Legal battle between Caracas and Bank of England over a golden jackpot

The Venezuelan sues the Bank of England to reclaim its gold reserves, worth nearly a billion euros to officially fight Covid-19. For more than a year, this gem has been a political tower on the side of the British central bank.

Venezuela wants to reclaim its gold that sleeps in the UK to fight against Covid-19. In what constitutes the final act of a protracted battle between Venezuelan President Nicolas Maduro and the Bank of England, Caracas has decided to take the valuable British institution to court to return € 930 million in bullion gold stored in London since 2008, reported the Financial Times on Thursday, May 21st.

The complaint, filed at the British Supreme Court’s commercial chamber, claims 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 Nicolas Maduro’s offenders, Caracas made clear that the money would be paid directly to the United Nations Development Program (UNDP), which would use them to transport medical equipment and aid to the most deprived.

Gold against Covid-19

Indeed, the United Nations considers this South American country, which was devastated by a five-year economic crisis, as a “priority area” to support during this period of pandemic. IN his report on the Humanitarian Aid Program, published in early April, cites the United Nations shortage of medical equipment, the immigration of doctors, the frequent power outages as so many factors that weaken the Venezuelan health system. In addition, the containment measures that have been in place since mid-March and the closure of borders have further aggravated the precarious economic situation of the population.

Although Venezuela does not belong to the countries most severely affected by Covid-19, with only 1,112 officially registered cases, the UN estimates that the situation could quickly become explosive without urgent assistance.

But to meet 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 of the oil price deprived the regime of its main source of income. The drastic sanctions imposed by the United States has isolated it from the international trade scene, and its traditional allies, such as Russia and Iran, meet their own health care.

The crisis of political legitimacy that Venezuela has undergone since January 2019 has further complicated the situation. Thus, in April, the International Monetary Fund rejected Caraca’s request to lend him $ 5 billion to fight Covid-19, arguing that indirectly joining that request would indirectly mean taking a stand for Nicolas Maduro in his fight for power opposing his rival and self-proclaimed president, Juan Guaido.

Over 900 million euros of gold, but for whom?

Thus, the Bank of England was in the uncomfortable position of being Venezuela’s last financial buoy. She did not comply with the request, which was received in late April, to release the funds, and Caracas lawyers accuse her of not having explained any radio silence. The British financial institution was contacted by several media and contented itself with “not commenting on individual situations”. “Holding gold reserves endangers thousands of lives in Venezuela,” he said said Sarosh Zaiwalla, one of the lawyers representing the country of South America.

The Bank of England really did not expect to one day have to play the role of arbitrator in a health crime when it accepted Venezuelan gold in 2008. For that, keep the gold safe from foreign countries is nothing unusual: it has the second largest reserves of this precious metal in the world after the US central bank.

Over the years, Venezuela, which has not yet been blacklisted by the United States, has slowly increased the amount of gold left in British coffins. This giant became a political tower on the side of the Bank of England in late 2018, a few months after the controversial re-election of Nicolas Maduro to the presidency of Venezuela in May of that year. Two representatives of the Venezuelan government would secretly discuss, on December 7, 2018, the possibility of settling the accounts with Bank of England officials. But the details of this meeting leaked in the pressand British parliamentarians asked the valuable financial institution to refuse to meet members of a government that 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 declared, in early January, the legitimate president of Venezuela with the support of a part of the international community, especially from the British government. It was no longer a matter of letting Nicolas Maduro get his hands on the Venezuelan gold until the political horizon in the South American country had opened up.

However, should we let Juan Guaido take care of it? The question arose quickly because the latter formally, the British government asked on January 28 to release the funds. London then chose not to choose and left it to the Bank of England to decide.

What she didn’t hurry to do … until today. And so the Bank of England, despite itself, was a major player in the political and economic crisis in Venezuela. And with the health crisis, its wait-and-see position has become increasingly difficult to maintain. The fact that the courts will have to decide in its place will free the Bank of England from a weight.