Venezuela has the fastest growing deforestation rate of any country in the Amazon Basin, and as in many of its neighboring countries, illegal mining is one of the leading causes. But combating this mining is complicated by the fact that the miners and the armed groups that control the trade are often business partners of corrupt elements of the Venezuelan state.
This analysis is part of a three-part series produced by InSight Crime’s Venezuela Organized Crime Observatory that looks at opportunities for policy intervention in areas where organized crime intersects with Venezuela’s ongoing political and social crises. Read the first chapter on organized crime and migration here. The third chapter on the involvement of organized crime in Venezuela’s election process will be published on July 6.
According to the Monitoring of the Andean Amazon Project (MAAP), deforestation in Venezuela has accelerated dramatically, with an estimated 140,000 hectares of old-growth forest in Venezuela destroyed between 2016 and 2020.
As well as leading to deforestation, this mining has left a trail of environmental destruction, including dangerously high levels of mercury contamination, the degradation of soils and riverbeds, and habitat destruction in some of the world’s most biodiverse regions.
The impact has not only been felt by the environment. In Venezuela’s mining hotspots, in the states of Amazonas and Bolívar, mines are controlled, regulated, and in some cases directly managed by armed groups, including guerrilla groups and mining gangs known as sindicatos. These groups are responsible for widespread human rights violations and violent conflict and pose an existential threat to the indigenous peoples who populate many mining areas.
InSight Crime’s investigations into organized crime and mining in Venezuela have revealed how many of these groups are supported by elements of the Venezuelan state, who take a share of the profits in exchange for impunity and even integrate the illegal mines into the state-controlled controlled supply chain.
In addition, Venezuela’s economic crisis and crippled oil industry have led Maduro’s government to become increasingly dependent on the export of this gold to fund the state, despite US sanctions against the country’s gold industry. In fact, gold smuggling remains an effective way for Venezuelan actors to circumvent sanctions in dealings with other countries.
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While the Maduro regime’s complicity in the illicit gold trade makes it almost impossible to tackle in the country, there are several points of intervention where international actors can have a positive impact.
Below, InSight Crime’s Venezuela Organized Crime Observatory presents the areas of greatest potential impact.
Increase international pressure
Venezuela is currently taking steps to reintegrate itself politically and economically into the international community after years of being treated as an outcast. This makes it more susceptible to international pressures and perceptions about things like deforestation, although the measures it takes may prove superficial as a result.
Sources consulted in Venezuela, including environmentalists and opposition politicians, believe there is a direct link between a recent spate of security operations targeting illegal mining and international outcry over deforestation in the country. This attention spanned everything from studies published in international media to the social media interventions of celebrities such as Leonardo DiCaprio.
As Maduro attempts to rejoin the international herd, he may be more willing to respond to such pressures, especially as he has sought to build an image as an “eco-socialism” leader.
This may come from regional partners restoring positive relations with Venezuela, such as Colombia and Brazil, and international organizations, such as the Amazon Cooperation Treaty Organization (ACTO), the Organization of American States (OAS), and the United Nations (UN), which exert diplomatic pressure on Venezuela, making concrete progress in environmental protection a precondition for future cooperation and support in other areas.
It can also come from civil society actors, such as human rights and environmental NGOs and media outlets, who can document the damage caused by mining and the ties to the state, the government’s claims to address the problems challenge and can work to empower, support, and amplify the voice of indigenous people and other communities affected by mining.
However, this approach has obvious limitations. MAAP satellite data, supported by InSight Crime sources from indigenous communities in the affected areas, suggests recent anti-mining operations have had limited impact on mining and have done nothing to address the control of the armed groups behind the mining . This pattern of operations for show rather than results is likely to be a hallmark of any state response to international pressure.
Improve supply chain regulation
U.S. sanctions against individuals and state-owned companies involved in the Venezuelan gold industry have effectively made Venezuelan gold illegal in global markets. As such, identifying and addressing the points where it enters the global supply chain presents opportunities to choke trade without ever setting foot in the country.
