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Ukraine: Skilled Marketeers Pursue The Business Of Dreams -- And Horrors

Kyiv, 23 June 1998 (RFE/RL) -- Much of Ukrainian industry is becoming aware only lately of such concepts as consumer education and new market creation. Narcotics traders implemented those phases of their business plans years ago.

Today's Ukrainian drug industry is by most standards not only the country's most sophisticated economic sector, but quite likely the its most buoyant.

Ukrainian chemists have developed new synthetic drug priced at cut rates to win market share of targeted consumer groups. Ukrainian trucks, trains and planes provide rapid and multimodal transport of product on demand, connecting producers in Asia and Africa to European end markets.

Four years ago there was no organized heroin market in Ukraine. Today, Ukrainian narcotics officials count around 60,000 regular heroin users. Independent analysts put the actual number at 10-12 times that. Ukraine's competitive advantages -- skilled technicians, ideal soil, and highly organized criminal networks -- seem poised to lift the former Soviet republic from backwater into competition with the likes of Columbia and the Golden Triangle.

Vasyl Levoshko, chief of Ukraine's Drug Enforcement Department (UDED), says law enforcement struggles with grossly insufficient resources. The UDED's main mission is to halt the transit of illegal narcotics across Ukrainian territory, with drugs sold in Ukraine a secondary consideration.

And there is solid market logic behind those priorities. Like the rest of the economy, the Ukrainian domestic drug market is poor and most consumers favor low-price, home-grown products. For the international narcotics businessman, Ukraine is most profitable as a bridge between Eastern manufacturers and European consumers. Levoshko estimates that most narcotics crossing Ukraine originate in Nigeria, Uganda, Afghanistan, Pakistan or the Golden Triangle of Thailand, Laos and Burma.

Levoshko says heroin shipped via Ukraine usually is refined in Egypt, Turkey, Israel, or the United Arab Emirates, which possess both the know-how to process opium into heroin and ports from which to ship it. Some cruder forms of opium also transit Ukraine for processing in Europe.

The usual means of transportation is the ubiquitous 20-ton ocean shipping container, in which narcotics can be concealed with legitimate merchandise. Shipping industry insiders say that a shipper wanting his container to be released no questions asked from a Ukrainian port can get just that, for $1,000 or less.

Narcotics businessmen don't ignore the siren song of 50 million potential Ukrainian consumers. As any other executives, they consider the peculiarities of the potential customer. The immediate marketing goal is to create demand for new goods.

Recently, a newly rich consumer group has emerged. Typically members of the commercial class, Ukraine's recreational drug users are enthusiastic party goers. Anna Kuptsova, deputy head of Kyiv's Union of Children and Youth Organizations, says: "We are talking about young people who have money. They want something interesting, and find drugs interesting."

Typically distributing through discos, narcotics dealers offer a way to party harder, with variety and prices: heroin and cocaine at $250 per gram, opium at $60 to $80, and marijuana at $10 to $20, and synthetics at $25 a pill.

Ukrainian chemists recently introduced synthetics unknown in the West. In one case last year, police broke up a Kharkhiv ring of underground manufacturers operating six government laboratories and headed by a member of the Ukrainian Academy of Sciences. Levoshko estimates that the ring had filled orders for some 65 million dollars worth of product from German and British dealers.

Last year in Dnipropetrovsk, a third-year chemistry student started a garage-based pill factory for the domestic market. Initially the project was simply production. In less than six months his business had expanded into distribution, wholesaling, and retailing.

"All we can do is try to hold the line," said Levoshko. "There's no way we can stop it."