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Sneaking a Smoke

Paraguay's Tobacco Business Fuels Latin America's Black Market

Large packets of cigarettes being loaded up in the Paraguayan border town of Alberdí, July 18, 2013. Phil Bird / Flickr

As a small country of 6.9 million inhabitants, Paraguay rarely draws international attention. Unlike some of its neighbors, it does not face debilitating violence, nor is it overwhelmed by paramilitary or gang activity. In fact, Paraguay has enjoyed economic growth in recent years. But beyond its apparent normalcy, the nation is grappling with pervasive corruption and organized crime.

One particular sector seems to play a significant role in the nation's corruption-related challenges—Paraguay's tobacco industry. According to a 2009 study by Uruguay’s Tobacco Epidemic Research Center (CIET), Paraguay accounts for approximately 11 percent of the world’s supply of contraband cigarettes. Paraguayan cigarette manufacturers produced 68 billion cigarettes in 2006, more than 20 times what the country consumes. Estimates suggest that 90 percent of the nation’s production—worth an estimated $1 billion—disappears every year to the black market. 

More recent figures paint a similar picture. In 2013, the International Tax and Investment Center (ITIC) put Paraguay’

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