18 months ago, the 'virtue-signaling' Bank of England stuck a knife between the ribs of Venezuela's embattled socialist leader, Nicolas Maduro, a former bus driver and anointed successor of Huge Chavez who managed to cling to power last year despite a Western-backed coup attempt led by opposition leader Juan Guaido, whose government was officially recognized by dozens of foreign governments.
But when the Venezuelan military refused to break with Maduro, choosing instead to back him over Guaido, Guaido gradually faded into irrelevance. He's still there, and still claiming to be the legitimate ruler of Venezuela, but instead of looking like a credible alternative to Maduro, he's sounding more like a deranged street preacher proclaiming that he is the one true messiah.
Despite the fact that Venezuela's leadership is no longer in doubt, a lawsuit brought by the Venezuelan central bank against the British government seeking the release of the Venezuelan gold sitting in the BoE's vaults ended on Thursday with a decision against the Maduro government, as it was denied access to $1 billion of venezuelan gold in the BoE vaults. Instead, the court ruled that it could only release the gold to the legitimate government of Venezuela. Since Britain recognizes Guaido as Venezuela's legitimate ruler, the British government has legal standing to treat the Maduro government like an illegitimate regime, allowing the gov't to essentially freeze and seize government assets at will.
Here's more from the Guardian:
Mr Justice Teare, a commercial court judge sitting in the high court, ruled on Thursday the Maduro-supporting bank was not entitled to make the request. “Her Majesty’s government does recognise Guaidó in the capacity of the constitutional interim president of Venezuela and, it must follow, does not recognise Maduro as the constitutional interim president of Venezuela,” he said.
“Whatever the basis for the recognition, Her Majesty’s government has unequivocally recognised Guaidó as president of Venezuela. It necessarily follows that Her Majesty’s government no longer recognises Maduro as president of Venezuela … There is no room for recognition of Mr Guaidó as de jure president and of Maduro as de facto president."
Sarosh Zaiwalla, senior partner at Zaiwalla & Co, representing the Banco Central de Venezuela, said his clients would appeal and challenged the court judgement for “entirely ignoring the reality of the situation on the ground”.
He said the ruling would delay money being sent to help the people of Venezuela. “Maduro’s government is in complete control of Venezuela and its administrative institutions, and only it can ensure the distribution of the humanitarian relief and medical supplies needed to combat the coronavirus pandemic."
He added that none of the member of a rival, Guaidó-appointed BcV board that sought to keep the gold in the UK, have “been resident in Venezuela for some years now”.
Though the Venezuelans plan to appeal, we suspect they won't have very much luck. That's of course terrible news for the Maduro government, which is officially broke with its oil output at record lows and its currency essentially worthless, the government has no money to finance anti-COVID-19 programs. And the international community, aside from Maduro's benefactors in Russia and China, has been pretty unforgiving. Back in May, we pointed out that Venezuela's gold vaults are probably empty, or close to it, after the government was forced to make some payments to the Iranians in gold.
The central bank's solicitor argued that the decision was illegal under international law as an illegal intervention in the affairs of Venezuela. The decision also puts the kibosh on a Venezuelan plan whereby proceeds from the gold could be handed to the UN allowing it to intermediate the purchases of critical COVID-19 supplies for Venezuela.
Ultimately, we imagine Hugo Chavez, who took strides to repatriate most of Venezuela's gold held in the vaults of foreign central banks, is rolling over in his grave. And Maduro is learning once again that gold doesn't have any owners - only spenders. He who controls the vault, controls the gold.