Gold for Christmas: Will the Latest Supreme Court Ruling Help Venezuela?

By Brynna Boyer

On December 20th, the Supreme Court of the United Kingdom ruled in favour of giving Venezuela’s interim President, Juan Guaidó, access to over £1.4 billion worth of the country’s gold reserves, currently held by the Bank of England. This decision follows months of marathon legal efforts – both on the part of Guaidó as well as Venezuela’s current de facto leader, Nicolás Maduro – and is a major step forward for democratic reform in Venezuela and helps further delegitimise Maduro’s totalitarian regime.

The Supreme Court explained that, going forward, the British government’s recognition of Guaidó as Venezuela’s interim president was ‘clear and unequivocal.’ This ruling has now made all British courts obliged to support the Guaidó’s de Jude legitimacy, disillusioning anyone doubting which side the U.K. stands on.

Also included in this adjudication was the rule that U.K. courts could not recognise rulings by Venezuela’s highest court, the Supreme Tribunal of Justice (STJ), which has declared Guaidó’s efforts to gain control of the reserves unlawful. The STJ has been under the control of Maduro and his party for over a decade and, therefore, unable to maintain the principle of separation of powers needed for impartial court rulings. The U.K. Supreme Court stated that the STJ’s judgement could not be recognised as long as the legal system supports Maduro’s legitimacy.

Maduro is supposedly seeking access to the reserves to transfer money to the United Nations Development Programme (UNDP) to purchase medical supplies to fight the COVID-19 pandemic in Venezuela. However, after more than seven years of mismanagement and corruption under his regime, critics are fearful he will instead use the funds to reward political supporters and pay off foreign allies who support his regime so he can continue to secure his rule.

Since his inauguration in 2014, Maduro has destroyed the, admittedly weak, foundations of democracy in Venezuela. Under his authoritarian rule, he has delegitimatised his own government as sham elections and conniving actions by Maduro have dismantled the country’s legal and democratic institutions. The institutions include Venezuela’s democratically elected National Assembly, members of the STJ, and the Attorney General. The National Assembly was the last bastion of democracy in Venezuela, as it was the remaining political entity independent of Maduro’s grasp or his allies’. However, the National Assembly had been rendered powerless since 2017, as the STJ declared it in contempt and annulled all its decisions.

In January 2019, Guaidó, as head of the National Assembly, declared himself interim President of Venezuela. He declared Maduro’s authority illegitimate, as it was created using violent and subversive totalitarian tactics. Nearly sixty countries, including the United States and the United Kingdom, have subsequently recognised Guaidó as Venezuela’s interim leader.

As well as being in the midst of a political crisis since Maduro’s–and, arguably, former President Hugo Chavez’s–regime, the economic situation in Venezuela is just as dire. In the same year as Maduro’s inauguration, global oil prices tumbled and the economy of the Latin American petrostate went into a free fall. As unrest simmered in response to the collapsing economy Maduro followed in the footsteps of his predecessor and consolidated power through political repression, censorship, and electoral manipulation. In 2018, he secured re-election in a race which is widely accused as having been unfair and undemocratic.

Venezuela’s failed petrostate economy has been further crippled by the imposition of sanctions by a group of nations (including the United States, United Kingdom, European Union, Canada, and Switzerland) since 2014 over the Maduro regime’s corruption, human rights violations and blatant suppression of democracy.

Since 2020, Maduro has used the COVID-19 pandemic as an excuse to call a state of emergency within the country. This has given the government the authority to repress dissent- lawyers who provide legal aid to demonstrators protesting lack of water, gasoline, or medicine as well as legislators, journalists, and even healthcare workers who criticise the government’s mishandling of the pandemic are being detained and prosecuted.

Maduro and his allies seized leadership of the National Assembly during the legislative elections in January 2021. The opposition, including Guaidó, boycotted the vote, alleging that it was fraudulent – a charge reaffirmed by United States’ President Joe Biden’s administration and other foreign governments and international bodies, including Canada, the European Union, and the Organization of American States.

Regional elections this past November have further cemented Maduro’s power as the fractured opposition, many of whom were still boycotting Venezuelan elections, only won three of twenty-three available governorships. With the entirety of Venezuela’s legal and governmental institutions under his control, and Guaidó quickly losing some of his international allies, not only will the Maduro regime continue, he will become emboldened to increase his repressive tactics going forward.

Meanwhile, the country’s humanitarian crisis continues unabated. Venezuela is the poorest country in Latin America, with over 94% of the country living in poverty – over 76% live in extreme poverty. This is a direct consequence of hyperinflation and unemployment. According to the United Nations High Commissioner for Refugees, there is still a need for nearly £1.5 billion in humanitarian assistance to address this crisis. 

Venezuela’s GDP shrank by roughly two-thirds between 2014 and 2020, and it is forecasted that, as global demand for oil continues to decrease amid the coronavirus pandemic, it will decrease by another 5% in 2022.

The destitute state of Venezuela’s economy has led to a mass exodus, creating what is becoming the largest migrant crisis in modern history. The flight of human capital is another sign which exposes the seriousness of the economic crisis, with nearly 6 million Venezuelans fleeing their country due to the repressive regime and expiring economy. The loss of humans as a resource will be one of the most difficult to recover, at the same time, leading to a destruction of the demand for money.

Regarding the political future of Venezuela, the Biden administration has promised continued recognition and support for Guaidó going forward into 2022. This pledge also reinforces the decision of the U.K. Supreme Court to recognise Guaidó’s legitimacy as interim President, and thus his right to access the Gold Reserves.

However, even with U.S. political backing and the U.K.’s ironclad legal recognition of his legitimacy, Guaidó is left with a dwindling number of supporters after the National Assembly’s legal mandate expires in January. Some Venezuelan political parties who rallied around the intrepid warrior for freedom are now reluctant to continue supporting him as more and more foreign governments are withdrawing support. Maduro’s power within Venezuela has increased, and Guaidó has yet to win any indelible victories against the dictator.

Unless Maduro makes specific changes to his allowances in the private sector, Venezuela’s economy will remain in derelict condition. The Venezuelan opposition is perhaps more fragmented than ever, with the Maduro regime exploiting the division and gaining control of the National Assembly. Furthermore, the Covid-19 pandemic persists, giving Maduro an excuse within a public health pretext to increase totalitarian measures.

As the sun sets on 2021, Venezuela and the Venezuelan opposition are at a critical juncture going into the new year. Even though the U.K. ruling creates a promising start to Venezuela’s 2022, it remains improbable that the Latin American country will see a resolution to its myriad of crises in the coming year. Instead of sprinting toward a future of revitalizing democratic institutions and rebuilding a moribund economy, Venezuela remains a country limping under the repressive yoke of an entrenched dictatorship.

The views expressed in this article are the author’s own, and may not reflect the opinions of The St Andrews Economist.

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