Thirty tons of Venezuelan gold, a bargaining chip between Chavismo and the opposition

The likelihood is growing that an agreement will be reached to use Venezuelan assets frozen abroad as part of talks, mediated by the United States, between government and opposition delegations that began earlier in August. Several figures involved in the negotiations have confirmed the information. In particular, the republic’s gold bars held at the Bank of England — about 31 tons, equivalent to $4 billion — could be released; they have remained frozen under the custody of the British regulator. The dispute erupted after opposition leader Juan Guaidó proclaimed himself interim president in 2019, claimed control over national assets abroad, and refused to recognize the government of Nicolás Maduro, which part of the international community considered illegitimate following accusations of fraud in the May 2018 elections.

British authorities have signaled they would be willing to release the assets if a political agreement is reached, according to sources close to the negotiating team. Unlike the stance it held in 2015, London now recognizes the legitimacy of Delcy Rodríguez’s mandate, following an earlier recognition by Washington. A longstanding point of distrust between the government and the Venezuelan opposition is the latter’s lack of confidence in the chavista administration’s probity in handling state funds. The U.S. mediation would be responsible for closing the deal and would assume control of the funds to administer them. Sources say use of those resources would have to be approved by the Treasury Department and the State Department.

Releasing funds to address Venezuela’s severe social and economic problems, worsened after the June earthquakes, is one of the U.S. mediation’s top priorities at present. In Washington officials are well aware that Venezuela has the economic means to address its problems, and there is therefore strong reluctance to commit U.S. funds to the local reconstruction agenda.

In addition to these gold bars, Venezuela owns the U.S. refining giant Citgo, a company valued at $10 billion (although it is currently embroiled in a costly legal battle that carries the risk of losing this asset). There are also the assets of Petróleos de Venezuela (PDVSA) that were frozen under Maduro, as well as the Special Drawing Rights held by the International Monetary Fund — an institution from which former president Hugo Chávez himself decided to withdraw in 2007. A Portuguese court recently ordered the release of $1.5 billion in Venezuelan public funds held at Novo Banco.

For decades Venezuela stored part of its international gold reserves at the Bank of England, one of the world’s universal custodial centers due to its multiple operational advantages. In 2011 Chávez decided to repatriate those assets, but for tactical reasons he did not withdraw all the gold held in the nation’s name. “The 2015 National Assembly is no longer a party to this litigation,” clarifies opposition leader Gustavo Marcano, who is close to the process. “Since the UK government recognized Delcy Rodríguez in March, things have cleared up. Our role is to facilitate agreements with guarantees for transparency.”

The protracted litigation over control of Venezuela’s gold at the Bank of England lasted more than five years. Maduro’s government claimed to be the caretaker government and the rightful owner of the funds, while Juan Guaidó argued he held legitimacy as president of the National Assembly and denounced Maduro’s fraudulent conduct in the previous presidential election. The case reached the Supreme Court of the United Kingdom, which had to adjudicate an extraordinary dispute between two parliaments, two central banks, and two executive authorities: Chavismo and the opposition. London maintained its stance: it recognized Guaidó as representative of the democratic forces and would not hand over the assets to an administration it deemed illegitimate: Maduro’s.

U.S. recognition of Delcy Rodríguez’s interim status, which took place in March of this year, helped resolve the dilemmas. But London has not released the funds and some methodological disagreements persist at the negotiating table in Caracas. Final handling is expected to be carried out by the United States.

“It’s a substantial amount. The Venezuelan government wants to use that money to meet the population’s immediate needs after the earthquake: housing, schools, health centers,” says Leonardo Vera, president of the Venezuelan Academy of Economic Sciences. “Generally speaking, I should note, gold bars that nations hold in their vaults are not used for those purposes; they serve as an adequate cushion of international reserves to, for example, address the foreign-exchange market. But we are not in normal times: there is enormous pressure to secure funds for national reconstruction, because what has been obtained so far is very little. It’s complex to put the brakes on these demands,” he explains.

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