While the world is grappling with the COVID-19 pandemic, Venezuela is struggling to get access to €930 million worth of its own gold, or approximately AU$150 billion, held in England, to fund the health response on home soil.
The central bank of Venezuela, Banco Central De Venezuela (BCV), has sought to have the value of its gold, held in the Bank of England (BoE) since 2008, transferred directly to the United Nations Development Program (UNDP).
These funds are earmarked for healthcare equipment, medicines and food to help fight the COVID-19 pandemic, as part of the UNDP’s Humanitarian Response Plan in a country identified to be in need of priority assistance.
The BCV claims that on April 21, 2020, it sent a letter, via its solicitors Zaiwalla & Co, advising BoE that it would request the value of the gold be transferred to the UNDP. Nevertheless, BCV maintains it has not received confirmation as to whether BoE would act on its request.
The letter was written more than a month after the Venezuelan government declared a state of alarm and formally requested assistance from the United Nations. Without external financing, the Venezuelan government is significantly constrained in terms of its fiscal response to the COVID-19 pandemic.
In BCV’s claim, seeking the transfer of funds or the equivalent sum in damages, it describes the BoE’s conduct as “wrongful” in a “time of national and global emergency.”
Partner at Zaiwalla & Co Sarosh Zaiwalla furthered that BoE’s “foot-dragging” is impeding the emergency health response in Venezuela.
“The Bank of England has a moral imperative to allow Venezuela to sell the country’s gold to allow the UNDP to effectively assist the Venezuelan population in the fight against Covid-19,” he said.
Already the country was in the firm grip of a depression, experiencing economic contraction since 2014 and hyperinflation since 2018.
Sanctions imposed by the U.S. Trump Administration, including on the central bank and the state oil company Petróeos de Venezuela, have exacerbated economic difficulties in the country of 30 million people and curtailed its oil production.
Many of the sanctions imposed by the U.S. relate to its rejection of authoritarian leader President Nicolás Maduro as the legitimate head of the country and backing instead National Assembly President Juan Guaidó, whom many nations including Australia recognise as the interim president of Venezuela.
In the midst of the pandemic the price of oil, Venezuela’s primary source of foreign exchange, began to plummet, heightening the need for external financing to support the government’s COVID-19 health response.
Additionally, the prevalence of the virus in neighbouring Colombia where there are more than 21,000 reported cases of COVID-19, has triggered the mass return of Venezuelans.
Since 2015 the country had welcomed as many as 1.7 million Venezuelan migrants who have left behind the dire economic situation and collapsed medical system in their home country. In spite of border closers, thousands of those people have returned to Venezuela where the virus is, at present, less prevalent.
To date, Venezuela’s population has not been among the most severely impacted by the virus, but as the number of new cases grows daily, it’s the country’s lack of medical preparedness and access to enabling finances that is causing great concern.