Who doesn't need
half billion dollars
in Russia?
The inadequacy of the customs-clearance system using TIR booklet as a means of checking customs formalities observation by carriers has been stated many times. First, using TIR-carnets implies a wide range of swindling possibilities in trucking process; secondly, the system doesn't provide for a real protection of carrier's interests. Russia, which is the largest user of the system, suffers the biggest losses in this case.
In this connection, transportation and economy experts suggest that a separate guarantee group really capable of performing its functions, should be established in Russia  
On the verge of absurd
After the Soviet Union collapsed, the newly-formed countries had to join the international customs conventions including the TIR convention. This system used to operate quite efficiently for a short time, but its obvious drawbacks discredited the convention to freight forwarders.
First of all, since the system is based on hard-copy documents, the cargo information was arriving too late, giving a chance to unconscientious consignors or consignees to avoid penalties for improper customs clearance – often at the expense of transportation companies. Therefore, the TIR procedure shielded possible smugglers who had an opportunity of shifting the responsibility to the carrier.
Secondly, according to the Convention requirements, carrier was obliged to guarantee the correctness of customs clearance procedure, this being actually consignee's prerogative having nothing to do with carrier's obligations.
All this resulted in two crises that the system experienced in 1995 and 2000-2002. The crises showed that, despite the claims legalized according to the TIR convention terms were lodged to the international guarantee union of IRU (The International Union of Road Transport), containing a demand to cover the lawsuits brought by customs institutions of Russia – actually no  payments were made in full. A similar situation was observed with national associations of road carriers, who had also refused to pay, taking refuge in IRU.
Despite the TIR convention was conceived as a liberal system, facilitating customs clearance formalities, it was just its liberalism that made it potentially disastrous to transportation companies. An absurd situation developed: carrier had to pay to a guarantee union, which was obliged to insure carrier's liability with respect to customs institutions. But it was the transportation company that had to be punished in case of violations.
Patient looks dead…..
Experience showed that the TIR system proved to be impractical. Its existence didn't yield any positive results except hundreds of million dollar-income received by IRU and the accompanying national associations.
By the way, the volume of profit made for issuing and administration of TIR books  exceeded 400 million U.S. dollars between 1993 and 1998. One more curious point is that, contrary to the Convention provisions, IRU reinsured the guarantees in an insurance pool specially established for the purpose. In 1995, the pool refused to cover the claims lodged by Russian Federation; currently the case examination proceedings are still going on.
Many steps were taken to save TIR as a system, including the introduction of SafeTIR system that was to check the delivery of cargo. Meanwhile, the EU countries just dropped  this procedure as not being prospective, and switched over to the general transit procedure as the one meeting the modern requirements. The main positive feature of this system was that it enabled electronic data transfer by using NCTS technology.
In so doing, both the old and the new members of EU support motor transportation business and develop the infrastructure of roads. As a consequence, the number of motor carriers in Baltic States and countries of Eastern Europe increases continuously, and new jobs are created. This implies the growing volume of receipts to the budget of those countries.
Who hinders
the development?
«Many Russian carriers ask themselves a question: why is the international trucking sphere developing so slowly in Russia?» – Vladimir Zvonarev, Director of Scientific Training and Consultation Centre of Transport and Logistics in Latvia, is commenting the current situation. It is an open secret that the percentage of the local transportation companies in Russia engaged in this business, currently makes 37 % only, whereas the bulk of carriages is performed by carriers from the Baltic states, Poland, Turkey, and other countries.  
  As a businessman active in transportation and transit business has noted, Russia is a country of oligarchs, one of which owns the largest insurance company included into the IRU insurance pool. According to the Minister of trade and economic development of Russia, oligarchs retard the business development and hamper the introduction of advanced know-how in Russia.
At the same time, it is quite obvious that, by investing USD $1 – 5 m into foundation of an alternative structure as opposed to IRU and, accordingly, creating a new guarantee system using SafeTIR possibilities, Russian businessmen, banks, and insurance companies accepted by the Federal Customs Service (FCS) of Russia could earn hundreds of million dollars that are currently settling in Switzerland. Moreover, it is worth to be noted that the Main Data-Processing Centre of the Russian FCS makes almost 90% of the whole MDP book-administration work on  the territory of Russia, earning as little as 1 – 2 % from selling TIR carnets.      
Two ways of solution
– The situation is paradoxical, – Mr. Zvonarev continues, – Russia is the largest user of TIR system, but the income is received by a Swiss institution. At the same time, during the session of the UN European Economic Committee’s WP30 customs group, it was suggested that the Russian counterpart should establish a new guarantee-making structure (which does not contradict with the provisions of the Convention). The newly-formed structure would actually provide for payments covering claims from the custroms institutions of Russian Federation.
Moreover, this step could serve as an efficient mechanism for enhancing and development of the economic potential of Russia and resolving political issues. Besides, the Russian Federation would obtain a powerful lever to influence the transportation and transit policy both of EU and the Euro-Asian region. This could yield a considerable profit to the State. However, my sense is that this can be achieved only by a personal interference of Alexander Zherikhov, Head of the Federal Customs Service of Russia, and Herman Gref, Minister of Trade and Economy.
The second alternative is also interesting to Russia: standardization of customs clearance procedures of EU and EES countries (Russia, Byelorussia, the Ukraine, Kazakhstan), based on the common transit procedures of EU.  This would create a huge space in terms of geography and economy, facilitating customs clearance procedures to carriers and enabling to call to account persons really guilty, making them cover any possible claims.
– These are the only alternatives for the  development of the Russian Federation, – Mr.. Zvonarev emphacises, – otherwise Russia will be lagging behind ever increasingly, whereas other countries will continue to develop at the expense of Russia.