Iran buys gold bars out of Venezuela’s almost-empty vaults

Out of cash and desperate for help in propping up its oil industry, Venezuela is raiding its gold vaults and handing tons of bars to its long-time ally Iran, according to people with direct knowledge of the matter.

Venezuelan government officials piled some 9 tonnes of gold — an amount equal to about $500 million — on Tehran-bound jets this month as payment for Iran’s assistance in reviving Venezuela’s crippled gasoline refineries.

The shipments, which resulted in a sudden drop in Venezuela’s published foreign reserve figures, leave the crisis-ravaged country with just $6.3 billion in hard-currency assets, the lowest amount in three decades.

The two nations — both pariahs of sorts in international circles — are working more closely together as they try to withstand withering U.S. sanctions and a coronavirus-sparked collapse in the price of oil, their main source of revenue. For Iran, the deals provide a fresh source of revenue. For Venezuela, they ensure that its supply of gasoline doesn’t totally run out.

Iran is the latest destination for Venezuelan gold after the U.S. cracked down on similar deals that the Nicolas Maduro regime was conducting with Russia, Turkey and the United Arab Emirates. The sanctioned Tehran-based carrier Mahan Air has flown more than half a dozen jets to the South American nation in the past week alone. Most delivered gasoline additives, parts and technicians to help repair a key refinery along Venezuela’s northwestern coast.

Meanwhile, Mahan has sent other planes to the international airport outside of Caracas, where they are loaded with the gold bars to take back to Tehran.

As oil prices collapse, the gold held in Caracas is a now an even more important source of wealth for Venezuela, which has been driven into extreme poverty under Maduro’s socialist rule. While the country holds some 70 tonnes of gold in its vaults, selling it has become increasingly difficult.

When Maduro’s predecessor, the late Hugo Chavez, was in power, he and Iran’s then-leader Mahmoud Ahmadinejad cut deals on a variety of energy, agricultural and financial projects. They even opened a joint car assembly plant west of Caracas.

Shekhar Ghosh is consulting editor, Indoasiancommodities.com. He has edited and written for publications like Business India, Business Standard, Business Today, Outlook and many other international publications. He can be reached at shekhar.ghosh@indoasiancommodities.in.

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