Image: Voice of America
A report by Bloomberg yesterday alleged that the Venezuelan government, battling both political and economic crises, requested the return of $1.2 billion worth of gold bars from the vaults of the Bank of England.
The bank reportedly rejected the request. Although it enjoys relative independence from the British government, it was also allegedly under pressure to keep hold of the gold from US Secretary of State Mike Pompeo. US diplomats were forced out of Venezuela on Wednesday, following the decision of President Trump to endorse the country’s interim President, Juan Guaido. Supporting a rival to the current socialist state is part of the US’ long-term strategy for regime change in Venezuela. President Nicolás Maduro, however, has thus far shown no sign of budging.
Venezuela stores around $8 billion worth of gold with the Bank of England. Its attempt to recall that asset, as well as the Bank of England’s refusal to allow the recall, are demonstrations of the unprecedented nature of the crisis facing Maduro.
Despite maintaining political control, Maduro faces a national economy in freefall. Venezuela holds the world’s largest oil reserves, but following the fall in oil prices of 2014, it has entered recession. The country’s economic woes have been worsened by high rates of corruption and unsustainable government spending, and Venezuela now faces inflation of over a million percent, as well as shortages of crucial supplies like medicine and food. The government has tried to address this by printing more money, and even creating a new currency, but these efforts have been unsuccessful in solving the country’s economic woes.
The crisis is not just a political, but also humanitarian. The usual route of sanctions has been applied with extreme caution, over concerns more barriers to trade will further impact the welfare of the general population. With food prohibitively expensive, Venezuelans are slowly starving, and lost an average of 8.2kg in weight from 2015-2016. Unsurprisingly, widespread poverty has led to massive emigration. Venezuela has lost 10% of its entire population since 1999 as refugees flee to Colombia, Peru, and the United States. This has understandably strained international relationships. Maduro’s government has lost the support of most South American governments, as well as the US.
Their decision to endorse Maduro’s political rival Juan Guaido as interim President is a risky move. The current government is propped up by support from the army. Widespread international support for Guaido, it is hoped, might dissuade the military from supporting the existing regime: Guaido has promised generals amnesty in return for support for him, and the ‘constitution’.
That said, division in the military between which President to support could lead to civil war in the country, which US officials want to avoid. Trump floated the idea of a ‘military option’, and possible invasion of Venezuela last year, but has been strongly dissuaded by both US aides, and Latin American leaders from carrying out the threat. US officials understand their country has a complicated relationship with South American governments, and do not wish to fuel Maduro’s narrative, supported by China and Russia, that Trump wants to start a coup in Venezuela. Out of money, and lacking popular support, the Maduro regime is under more threat now than ever before. That said, the apparent lack of any military threat to Venezuela's Maduro means that unless Guaido gains the support of the military, the plight of Latin America’s most desperate economy is unlikely to improve.