
President NicolĂĄs Maduro holding a gold bar. File photo.
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From Venezuela and made by Venezuelan Chavistas
President NicolĂĄs Maduro holding a gold bar. File photo.
By John McEvoy – Jan 27, 2023
Four years ago, the UK government recognised Juan GuaidĂł as Venezuelaâs president. Heâs now gone, but the Bank of England is still holding some of the countryâs key assets.
In late December, Venezuelaâs leading opposition parties voted to oust Juan GuaidĂł as âinterim presidentâ and dissolve his parallel government.
This was clearly not the ending the UK government had in mind.
Four years ago, the British government made the bold decision to recognise GuaidĂł as Venezuelan president, and proceeded to facilitate his legal battle to seize roughly $2bn of gold held in the Bank of England.
Indeed, the UK government insisted at every turn that it recognised GuaidĂł â and not NicolĂĄs Maduro â as Venezuelan president. In turn, GuaidĂłâs lawyers argued that he was authorised to represent and control the assets of the Central Bank of Venezuela held in London.
Throughout this time, GuaidĂł paid his UK legal costs by drawing on millions of dollars of his countryâs assets originally seized by the US government. In other words, Guaidó tried to seize Venezuelan state assets with looted Venezuelan state assets.
Meanwhile, it seems certain that the Foreign Office also used a significant amount of public funds to sustain its backing of GuaidĂł.
Now that GuaidĂł has been ousted, the legal argument for transferring the gold to the Venezuelan opposition has effectively disintegrated. Despite this, the gold remains frozen in the Bank of England, with no clear resolution in sight.
Whatever happens next, this case sets a precedent which could have far-reaching consequences: the UKâs coup weapons now include asset stripping a foreign state, and transferring those assets to political actors engaged in regime change.
This will surely serve as a warning to any state which plans to store its gold in the Bank of England.
Dramatic Development in Venezuela’s Fight for Gold Seized by Bank of England
Recognising GuaidĂł
The recognition of GuaidĂł was a key prerequisite for the Bank of Englandâs refusal to release Venezuelaâs gold.
GuaidĂł had never run for presidential office. Yet on 23 January 2019, he swore himself in as Venezuelan âinterim presidentâ, using Article 233 of the Venezuelan constitution to declare that Maduro had abandoned his post and thereby left an âabsolute vacuum of powerâ.
This vacuum, claimed GuaidĂł, would have to be filled by the president of Venezuelaâs National Assembly â a post occupied by GuaidĂł.
Without the support of the US government, GuaidĂłâs legal gymnastics would probably not have gotten him very far. However, the Donald Trump administration moved quickly to recognise GuaidĂł, and began pressuring the so-called âinternational communityâ to follow suit.
The day after GuaidĂłâs self-swearing in, then UK foreign secretary Jeremy Hunt visited Washington and met key members of the Trump administration including Secretary of State Mike Pompeo, Vice President Mike Pence, and National Security Adviser John Bolton.
The political crisis in Venezuela was high on the agenda. Before meeting with Pompeo, Hunt told the press that âthe United Kingdom believes Juan Guaido is the right person to take Venezuela forward. We are supporting the US, Canada, Brazil and Argentina to make that happenâ. This was a strong statement â but not yet recognition.
Documents obtained by Declassified show that Hunt was privately thanked by Pompeo and Bolton for this. However, Britainâs contribution to toppling Maduro would go further.
âDelightedâ to freeze Venezuelaâs gold
The Foreign Office is refusing to say whether its officials or ministers have had discussions with counterparts in the United States on the Venezuelan gold stored in the Bank of England since 2019.
In response to a Freedom of Information request, it also claimed that âthe release of information relating to this case could harm our relations with the United States of America and Venezuelaâ.
Yet according to Bolton, Hunt was âdelightedâ to help with Washingtonâs destabilisation campaign in Venezuela, âfor example freezing Venezuelan gold deposits in the Bank of Englandâ.
The Bankâs directors, however, were uneasy about the legal implications of freezing a foreign stateâs assets. The Bank of England had already refused to release Venezuelaâs gold in 2018, citing doubts over the legitimacy of Maduroâs government, though they were on shaky legal ground.
