Guerrilla Trade War : Consumers Defy Rules in East Bloc

When a Polish girl and her family came home this summer from a vacation in Czechoslovakia, they passed through Czechoslovak customs, where an officer spotted the little girl’s shiny new shoes and did his duty by the book. He ordered her mother to hand over the shoes and left the weeping child to return home, like some latter-day Cinderella, wearing a tattered pair of borrowed slippers.

It is illegal, the customs officer pointed out, to export children’s shoes from Czechoslovakia.

Revenge was swift. Polish customs officers at the same border post promptly flagged down a carload of homeward-bound Czechoslovaks, confiscated all four brand-new tires and left the car sitting on blocks.

It is illegal, they explained, to export automobile tires from Poland.

Long-Running War

This little border skirmish, reported in a recent issue of the Warsaw newspaper Express Wieczorny, offers a glimpse of a long-running war against unofficial consumer trade that rages among the nominally fraternal Communist countries of Eastern Europe.

On one side of the battle, and often in conflict with each other, are the customs authorities of the seven Soviet Bloc countries, whose weapons are bewildering webs of protectionist duties and export prohibitions covering the gamut from Czechoslovak shoes to Hungarian salami to Polish tires.

Arrayed against them are whole nations of would-be consumers, who have already endured decades of adversity and scarcity and who are reluctant to wait yet another generation for the promised day when such things as shoes, tires and salami--as well as toilet paper, stereos and designer jeans--will be readily available at home.

Inefficient Economies

Eastern Europe’s guerrilla trade war is driven by huge disparities in the availability of ordinary consumer goods that persist among the region’s generally inefficient, centrally controlled economies, including that of the Soviet Union.

Except possibly for impoverished Romania, where almost everything but the literary works of its deified leader, Nicolae Ceausescu, is in short supply, East European countries generally manage to make enough of some goods to satisfy their own demand and sell the rest in the West for hard currency or to the Soviet Union for oil. But for many other goods, scarcity is the rule.

Czechoslovakia, for instance, may not have enough tires to go around, but it does produce adequate quantities of children’s shoes--as does Hungary. But the central planners in Prague make provision for state-run shoe factories to turn out only enough for little Czechoslovaks, plus some extra for export to the West or the Soviet Union.

Czechoslovakia, in any case, has little use for the zlotys left by Polish tourists. Zlotys are good only for purchases from Poland, which has little enough to sell that Czechoslovakia might want, apart from tires, which are in short supply in Poland.

Hungary, with the strongest currency, the freest economy and the fewest scarcities in Eastern Europe, is no less intent on supplying its own population with goods and selling the rest through official state channels to the West, socialist solidarity notwithstanding.

So it is illegal for travelers to export from Hungary such prosaic items as salami, toilet paper, dish-washing liquid, baby supplies, knitted underwear, socks, medicines of all kinds--and children’s shoes.

Officials in Budapest explain that American and West European tourists are not the problem. It is the socialist neighbors who would deplete productive little Hungary like a swarm of locusts and leave behind heaps of mostly useless Romanian lei, Bulgarian leva, Polish zloty and the like.

For a variety of reasons, Poles have emerged as the leading contrabandistas in Eastern Europe, breaching customs barriers to barter goods that are plentiful in one country for those that are scarce in another and manipulating currencies from the Hungarian forint to black market Turkish lire.

‘Commercial Tourism’

While many families, such as the one that lost its shoes at the Czech border, are only trying to satisfy personal needs, many others manage along the way to pay for their vacations, and in some cases to reap sizable fortunes, from what the official press condescendingly describes as “commercial tourism.”

This helps to explain why surprising numbers of Poles drive BMWs and Mercedes-Benzes through currency manipulations, while the rest of Eastern European motorists limp along in Czechoslovakian Skodas, East German Wartburgs and Romanian Dacias.

While many working-class Poles struggle to make ends meet on state salaries, many others have more zlotys than ways to spend them, in part through cross-border trade in consumer goods (and also through legitimate small businesses).

