British Court divides Venezuela’s gold reserve

For three years the fate of gold has been in limbo. Last July, the court decided to deny Caracas access to the gold bullion.

“Juan Guaido has been recognized by her majesty’s government as the only legitimate president of Venezuela since February 2019,” the British Foreign Office said in a statement.

At issue is a stock of about 15% of the country’s foreign exchange reserves – 31 tons of Venezuelan gold worth $1 billion. Central banks in many countries prefer to keep their gold reserves in vetted vaults in neutral territory. Normally, the procedure for issuing gold is simple, if the recipient is not in doubt of the custodian. But in the case of political changes, such as those in Venezuela, difficulties can arise.

The dispute over the gold began in May 2018, when Venezuelan President Nicolas Maduro was re-elected to a second six-year term. Most opposition parties boycotted the election. The country’s National Assembly, in which the opposition had a majority at the time, did not recognize the results of the vote. Parliament ruled that the office of president was then vacant.

According to the Constitution in such situations the head of the National Assembly, at that time Juan Guaidó, must temporarily exercise the presidential power. He was recognized as head of state by 50 countries, among them the U.S. and Britain. Russia and China supported Maduro.

At the end of 2018, the head of the Venezuelan Central Bank went to London to discuss the issue with representatives of the Bank of England, but he was refused, citing that a similar request was received from the Banking Council, appointed by Juan Guaido.

Lawyers for the Central Bank of Venezuela said that the conclusion of the court noted: de jure Britain does not recognize Maduro as president of the country, but does it de facto. Thus, there is a British diplomatic mission in Caracas, and in London Venezuela is represented by an ambassador appointed by Maduro. Maduro has remained in the presidential palace, and the police, army, and other important state structures are subordinate to him.

London lawyer Lee Cristolle, representing the Central Bank of Venezuela, notes that while the case was being heard in British courts, other European courts agreed to the Venezuelan government’s request and issued the funds needed to buy medical drugs to fight covid and, in particular, a vaccine against the coronavirus.

In the current situation, it is difficult to explain why Venezuelan reserves continue to be held at the Bank of England. If one recognizes Maduro, then one must confess that they made a serious mistake in supporting Guaido, and also return the money. And if one does not recognize Maduro, it becomes ambiguous, because there is a legitimate government in control of the country, and Britain continues to withhold money from that state. All in all, British foreign policy is in a discomforting position, and there are no good ways out of it.