Britain’s ambassador to the United Nations linked Venezuela’s gold holdings in the Bank of England to Venezuelan President Nicolás Maduro’s grip on power — and his possible undoing.
Ambassador Karen Pierce told the U.N. Security Council at New York, in a letter made public on February 27, that the United Kingdom recognized Venezuela’s National Assembly President Juan Guaidó as interim president of Venezuela until credible, free and fair elections can be held.
Without directly commenting on Venezuela’s gold holdings abroad, Pierce said in the letter the Bank of England provided “safe custody” for the U.K.’s gold reserves and those of other central banks, while observing the highest standards of risk management in all of its operations.”
The U.K. central bank “abides by all relevant legislation,” she said, including laws on money laundering, U.K. and European Union financial sanctions and other applicable international financial sanctions. “The bank has operational independence over such matters,” she added.
Access to the gold could help Maduro, an authoritarian leader, maintain his hold in the cash-poor, oil-rich nation as it collapses into economic chaos. His refusal to allow delivery of humanitarian aid along with severe hyperinflation and food and medicine shortages has contributed to an exodus of about 3 million people since 2015, according to U.N. estimates.
With military backing, Maduro refused to concede power despite his nation’s constitutional and humanitarian crises. Maduro, whose nation has the world’s biggest proven oil reserves and is the fifth biggest oil exporter, controls state-owned oil and gas company Petróleos de Venezuela. But it was pumping oil at a 70-year low even before the latest sanctions on oil went into place.
The crisis deepened in January when the opposition-majority National Assembly declared Maduro’s 2018 re-election invalid and Guaidó to be acting president.
British Foreign Secretary Jeremy Hunt announced U.K. recognition of opposition leader Guaidó as interim Venezuelan president earlier this month. More than 50 nations have formally recognized him.
“The United Kingdom is not attempting to ‘impose a puppet government’ in Venezuela,” Pierce said in the letter. “Our efforts to support democracy and stability in Venezuela, and to address the acute humanitarian need of the Venezuelan people by providing an emergency aid package, do not violate international law.”
Conference room empties as delegates from #LimaGroup and other missions walk out of U.N. Human Rights Council #HRC when #Venezuela foreign minister #JorgeArreaza takes to the podium @UNGeneva pic.twitter.com/qeuocMRRMD
— Paula Dupraz-Dobias (@pauladdobias) February 27, 2019
Venezuelan foreign Jorge Arreaza began to give a speech at the UN human rights council in Geneva about the situation in Venezuela, in response, several delegations got up and walked out #Venezuela pic.twitter.com/hYtWfwGxS6
— CNW (@ConflictsW) February 27, 2019
Protest over human rights
Last September, the U.N. Security Council held its first-ever meeting devoted to corruption, peace, and security, with a special focus on Venezuela’s dangerous instability. The United States convened the meeting during its monthly rotating presidency of the U.N.’s most powerful body.
The meeting examined how Maduro’s widespread theft of state resources and kleptocratic networks are at the root of Venezuela’s challenges, according to a U.N. description of the event.
At the U.N.’s 47-nation Human Rights Council this week, diplomats left when Venezuela’s foreign minister Jorge Arreaza suggested Maduro and U.S. President Donald Trump could talk.
“We’re calling for dialogue, dialogue with the United States — why not between Presidents Maduro and Trump?” Arreaza said. “Why shouldn’t they meet so that they could try to find common ground and explain their differences?”
But Arreaza alleged the United States wanted to oust Maduro in an effort that “goes against all rules of international law.” This week, the United States imposed tough sanctions on Venezuela’s oil industry, preventing half a billion dollars worth of oil in ships from getting to market.
He likened the U.S. blockade to a “theft of the assets and gold” from Venezuela totaling US$30 billion since late 2017, and said the Bank of England blocked US$1.5 billion and Belgium withheld US$1.4 billion.
— Russian Embassy, UK (@RussianEmbassy) February 27, 2019
The gold standard
Russia’s government, which backs Maduro, tweeted a picture of Pierce at the Security Council this week and accused the British government of “double standards” by pushing for humanitarian aid delivery but withholding the gold, which could be used for aid.
Russian President Vladimir Putin invested billions of dollars in Venezuela to win influence in South America — and to thumb a nose at U.S. hegemony.
Each of the Security Council’s permanent members — Britain, China, France, Russia and the United States — hold veto power over its proceedings, in a frozen reflection of the world’s power structure just after the end of World War II and perennial sore topic among U.N. members.
Maduro’s government tried to withdraw its gold holdings from the Bank of England, which refused to comply after U.S. Secretary of State Mike Pompeo and U.S. National Security Adviser John Bolton asked the U.K. to help cut off Maduro’s access to Venezuela’s overseas assets.
That includes about US$1.2 billion in Venezuelan gold reserves — accounting for 15 percent of the Venezuelan central bank’s US$8 billion in foreign reserves. Venezuelan officials reportedly traveled to London in December to seek the gold’s repatriation.
The Bank of England, which has not commented publicly on the situation with Venezuela, has said its gold vaults hold around 400,000 bars of gold, worth over US$133 billion, making it the world’s second biggest repository of gold behind only the New York Federal Reserve.