KOSOVO: COMMERCIAL TRAFFIC FINDS ALTERNATE ROUTES

C O N F I D E N T I A L SECTION 01 OF 05 PRISTINA 000166

SIPDIS

SIPDIS

DEPT FOR EUR, EUR/SCE, DRL, INL, AND S/WCI, NSC FOR BRAUN,
USUN FOR DREW SCHUFLETOWSKI, USOSCE FOR STEVE STEGER, OPDAT
FOR ACKER

E.O. 12958: DECL: 03/25/2018
TAGS: PREL ETRD ECON EAID EAIR ETTC PTER KTFN UNMIK
KV, YI
SUBJECT: KOSOVO: COMMERCIAL TRAFFIC FINDS ALTERNATE ROUTES
INTO KOSOVO, CUSTOMS REVENUE STEADY

REF: PRISTINA 63

Classified By: COM TINA KAIDANOW FOR REASONS 1.4 (B) AND (D)


1. (C) SUMMARY: A visit to several of Kosovo,s border
crossings and customs clearance terminals highlighted
functional customs operations and a steady stream of
commercial traffic. Customs officials on site reported a
general increase in commercial traffic for 2008, with a
portion of this increase comprising re-routed goods from
Gates 1 and D31 on the Serbian border. Local Kosovo
businesses have also confirmed using alternate shipment
routes and have not indicated any impediments to entry since
independence. The Kulla crossing with Montenegro and Vermice
crossing with Albania both reported slight increases in
exports. There is some concern that heavier summer traffic
will lead to longer processing times if all of Kosovo,s
entry points are not in use. Overall, Kosovo Customs
describes positive cooperation and frequent communication
with their colleagues in neighboring countries, although
there is room for improvement in some areas. A 12-kilometer
no man,s land between the Montenegro and Kosovo checkpoints
makes it difficult to control smuggling in that area.
Additional security equipment such as x-ray equipment and
improved terminal facilities with separate truck search areas
would enable customs to conduct their operations more
efficiently and curb smuggling efforts. END SUMMARY.


2. (C) USOP recently visited several Kosovo border
checkpoints and customs clearance facilities to view how
Kosovo Customs is handling increased commercial traffic on
the ground. Several aspects of customs processing apply to
all sites, regardless of size and location. All official
customs clearance processing occurs between 8:00am and
8:00pm. Outside of these hours, trucks are permitted to
overnight at customs clearance terminals for a fee of 30
euros/24 hours, which is paid to the terminal owner. Kosovo
Customs does own the terminal facility at Vermice crossing
but does not charge a fee for a truck to overnight. A
terminal fee of 10 euros/24 hours is being considered.
During the summer months, all border crossings report a
significant increase in both commercial and passenger
traffic, due to better road conditions and the return of the
Kosovo diaspora for summer visits. Kosovo Customs officials
have good working relationships with their Kosovo Police
Service (KPS) colleagues directly at the gates and conduct
joint patrols of the green border, often with KFOR, to
control smuggling.

Podujevo Customs Clearance/Gate 3 - Medare Crossing (Serbia)


3. (C) A few kilometers from the Medare (Gate 3) crossing
with Serbia is Podujevo customs clearance facility, which
processes all commercial traffic entering through this gate.
This facility is about a 30 minute drive east of Pristina.
On average, Podujevo processes 50 trucks/day during winter
and as many as 100 trucks/day during summer. The terminal
itself can handle a maximum of 115 trucks at one time. The
director of the Podujevo facility reports that commercial
traffic through Gate 3 was 12% lower in March compared to the
same time last year due to recent events, but noted that
traffic in January was 35% higher than the previous year.
Overall, Podujevo has seen a 7-8% increase during the first
quarter of 2008. Construction materials, fertilizers, soft
drinks, dairy products and wheat imports from Hungary
comprise most of the goods entering through Gate 3. Podujevo
has noted more companies re-routing goods through Gate 3
rather than using Gates 1 and D31, as well as an increase in
the variety of transit goods coming through destined for
northern Kosovo. Goods of Serbian origin dominate but are
slowly being overtaken by transit goods from Europe.


