Amid US sanctions, described by Venezuela as illegal, the Latin American country seeks to get rid of US financial institutions, in addition in trying to abandon the dollar, giving preference to transactions in Euro and Yuan.
The Venezuelan government intends to repatriate 14 tonnes of gold bars worth $550 million from the Bank of England for fear that shares will be affected by US sanctions, Reuters reported, citing two sources. While FRN considers Reuters to be an often questionable source, this report was also confirmed by the officials in Caracas as well.
Due to security concerns, the shipment back to Caracas was stopped for almost two months.
“They are still trying to find insurance coverage, because the costs are high,” said the whistleblower, without determining who is responsible for the delay.
New rounds of US sanctions against Venezuela came into effect in early November, barring US legal and natural persons from buying gold from the Latin American country.
Venezuelan President Nicolás Maduro reacted and called the US leader “schizophrenic” and promised that Caracas would not “kneel before the imperialism of America.”
According to Maduro, the country is in the process of becoming “the second largest gold reserve on Earth”. With public and private investments, the government is also building 54 gold processing units.
Losing the gold would be a significant blow to the country’s finances. Lack of hard currency can create shortages of basic goods ranging from staple foods to drugs and automobile parts.
The amount is equivalent to five times the total hard currency that Venezuela has sold in 2018 via hard currency auctions that are carried out under the country’s 15-year-old exchange control system, according figures compiled by local consultancy Sintesis Financiera.
The Bank of England has sought to clarify what Venezuela wants to do with the gold, while seemingly oblivious to the fact that it is Venezuela’s gold to do with as it pleases. However such lingering imperial arrogance is typically displayed in the diplomacy between 1st world and developing countries.
But Maduro’s policy is in line with his predecessor. Hugo Chavez, citing the need for Venezuela to have physical control of central bank assets, in 2011 repatriated around 160 tonnes of gold from banks in the United States and Europe to the central bank in Caracas.
In addition, Venezuelan authorities have promised to make future international trade transactions in Euros and Yuan, instead of the Dollar.
In recent years, Venezuela has been facing a serious economic crisis accompanied by hyperinflation, devaluation of the national currency and scarcity of goods in stores. With the entry into power, Maduro created projects to recover the economy of the country, however, the American sanctions end up exacerbating even more the situation in the country’s oil sector.