To suit their political aims, both President Nicholas Maduro and his Western-backed opponent, Juan Guaido, want to withdraw Venezuelan gold stashed in the Bank of England’s deposits in London.
The Venezuelan political deadlock between President Nicholas Maduro and Juan Guadio, the opposition leader and the president of the country’s Congress, has manifested itself in various forms in recent years.
Most recently, the two powerful political figures have begun to fight over $1bn of their country’s 14 tonnes of gold that is deposited with the Bank of England in London for safekeeping. They are each suggesting they have the legitimate political mandate to use the deposits.
Since the latest presidential elections in 2018, Maduro’s government and his presidency have been challenged by Guaido, who declared himself as interim president claiming the elections were fraudulent. But the military, and a crucial part of Venezuelan society, stands for Maduro, a situation that ultimately prevents Guaido from ousting Maduro.
Citing the political uncertainty and the problem with authority in Venezuela, the Bank of England (BoE) has refused to release the bullion to the Maduro government, leading the Banco Central de Venezuela (BCV) - controlled by the president - to apply to the High Court in London to elicit an order to get the gold out.
The court is expected to rule in the next three days.
Caracas, which has been hit by both an economic crisis and the effects of the Covid-19 pandemic, faces US sanctions but still desperately needs to strengthen its health sector in order to bolster its response to the devastating virus.
“This is a humanitarian emergency. The Bank of England’s continued intransigence is putting lives at risk,” said Sarosh Zaiwalla, a lawyer, representing the BCV.
The Maduro government’s requests amount to approximately 15 percent of Venezuela’s foreign currency reserves from the BoE.
“Venezuela has been denied access to its resources during an international crisis. In effect, the nation’s gold reserves in the BoE are being held hostage to political factors dictated by the foreign policy of the United States and certain of its allies,” Zaiwalla added, referring to the Guaido-supporting Western bloc.
Like many other countries, Venezuela stores its gold in the Bank of England. It is the second-largest keeper of gold in the world, storing nearly 400,000 bars of gold worth more than 200 billion pounds ($250bn) on the premises controlled by the City of London.
The New York Federal Reserve is the world’s biggest caretaker of gold.
Albanian gold at the hands of BoE
Venezuela is not the first country to have trouble in accessing its own gold from the BoE. Long before the socialist-led Latin American country encountered hurdles, the former communist republic, Albania, was unable to claim its own bars back.
During World War II, Albania was invaded by Nazi Germany who went on to take over their reserves in gold. When the US, Britain and France claimed victory, the trio confiscated the country’s gold and stored it at the BoE.
Due to Albania becoming a communist state, and therefore an ally of the Soviet Union, the three nations who were just some behind the founding of NATO, refused the country access to its stash.
With the fall of the communist bloc in 1991, Albania moved away from the Russian sphere of influence, and in effect, laid the political ground to start negotiations over the gold that was lost somewhere between Tirana’s grasp and the deciding three countries.
Nearly five decades later, in 1996, Albania was able to claim 6.5m of gold, weighing 1,574kg, from the BoE.
But it was only half of what was confiscated. The other half was used to compensate the US and British claims over the political disputes they had had with communist Albania after WWII.