4. (C) Medare crossing is fairly quiet, according to the
terminal director, and unobstructed views of the surrounding
area prevent major smuggling. Small amounts of electronics

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and recreational drugs are confiscated at the border, usually
from passenger vehicles. Importation of cigarettes and fuel
are not permitted through Gate 3 and must go through the Hani
i Elezit crossing with Macedonia. The terminal director
reported that communication with Serbian colleagues is
generally good and officials from both countries meet on an
ad-hoc basis to discuss common issues of concern. Customs
does not have an x-ray or other scanning equipment for
searching vehicles and goods deemed to be high-risk, and
completes all of these searches by hand. There is one
non-enclosed search area without camera surveillance. In
order to facilitate a more efficient flow for commercial
traffic, customs would like to expand Gate 3 to two lanes
entering and exiting Kosovo to separate commercial from
passenger traffic, and improve the road to the Podujevo
customs clearance facility.

Hani i Elezit/General Jankovic Crossing (Macedonia)


5. (C) The Hani i Elezit/General Jankovic crossing with
Macedonia is Kosovo,s largest port-of-entry (POE) for
commercial goods both in terms of volume and value. Hani
processes 70% of all commercial goods entering Kosovo and
collected 60% of Kosovo Customs, total revenue for 2007 (253
million euros). On average the Hani crossing receives 200
commercial trucks/day, and reports a 10% increase in
commercial traffic during the month of March. The terminal
can handle a maximum of 300 trucks at one time. Hani also
provides accelerated clearances for KFOR and diplomatic
shipments. Due to the heavy volume of traffic through this
gate, the average clearance time at the Hani terminal is 3
hours and 45 minutes. The terminal director,s goal is to
meet the EU standard of 3 hours processing time.


6. (C) Hani i Elezit also receives the most varied goods of
all Kosovo POEs, making risk analysis of type and origin more
challenging. Most goods are of European or Asian origin, the
most common comprising construction materials (steel, bricks,
insulation materials, roof tiles),food products, textiles,
fuel/petroleum, cigarettes, alcoholic beverages, electronics
(computers, televisions) and household appliances. The
majority of smuggled goods originate or transit through
Turkey, with drugs, weapons and ammunition among the items
most often confiscated. The terminal director reports that
working relationships with Macedonian customs and police
counterparts are very good, and that they try to anticipate
potential problems and have good information sharing.


7. (C) As the busiest POE in Kosovo, the Hani gate benefits
from the most specialized equipment and a large terminal
facility. There are several separate and enclosed search
areas for both commercial and passenger vehicles that are
equipped with camera surveillance for the protection of the
officers. It is also the only terminal in Kosovo with a
mobile x-ray unit capable of scanning commercial trucks in
their entirety to match the invoiced goods with the truck
contents. Goods identified as high-risk are scanned in a
separate, protected area and if suspicious contents are noted
on the x-ray, the truck is hand-searched in an enclosed area.
The mobile x-ray scanning unit was procured with the
assistance of USOP,s EXBS program advisor.

Gllobocica Crossing (Macedonia)


8. (C) About 30 kilometers to the west of Hani i Elezit is
the Gllobocica crossing, also bordering Macedonia. Although
Gllobocica does not handle commercial traffic, the Head of
UNMIK Customs Operations stated that if commercial traffic
increases by 50% or more at Hani, low-risk commercial traffic
could be re-routed to Gllobocica per an already established
agreement with Macedonia. Up to 50 commercial trucks could
be accommodated at this crossing if the need arises. The
distance from Skopje to Gllobocica is only 42 kilometers more
than to the Hani crossing. Customs and KPS have tentative
plans to expand facilities at this crossing to include a full

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customs clearance terminal that can accommodate 200
commercial vehicles, benefitting many businesses in western
Macedonia and southwestern Kosovo. Although the project has
the pledge of European Assistance and Reconstruction (EAR)
aid, plans are on hold pending the resolution of property
ownership in the immediate vicinity of the proposed terminal.
Passenger traffic at Gllobocica averages 250 cars/day,
mostly day commuters going to work or school.

