Venezuela’s President Nicolás Maduro speaks during a press conference at the Miraflores Government Palace on March 12, 2020 in Caracas, Venezuela.
Carolina Cabral | fake pictures
Venezuela’s rival leaders are engaged in a legal battle to determine the fate of more than $ 1 billion of gold reserves stored in the Bank of England vaults, and a High Court ruling is expected in the coming days.
The hearing, which started in London on Monday and is expected to last four days, represents an extraordinary case for the South American country affected by the crisis.
Venezuela’s central bank, controlled by President Nicolás Maduro, is seeking an order to compel the Bank of England to hand over most of the country’s gold reserves.
Lawyers representing Maduro have argued that the funds will be transferred directly to the United Nations Development Program to help the country’s response to the coronavirus pandemic.
However, the leader of the National Assembly, Juan Guaido, believes that the ingot should be under his control since the UK government, along with approximately 60 other world leaders, recognizes him as the legitimate interim president of Venezuela.
“The gold in the Bank of England vaults is our national reserves. It belongs to our people, to ensure the future of our nation,” Vanessa Neumann, chief diplomat in London of Venezuelan opposition leader Guaido, said Monday.
“It must not be stolen as the transnational criminal organization that is the Maduro regime has stolen everything else. It must not be handed over to our enemies, their partners in crime and terror and our oppression.”
Venezuela’s central bank filed the claim in a commercial court on May 14, saying the money would be used to manage the purchase of food and medical supplies to combat the coronavirus outbreak.
Last month, a group of United Nations experts warned that hospitals in the country had reported shortages of medical supplies and protective equipment.
To date, more than 4,100 people have contracted the coronavirus in Venezuela, with 35 deaths across the country, according to data compiled by Johns Hopkins University.
Venezuelan opposition leader Juan Guaido addresses the annual meeting of the World Economic Forum (WEF) in Davos on January 23, 2020.
FABRICE COFFRINI | AFP via Getty Images
“Maduro says they want to use it as humanitarian aid to deal with Covid-19. It is highly unlikely that this will happen in part because the UK does not recognize the Maduro administration as legitimate, they recognize Guaido as the interim constitutional president,” Diego Moya-Ocampos, Venezuela’s lead analyst at London-based consulting firm IHS Markit, told CNBC by phone.
“But they are also not likely to transfer him to Guaido, so I think the money will stay here,” he added.
“It is significant because it is a lot of money for Venezuela, for both parties,” Moya-Ocampos continued. “If that money was transferred in one way or another, it could certainly be a game changer.”
How do we get here?
The Bank of England is the second largest gold custodian in the world, second only to the New York Federal Reserve.
The central banks of many developing countries store their national gold reserves in the vaults of the central bank of the United Kingdom, and Venezuela is one of them. In January 2019, the Bank of England refused to allow Venezuela to extract gold from its vaults and return it to South America.
Since then, he has refused to comment publicly on this decision. Venezuela has been locked in a political impasse for almost 18 months, so it has an internationally recognized government, with no control over state functions, that runs parallel to the Maduro regime.