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How Does London’s Refusal to Return Venezuelan Gold Affect Russia’s Interests?

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How does London’s illegal refusal to return Venezuela’s sovereign gold holdings affect Russia’s interests? Amidst US sanctions, the Venezuelan government plans to repatriate 14 tonnes of gold bars worth $550 million from the Bank of England. But London is in no hurry to meet the request of the Latin American country. Analysts point out how Britain’s refusal to return Venezuelan gold threatens Russian interests.

Facing a difficult economic situation, Caracas has sold its gold reserves, which have declined in recent years by more than 200 tons and continue to decline.

Part of the Venezuelan gold remains in the United Kingdom. The request for repatriation of the precious metal was still transmitted by former President Hugo Chavez, and the United Kingdom returned most of the gold bars, but in recent months the problems began, said Anton Krylov, a columnist for the Russian newspaper Vzglyad.

The government of Nicolás Maduro tried to recover the gold before new American sanctions were introduced, but it did not work. On November 1, Donald Trump announced a new round of sanctions against Venezuela, barring US legal and natural persons from buying gold from the Latin American country. Now the Bank of England requires the country to explain how it will use the precious metal.

“The chances of Venezuela getting back its 14 tonnes of gold… seem like a mirage. The UK may well refer to unclear objectives [for use of gold] as a pretext and refuse to return the gold until a change of power,” commented Krylov.

Even if there is no correlation at first glance, London’s refusal directly affects the Russian economy, the author of the article claimed.

First, Russia is one of the major buyers of gold in the world, including Venezuelan gold. In the third quarter of this year the Central Bank of Russia acquired a record 92.2 tonnes of gold, with its reserves surpassing for the first time 2,000 tonnes, recalls the analyst.

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Lately, gold has been sought by economically and geographically diverse countries, such as Turkey, Kazakhstan, India, Poland and Hungary, which have also recently purchased large quantities of this precious metal.

The second reason why the sanctions against Venezuela and London’s refusal to return its gold affect Russia is the close economic cooperation between Moscow and Caracas, Krylov said.

Thus, since 2014, Venezuelan state oil company PDVSA has received advanced payments from the Russian oil company Rosneft for the supply of 6.5 billion dollars worth of oil and petroleum products.

In the third quarter of 2018, Venezuela’s debt to Russia has fallen to $3.1 billion and Moscow wants Caracas to keep paying. Therefore, the author emphasized, any actions directed against the Venezuelan economy threatens the Russian interests.

Finally, the very fact that the United Kingdom is asking Venezuela to justify the need to recover gold may hinder international economic cooperation, Krylov added.

“So, next time Britain, for example, may refuse to pay for Russian gas until [Russian gas giant] Gazprom gives explanations about how it will spend the money paid,” the columnist quipped.

Refusing to return 14 tonnes of Venezuelan gold, London rejects the principles of international trade that were formed long ago, concluded the article and may create difficulties for the British economy itself.

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