Venezuela’s $4 billion in gold is heading to the United States

A deal between the government and the opposition to transfer Venezuela's central bank's nearly $4 billion worth of gold reserves from the Bank of England to the Federal Reserve Bank of New York is nearing completion, according to four people familiar with the discussions.

Under the terms of the agreement under discussion, interim government head Delcy Rodriguez would gain legal control over the gold. However, the government would not be able to sell it immediately. Instead, it could use the gold reserves as collateral to borrow money to cover government expenses, particularly to finance reconstruction efforts after the devastating twin earthquakes in June.

The agreement could be one of the first tangible results of ongoing US-sponsored talks between the Venezuelan government and the opposition, ending a seven-year dispute over gold.

The dispute began in 2019 after several countries, including the United States and the United Kingdom, recognized then-National Assembly head and opposition leader Juan Guaido as Venezuela's legitimate president. The opposition then demanded control of the Venezuelan central bank's gold held in the vaults of the Bank of England. The legal dispute eventually reached the United Kingdom's Supreme Court.

However, the people concerned said that the agreement has not been finalized yet. It may take some more time to finalize various technical issues.

"The gold will go to the United States, but Delcy will not have direct control of it. It will be under supervision and restrictions," said an opposition leader involved in the talks.

Venezuela's government and opposition said last month they were working together to unlock the nearly 31 tons of gold stored in the vaults of the Bank of England. But the opposition, which has long accused the socialist government of corruption and economic mismanagement, has demanded stricter controls to prevent the gold reserves from being misused.

Meanwhile, amid talks over the gold transfer, the UK and Venezuela agreed this week to further strengthen diplomatic ties. The UK will re-appoint an ambassador to Caracas. The government also welcomed ongoing talks on holding new elections in Venezuela.

Earlier this week, Jorge Rodriguez, the current head of Venezuela's National Assembly, met with the UK government in London. After the meeting, he took to social media to say there was "good news" for the Venezuelan people.

A Bank of England spokesman said the bank was not in a position to implement any directives until it received a new order from a UK court. The parties involved would have to resolve the dispute in a UK court to clarify who had legal authority over the gold accounts.

The ongoing talks between the government and the opposition in Venezuela are aimed at creating the necessary conditions for new elections. In the 2024 elections, Nicolas Maduro declared himself the winner. However, according to independently verified vote counts by the opposition, he was claimed to have been defeated by a large margin.

The process of international reengagement with Venezuela intensified after the ouster of then-President Nicolas Maduro in a US-led military operation in January. Some US sanctions on the country's economy were then eased. In April, the International Monetary Fund (IMF) resumed formal operations with Venezuela after seven years, allowing the government in Caracas to access funds held by the IMF.

Delcy Rodriguez, who took over as interim leader in January, is looking at ways to revive the economy, which had been growing slower than expected before the earthquake.

Source: Financial Times