The Underground Economy of Amber: A Destabilizing Threat to Ukraine

Photo description: Raw amber overlapped by the Ukrainian flag (Photo credit: Hans Splinter, CC BY-ND)

By Nicole Kalczynski

The sociopolitical climate in Ukraine has become an increasingly popular topic. News pundits, security experts, and civil society representatives have continuously expressed concerns over the development of unnerving events throughout the state. Most commonly, the discourse revolves around the war on Ukraine’s eastern border where government forces are deadlocked in a violent struggle against Russian backed separatists. However, on the state’s western border a new, and largely unrecognized threat has emerged. The illegal trafficking, extraction, and exploitation of amber has created an informal economy where organized criminal groups and corrupt government officials reign supreme.

In the Rivne, Volyn, and Zhytomyr oblasts the informal amber trade has grown to amass hundreds of millions of dollars in illicit profits annually. In these regions, organized criminal groups work in tandem with corrupt officials to exploit locals and garner control of amber rich lands. The aptly named “Amber Mafias” exploit local populations to extract amber by illegally mining the precious stone with the help of industrialized pumps and hoses. The amber rich regions are plagued by a lack of opportunities, unemployment, and low wages yet amber mining offers locals an incentive to garner weeks’ worth of income through mining. A raw kilogram of amber can sell anywhere from US $1,000-$3,000 on the black-market, while only 29% of the population has a monthly income that exceeds US $218. With few options available, locals rely on illegal amber mining to make ends meet. If the trade were shutdown, an estimated 50,000 Ukrainians would lose their livelihoods.

The informal amber trade has become so lucrative that nearly anyone can get involved. Amber miners can vary in occupation from students, retirees, and even priests looking to make additional income. However, the informal trade is fraught with dangerous risks, and has become increasingly violent as corrupt officials and criminals battle over territorial control. In January of 2017, masked assailants opened fire on a group of young men in a café, killing one and critically wounding bystanders. In another instance of violent clashes, hundreds of locals faced off with police and blocked off a highway to prevent the shutdown of an informal amber mine which led to the hospitalization of eight police officers. Stephan Tsaryuk, the chief of police in Dubrovytsya was quoted as saying “It’s not a little bit dangerous, it’s very dangerous…We have an open war in the east and a secret war here

Members of parliament have taken steps to criminalize the informal amber economy, however as it currently stands the trade is simply too profitable to sway lawmakers to enforce stricter legislation. Amber mafias have deep rooted ties with corrupt officials that can easily influence the success of passed legislation. In February of 2017, draft law #1351-01 was introduced to parliament and aimed to legalize amber mining as a legitimate profession. The draft proposed the creation of an amber exchange where legally sourced amber could be sold and recommended that local mining companies handle the extraction of amber regionally. The project would leave the control of mining amber to companies which could issue licenses for locals seeking to prospect the stone. However, this change in law would mandate prospectors to pay a 20% tax on amber, among other fees for the retrieval of amber (payments for land repossession, and government remittance). The proposed changes were met with poor reactions from parliament, as they opposed higher rates of taxation and raised concerns over the implementation of countless environmental protections (as the use of industrialized pumps is more lucrative albeit more destructive when extracting amber). This has left lawmakers in a stalemate pitted against the lure of illicit funds and corruption while coping with the destructive aftermath of amber syndicates.

Most importantly, the corrupt mismanagement of officials across the Western region of Ukraine illustrates that the state’s fragility extends beyond the conflict on the eastern border and severely weakens the state’s ability to secure its future. This raises the question – if the war in Donbass was mitigated, would Ukraine truly be able to rebuild its national cohesion? In order to do so, Ukraine would have to acknowledge and combat the longstanding effects of systemic corruption present in all ranks of government. The state must provide greater incentives for legitimate professions (across the medical field, law enforcement, and generally government jobs) in the form of gradual salary increases to curb the allure of amber mining and bribe taking. Most importantly, regional companies, in consultation with local actors, must be allowed to license amber mining certificates which would legitimize the trade and extraction of the raw material.

By expanding their reach into amber rich regions, organized criminal groups have created a chain of destabilizing effects. Millions of dollars in lost income are bypassing the state’s official budget, violent clashes between locals, law enforcement, and OCGs are becoming increasingly common while large swathes of territory are becoming informally governed by non-state actors, resulting in areas where few legal mechanisms function. This poses a deadly risk to an already fragile state. Nevertheless, this is important to consider when discussing the intensifying tensions on Ukraine’s eastern border because the nation is being fractured on multiple fronts, with little attention to either conflict. The state continues to fight against separatists in Donbas while simultaneously being weakened by the corrupt mismanagement of officials – leading to the emergence of further destabilizing informal economies. As Ukraine seeks to join the European Union and NATO the risks associated with the informal amber economy pose an ever-growing threat to legitimacy, social cohesion, and the rule of law which could easily squander these aspirations and propel the state into further instability.


Nicole Kalczynski is a first-year graduate student at the School of Diplomacy and International Relations, Seton Hall University, specializing in foreign policy analysis with a regional concentration in European affairs. Nicole is a graduate research assistant at the Center for the United Nations and Global Governance Studies and associate-editor for the Journal of Diplomacy at the School of Diplomacy. She is currently working towards her MA degree in Diplomacy and International Relations. She holds a BA degree in International Criminal Justice from John Jay College of Criminal Justice, where her studies focused on crime and crime prevention on the international level. Her published work has centered on the mechanisms which propel state failure and the relationship between non-state actors and state sustainability.



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