Venezuela's most successful financial transactions in recent years have not been on Wall Street, but in primitive gold mining camps in the south of the country.

While the country's economy is in crisis, an estimated 300,000 makeshift hunters have settled in this mineral-rich jungle to make a living by firing on improvised mines to extract the speckled land from the land. # 39; gold.

Their picks and shovels help support the leftist government of President Nicolas Maduro. Since 2016, his administration has bought 17 tons of metal worth about $ 650 million from so-called artisanal miners, according to the most recent data from the country's central bank.

Paid with almost worthless banknotes of the country, these amateurs provide the government with hard currency to buy food products and essential hygiene products. This gold trade is a shock on the international markets. Nevertheless, the United States is resorting to sanctions and intimidation to prevent Maduro from using his country 's gold to stay afloat.

The Trump administration is pressuring the UK that it does not release gold reserves of $ 1.2 billion that Venezuela has stored in the Bank of England. US officials recently criticized an investment firm based in Abu Dhabi for its gold purchases in Venezuela, and warned other potential foreign buyers.

The existence of the Maduro gold program is well known. How it works is not.

To gain insight into the interior, Reuters tracked Venezuelan gold from hot jungle mines, through the central bank of the capital Caracas, to the refineries of Venezuela. And exporters of food products abroad, speaking to more than 30 people with knowledge of the trade. They included miners, intermediaries, merchants, university researchers, diplomats and government officials. Almost all of them asked for anonymity because they were not allowed to speak in public or because they feared reprisals from the Venezuelan or US authorities.

What emerges is the portrait of a desperate experience of laissez-faire industrial policy led by Venezuela's socialist leaders. US sanctions have hit the country's oil industry and reduced its borrowing capacity. The formal mining sector has been decimated by nationalization. Maduro has therefore launched independent prospectors to extract the mineral wealth of the country, practically without any regulation or public investment.

The Bolivarian revolution now relies heavily on white-collar workers, such as Jose Aular, a teenager who claims to have contracted malaria five times in a wildcat mine near the Brazilian-Venezuelan border. Aular works 12 hours a day carrying bags of soil in a small mill that uses toxic mercury to extract precious metal particles. Mining accidents are common in these dilapidated operations, the workers said. The same goes for shootings and robberies.

"The government knows what's going on in these mines and benefits from it," said Aular, 18. "Our gold is in their hands."

Maduro has also received crucial help from Turkish President Tayyip Erdogan, a strong man who has also been fighting with the Trump government.

Venezuela sells most of its gold to Turkish refineries, then uses part of the proceeds to buy consumer goods from that country, according to people with direct knowledge of the trade. Turkish pasta and milk powder are now part of Maduro's subsidized food program. Trade between the two countries increased eight-fold last year.

But the review intensifies as Venezuela's policy reaches its boiling point. In recent days, many Western countries have recognized Venezuela's opposition leader, Juan Guaido, as the legitimate president of the South American nation.

Maduro's opponents have called on foreign buyers of Venezuela's precious metal to stop doing business with what they say is an illegitimate regime.

"We will protect our gold," said in an interview with Reuters Carlos Paparoni, member of the opposition.


The road of gold begins in places like La Culebra, an isolated jungle of southern Venezuela. Here, hundreds of men work in raw mines that would be home in the 19th century. They dig dirt loaded with minerals with picks in tunnels dug by hand and carry them with pulleys and winches.

Their activity destroys fragile forest ecosystems and spreads diseases transmitted by mosquitoes. The miners complain of sabotage by military forces to keep the region, whose homicide rate is seven times higher than the national average. Venezuela's defense and information ministries did not respond to requests for comment.

The minor Jose Rondon is used to difficulties. Today, 47, he arrived in 2016 from northeastern Venezuela with his two adult sons. The salary of his bus driver could not keep pace with the hyperinflation of Venezuela, whose projects the International Monetary Fund will reach 10 million percent this year.

The three men collect about 10 grams of gold a month in a backbreaking job. Yet it is about 20 times what they could earn at home.