According to a report by the Organization for Economic Co-operation and Development (OECD), the main transit countries for Venezuelan gold are all in the region, with Colombia, Brazil, Suriname, Guyana and the Dominican Republic leading the way. Each of these has different dynamics and presents different challenges.
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In neighboring Colombia and Brazil, there is currently political will to fight illegal gold: Colombia has spent the last decade trying to improve supply chain transparency and oversight through measures such as the introduction of a register of mineral traders ( Registro Unico de Comercializadores de Minerales). Brazil, under the new government of Luiz Inácio Lula da Silva, has begun tightening domestic mining regulations and is looking for new innovative solutions, such as the Federal Police’s Ouro Alvo (Gold Target) program, which measures the chemical composition of gold from various deposits to trace the origin of seized minerals.
However, as illegal mining is widespread in both countries, both governments face sophisticated criminal networks with high money laundering capacity, as well as the complex issue of the overlap between organized crime and informal and artisanal mining on which many communities depend.
For both countries, addressing these issues will require international cooperation and support not only in enforcement but also in development, creating mechanisms to facilitate the formalization and regulation of small-scale mining to separate the illicit – including Venezuelan gold – from it’s just informal.
In Suriname and Guyana, the much smaller national mining sectors should make gold easier to trace, but efforts are undermined by high levels of corruption, institutional weaknesses and weak regulatory frameworks. Changing this dynamic is likely to require a carrot-and-stick approach, combining support for capacity building with implications for allowing the illicit gold to flow freely.
The Dominican Republic and other destinations, such as the islands of the Dutch Caribbean, meanwhile, can act as laundering grounds due to their high trade and commodity flows, improving transparency and oversight of economic vulnerabilities such as barely regulated free trade zones. act as hubs for gold laundering a priority.
However, these countries should not be expected to bear the burden alone. Numerous lawsuits and investigations over the past few years have shown how Latin America’s illicit gold often ends up in the hands of major international refiners, many of which are based in the United States and Europe, which in turn supply multinational corporations and commercial interests.
While both the refiners and many gold buyers are committed to maintaining conflict-free supply chains, these cases have shown that as long as the gold is sufficiently laundered before it reaches such companies, in many cases they are unlikely to look beyond red flags found along their supply chains . Enforcement efforts should also focus on this end of the supply chain, incentivizing companies to improve compliance standards by confronting them with the risk of seizures or legal action.
Boost legal Venezuelan mining
If sanctions on Venezuelan gold were relaxed, it would open up the country to international mining companies and allow legal international sales of the mineral. Done properly, this could introduce higher environmental and labor standards to the mining sector and reduce ties between the gold trade and armed groups. Done badly and it could provide legal cover for continued crime and environmental destruction.
While US sanctions against the Venezuelan gold industry remain in place, some relief could be on the table as electoral negotiations between Maduro and the opposition progress, and there are signs that Maduro appears to be gearing up to reopen Venezuelan mines to international investments.
If the sanctions were lifted, the responsibility would likely have to be placed on buyers to ensure that the companies they buy from meet international standards due to Venezuela’s high levels of corruption and weak regulatory enforcement.
Associations such as the World Gold Council have already established a Conflict-Free Gold Standard, which can be adapted to multiple countries, while the OECD’s Due Diligence Guidance has been adopted by several countries. Such regulatory frameworks should serve as a basic minimum for any company operating in Venezuela or purchasing gold from Venezuela.
However, to be effective, such frameworks will have to be mandatory. Previous voluntary frameworks, such as the Kimberly Process, a cross-industry alliance aimed at curbing the trade in conflict diamonds, have been undermined by a lack of enforcement capacity
To that end, mandatory third-party audits of gold mining facilities in Venezuela can play an important role in identifying environmental damage and human rights violations. However, they alone should not be seen as a panacea. Human Rights Watch has documented multiple shortcomings of such audits, highlighting the need for transparent long-term monitoring with specific training for auditors on human rights and environmental issues.