Venezuela’s government and opposition are nearing a deal to transfer about $4 billion of the country’s gold held at the Bank of England to the Federal Reserve Bank of New York, potentially ending a seven-year dispute over the frozen reserves.

The proposed agreement covers about 31 tonnes of bullion and would give the interim government of Delcy Rodríguez legal control of the assets without allowing it to sell them immediately, the Financial Times reported Friday, citing people familiar with the discussions. Instead, the gold could potentially serve as collateral for government borrowing, including financing reconstruction after twin earthquakes struck Venezuela in June.

The potential deal is one of the first concrete results of US-backed negotiations between Venezuela’s government and opposition and comes as the South American nation seeks greater access to international financing.

The International Monetary Fund resumed official dealings with Caracas in April after a seven-year hiatus, while the US has lifted some sanctions on the Venezuelan economy.

“The gold is going to the US but Delcy won’t have direct access to it,” an opposition figure involved in the talks told FT. “It will be supervised and restricted.”

Legal hurdles

Any transfer would still have to overcome the British court dispute that has kept the bullion beyond Caracas’s reach since 2019.

The conflict began after the UK, US and other governments recognized then-opposition leader Juan Guaidó as Venezuela’s legitimate interim president rather than then President Nicolás Maduro. The opposition subsequently claimed control of gold held by Venezuela’s central bank in the Bank of England’s vaults, triggering litigation that at one point reached the UK Supreme Court.

The political landscape has since shifted substantially. Maduro was seized in a US raid in January, Rodríguez became interim leader and the Venezuelan government and opposition announced last month that they were working together to unlock access to the bullion. The opposition has sought safeguards governing how the assets could be used.

The UK and Venezuela also agreed this week to upgrade diplomatic relations, with Britain moving to restore an ambassador in Caracas. National Assembly chief Jorge Rodríguez visited London for discussions with the UK government and later said there would be “good news” for Venezuelans.

Still, the British government says it cannot determine who controls the bullion.

“The government is not a party in the legal case to determine who should have control of Venezuelan gold held in the Bank of England,” a Foreign Office spokesperson said, adding that the issue is being handled through independent legal proceedings.

London court to decide

The Bank of England said it cannot act on instructions until a UK court determines who has legal authority over the account.

“This requires the parties involved in the case to approach the UK Court to settle the dispute,” the central bank said.

The agreement has not been finalized and resolving its technical and legal details could take time. If completed, however, moving the bullion to New York would give Venezuela a potential source of collateral as Rodríguez’s government seeks financing to rebuild infrastructure and revive the economy without immediately liquidating one of the country’s major foreign assets.

(With files from Reuters)