Cash-strapped Venezuela empties vaults to send tons of gold to long-time ally Iran

Cash-strapped Venezuela empties vaults to send tons of gold to long-time ally Iran
Crisis hit Venezuela has payed Iran nine tons of gold in exchange for help to rebuild its troubled oil industry.

4 min read
01 May, 2020
Venezuela has emptied its gold vaults to pay Iran [TASS/Getty]
Cash-strapped Venezuela has reportedly raided its gold vaults and sent tons of gold to its long-time ally Iran this month as payment for Tehran's help in rebuilding its troubled oil industry

Venezuelan government officials sent 9 tons of gold, equal to approximately $500 million, to Tehran on jets, sources close to the matter told Bloomberg.

This staggering amount was taken from Venezuela's gold vaults and given to the Islamic Republic to pay for Iran's help in revitalising Venezuela's debilitated gasoline refineries Bloomberg reported Thursday.

The payment caused a sudden drop in the South American country's published foreign reserve figures, the news agency reported. Venezuela now holds the lowest amount of hard currency assets in three decades. 

Both Iran and Venezuela are the targets of US sanctions, and with oil prices slumping since the beginning of the year due to the Covid-19 pandemic, the two countries have turned to each other to withstand the crippling effects. 

It appears the exchange of gold for help in Venezuela's oil sector is a mutually beneficial arrangement - providing Iran with revenue and ensuring Venezuela does not run out of gasoline.

Iran's first private airliner Mahan Air, which is under sanctions by the US and some European countries, has flown more than half a dozen times to Venezuala in the past week, Bloomberg reported.

The jets reportedly delivered gasoline additives, parts and technicians to help repair the country's refineries on its northwestern coast.

Mahan Air jets also flew to Venezuela's capital Caracas where they picked up the gold bars, the anonymous sources told Bloomberg.

US allegations

The United States denounced on Thursday what it saw as growing cooperation between its two adversaries.

Elliott Abrams, the envoy who leads US efforts to topple Venezuela's leftist leader Nicolas Maduro, said that Iran has been sending "more and more planes" to the South American nation, including this week.

"Our guess is that they are being paid in gold," he said at the Hudson Institute, a conservative Washington think tank.

"Those planes that are coming in from Iran that are bringing things for the oil industry are returning with the payments for those things: gold."

President Donald Trump's administration has slapped unilateral US sanctions aimed at reducing oil exports from both Iran and Venezuela, major crude producers.

Venezuela has the world's largest proven oil reserves but analysts say that the sector operates well below capacity due to corruption and a lack of investment in upkeep.

Venezuela's economy has been collapsing, with millions fleeing as they lack basic goods, and Iran has also taken a hit from US sanctions after Trump pulled out of a denuclearization accord.

Abrams charged that Iran's role showed soft support for Maduro from Russia and China, which have stood by him despite Western pressure.

"One of the reasons I mention that is not just to show that Iran is playing an increasing role, but notice that it's cash," Abrams said.

"We know that Maduro has over the last year wanted Russian and Chinese additional loans, additional investments, and he has not gotten a dime," he said.

Read more: US to seek 'all ways' to extend Iran arms embargo, Pompeo vows

Secretary of State Mike Pompeo on Wednesday also highlighted the two US adversaries' cooperation, saying that "multiple" aircraft had been spotted in Venezuela from Iran's Mahan Air.

The carrier is under US and other sanctions for allegedly transporting fighters and weapons on behalf of Iran's elite Revolutionary Guards.

"These flights must stop and countries should do their part to deny overflights just as many have already denied landing rights to this sanctioned airline," Pompeo told reporters.

The relationship between Iran and Venezuela is no secret, with the Venezuelan foreign ministry saying that Maduro and Iranian President Hassan Rouhani agreed to step up cooperation in an April 13 phone call.

Maduro has withstood more than a year of US-led efforts to remove him and retains the support of the military.

Some 60 nations recognize opposition leader Juan Guaido as interim president due to wide reports of irregularities in Maduro's 2018 re-election.

Agencies contributed to this report

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