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In August Mr Chávez decreed that Britain—along with the United States, France and Switzerland—was no longer a suitable place to safeguard his country’s gold reserves. Unlike many of his schemes that are announced with fanfare only to be quickly forgotten, the president meant business this time: on November 25th the first shipment of repatriated ingots arrived in Caracas, the capital. In total, Venezuela plans to move 160 tonnes of the precious metal from those countries to the vaults of its own central bank, as well as transferring $6.3 billion in foreign-currency reserves from banks in the United States and Europe to Russia, China, Brazil and other emerging economies.
The government says that relocating the gold reserves is a question of sovereignty. As for the foreign exchange, its spokesmen argue that the turmoil in the rich world’s economies makes it prudent to diversify out of dollars and euros. Since capitalism is in terminal decline, they maintain, Venezuela’s reserves will be safer with its allies in Moscow, Beijing and elsewhere, who will dominate the new world order.
The proposal for the policy prepared by the president’s financial team, which was leaked to an opposition legislator, made quite a different case. Mr Chávez’s advisers warned him that Venezuela might be vulnerable to the type of asset seizure that befell Muammar Qaddafi and his family at the outset of Libya’s rebellion. The country faces over a dozen arbitration proceedings at the World Bank’s dispute-settlement tribunal, and could face adverse rulings amounting to as much as $20 billion.
Both arguments seem somewhat farfetched. Russia, China and Brazil are of course still betting on capitalism, and keep much of their own reserves in dollars in the same banks the Venezuelans are planning to abandon. And the Bank for International Settlements in Switzerland, where most of the currency is deposited, has legal immunity from asset seizures. The assets might well be more at risk in the countries it is being moved to, all of which have lent money to Venezuela.
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