The Foreign Office worked to ease their nerves. On 25 January 2019, Alan Duncan, the minister of state for Europe and the Americas, wrote in his diary that he held a phone call with Mark Carney, Governor of the Bank of England, about Venezuelaâs gold. He wrote:
âHunt was âdelightedâ to help with Washingtonâs destabilisation campaign in Venezuelaâ
âI tell Carney that I fully appreciate that, although itâs a decision for the Bank, he needs a measure of political air cover from us. I tell him I will write him the most robust letter I can get through the FCO lawyers, and it will outline the growing doubts over Maduroâs legitimacy and explain that many countries no longer consider him to be the countryâs Presidentâ.
In other words, the Bank of England required a robust legal rationale for keeping Venezuelaâs gold frozen, and the Foreign Office was happy to provide it with one.
One week later, on 4 February, Hunt went one step further by issuing an official statement recognising GuaidĂł âas the constitutional interim President of Venezuela, until credible presidential elections can be heldâ.
With this, the UK government had committed to the Washington-backed coup effort. Hunt apparently declared: âVenezuela is in their back yard, and itâs probably the only foreign adventure they might just pursueâ.
When the Foreign Office was asked in parliament this month whether it received legal advice in recognising GuaidĂł as president, it replied âWe do not comment on when legal advice has been receivedâ.
In May 2020, the Maduro government sued the Bank of England over its refusal to release the gold. The issue then moved to the courts, centring on whether the UK government recognised GuaidĂł, and if the Bank of England could therefore act on instructions from his âad-hoc boardâ of the Central Bank of Venezuela.
Throughout this time, the UK government consistently supported GuaidĂłâs case by emphasising its recognition of him.
In 2020, for instance, the Foreign Office provided a written certificate to the courts to confirm that the UK still ârecognises Juan Guaido as the constitutional interim President of Venezuelaâ.
In 2021, the Foreign Office even acquired the services of Sir James Eadie QC and Jason Pobjoy (of Blackstone Chambers) and Sir Michael Wood and Belinda McRae (of Twenty Essex) â some of the countryâs top lawyers â to present its case on recognition of GuaidĂł at the Supreme Court.
âIt thus looks certain that the UK government has spent a significant amount of public funds on this caseâ
It thus looks certain that the UK government has spent a significant amount of public funds on this case. This casts obvious doubts on the UK governmentâs claim that this is merely a matter for the Bank of England or the courts: the UK has invested both political and seemingly financial capital into this case, with the explicit intention of overthrowing the Maduro government.
Declassified asked the Government Legal Department how much was spent in legal costs on this case. A spokesperson for the Department said: âWe will not comment further due to ongoing legal proceedingsâ.
With each hearing, GuaidĂł and his representatives also incurred substantial costs. Recently published accounts suggest that GuaidĂłâs team spent over $8.5m on legal fees â roughly ÂŁ7m.
Remarkably, GuaidĂłâs UK legal fees were paid with money which was originally appropriated from the Venezuelan state in the US.
Venezuelaâs Gold Dispute in UK Courts is a Battle for Sovereignty
GuaidĂł gone
GuaidĂł and his representatives never managed to get their hands on the gold.
In the most recent hearing, in October 2022, judge Justice Cockerill granted the Maduro board permission to appeal, declaring that the issues at stake were âeffectively unprecedentedâ, and that âthe consequences of the decision have the potential to affect all the citizens of Venezuelaâ.
Indeed, the freezing of Venezuelaâs gold has served as a form of collective punishment.
In 2021, United Nations special rapporteur on sanctions, Alena Douhan, urged the UK âand corresponding banks to unfreeze assets of the Venezuela Central Bank to purchase medicine, vaccines, food, medical and other equipment, spare parts and other essential goods to guarantee humanitarian needs of the people of Venezuelaâ.
With the issue still in the courts, Venezuelaâs main opposition parties voted in December 2022 to remove GuaidĂł as âinterim presidentâ and dissolve his parallel government.Â
The UK government announced that it would ârespect the result of this voteâ, adding that: âThe UK continues not to accept the legitimacy of the administration put in place by NicolĂĄs Maduroâ.
The legal basis for freezing Venezuelaâs gold and transferring it to the Venezuelan opposition has therefore largely crumbled. Further hearings are expected later this year.
Whether the gold will remain frozen until Venezuela holds elections which are to the satisfaction of the UK government, or the courts will find that the case for freezing the gold has now collapsed, remains unclear.
The issue would be immediately resolved if the UK normalised relations with the Maduro government â though this would entail an embarrassing climb-down and would have to be worked out alongside Washington.
Whatâs clear is that the sanctions regime against Venezuela has failed to remove Maduro, but has harmed ordinary Venezuelans.
Independent journalist @theCanaryUK, @jacobinmag, @ColombiaReports , & International History Review.