"Here, I do a lot better," said Rondon, resting in a poorly equipped dormitory with hammocks.

Now in hand, the miners go to the city of El Callao to sell their nuggets. Most buyers are small, unlicensed shopkeepers who work in tight stores with alarms and steel doors.

"The state buys gold, everyone buys gold because that's what's going well," said Jhony Diaz, a licensed wholesaler in Puerto Ordaz, 171 km north of El Callao. Diaz says that he buys gold from traders and resells it every three days to the central bank.

Because the Venezuelan currency, the bolivar, is worth less every hour than anyone else holds it, the state pays a premium on international prices so that it is worth it for those who could pass the money. gold smuggled out of the country in exchange for dollars.

Traders who sell to Diaz end up with silver bricks to bring back to El Callao and other cities of the Gold Rush to pay the miners, who use them to buy food, supplies and send everything what remains to their families.

According to a senior employee, the gold purchased by the government is melted in the nearby boilers of Minerven, the state-run mining company. It is then transported in the coffers of the central bank of the capital Caracas, to 843 km.

The gold does not stay there long. The central bank's gold reserves have fallen to their lowest level in 75 years. Venezuela sells hand-made metal as well as existing reserves to pay its bills, according to two senior government officials.

The main buyer these days is Turkey, officials said.


Maduro's gold program is being developed in parallel with the deepening of its relations with Turkish Erdogan. Both leaders have been criticized internationally for suppressing political dissent and undermining democratic norms in order to concentrate power.

A November 1 decree signed by US President Donald Trump forbids American people and entities from buying gold in Venezuela. This does not apply to strangers. Ankara assured the US Treasury that all of Turkey's trade with Venezuela was in accordance with international law.

Venezuela in December 2016 announced a direct flight from Caracas to Istanbul with Turkish Airlines. This development was surprising given the low demand for travel between the two countries.

Commercial data shows that these planes carry more than just passengers. On New Year's Day 2018, Venezuela's central bank began shipping gold to Turkey with a $ 36 million air shipment of this metal to Istanbul. It was just a few weeks after Maduro's visit to Turkey.

Last year 's deliveries reached $ 900 million, according to Turkish government data and trade reports.

The Venezuelan central bank has sold its artisanal gold directly to Turkish refiners, according to two senior Venezuelan officials. The proceeds will go to the Venezuelan Development Bank Bands to buy Turkish consumer goods, officials said.

Gold buyers include Istanbul Gold Refinery, or IGR; and Sardes Kiymetli Madenler, a Turkish trading company, according to a person working in the Turkish gold industry, as well as a diplomat based in Caracas and the two Venezuelan senior officials.

In an interview with Reuters, Aysen Esen, CEO of IGR, denied that the company was involved in Venezuelan gold transactions. In a written statement, she said she met with Venezuelan and Turkish officials in Istanbul in April to give her perspective on compliance with international regulations.

Esen said that she had informed the Turkish government that working with Venezuela "would not be fair for large institutions or for the state".

Regarding Sardes Kiymetli Madenler, no one in his Istanbul office responded to Reuters inquiries.

Turkish consumer goods, meanwhile, are heading to Venezuelan tables. In early December, 54 containers of Turkish milk powder arrived at the port of La Guaira, near Caracas, according to port records seen by Reuters.

Istanbul-based forwarder Mulberry Proje Yatirim shares an address with Marilyns Proje Yatirim, a mining company that signed a joint venture with Venezuela mining company Minerven last year, according to news reports in the Turkish Trade Register in September.

Companies did not respond to a request for comment.

Even Maduro's critics acknowledge that he has achieved a tour-de-force of alchemy: by compensating miners citizens in a hurry with inflation-ravaged bolivars and by getting precious metal, he found the way to turn the straw into gold.

Venezuelan economist Angel Alvarado, an opposition MP, said that "dark operations and unusual mechanisms of commercial exchange" are among the few tools Maduro has.

"There is a desperation to stay in power at all costs," said Alvarado.

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