Published on : 05/25/2020 – 19:24Modified : 05/25/2020 – 19:24
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Venezuela is suing the Bank of England to recover its gold reserves, which are worth nearly a billion euros in order to officially fight the Covid-19. For more than a year, this gem has been a political thorn in the side of the British central bank.
Venezuela wants to recover its gold which sleeps in the United Kingdom to fight against the Covid-19. In what constitutes the last act of a long-drawn-out battle between Venezuelan President Nicolas Maduro and the Bank of England, Caracas has decided to take the venerable British institution to court in order to be able to repatriate 930 million euros in bullion gold stored in London since 2008, reported the Financial Times on Thursday May 21.
The complaint, filed with the Commercial Division of the British High Court of Justice, argues that the Bank of England’s refusal to release gold “prevents Venezuela from facing an emergency health situation”. To cut the grass under the feet of detractors of the regime of Nicolas Maduro, Caracas clarified that the money should be directly paid to the United Nations Development Program (UNDP), which would use it to transport medical equipment and help for the most deprived.
Gold against Covid-19
The United Nations considers, in fact, this South American country, ravaged by an economic crisis for five years, as a “priority area” to support in this period of pandemic. In his report on the Humanitarian Aid Program, published in early April, the UN cites the lack of medical equipment, the immigration of doctors, the frequent power cuts as all factors that weaken the Venezuelan health system. In addition, the containment measures in place since mid-March and the closure of the borders have further worsened the precarious economic situation of the population.
Even though Venezuela is not among the countries hardest hit by the Covid-19, with only 1,121 officially registered cases, the UN estimates that without urgent aid, the situation could quickly become explosive.
But to face these challenges, Caracas needs funds, and the state coffers are empty. Its foreign exchange reserves melted in the wake of the economic crisis, while the collapse in oil prices deprived the regime of its main source of income. The drastic sanctions imposed by the United States have isolated it from the international trade scene, and its traditional allies, such as Russia and Iran, face their own health emergency.
Venezuela’s political legitimacy crisis since January 2019 further complicated the situation. Thus, the International Monetary Fund rejected, in April, Caracas’ request to lend him $ 5 billion to fight the Covid-19, arguing that to accede to this request would indirectly amount to taking a stand for Nicolas Maduro in his fight for power that opposes his rival and self-proclaimed president, Juan Guaido.
More than 900 million euros in gold, but for whom?
This is how the Bank of England found itself in the uncomfortable position of being Venezuela’s last financial aid buoy. She did not comply with the request, received in late April, to release the funds, and Caracas lawyers accuse her of offering no explanation for her radio silence. Contacted by several media, the British financial institution contented itself with asserting “not to comment on individual situations”. “By keeping gold reserves, it endangers thousands of lives in Venezuela,” said said Sarosh Zaiwalla, one of the lawyers representing the country of South America.
The Bank of England surely did not expect that it would one day have to play the role of arbitrator in a health emergency when it accepted Venezuelan gold in 2008. For it, keep the gold safe from foreign countries is nothing extraordinary: it holds the second largest reserves of this precious metal in the world after the Central Bank of the United States.
Over the years, Venezuela, which had not yet been blacklisted by the United States, has slowly increased the amount of gold kept in British coffers. This giant became a political thorn in the side of the Bank of England at the end of 2018, a few months after the controversial re-election of Nicolas Maduro to the presidency of Venezuela in May of the same year. Two representatives of the Venezuelan government were to secretly discuss, on December 7, 2018, the possibility of liquidating the accounts with officials of the Bank of England. But the details of this meeting were leaked in the press, and British parliamentarians asked the venerable financial institution to refuse to meet with members of a government who had not been confirmed by the Venezuelan National Assembly.
The meeting still took place, but the situation became more complicated a few weeks later, when Juan Guaido proclaimed himself, at the beginning of January, legitimate president of Venezuela with the support of part of the international community, in particular of from the British government. There was no longer any question of letting Nicolas Maduro get his hands on Venezuelan gold until the political horizon of the South American country had cleared up.
However, should we let Juan Guaido get their hands on it? The question quickly arose, since the latter formally asked the British government on 28 January to release the funds. London then opted not to choose and left it to the Bank of England to decide.
What she hastened not to do … until this day. And that is how the Bank of England became, despite itself, a major player in the political and economic crisis in Venezuela. And with the health emergency, its wait-and-see position has become increasingly difficult to maintain. That the courts will have to rule in its place will relieve the Bank of England of a weight.
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