The Bank of England (BoE) has been accused of “putting lives at risk” after denying a request from Venezuela to release more than £800m from the South American country's gold reserves currently withheld by the UK.
Legal representatives of the Central Bank of Venezuela (CBV) have claimed that the BoE is holding the nation's gold "hostage" as they face a "humanitarian emergency" from the coronavirus pandemic.
The Bank's lawyers say that the urgency of the situation within the country, which is currently under blockade by the United States in an effort to remove the current administration, means that the reluctance of the BoE to release the gold is placing additional harm on the oil-rich nation.
“This is a humanitarian emergency. During this critical time, the Central Bank of Venezuela has negotiated with the UNDP to ensure all funds raised by the sale of Venezuelan gold will be used in the fight against Covid-19, and the Bank of England’s continued intransigence is putting lives at risk", said Sarosh Zaiwalla, a senior partner at law firm Zaiwalla & Co.
He said that Venezuela is being "denied access" to its resources during an international crisis.
"In effect, the nation’s gold reserves in the Bank of England are being held hostage to political factors dictated by the foreign policy of the United States and certain of its allies. In the meantime, there is a very real risk that the people of Venezuela will suffer", he said.
The authorities say they plan to give the funds to the United Nations Development Programme in order to purchase “healthcare equipment, medicines, and basic foodstuffs” as the coronavirus pandemic spreads across Venezuela with 2,978 confirmed cases and 25 deaths. But the two countries are currently in a legal dispute over who controls the bullion reserves currently being stored in the London bank’s vaults.
The UK High Court will hear a dispute next week regarding whether the board of the Venezuelan bank appointed by the country’s president, Nicolas Maduro, has the ability to order the sale of the gold.
A Political Crisis
The Bank of England refuses to release the gold assets due to Maduro not being recognised as Venezuela's official head of state by the UK. Instead, Westminster considers the self-declared Juan Guaidó to be the country's "interim president".
Under the Maduro government, the country has been mired by a serious economic crisis. The administration has been trying since 2018 to get 31 tonnes of gold held by the BoE transferred back to the country.
The bank serves as custodian for the bullion of various countries and holds a total of around 400,000 bars of Venezuelan gold worth £200bn, which it has so far refused to provide.
The Venezuelan central bank is seeking a court order for 930m euros (£835m) of gold to be released immediately.
As a result of the disputed presidency, the BoE argues that it cannot ensure that any recipient authority has the right to the country's national assets. Self-proclaimed interim president Guaidó has been permitted a position at the High Court proceedings and has set up his own rival organisation claiming to be the board of the CBV.
The CBV claims that the situation has effectively given the High Court the responsibility of ruling who the legitimate government of Venezuela is. The Foreign Office has declined to say whether it considers Maduro or Guaidó to be the president and instead highlighting the recognition as Guaidó by the Theresa May government in February 2019.
Venezuelan authorities will tell the High Court that since Britain maintains diplomatic relations with Maduro’s government, recognition and sovereignty over the gold assets should be decided based on who has “effective control over the territory of the state”.
The Prolonged Coup
In January 2019, Venezuela plunged into a political crisis when the then-head of the opposition-controlled National Assembly, Juan Guaido proclaimed himself interim president in a bid to oust reelected President Maduro from power.
Britain is offering ‘aid’ to #venezuela while withholding $1.2 billion of gold.— Chris Williamson #GTTO (@DerbyChrisW) February 23, 2019
America does the same while enforcing ruinous sanctions.
Now @richardbranson holds a #VenezuelaAid concert at the border.
This is a coup. Venezuelans need the economic warfare to end. pic.twitter.com/SDI5fMLwyh
The United States and most of Western countries have endorsed Guaido and slapped crippling sanctions on Venezuela. Russia, China, Turkey and other nations have supported Maduro.