Vermice Crossing (Albania)


9. (C) Vermice crossing, about eight kilometers south of
Prizren, is Kosovo,s largest crossing with Albania. This
terminal primarily receives day travelers from western
Albanian coming to Kosovo for shopping. According to the
customs terminal director, Vermice processes 10-15 commercial
trucks/day, with a maximum capacity of 50 trucks. A new road
under construction from the Albanian port of Durres to Kosovo
is anticipated to bring a significant increase in commercial
traffic through this crossing. The new road is projected to
be complete by the end of 2009, shortening the driving time
from Durres to Vermice to three hours. Additionally, the
Fushe Kosove/Kosovo Polje - Prizren rail link could also be
used to facilitate the transport of goods through Vermice to
Eastern Europe and the Balkans via connections with Skopje,
Athens, Belgrade and Budapest. EAR and Albania have each
pledged 100 million euros to the expansion of the Vermice
terminal facilities and are conducting feasibility studies.
Currently, Vermice only has one unenclosed area designated
for commercial truck searches without security camera
surveillance of the search area. All searches are done by
hand.


10. (C) The main goods entering through Vermice are food
products, alcohol, cosmetics and Chinese goods (plastics and
textiles) arriving via Durres. The terminal director
anticipates seeing an increase in Chinese goods because
Macedonia is enforcing its intellectual property rights laws
more stringently. The director also noted that more
agricultural products are being exported to areas of western
Albania without many commercial establishments. During the
summer, Vermice processes a higher volume of consumer goods
brought in by the diaspora for re-sale, traveling to Kosovo
via Durres. As many as 2,000 passenger vehicles per day
enter Kosovo during the high season, bringing new vehicles,
tires, car parts and motorbikes to sell in Kosovo before
returning abroad.


11. (C) A fair amount of smuggling is detected at Vermice,
primarily quantities of consumer goods Albanians have
purchased during day trips for re-sale and are claiming for
"personal use." In an attempt to avoid detection, customs
officers have reported seeing several individuals in a row
declaring an identical amount of the same item for "personal
use" to avoid export fees. There is some smuggling of
computer parts via Italy and drugs in small amounts. KPS and
customs have had success apprehending smugglers but the
mountainous terrain around the border, with many secondary
roads and small paths, make this area difficult to patrol.
There have been incidents of violence against authorities,
with would-be smugglers shooting at officers over as little
as five kilograms of cannabis. Vermice customs authorities
are also responsible for the Qafa Morinas and Qafa Prushit
crossings along the Albanian border. These two crossings do
not accept commercial traffic but see a significant amount of
small-time smuggling attempts due to the lack of 24-hour
customs officials at these gates and no camera surveillance.
According to the terminal director, Kosovo Customs meets
bi-weekly with Albanian customs and police, as well as with
Turkish KFOR which has a presence directly at Vermice
crossing.

Kulla Crossing (Montenegro) and Peja Customs Clearance Center


12. (C) Kulla crossing at the Montenegrin border receives 80

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commercial trucks/day but has no facility for customs
inspection or clearance directly at the gate. Customs and
KPS officers are operating out of temporary buildings at the
crossing and sending commercial goods for clearance to the
Peja customs processing center 22 kilometers from Kulla.
Only passenger goods are cleared directly at the gate. In
2007, Kosovo Customs processed 280 million euros worth of
goods entering through Kulla, and 22 million euros worth of
exports. The main products entering Kosovo through this gate
are food products (wheat, sugar, sweets, fruit),household
appliances, electronics, machinery, wood products and oil.
Most goods are of EU origin, as well as from Bosnia, Croatia,
Slovenia, Montenegro, China (textiles and plastic goods) and
Brazil (chicken). Products from China and Brazil transit
through the port at Bar. A small number of goods are
transiting through Kulla destined for Macedonia. The Peja
terminal can accommodate up to 230 trucks at one time, and
has a three and a half hour average processing time.


