Customs authorities in the European Union states severely criticised the plans of British American Tobacco to construct the tobacco factory worth 150 million DEM in Serbia. Customs authorities claim that such factory would not reduce, but support smuggling of tobacco by increasing the supply of cigarettes at the local market, states British “Financial Times”. The newspaper states that Western governments have not been publicly stated their attitude so far, fearing from destabilisation of very frail democracy in Serbia. “Financial Times” publishes the statement of the vice-president of the Serbian Government, Zarko Korac, that the whole project was on “stand-by” as well as the statement of premier Djindjic that the new factory would reduce the smuggling of tobacco and open 5,000 new posts. The newspaper also states that the British Government began investigation in October last year on accusations that the company British American Tobacco was involved in smuggling of tobacco in America, Asia and Africa.