A worker wearing a protective face mask walks past the Bank of England in the City of London, Britain, on Aug. 6, 2020.TOBY MELVILLE/Reuters
Venezuelan President Nicolas Maduro doesn’t have many friends around the world, but a British court has given him a victory in a long-running battle over nearly US$2-billion worth of gold that’s housed at the Bank of England.
The England and Wales Court of Appeal has overturned a lower court ruling that handed the gold to Mr. Maduro’s opponent, Juan Guaido, who is supported by Britain and more than 50 other countries, including Canada. The appeal court judges ordered a new hearing in the case and said Mr. Maduro’s government has a credible claim to the fortune.
The ruling highlighted the tricky problem governments face in choosing sides in Venezuela especially since Mr. Guaido’s political revolution has stalled and Mr. Maduro remains in control.
Mr. Maduro has never been popular among Western leaders who accuse him of widespread human-rights abuses, rigged elections and economic blundering. In January, 2019, Western governments rushed to back Mr. Guaido, the head of the National Assembly, who was declared president after Mr. Maduro won re-election in a contentious vote. His days in office appeared numbered as protesters took to the streets in support of Mr. Guaido and the country’s economy collapsed.
But Mr. Maduro has hung on and Mr. Guaido’s political revolution has run out of steam. That has left Britain and other countries facing a dilemma. While they recognize Mr. Guaido as president, they have to deal with Mr. Maduro, who still runs the country. That dichotomy has played out in the gold fight.
It began in May, 2019, when the Central Bank of Venezuela moved to cash in a gold swap contract it had with Deutsche Bank in London. The contract was secured by US$1.95-billion worth of bullion held at the Bank of England and the Venezuelans wanted payment. A rival central bank board appointed by Mr. Guaido moved to stop the transaction and demanded that the gold remain in Britain. Deutsche Bank didn’t know what to do and the case ended up in court.
Last summer, Commercial Court Justice Nigel Teare ruled that Britain had clearly signalled its support for Mr. Guaido and he cited former foreign secretary Jeremy Hunt, who said in 2019, "The people of Venezuela have suffered enough. The United Kingdom now recognizes Juan Guaido as the constitutional interim president of Venezuela, until credible presidential elections can be held.”
Justice Teare said the statement was unequivocal. “There cannot be two presidents of Venezuela and so it was necessarily implicit in the statement that [Britain] no longer recognized Mr. Maduro as the president of Venezuela,” he wrote.
The Venezuelan central bank appealed, and this week a panel of three appellate court judges rejected Justice Teare’s conclusions and said the British government had not been clear. The judges noted that Britain had maintained diplomatic relations with the Maduro government and refused to recognize an ambassador appointed by Mr. Guaido.
That left open the possibility that, while Britain recognized Mr. Guaido as head of state, it also recognized Mr. Maduro as the de facto president. “It is perfectly possible for [Britain] to recognize one ruler or government de jure and another de facto,” the judges ruled.
The judges ordered the lower court to ask the Foreign Office about whether Britain viewed Mr. Guaido as president “for all purposes” or whether it considered Mr. Maduro “as the person who does in fact exercise some or all of the power.” If the Foreign Office was still vague, the judges said the court should decide. Establishing if Mr. Maduro has de facto control will determine the outcome of the case, they added.
The ruling was hailed by lawyers representing the Maduro government. They said the money will be used to fund the country’s fight against the COVID-19 pandemic.
Supporters of Mr. Guaido believe the money will be stolen by Mr. Maduro, and they said an appeal to Britain’s Supreme Court was likely. “It is an irony lost on no one that a regime accused of crimes against humanity is seeking to use the British court system to illicitly finance itself,” Vanessa Neumann, Mr. Guaido’s envoy to Britain, told reporters.
Christopher Sabatini, a senior fellow who specializes in Latin America at London’s Chatham House think tank, said the appeal court decision has put Britain in a quandary. The British government went further than many of its allies in maintaining close diplomatic contacts with the Maduro regime.
“The U.K. tried to split the difference and were trying to be clever by half" in recognizing Mr. Guaido but keeping contact with Mr. Maduro, he said. “That’s coming back to bite them.”
He added that Canada faces similar challenges. Canada has been among the most vocal critics of Mr. Maduro, and the government has downgraded its diplomatic relations with Venezuela. But it still has to deal with the Maduro government on some level.
Dr. Sabatini said Western countries thought Mr. Maduro would be pushed out quickly but that hasn’t happened. “It is a tragic stalemate," he added. "The country is suffering and it isn’t clear what the trigger mechanism would be that would [prompt] some change.”