Venezuela nears deal to move $4bn gold from London to US custody

Venezuela’s government and a faction of the opposition are close to reaching an agreement that would transfer approximately four billion dollars worth of the country’s gold reserves from the Bank of England to United States custody. The proposal, which covers around 31 tonnes of bullion, aims to resolve a legal deadlock that has persisted for years. Under the terms being discussed, the metal could be moved to the Federal Reserve Bank of New York, although the US Treasury remains a potential alternative destination. Acting President Delcy Rodríguez’s administration would gain legal control of the assets, but this control would be subject to strict restrictions on the sale or direct use of the gold.

Instead of immediate liquidation, the gold could be utilised as collateral to secure financing. This funding mechanism is intended to support reconstruction efforts following the earthquakes that struck Venezuela in June. Opposition representatives involved in the negotiations are seeking robust US oversight, including project-by-project approval for any utilisation of the assets. This development advances an agreement reached in August between the Venezuelan government and opposition figures to jointly pursue the return of the bullion. The proposed transfer is also embedded within broader US-backed negotiations concerning Venezuela’s political and economic transition, oil arrangements, and debt restructuring. However, the agreement has not yet been finalised, with several legal and technical issues remaining unresolved.

The move aligns with recent shifts in US policy towards Venezuela. Washington has eased restrictions on parts of the Venezuelan economy this year, with the US Treasury issuing and amending licences that permit specific transactions involving Venezuelan oil, banking, and minerals, including gold. The latest minerals licence was amended on September 2. Records from the Office of Foreign Assets Control indicate that these measures also allow for negotiations regarding new investment in the country’s minerals sector. Additionally, the International Monetary Fund resumed dealings with Venezuela in April after a pause that had lasted since March 2019. The IMF now engages with the administration headed by Rodríguez and has resumed regular discussions with the finance ministry and central bank, although Venezuela had not requested IMF financing as of May.

Despite these diplomatic and economic developments, any transfer of the gold still faces significant hurdles within the British court system. The dispute originated in 2019 when rival boards of Venezuela’s central bank claimed authority over the reserves after Britain recognised opposition leader Juan Guaidó as the country’s interim president. Conflicting instructions from these boards sent the matter through the British courts. The case reached the UK Supreme Court, which ruled in 2021 that British courts were bound by the UK government’s recognition of Guaidó. The court sent unresolved questions regarding the validity of his central bank appointments back to a lower court.

The political landscape has since changed significantly. Nicolás Maduro was seized in a US raid in January, and Rodríguez became acting president. Lawyers representing the opposition-appointed central bank board have since withdrawn from the British proceedings. Britain and Venezuela are also working to upgrade diplomatic relations, aiming to restore ambassador-level representation. This shift could impact the recognition issues underlying the gold dispute. However, the British government maintains that it does not control the outcome. In a parliamentary response on September 7, the Foreign Office stated that the government is not a party to the case and that the UK courts and the Bank of England operate independently. The Bank of England requires a British court determination of who has legal authority over the account before it can act on new instructions. Consequently, even a completed agreement would only resolve part of the seven-year dispute, as the British legal process must still clear the way for the bullion to leave London.