Romanians speak in mixed tones of awe and resentment about the well-dressed Poles who descend on state ski resorts in the Transylvanian Alps every winter toting the latest Western equipment and suitcases full of cosmetics, designer sunglasses and panty hose.

“They are not subtle,” a Romanian tour guide said. “They’ll settle down in a corner of the hotel lobby, spread out their wares, and in a couple of hours they’ve paid for the trip.”

In summertime, the scene shifts to the industrial-scale beach hotels that Romania and Bulgaria have built along their Black Sea coasts. For millions of East Europeans, most of whom face severe restrictions on travel to the West and have no access to the hard currency that they would need in the first place, the Black Sea offers the best alternative for a seashore vacation.

Western Cosmetics, Jeans

It is also not a bad place to buy Western cosmetics, jeans, electronic watches, cameras and a great deal more from one’s fellow travelers, more likely than not a Pole.

Last year, Romania and Hungary retaliated by limiting Polish citizens to one visit per year. This summer, Romania and Czechoslovakia cracked down on free-lance foreign trade with new and unabashedly discriminatory rules requiring Polish travelers to list all “valuable items” they carry with them into the country.

The new rules were imposed without warning. Customs delays at some border points have been running 12 to 15 hours, and many outraged Poles have found themselves surrendering cameras, electric razors and lacy lingerie to customs officers when they were unable to prove prior ownership.

“It is . . . true that Polish tourists are busy buying and selling whatever possible, and that has also partly caused the present situation,” Express Wieczorny acknowledged, but added, “let us not exaggerate.” The newspaper called for a truce, or at least a summit meeting of customs officials, to prevent a “war of regulations.”

Several factors have given Poles a leg up on other East Europeans in unofficial consumer trade. One is legal access to dollars. Unlike most East Europeans, Poles can receive dollars from relatives abroad, or by working abroad, and bank them at substantial interest (up to 11%). They can also buy dollars on the illegal black market (at four times the official rate) and deposit them, no questions asked, in state bank accounts that bear interest after a one-year wait.

Western Goods Available

With dollars or other Western currencies in hand, Poles can shop in the state-run chain of Pewex stores that offer a wide selection of sought-after Western goods such as instant coffee, Lego toys, brand-name perfumes and the inevitable Western jeans. Equally important, Poles are freer than many other East Europeans to travel abroad, especially to the West. More than 90% of Polish citizens who request passports from the state receive them.

Just as few Americans seem to travel without a camera, few Poles would think of taking a foreign trip without buying or selling something for profit, or at least acquiring some urgently needed household item for their own use, not excluding bathtubs (currently in short supply in Poland) and freezers.

They move a formidable volume of consumer goods outside the confines of official foreign trade. In 1985, Poles made three million trips to foreign countries, mostly in the Soviet Bloc but including 650,000 to the West.

That the smuggling instinct runs strong is indicated by official figures showing that 9 out of 10 Polish travelers who carry dutiable items in and out of the country, which almost everyone does, fail to declare them. Last year about 17,000 Poles were arrested and tried on smuggling charges in Poland and other East Bloc countries, according to the Polish news agency.

Seizure of Smuggled Goods

Some of those caught are amateurs lacking the resources to bribe their way through customs, and some are professional smugglers in league with customs officers. Among the latest seizures reported in the Polish press:

--A truck driver entering Poland from East Germany was found to have stashed 49 one-kilogram tins of caviar, 108 pounds in all, inside a load of strawberries.

--A Pole driving home from a visit to West Germany was caught with 336 pounds of raw sheepskins hidden in his trailer, evidently to be made into the sheepskin coats that East Europeans favor.

--An unidentified airline passenger was nabbed recently at the Warsaw airport as he tried to leave with 1,300 doses of a Polish-made antibiotic called Biseptol. This seizure reflects widespread shortages of medications in Eastern Europe and the Soviet Union.

--Sixteen Poles, including a former customs officer, were sentenced to prison for up to five years earlier this month for smuggling $600,000 worth of goods (including 3,000 pairs of jeans) from Sweden to Poland.

