BLOOMBERG NEWS
VENEZUELA NEWS
Maduro Regime Is
Moving Its Money Through Spain’s Central Bank
Monday, September 9,
2019 08:33 AM
By Patricia Laya
Venezuela telling
contractors they can be paid through Spain
Sanctions have hurt
Venezuela’s standing among global banks
(Bloomberg) --As a
growing number of banks around the world refuse to move money on President
Nicolas Maduro’s behalf, Venezuela has found an ally in the Bank of Spain,
according to two people with knowledge of the matter.
Venezuela’s central
bank is increasingly relying on its Spanish counterpart to transfer and receive
funds abroad at a time when U.S. sanctions have prompted many large banks and
financial institutions to shy away from any actual or perceived dealings with
the socialist regime.
Nicolas Maduro speaks
during a press conference in Caracas on Sept. 18, 2018.
Venezuelan central
bank officials are telling contractors that going through the Bank of Spain is
an option to make and receive payments outside of the country, while warning
that it may still take at least a month to clear transactions due to increased
scrutiny, one of the people said.
The Spanish government
has deftly maintained relationships with both Maduro and the opposition’s Juan
Guaido who is recognized by more than 50 countries as the rightful leader of
the crisis-ravaged nation. While a top Guaido ally, Leopoldo Lopez, has been living
at the official residence of the Spanish ambassador in Caracas for months, the
Spanish government still maintains normal relations with Maduro and his allies.
The help from the Bank
of Spain comes at a critical time for the embattled Maduro administration after
state-run Ziraat Bank, Turkey’s largest bank by assets, stopped offering its
services to move money. The U.S. financial system is off grounds and suppliers
sometimes have to wait weeks to find a working account to make payments to the
government. They often end up relying on far-flung financial institutions from
Eastern Europe to Asia.
A spokesman for the
Bank of Spain declined to comment. A press official for Venezuela’s central
bank directed questions to the bank’s president, Calixto Ortega, who didn’t
respond.
Widening Sanctions
Since U.S. President
Donald Trump took office three years ago, he’s slapped sanctions on more than
100 Venezuelan individuals and entities, including the central bank, to
increase pressure on Maduro in the hopes of regime change. The U.S. has
increased its maneuverings against Maduro and support for Guaido this year, but
the status quo remains.
As a consequence of
the increased scrutiny -- and very limited access to dollars -- the central
bank is conducting more transactions in euros, sometimes offering local clients
access to euros in cash. That shift would make the Bank of Spain an attractive
choice over other banks outside the eurozone.
The Bank of Spain’s
willingness to move Venezuela’s money is legal within the correspondent banking
system, in which countries, companies and consumers send trillions of dollars
in payments around the world. In some instances, correspondent banks increase
scrutiny when dealing with countries under financial penalties or flagged as
money-laundering risks.
Sanctions imposed
against Venezuela by the European Union, of which Spain is a part, include an
embargo on arms sales as well as a travel ban and asset freeze for 18 officials
deemed responsible for human-rights violations.
Within Europe, Spain
receives by far the highest number of Venezuelan migrants fleeing the chaos in
their home country. While Spain recognizes Guaido as the country’s rightful
leader, it still hosts the Maduro-appointed ambassador in Madrid, as well as a
representative picked by the opposition.
Even though Spain’s
biggest oil company, Repsol, stopped shipping gasoline to Venezuela in March,
the company still supplies low-sulfur diesel in exchange for Venezuelan crude
oil.
In order to shield
itself from the effects of sanctions, Venezuela’s government has been
considering the possibility of switching to a Russian-operated international
payments messaging system as an alternative to the SWIFT system that most
financial institutions use.
--With assistance from
Alex Vasquez, Jose Enrique Arrioja and Jeannette Neumann.
To contact the
reporter on this story:
To contact the editors
responsible for this story:
Daniel Cancel at dcancel@bloomberg.net
Brendan Walsh
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