How The Black Market is Booming in Ukraine

The deal was complete in a matter of minutes and the fuel barrels stood empty. The smugglers, however, would soon be embarking on their next run.

A week’s work in rebel-held Luhansk had depleted the taxi’s diesel tanks; every fuel station stood empty. Following a flurry of phone calls, the driver reserved the last spot on the client list of a local smuggling ring. “We need to get there quick,” said the cabbie, who took VICE News to the fuel traffickers on condition of anonymity. “We can’t miss this — the city will be dry for days.”

In the biting cold, he sped down a central, concrete boulevard then veered onto backroads that crisscross this Soviet-era city of desolate proportions — the de facto capital of the self-proclaimed Luhansk People’s Republic (LNR). He eventually pulled into a warehouse on a run-down industrial estate on the outskirts.

Two men in oil-stained overalls checked the driver’s name and vehicle against the description given over the phone before starting up a little engine to pump in the diesel. Conversation was kept to a minimum, though the younger of the local pair disclosed the diesel’s origin. “Russia,” he grunted without looking up.

The customer handed over a mixture of roubles and hryvnias — a headache in a corner of Ukraine where Russian banknotes have become the predominant currency. “Are you fucking kidding me? I don’t have time for this,” said the older man, before charging a surcharge on top of the official exchange rate.

The cost of fuel fluctuates with availability. The previous day, the price had hit an inflated 55 roubles per litre. With supplies now close to zero, it had ballooned by almost 10 percent to 60 roubles.

Before the taxi driver had secured the reservation, he had contemplated heading southeast to nearby Krasnodon, which earned its notoriety as a smuggling hub in the chaotic aftermath of Ukraine’s independence in 1991. But he received a tip-off: truckers had bought up the border town’s last remaining 200 liters of black market diesel earlier that day.

Now, finally, his vehicle’s tanks were full. He could return to work and to the semblance of a normal, civilian life. No need to get himself mixed up with such unsavory types again, at least until the fuel gauge inevitably dipped to zero once more.

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The conflict in eastern Ukraine has done little to dent the coffers of the country’s criminal underworld. Smugglers are profiting from the war as an economic blockade of separatist territories spawns a black market trade in food, fuel, and medicine. By intensifying bureaucracy and prohibiting certain goods, Kiev has made it progressively difficult to supply this breakaway enclave. The aims of this punitive strategy include limiting supply routes for rebel militia commanders and forcing Russia to aid a region that it spurred into war. In reality, it is simply aggravating the country’s bitter divide.

Vast queues block checkpoints into the self-proclaimed Donetsk People’s Republic (DNR), where traffic jams ensnare hundreds of cars for miles and tempers run high. Civilians are allowed up to 50kg (110 lb) of goods while fuel, weapons and other supplies with potential military uses are banned.

But the profitable combination of economic blockade and inflated prices has proved a boon to illegal trade. Ukraine’s security service (SBU) spearheads counter-smuggling efforts with mobile units comprised of border guards, civilian volunteers, customs officials, and military personnel to monitor key checkpoints and patrol the front line.

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