Customs agents fight drugs and nuclear proliferation
Raising revenue just one function of Azeri State Customs

In 1999, Russia attempted to ship 21 metric tons of plutonium to Iran. Alert customs personnel of Azerbaijan’s State Customs Committee stopped the shipment as it crossed the border from Georgia.

In 2001, customs personnel seized a large cargo of T-55 tank parts, again enroute from Russia to Iran. In this part of the world, traffic in materials used to make nuclear weapons and arms shipments to sworn enemies of the United States are top concerns of U.S. policy makers. In cases such as this, it’s good to know who your friends are.

Kamaladdin Heydarov, Chairman of the Azeri State Customs Committee and Major-General of the Customs Service, says: "We have a very long and close relationship with the U.S. Embassy in Baku. We’ve worked on technical and educational issues concerned with customs control."

In addition to keeping an eye out for illicit shipments of nuclear weapons material, a second area of concern for the State Customs Committee is drug interdiction. That job is complicated by a number of geographic and geo-political concerns.

"To our south and east, we have Afghanistan, Pakistan and Tajikistan," Heydarov relates. "Drugs originating in these countries are often smuggled through Iran. Sometimes smugglers try to use the direct route through Azerbaijan to Russia. Despite our best efforts, however, we have 138 kilometers of our border with Iran which are unguarded; that’s the borders of Azerbaijan territories which are occupied by Armenia. And we know for a fact, that there is smuggling going on through the occupied territories. We have often raised our concerns about this matter in international meetings. Armenian drug smuggling through the occupied territories is not only a tragedy for Azerbaijan and Europe, it is a tragedy of a global scale."

Sometimes the smuggling routes are so circuitous as to be curious.

"Last year," Heydarov explains, "we intercepted 48 tons of opium seeds that were intended to go from Afghanistan to India. But instead of an almost direct route, the smugglers elected to go through Tajikistan, to Turkmenistan, and then across the Caspian Sea to Azerbaijan. From here, they were to be transported to Georgia, and then to Turkey where they would be finally put on a ship bound for India."

Heydarov says the State Customs Committee maintains a close liaison with the U.S. and European Union Embassies on drug smuggling matters.

Of course, as a revenue collector for import duties, the State Customs Committee keeps data on import quantities by country. Heydarov notes the growing trade between Azerbaijan and the United States. "A few years ago, the U.S. was in last place as a source for Azerbaijan imports. Now it is in fourth place overall, and for non-oil materials, it is now in second place. In 2,000, total Azerbaijan exports, including oil, increased 141 percent, and imports were up 110 percent.

Heydarov is one of the most vocal drum-beaters in the Azeri government in the need to attract more foreign investment, particularly American. He cites Ministry of Economic Development figures projecting that investment in the year 2005 would increase 3.4 times in comparison to 2001. The implementation of approximately 300 new projects will account for this investment increase.

He notes with irony, however, that increased production stemming from new foreign investment, and the ongoing economic reforms in Azerbaijan, makes it that much more difficult to meet his own agency’s revenue targets.

"We are now nearly self sufficient in wheat, meat and dairy products. That means we import less, and so our import duties decline. Another example: our tobacco company is very successful, that means we import fewer cigarettes, and so collect lower import duties."

Heydarov has worked closely with foreign businessmen who seek to streamline and modernize custom procedures. "We’ve worked directly with our friends in the American Chamber of Commerce in Azerbaijan, Heydarov says. "Every two or three weeks, we’ve had meetings with working groups reviewing policies and evaluating suggestions."

Current Economic Indicators (Source – Azerbaijan Ministry of Finance) • Annual inflation rate – Less than 1 percent in 2001 • Annual budget growth -- 15-20 percent • GDP growth every year -- 8-11 percent • Budget deficit as share of GDP -- 1 to 1.5 percent; decreasing annually • Corp. tax rate lowered from 35 percent to 27 percent in last nine years • Social security contribution requirements reduced from 40 percent to 30 percent • VAT reduced from 20 percent to 18 percent • New tax code that conforms to international standards adopted January 1, 2001 • Collection of taxes is increasing while tax rates are decreasing • Real income for population increasing 15-16 percent annually • International long term credit rating for Azerbaijan is "BB-"; second among CIS states after Kazakhstan, ahead of Russia • Trade surplus more than $570 million in 2000