How is the Juan Guaidó government financed?

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Guaidó: We have put elements for the transition on the table 0:54

(CNN Spanish) - As soon as Juan Guaidó was sworn in as interim president of Venezuela on January 23, 2019, the United States was among the first countries to recognize him politically.

That same day, Secretary of State Mike Pompeo issued a statement offering support for the "transition to a democratic government with free elections."

But an objective of this magnitude could not be carried forward with empty coffers.

In welcome, the State Department announced its intention to award more than $ 20 million, which was supposed to be used for humanitarian aid and in the "fight against food and medicine shortages."

But that was just the beginning of a relationship that continues over time despite the attacks, including the last episode, starring an alleged armed group made up of Venezuelans and Americans who - according to them - sought to capture the questioned President of Venezuela, Nicolás Maduro and several of his collaborators. For those in power, it was something broader: an attempted coup.

In an interview with CNN, Carlos Vecchio, Juan Guaidó's ambassador to the United States, ruled out that relations between Washington and Guaidó's representatives had been affected: “We are fine, because let's say that after all this, (USA) He knows that this is an operation that, in order to do what was done, had to be infiltrated and pushed by the (Maduro) government itself. ”

But more than a year before this incident, on January 25, 2019, the authorization to Guaidó to control the accounts of the government or the Central Bank of Venezuela, deposited in the Federal Reserve Bank in New York, was released u another insured banking institution in the United States.

In practice, this meant access to resources that exceed US $ 340 million and can only be mobilized with the prior authorization of the National Assembly in Caracas and the Treasury Department in Washington, according to Vecchio.

The agreement only entered into force in April 2020, when the Guaidó government managed to obtain that amount after being recovered from a gold exchange operation that they had with a private banking institution in the United States.

According to the explanation given by the economist Francisco Rodríguez to CNN in an interview, the Central Bank of Venezuela (BCV) had agreed in 2015 a loan with Citibank for more than US $ 1,100 million and gave gold as guarantee of international reserves .

The government of the questioned President Nicolás Maduro was delayed in the partial payment of the acquired commitments, which had to be fulfilled in March 2019.

The solution the bank found was to liquidate the gold to collect all the debt at once, “but since there was a difference between the value of the guarantee and the amount for which the loan was made; That difference corresponded to the Republic, ”explained Rodríguez, who clarifies that when it refers to the Republic, it is about Guaidó and his delegation.

The agreement was, then, to transfer that difference to a Federal Reserve account that would remain in the hands of the National Assembly chaired by Guaidó.

The BCV protested the measure, calling it "dispossession of its financial resources." But the decision was already made. That difference is the more than US $ 340 million that represents the main budget that the Guaidó government has, Vecchio confirmed.

Release🔵 | The BCV rejects the unilateral measure imposed by the US Government in which it orders Citibank to transfer the resources of an account whose owner is the Venezuelan issuing entity to an account of the US Federal Reserve # BCV🇻🇪 pic.twitter.com/X3iWedMWRQ

- Central Bank of Venezuela (@BCV_ORG_VE) April 16, 2020

However, the mobilization of these funds is not discretionary.

So far, Vecchio says approval has only been achieved to mobilize $ 80 million, after reaching agreements with the Office of Foreign Assets Control (OFAC), which set out the conditions of use. and implementation and authorization of the National Assembly of Venezuela.

This amount is part of the Special Law of the Fund for the Liberation of Venezuela and Attention to Cases of Vital Risk, which caused so much controversy in the South American country, since in principle it emerged that each deputy of the National Assembly would be assigned a monthly salary of US $ 5,000. This was information initially reported by the AP news agency.

However, in a statement from the National Communication Center, the body that centralizes the communication policy of the Guaidó government, it was explained that US $ 14 million of this budget would be destined for the support program for Parliament, and not for the direct payment of the deputies.

RELEASE | Legitimate government denies false information of alleged salary of $ 5000 per month to the deputies of the @AsambleaVE pic.twitter.com/NWzmVGn4AG

- National Communication Center (@Presidencia_VE) April 24, 2020

Apart from the expenses for the operation of the Assembly, the rest would be disaggregated in the defense of democracy (US $ 4.5 million); social expenses for humanitarian care (US $ 35.9 million); strengthening communications (US $ 5.5 million); international relations and foreign service (US $ 8.8 million); special comptroller and judiciary (US $ 1.9 million) and budget implementation (US $ 9.3 million).

