The Secretive Gold Deal Keeping Venezuela Afloat


Day-to-day life for the average
Venezuelan is a struggle, from the moment you wake up to the moment you go to sleep. From waking up and trying
to turn the lights on, to finding out that the
power went out overnight, and then trying to take
your morning shower, to find out that you
have no water at home. Then paying for everything has become increasingly
complicated, there’s no cash. Venezuela finding itself
without access to dollars, without access to banks, without access to avenues of
finance, even for their oil, came to the realization, I
guess, that it needed money, and it needed to find a way to get cash when most of the world didn’t want to give ’em access to cash. All assets of Maduro,
subject to U.S. jurisdiction, are frozen. So now that U.S. sanctions
have effectively cut off Maduro’s access to a
global financial network, gold is the last lifeline that Maduro has. [Television Announcer] Reports
claim the Maduro regime is selling out the country’s gold reserves to ease the pressure of
international sanctions. In the last couple of years, on the side, and sort of in secret, the Venezuelans and the
Turks started setting up a pretty sophisticated web of trade of food and gold between
the two countries. We’re not sure who’s winning from the sale of Venezuela’s gold, but what’s clear is that the
Venezuelan people are losing. My name is Michael Smith, and I’m a reporter for the
project and investigations team here at Bloomberg News. My name is Patricia Laya, and I’m Bloomberg’s
Venezuela bureau chief, and I write about Venezuela’s
clandestine gold sales. So the situation in
Venezuela is really bad, and there’s currently sort
of two worlds in Venezuela, one world is for the people
who have access to dollars. You can probably afford to
have a power generator at home in case the power goes out, and you can probably have
a water tank installed for when there’s shortages of water. Now there’s the second
world, that’s the world that the vast majority
of Venezuelans live in, and it’s the world where
you live in bolivares. There’s shortages of food, inflation runs in the
thousands, tens of thousands, hundreds of thousands
percent, nobody really knows. Which means, your savings
have long been gone. There’s extreme levels of crime that makes life extremely difficult for anyone who’s just
sort of living there. You have a whole population
that’s subdued by hunger, and that’s also under the
control of the government, who’s become their sole provider. People who can’t really
think of an economic future because they can’t think beyond
the day that they’re living. Nicolas Maduro is a former bus driver and a former union leader. Maduro came to power in
2013, when Hugo Chavez died. And he was basically Chavez’s
handpicked successor. Outwardly, their message was that they wanted to spread
the country’s oil wealth fairly among the poorest Venezuelans. And for a while, they were able to, when oil prices were really high, they funneled much of that money through social programs in Venezuela. But they’ve been heavily corrupted in so many different ways,
and bungled, and misapplied, that they’ve really turned into something that has just had an
incredibly detrimental effect on the people of Venezuela
in many, many different ways. And when oil prices crashed, the whole economy came crashing down, ’cause Venezuela depends on
95% of its revenue on oil. How bad is it, and is
there any end in sight? It’s terrible, it’s getting worse, basically Maduro is
waging economic warfare against his own people, his own country. An abuse of power that
started with Chavez, that allowed him to not just change the country’s constitution, but also fill the country’s courts and the electoral authority with people that were loyal to him, and that allowed the country to completely eliminate any
sort of democratic institution. Maduro has given most of
the government’s control to the military, so the feeling is that, if
Maduro falls, they fall. So, they have formed a bond
through money laundering, fraud, and all sorts
of illegal businesses. [Television Reporter] A
first shipment of gold bars has arrived in Venezuela
after President Hugo Chavez recalled almost all the country’s
foreign bullion reserves from western banks. So in 2011, shortly after
the US economic crisis and the European debt crisis, Chavez basically used that as an excuse to have about 11 billion worth of Venezuela’s gold repatriated
from banks in North America, banks in Europe, back to Venezuela. He said that it was a measure to safeguard against financial
instability around the world. And that move by Chavez
almost a decade ago is what’s keeping Maduro
selling gold nowadays. It’s legal for Maduro to sell his gold, but what’s happened is
that after U.S. sanctions, a lot of the buyers have been spooked. So what’s happened is that they’ve begun to sell the gold in secrecy. [Reporter] On Venezuela, you did the tough sanctions and you sent the aid, but it seems like Maduro
is no closer to leaving. We really haven’t done the
really tough sanctions yet. We can do the tough sanctions
and all options are open. We want Maduro to leave so there can be free and fair elections, with the ultimate goal of ensuring that there’s democracy
and freedom in Venezuela. The U.S. has imposed sanctions on Venezuela more than a decade ago, but they never went further than individual targeted
sanctions until 2017. We have our eye very closely on Venezuela, Since President Trump took office, they were just accelerated
to cover hundreds of people and companies and government entities and that sort of thing. We have continued to expose the corruption of Maduro and his cronies
and today’s action ensures they can no longer loot the
assets of the Venezuelan people. US sanctions can be
devastating for the people and companies that are targeted, they’re listed and targets of sanctions. You become a pariah in the
system of commerce and finance. Unless you’re in a country that will allow you to do
business despite US sanctions, and that’s what’s going on with Turkey. [News Anchor] Let’s get straight to the
breaking news overnight. An attempted coup leading to chaos, death, and instability in Turkey. In July of 2016, there was a coup attempt in Turkey against the government President Erdogan, and it was a serious material threat to the Erdogan government. The US watching this sudden uprising with concern. Erdogan felt isolated, he wasn’t getting much support from anyone in the world that day, and one of the first calls he got was from a representative of
the Venezuelan government, who contacted the Turkish
embassy in Venezuela, and said, “We’re with you, we know what it’s like to be
a victim of a coup attempt, we’re pretty sure the U.S.
government was behind it somewhat, we’re with you.” And that contact, which went all the way up to
the president of Venezuela and the president of Turkey, was really sort of the seed that turned into a conduit
for the Venezuelans to get their gold out of the country, and to turn it into money. There’s been a tremendous trade of gold, tons and tons and tons and tons of it, that has left Venezuela, a lot of the national
reserves have been sold off. He still has this lifeline
that’s available to him, and that he’s clearly been
able to get away with. We’ve seen him do a multitude
of gold sales this year, despite the sanctions that are in place, so they realized that he still has a way to prop up his regime
and to stay in power. There is an estimated eighty tonnes
left at the central bank. That’s about $3.5 billion worth. What’s left right now is only
enough for six more months of food subsidies for Venezuela’s people, so if Venezuela runs out of gold, we don’t really know
what’s going to happen. What we do know is that they
are feeling the pressure, and this pressure of knowing
that gold can soon run out is what’s bringing them to
negotiate with the opposition. To predict where things
are going in Venezuela is a dangerous game in my experience. You could always find people saying, “Oh, this can’t go on any longer, it’s gonna collapse,” but I think it’s a very
complex crisis there and it’s gonna be very
difficult to find a solution that really works quickly, I think.

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