Economic Warfare From These Global Bullies
- Holding the gold
- New East-West cold war begins
- Coercion and control
America is known for their weapons.
The Civil War is famed for being the first with mass manufactured modern weapons.
The Manhattan project set about creating the world’s first atomic bomb.
From the 1950s onward, they used their booming population to lob economic embargo’s at non-compliant countries.
And after President Richard Nixon ditched the US dollar, if countries wouldn’t comply, the US would simply kick them out of the international payments system…
No matter what course of action was needed, the US would weaponise every tool at their disposal to coerce either a government or elites into what they wanted.
But what do you do when economic warfare no longer works?
Holding the gold
How do you change a country’s behaviour when threatening the economic stability of a country no longer works?
The Venezuelan bolivar is down nearly 95% against the US dollar in just a few years.
Furthermore, the country’s inflation rate was tipped to reach 1,000,000% by the end of last year, according to the International Monetary Fund.
Economic warfare from the US — and to some extent Europe — isn’t an option anymore.
However, an opportunity to twist Venezuela arose recently.
In November last year, Venezuelan President Nicolas Maduro asked for the Bank of England (BoE) to send over the US$550 million in gold it holds there.
According to UK’s The Times, the Bank of England ‘refused’ to hand the gold over. Saying that the BoE wanted further clarification on what the Venezuelan president planned to do with the gold, to ensure it wouldn’t be used for money laundering purposes.
As I wrote in The Daily Reckoning Australia at the time, this is a blatant abuse of power by a ‘trusted’ third party.
Why would the Bank of England refuse to repatriate gold that clearly isn’t theirs?
It could be because of that time in the 1930s when England sold gold to a questionable country leader, unintentionally funding the Nazi’s march across Europe.
Yet, the Bank of England’s objective is to be the safe haven of bulk gold storage.
Declining to release a country’s rightfully owned bullion undermines this. When it comes to housing gold, the BoE is meant to remain neutral — not the arbiter of which governments it does or doesn’t like.
Refusing to release a country’s gold is an economic sanction.
More importantly, declining to release the gold is more a case of the Western world getting their last chance to manipulate the politics of the South American country.
New East-West cold war begins
At first it was a case of the BoE not sending off the gold rightly owned by Venezuela.
In a few short months, the refusal to send the gold back is creating two very clear sides.
And President Donald Trump is the latest to not only be vocally opposed to President Maduro, but he is telling other nations to pick a side as well.
Trump has come out supporting Venezuelan opposition leader Juan Guaido as the rightful political leader.
What’s most interesting about this, is how backing a leader over another is breeding a cold war ‘East-West’ divide once more.
The supporters of Juan Guaido (blue) and Maduro (red)
Source: Big Think
In the middle is the Eurozone, claiming to be on the fence until more discussions can be held, yet they said they are willing to hold out for less than two weeks.
As the two sides gather power, it’s just another way to coerce one political leader to bow to the pressure of other political leaders.
Coercion and control
The traditional methods of bullying a country into submission are absent, which is why this latest coercion technique is being used.
The Bank of England has taken extraordinary steps by abusing their privilege as a trusted third party.
Now, the US is demonstrating their political power by picking a side.
It’s a frightening power play we haven’t witnessed in decades.
The key point to remember here is that unless you have it in your hands, the gold isn’t yours.
Until next time,