Potential, but in reserve

Within the United States there are other sources of financing, but they are only in a futuristic universe, since neither Guaidó nor Maduro have access or availability of these resources.

The economist and managing partner of Caracas Capital Markets, Russ Dallen, explains that one of them is Citgo, a subsidiary in the USA. from state oil company PDVSA, which according to calculations could be valued at US $ 1.7 billion in liquidity. However, Vecchio clarifies that it is not only a company covered by a United States protection measure, but its production is only enough to finance its operations.

Juan Guaidó, in Caracas. (Credit: MATIAS DELACROIX / AFP / Getty Images)

However, from a debt that Citgo had with PDVSA, US $ 72 million came out to cover the interest on the payment of the PDVSA 2020 bond, according to Vecchio.

Vecchio points out that this was done in April, under protest, and that more than US $ 900 million of interest and principal payments are still pending, an operation that is suspended due to the legal action they themselves took. It is a complex chess of financial and legal actions that sought to guarantee the protection of Citgo -and at the same time- the nullity of the payment of the bonds.

Another account that could be part of the nation's coffers is the resources obtained from seizures of money laundering and corruption, both possible and proven, in cases that are being investigated or that already have a final sentence.

For example, according to the United States Department of Justice, Alejandro Andrade, a former official of the Hugo Chávez government, has had more than $ 1 billion seized, including real estate, vehicles, race horses, watches and aircraft. In November 2018, he was sentenced to 10 years in prison in the United States for money laundering.

As explained by a State Department source, each case is studied separately, and it is usually after long legal battles that can last for years that the procedures are activated so that part of those seized resources can be redirected to the country of origin.

Vecchio explained that the Guaidó government is in talks with the State Department to sign an agreement "from country to country", in order to establish a fund and not need to litigate each of the cases individually. The limitation they face is that, even if an agreement were reached, it would still be an account supervised by Washington.

As for humanitarian aid, Vecchio says that more than US $ 600 million has been allocated, although Guaidó's team notes that it has not had access to these resources. Everything is managed through third countries, such as Colombia and Peru, and the bulk of this amount goes to the attention of the diaspora that has migrated to other countries. They add that a certain amount did indeed enter Venezuela, but only through non-governmental organizations or agencies such as the Red Cross.

These funds include, according to Vecchio, more than US $ 128 million given to the Juan Guaidó government through the Agency for International Development (USAID), to finance its operations, defend human rights and develop plans to recover the economy and basic services in Venezuela. "None of them directly to the deputies of the National Assembly, to high officials, diplomats or to Guaidó himself," he said.

Beyond the United States

There are two cases, outside the United States, that Maduro uses publicly. He refers to them as Venezuelan resources that have been "hijacked" by international banks. One of them is the Novo Banco, in Portugal, and the other is that of a gold reserve in London.

In the first, it refers to US $ 1,726 million that, according to Maduro, would be used to buy medicine and food. In April 2019, he asked the Portuguese government to rule on this case. Foreign Minister Augusto Santos Silva responded negatively, saying that in his country "banks do not receive orders from the government" and that "disputes are resolved in court."

In the second, it refers to the Bank of England measure, which prevented Maduro officials from withdrawing US $ 1.2 billion in gold deposited there, in a resolution of January 2019.

Last week, and according to court documents, the Maduro government sued the bank in the London Supreme Court, arguing that it needs those ingots to combat the covid-19 pandemic.

"We are shoulder to shoulder with the United States in saying that the National Assembly and its president, Juan Guaidó, are better positioned to lead Venezuela to the restoration of its democracy, economy and freedom," said the Minister of State at the time. British Alan Duncan.

At that time, Guaidó admitted that he had interceded so that Maduro's resources were not granted. "If the money is transferred ... it will be used by the illegitimate and kleptocratic regime of Nicolás Maduro to repress and mistreat the Venezuelan people," he said in a letter sent to the then British Prime Minister, Theresa May, and Governor of the Bank of England, Mark. Carney, reported by Reuters.

Vecchio explains that these two cases occurred "prior to the existence of the transitional government and have to do with money laundering problems and illegal petitions in London", and that, so far, they have no access.

When asked if the agreements he had reached with the United States would be maintained over time, regardless of who is in power, the ambassador said yes, as long as he is not Maduro.

Juan Guaidó