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Central/Eastern Europe: Red Tape Curtain Replacing The Iron

  • Breffni O'Rourke

Prague, 31 October 1997 (RFE/RL) -- An independent report dealing with customs problems in Central and East Europe says there is a real danger that a new curtain of red tape is springing up to replace the region's old Iron Curtain.

The report, commissioned by the DHL worldwide delivery company, says that as a result of delays and muddles at borders, foreign investment in the region could be discouraged. And it says the situation is improving only very slowly.

One hundred major multinational companies from 13 European countries contributed to the document, including Britain, Germany, Finland, Switzerland and Italy. Many of the participating companies have an annual turnover in excess of $2 billion each.

The research shows that almost nine out of 10 (89 percent) of these multinationals experienced problems with customs clearance. This far outweighed in frequency problems related to currency fluctuations, corruption and political instability. Many of the companies in the survey said that as a result of customs delays they had lost revenues, ranging from hundreds of thousands of dollars to several millions of dollars.

Some of the difficulties related to petty bureaucratic mentality. One French company encountered trouble because rubber stamps on documents were in the wrong place or not pressed-on hard enough. A British company said it had had documents refused because they were filled-out in black ink instead of blue.

Commenting in the report, DHL's Central and East European Director Peter Davies says that part of the problem is that officials see themselves as policemen rather than as facilitators of the economy. Davies says the worrying thing is that only a minority of companies have seen any improvement in the situation in the last two years, and most feel that the region's local authorities just do not understand their needs.

Davies says the problem is particularly acute in those countries which are not in line for first-wave membership of the European Union. He said "unless there is a concerted effort to do away with excess rules and regulations, then the Iron Curtain could be replaced by a new red tape curtain running through Central and East Europe."

Moreover, he says that there's a danger that if companies experiences large-scale problems in getting material across borders, they may well think of investing elsewhere.

The report lists those countries are perceived as the most straightforward in terms of their customs procedures. The Czech Republic tops the poll, with 41 percent of participant companies listing it as the best in the region. It is followed by Hungary, with 34 percent support. Then there's a big drop, with Poland, Estonia and Slovenia sharing third place at 12 percent support each. Then comes a descending group including the other Baltic states, Slovakia and Croatia. At the bottom end of the list are Bulgaria, Ukraine, Romania, Moldova, Bosnia and rump Yugoslavia.

The countries seen to be improving their procedures most are also those expected to gain EU membership quickest, including Hungary, the Czech Republic and Poland.

Davies says finding a solution to the problems depends in large part on educating customs officers on the needs of businesses. He says that in some countries there is a lack of motivation, resources and pay.

He suggests that the delivery companies, the business community and government officials need to work to understand the problems, and to formulate a realistic approach to bring the region more in line with the European Union. He says the financial stability of the nations involved depends on this.