13. (C) The Assistant Director of the Kulla/Peja terminal
reports an increase in commercial traffic of 30% since the
beginning of 2008, mostly goods re-routed from Gates 1 and
D31 along the Serbian border with northern Kosovo. Kulla has
also noted an increase in export traffic by about 10 trucks
per day, mostly unprocessed leather, base metals from the
Ferronikeli nickel factory and agricultural goods.
Commercial traffic increases in the summer but a travel
restriction on trucks during the hours of 7:00am to 7:00pm
through Montenegro during the high season has lead to
congested roads. In order to travel during daytime in the
summer, trucks must transit through Serbia to reach Kosovo
from the north.


14. (C) The Assistant Terminal Director reports cooperation
with Montenegrin customs is only adequate, and noted that
Montenegro and Kosovo customs directors used to meet monthly
and shared truck data regularly. However in July 2007, this
cooperation suddenly stopped with no explanation. Kosovo
Customs is informally receiving information through
previously established relationships at the working level
with Montenegrin customs, but still does not receive data to
control entering trucks and goods.


15. (C) Further complicating the situation is a 12 kilometer
"no man,s land" between the Kosovo and Montenegro
checkpoints. EAR proposed a joint terminal project to move
the checkpoints closer together and to provide Kosovo Customs
with inspection and clearance facilities directly at the
gate. Kulla,s present facilities do not have separate areas
for searching or weighing incoming trucks, and there is no
designated area for passenger searches, and officers are
using their own offices for these procedures. Montenegro
refused the joint-terminal initiative, citing unresolved
border demarcation issues.


16. (C) Although Montenegro currently provides a police
escort to the Kosovo checkpoint for commercial trucks leaving
Montenegro, smuggling is a major problem, in particular of
cigarettes and fuel. The high mountainous terrain makes it
difficult to spot smuggling activities and perpetrators can
escape via numerous mountain paths. Neither side can
effectively cover 12 kilometers without a permanent station.
Smugglers have also employed mules and horses to bring their
goods into Kosovo, saddling the animals with illicit goods
from a truck stopped en route to one of the border
checkpoints. The animals then instinctively follow the
mountain paths back to their homes. The Montenegrin police
escort only brings trucks in large groups, also increasing
the wait time at the Kulla gate. When EconOff visited last
week, the line of commercial traffic was backed all the way
to the Montenegrin checkpoint. A new terminal would
eliminate many of these difficulties and also facilitate
better cooperation with their Montenegrin customs colleagues.



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Local Businesses Report No Problems; Customs Revenues Up


17. (C) Several local businesses recently contacted by USOP
said that one month after independence, they have not
experienced any difficulty importing goods into Kosovo. The
ELKOS Group, Kosovo,s largest wholesaler and distributor,
reported re-routing delivery trucks through Gate 5 near
Gjilan in eastern Kosovo instead of using Gates 1 or D31.
Agim Shahini, head of the Kosovo Business Alliance stated
that he has not heard of any difficulties from member
companies bringing goods to Kosovo, and also mentioned some
businesses using Medare (Gate 3) as well as Gate 5 as
alternate entry points. Kosovo Customs spokesperson Adriatik
Stavileci announced this week that there is an overall
increase in total customs revenue collection by 1.8% for the
first quarter of 2008 compared to the same period last year.


18. (C) COMMENT: Despite the closure of Gates 1 and D31 to
large commercial traffic, the increase in numbers and the
variety of goods at other POEs indicates that, as we
anticipated, businesses are finding their own way to ensure
their products reach Kosovo. Customs operations on the
ground are prepared and anticipating possible spikes in
commercial and passenger traffic in response to unanticipated
future events. Combatting smuggling and maintaining an
efficient flow of traffic will continue to be a challenge,
particularly during the peak summer season. Kosovo Customs
will continue to engage and cooperate with neighboring
country colleagues, and USOP will pursue all options to
facilitate the flow of communication between all parties
involved, as well as using EXBS and other related programs to
help increase Customs' capabilities. END COMMENT.

KAIDANOW