--Indian authorities in New Delhi last month sentenced a Polish citizen, identified only as Grzegorz Ch., from Katowice in southern Poland, to a year in jail for attempting to smuggle 1.1 kilograms of Swiss gold (about 2.4 pounds, worth about $10,400) into the country from Singapore in the tubular frame of his backpack.

Singapore is one of the few places in the West where “soft” East European currencies can be traded at black market rates for Western currency and precious metals.

Slipping Through the Net

Thousands of other unofficial traders, big and little, slip through the net. Like the pensioner from Lodz who set out recently for a 10-day beach vacation in Bulgaria carrying 80 jars of Nivea skin cream, a “deficit” item in Eastern Europe that he clearly planned to sell. As the Warsaw weekly “Veto” tells the story, a customs officer asked him if it was all for his own use. Indeed it was, the man replied: his delicate skin required eight jars a day. The agent let him go.

With a passport and the right goods in hand, the Polish entrepreneur may set out along one of several routes that have taken the place of the Silk Road of ancient times.

“Routes of shame,” the Polish press has dubbed them, in a fruitless effort to put across the idea that profiteering from the economic handicaps of one’s socialist neighbors is not what Lenin meant by proletarian internationalism.

Probably the most heavily trodden road, whether of shame or shrewd business, is currently the one to Greece and Turkey. The tourist trade has ballooned in the past few years as thousands of Poles have bought or in some cases bribed their way onto charter flights and grueling overland bus trips to Athens and Istanbul to buy armloads of leather jackets and sheepskin coats.

Even with huge duties to pay on the return trip--it is not uncommon for some arriving airline passengers to pay a million zloty, or $6,000--the profits more than pay for a look at the Acropolis or St. Sophia’s.

The quantities of incoming goods on the return flights are so great, and the customs lines so long, that the Polish airline usually schedules landings in the middle of the night to avoid paralyzing Warsaw’s Okecie Airport.

Paying Off Customs Officers

“The trick,” one knowledgeable Polish traveler explained, “is to make sure there’s a customs guy you know on duty when you return. You pay him off before you leave.”

All across Eastern Europe, even in the Soviet Union, working as a customs agent can produce a handsome income on the side. When the lust for consumer goods comes into play, the Iron Curtain has proved exceedingly porous.

By no means is all such trade illegal. Sophisticated Poles heading to the United States and other points west have found recently that carrying out silver fox jackets and pelts, despite a 200% export duty, is an efficient way to generate enough dollars to buy a computer to bring home, for still greater return on investment.

Probably the most exotic and profitable trade routes, traveled mainly by professionals, are the trains from Warsaw to Lvov, a former Polish city just across the border in the Soviet Union, and on to Moscow. Jeans, designer sunglasses, electronic watches, calculators and cassette tape recorders are traded on these rolling flea markets for thick wads of rubles.

A pair of Western-made jeans, for example, reportedly fetches up to 200 rubles, or $280 at the official rate of exchange.

With the right connections in Lvov or the Black Sea port of Odessa, the legendary center of the Soviet black market, rubles can be converted to gold or diamonds at well under world market prices. From here, the possibilities of further profitable conversion are almost endless, but current lore holds that Turkish sheepskins and Italian leather are the best commodities.

Turning a Profit

But almost anything will turn a profit in Poland. Returning trains from the Soviet Union bring tourists laden with cheaply made power tools, freezers, small television sets and washing machines.

Those who travel the “roads of shame,” at least the ones leading to the West, also do their part to bring a touch of cheer to Warsaw in the gray depths of the Polish winter--for a price.

It is thanks to them that, even in February, when the most exciting fare that the state food stores have to offer is pickled cabbage, a modest little huddle of privately run food stands in the center of the city called Polna market does a thriving business selling such exotica as avocados, oranges, grapefruit, bananas and even kiwi fruit.

Not cheaply, of course. At the official rate of exchange, one plump fruit may run the equivalent of $5. But as the Polish saying goes, where there is kiwi fruit there is capitalism, and where there is capitalism there is hope.