The decision by Deutsche Bank, Citigroup and the Bank of England to hold Venezuela’s gold is a political decision, analysts Pye Ian and Mehmet Ozkan said: banks hold back Venezuelan bullion because the US wants to corner the president Nicolás Maduro and replace him with Juan Guaidó.
On June 4, Bloomberg reported that Deutsche Bank confiscated 20 tonnes of gold from Venezuela for the alleged breach of payment of the $750 million loan received in 2016. Although the contract is due to expire in 2021, the bank rescinded the contract early payment due to non-payment of interest. In the same vein, in March 2019, Citigroup bank seized Venezuelan gold.
Analyst Pye Ian believes the contract was terminated prematurely to further undermine Venezuela’s credit repayment reputation and sovereign ratings, while Juan Guaidó is presented as the alleged guarantor of Venezuela’s default settlement.
Pye also stressed that in the case of Venezuela, gold is not only the main financial asset, as designated by the Bank for International Settlements, but also a key monetary asset to free itself from the dollar standard as reserve currency and the global oil monopoly.
The analyst explained that the latest developments involving the US Treasury Department to block the use of gold in international transactions for Venezuela, Iran, Turkey and other countries, is the most recent proof of this fact.
Mehmet Ozkan, a member of the American think-tank Center for Global Policy, agrees with Ian. For him, the latest US actions are part of efforts to corner President Nicolás Maduro and the Venezuelan government economically.
In March 2019, Maduro’s government was unable to buy back Citigroup’s gold worth nearly $1.1 billion. In 2018, the Venezuelan Central Bank paid $172 million to Citibank to recover part of the gold it had placed in the bank as a guarantee of a loan of $1.6 billion.
According to Reuters, the Venezuelan Central Bank had to pay another $400 million to Citibank in 2020 under the agreement, but the financial institution chose to keep the gold instead of money.
As a result, Deutsche Bank and Citigroup took control of the Venezuelan government’s gold worth about $1.4 billion.
Ian underscores the fact that Deutsche Bank and Citigroup do not seek to restructure Venezuela’s debt after these failures, unlike Greece in 2015. According to him, this is due to clear goals of isolation and state collapse of Venezuela.
Last year Maduro’s government failed to repatriate the Bank of England’s $1.2 billion gold, although gold does not belong to this bank or the British government, but to Venezuela. That would have happened under pressure from Washington.
For Ian, refusing to return gold to Venezuela, the Bank of England raised a legitimate fear throughout the world that storing gold in the bank began to involve direct political risks.