WITH BANK OF ENGLAND DENYING GOLD TO MADURO, US NOW TARGETS TURKEY

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After the US managed to convince the Bank of England to reject the request of Maduro government to return the gold deposited in the UK, Washington shifts its attention to Turkey, which also keeps gold for Venezuela. According to experts, Turkey's decision will be more independent based on potential gain.

Gold ingots of Venezuela

The Bank of England rejected application of the government of the President of Venezuela Nicolas Maduro for the return of gold ingots in the amount of USD 1.2 billion. According to media reports, this decision was taken after consultations that the US Secretary of State Mike Pompeo and National Security Adviser John Bolton held with the British colleagues, proposing “to separate Maduro from his foreign assets.”

US officials are now trying to redirect the foreign assets to the head of the National Assembly of Venezuela, Juan Guaidó, who had recently declared himself an acting president. According to Washington, this approach increases the chances of Guaidó to establish “an effective control over the government.”

Russian senator Alexei Pushkov is nonetheless convinced that keeping cash in Western assets and Western depositories is extremely dangerous today. This is confirmed by the experience of Iran, Libya, Kazakhstan, and now Venezuela. “To hell with the old rules, politics rules the ball today,” Pushkov commented.

The objective outlook on the situation in Venezuela by the Bank of England suggests that the country now has a dual power, and absolutely no one can predict how this story will pan out. Moreover, Maduro’s desire to return the gold reserve to Venezuela may be interpreted, even by the entirely neutral peers, as an attempt to seize it, since the power mechanisms in the country are extremely unstable.

At the same time, the experts do not believe that gold might fall into the hands of Guaidó, ruling this out as a very unlikely scenario. The objective is to ensure a temporary freeze on these accounts until the situation is resolved. As experts believe, the situation will be resolved within months, then a de-freeze of the accounts will follow, even if some external forces protest the decision.

US pressure on Turkey

In any case, Turkey also came under serious US pressure. The Central Bank of Venezuela owns USD 8 billion stored globally in foreign depositories. While USD 1.2 billion is known to be stored in the UK, very few know where most of the gold reserves is stashed. According to financial circles, good part it is stored in Turkey.

Ankara's behaviour in this matter is rather difficult to predict. On the one hand, President Erdogan personally supported Maduro following the popular unrest in Venezuela, on the other hand, Turkey is the US ally in NATO.

Although Turkey is an important NATO partner, it is also very far from Venezuela geographically. Unlike Brazil or Colombia – countries which share a common border with Venezuela, Turkey has no particular political interest in the current confrontation. Therefore, experts believe that bargaining is a possible outcome with the attempts to resolve the issue by some non-public means.

“If Maduro offers some sort of larger interest to Ankara for these transactions, it is quite possible that the Bank of Turkey will accept his terms. It will be extremely difficult for the United States to exert pressure on Turkey, since Ankara will probably prefer to settle the issue on its own, without any consultation with allies,” the financial experts believe.

Moreover, the Central Bank of Turkey withdrew about 29 tons of its gold reserve from the Fed last year. The country's largest private banks also withdrew their reserves from abroad. They responded to President Erdogan's call for “getting rid of the pressure of FX markets and use gold against the US dollar”. In total, about 220 tons of gold was returned to Turkey. The economists have called this decision of Ankara an “unpleasant signal” for Washington.