consumer Goods Markets: Market size vs. legal imports

9. Size of Consumer Goods Markets: Market size vs. legal imports

10. Size of Consumer Goods Markets: Market size vs. legal imports

11. Expert assessment of bribery volumes  Crony surveys  Bribery volume = (size of market) x (payment per shipment)

12. Gray Market Cigarettes $8 mln Alcohol $3.2 mln Coffee$2 mln Petrol $10 mln Electronics$2.5 mln

13. Further information www.csd.bg www.seldi.net