Ukraine launched its new national police force on November 7, moving policing from out of the structure of the Soviet-style interior ministry, into an independent force, as is standard in the West. Just over a hundred days before this revolution in national policing, Kyiv had rolled out a new police patrol division, which will be followed by other regions, to serve as the vanguard of the new national police force.

A top-level political effort – backed by a major PR campaign – went into launching this new police patrol, not least to symbolise domestically and internationally the emergence of the ‘new Ukraine’. The youthful officers sport dashing US-style uniforms, and their new Japanese patrol cars have permanently flashing lights, making them highly visible on the streets of the capital.

But questions remain over how effective this new force is in dealing with gritty everyday life, in a country where just under half the economy operates in the shadows. Kyiv shows increasing signs that the shadow economy is even extending into new areas – not least the sudden proliferation of illegal foreign exchange booths citywide, plying their trade in broad daylight in locations with the highest foot traffic and apparently undeterred by the bright lights of the new police patrols.

The new phenomenon even prompted an emotional outburst from the head of National Bank of Ukraine, Valeriya Gontareva, a close ally of President Petro Poroshenko, during an extensive press interview in October. “These ‘exchange booths’ are an illegal business – they have appeared, without licences, without any other documents either. It is really complete lawlessness – these are black-market dealers but behind a shop window,” she exclaimed. “What can I do apart from pass the information on to law enforcement? I can’t fight them on my own.”

Change money?

The exchange booth only 10 metres from the Left Bank metro station exit at first glance looks the same as nearby competitor booths. Bright signs announce its trade and the day’s exchange rates, for dollars, euro and rubles. Passed by a flood of humanity at the evening rush hour, a constant line of four or five people outside the booth suggests business is good.

But entering the booth reveals a striking difference to other booths at the same location – it displays no paperwork to show that it is legally registered as a firm, let alone that has a licence for forex operations, as required by Ukrainian law.

“Can I buy dollars here without a passport?” a Ukrainian citizen asks the middle-aged lady behind the counter. According to Ukrainian currency regulations, it is illegal to sell hard currency without inspecting a passport, since foreign currency purchases by individuals are restricted to UAH3,000 per day, around $130.

“Yes, of course” says the vendor. Having received the dollars, we ask for a receipt, although it is already obvious what the answer will be: “We don’t give receipts,” the vendor replies curtly, making it clear this is a shadow economy operation and in breach of several laws simultaneously.

An activist called the local police station to file a complaint, and encountered typical reluctance to deal with the case. “This is organised crime,” said the duty officer. “It’s not for us to deal with. You have to file a complaint. You think I’m the manager of these exchange booths? This is a job for the anti-economic crime department.”

Only after insisting that the police come does a patrol car arrives with flashing lights, but after a two-hour wait. The police question briefly the exchange booth woman. Since she has no equipment other than a pocket calculator, she simply claims she is not doing anything at all, despite sitting in a booth with a ‘currency exchange’ sign and table of currency exchange rates.

In the meantime, the anti-economic crime department phones to say it had no time to deal with the case. It takes another hour for the police to fill out all the paperwork, by which time the exchange booth has closed for the evening and its attendant gone home. The next day it opens again and works in exactly the same way.

“The police look by, but only to say hello – no one interferes,” says Elena, a vendor at another illegal exchange booth, this time situated opposite Ukraine’s constitutional court – near the heart of Ukraine’s shaky legal system. Elena does not deny that her activity is illegal, but answers simply, “what difference does it make?”

Another illegal exchange booth, beside the metro station in Kyiv’s northern Obolon district, is appropriately painted black on the outside. Asked about the lack of any documents on display, a close-cropped youth in a shell suit, apparently a security guard, assures the bne IntelliNews reporter that “everything’s ok”, adding forthrightly that in fact Omega Bank is behind at least this one operation. Tiny Omega Bank was unavailable for comment, having been taken into receivership by the central bank in July.

Shadow economy

The police’s equanimity in the face of the booths lamented by Gontareva is surprising, since targeting the shadow economy and illegal street trade in particular was billed as a focal point of the new patrol force.

“There are always a lot of criticisms possible. There will never be an ideal solution, but we should nevertheless strive to reach one,” Artem Shevchenko, spokesperson for the interior ministry, tells bne IntelliNews.

Criminal lawyer Kseniya Prokonova, who helped train Kyiv’s police as a volunteer, argues these illegal exchange booths are not really a job for the police patrol. “It’s a crime, so it requires criminal investigators first to buy or sell dollars and then to arrest the sellers directly at the scene of the crime,” she explains.

Oleksiy Kondakov, who formerly worked in public relations for the police patrol division, agrees, putting the blame firmly on those higher up. “The problem is that only the police patrol have been truly reorganised, and they are responsible for order on the streets. The interior ministry and state security service (SBU) remain corrupt, and officials have a significant share in the business of illegal currency exchange booths. This can only be altered by political change and this requires time. But the pressure of civil society will ultimately put everything right here.”

Illegal exchange booths are not the only sector of the shadow economy thriving on the streets of Kyiv, despite the rollout of the new police patrols. “Today I had a chance to meet the new police. But unfortunately no one came, when I called because of an illegal [paid] car park, with no parking meters,” blogged star journalist Anna Babinets on November 11. “The car park attendant requesting money seemed very cocky: ‘Go on, call the police, the address is Degtyarivska 7’, he said. I called repeatedly, they said they would come, four police cars drove past while I waited, but none stopped. ‘Where’s your police now?’ the attendant asked. It seems the police collude with this [illegal] parking lot.”

Some fear that Ukraine’s proliferation of new anti-corruption and law enforcement organs may actually hinder, rather than help, the struggle against the shadow economy and corruption. “As someone with two higher degrees [in finance and law], I cannot understand why we need as many as three new anti-corruption organs – an agency for combating corruption, an agency for resisting corruption, and an agency for selling assets acquired through corruption, and also a fourth organ to coordinate the first three, and in addition a fifth – the anti-corruption prosecutor,” protested NBU head Gontareva, in the interview. “How is this deregulation?”

“[Justice Minister Pavlo] Petrenko tells me this has been all agreed at the highest levels and that it is international best practice. But I have never seen such practices anywhere,” she concluded.