Venezuelan President Hugo Chavez Nationalizes Gold Industry, Repatriates Gold Reserves

By Gaudin, Andres | NotiSur - South American Political and Economic Affairs, October 7, 2011 | Go to article overview
Save to active project

Venezuelan President Hugo Chavez Nationalizes Gold Industry, Repatriates Gold Reserves


Gaudin, Andres, NotiSur - South American Political and Economic Affairs


As Venezuelan President Hugo Chavez's image in the polls has begun to climb again and he has retaken the political initiative by enacting several important measures--including nationalizing the gold industry and repatriating gold reserves--the divided opposition seems to be betting its future on the Revolucion Bolivariana leader's demise. Chavez has been convalescing from a cancer operation and receiving further treatment since June. The opposition's campaign includes disputing everything that the government does or says (including carrying out a census) and spreading the direst rumors about the president's health. And for that, it counts on efficient allies abroad, in the press and in the political world.

The positive signs seen several weeks ago regarding an eventual normalization of the always-tense relations between Venezuela and the US seemed to go up in smoke recently, after the US Department of the Treasury, without providing any proof, sanctioned several Venezuelans, including a diplomat, for allegedly supporting terrorist organizations. Venezuela's foreign-trade figures make it clear, however, that the differences between the two countries exist only in the strictly political realm. The US continues to be, as it has been for decades, Venezuela's principal trading partner.

The Venezuelan government, which had become paralyzed when Chavez underwent emergency surgery in Cuba in June for a pelvic tumor (NotiSur, June 24, 2011), has been particularly active in recent weeks. On Aug. 17, the president announced the nationalization of the gold industry, a measure finalized on Sept. 16. On Sept. 18, he announced the decision to repatriate the country's gold reserves deposited in banks outside the country, mostly in Great Britain.

The following day, the government made it known that private banks that had received large benefits--specifically a reduction of the reserves requirement from 17% to 14%--in exchange for providing financing for a government housing plan and had not done so could face sanctions. What the sanctions might be is not yet known, but Chavez made it clear that "the screws are tightening," and the bankers know very well that that if they do not fulfill the agreement, the government has the wherewithal to force them to do so or punish them.

Five days after his first announcement, Chavez signed the gold-industry-nationalization decree and said that, in a few weeks, Venezuela would begin repatriating 211 tons of gold reserves, worth some US$11 billion. The majority of the reserves are in British banks. The Bank of England holds Venezuelan gold deposits worth US$4.7 billion; Barclays Bank PLC, $2.1 billion; HSBC, US$1.4 billion; and Standard Chartered, US$1 billion. Venezuela plans to repatriate 57.7% of its total US $18.3 billion in international gold reserves.

Chavez signed the nationalization decree within the framework of a special fast-track authorization (Ley Habilitante) that allows him to govern by decree during a certain period. It establishes that "all gold obtained from mining operations in national territory must be sold and turned over to the state." It adds that the state "will exercise a monopoly on gold production and sales." In another section, the decree foresees a "process moving toward joint ventures for concessions, authorizations for small-scale mining, and contracts for the exploration and exploitation of gold." It also sets a 13% royalty "on quantities of gold extracted from any mine or deposit."

Energy minister defends government actions

Minister of Energy and Petroleum Rafael Ramirez, one of Chavez's closest advisors, analyzed the context in which the nationalization of the gold industry and, particularly, the repatriation of the gold reserves should be evaluated. Ramirez said that every country whose reserves are deposited in fragile or unstable financial systems should opt for protecting their assets. In speaking of reducing exposure to risk in the face of the global crisis, he referred explicitly to the US and Europe.

The rest of this article is only available to active members of Questia

Sign up now for a free, 1-day trial and receive full access to:

  • Questia's entire collection
  • Automatic bibliography creation
  • More helpful research tools like notes, citations, and highlights
  • Ad-free environment

Already a member? Log in now.

Notes for this article

Add a new note
If you are trying to select text to create highlights or citations, remember that you must now click or tap on the first word, and then click or tap on the last word.
Loading One moment ...
Project items
Notes
Cite this article

Cited article

Style
Citations are available only to our active members.
Sign up now to cite pages or passages in MLA, APA and Chicago citation styles.

Cited article

Venezuelan President Hugo Chavez Nationalizes Gold Industry, Repatriates Gold Reserves
Settings

Settings

Typeface
Text size Smaller Larger
Search within

Search within this article

Look up

Look up a word

  • Dictionary
  • Thesaurus
Please submit a word or phrase above.
Print this page

Print this page

Why can't I print more than one page at a time?

While we understand printed pages are helpful to our users, this limitation is necessary to help protect our publishers' copyrighted material and prevent its unlawful distribution. We are sorry for any inconvenience.
Full screen

matching results for page

Cited passage

Style
Citations are available only to our active members.
Sign up now to cite pages or passages in MLA, APA and Chicago citation styles.

Cited passage

Welcome to the new Questia Reader

The Questia Reader has been updated to provide you with an even better online reading experience.  It is now 100% Responsive, which means you can read our books and articles on any sized device you wish.  All of your favorite tools like notes, highlights, and citations are still here, but the way you select text has been updated to be easier to use, especially on touchscreen devices.  Here's how:

1. Click or tap the first word you want to select.
2. Click or tap the last word you want to select.

OK, got it!

Thanks for trying Questia!

Please continue trying out our research tools, but please note, full functionality is available only to our active members.

Your work will be lost once you leave this Web page.

For full access in an ad-free environment, sign up now for a FREE, 1-day trial.

Already a member? Log in now.

Are you sure you want to delete this highlight?