Afghanistan and Venezuela are far apart but alike currently in seeking access to their central government funds held in the US for Afghanistan and with the Bank of England for Venezuela.

The Venezuelan case has been contested in London all the way to the Supreme Court, and judgment is expected within the next few months. With Afghanistan the Taliban government is of course nowhere near moving a US court to access their funds.

The common question that arises from the cases of these two countries – and many others – is that in the event of disputes over the legitimacy of the current ruling government, who gets to decide whether those governments can claim their countries’ wealth held with central banks in the UK or the US, or whether the governments in those countries get to take that decision.

That decision could fall to governments and not just the central banks. In the case of Venezuela, the British foreign secretary intervened in the case to claim that the UK does not recognise the government of President Nicolas Maduro, but only Juan Guaido who was declared by the country’s opposition-dominated National Assembly to be the president in 2019.

Maduro has remained in effect the president following a failed coup attempt in April 2019. The EU does not recognise either as president, but the UK has backed Guaido against Maduro.

The Venezuelan case hit the UK courts after the Bank of England refused to facilitate the transfer of a billion dollars worth of the country’s gold it holds. The Maduro government said it needed the gold to pay the United Nations Development Programme (UNDP) to provide COVID relief to its people. "The Bank of England refused on the basis that the UK government recognises Guaido as the interim president of Venezuela in the political dispute," Kartik Mittal, partner at the solicitors firm Zaiwalla & Co tells CNBC-TV18.

The firm won its case before the English Court of Appeal. The rival board appointed by Guaido and backed by the UK government has taken their case now to the UK Supreme Court.

“The bigger question here is that if there are disputed elections in a country, does the UK government’s view trump the views expressed by state institutions set up under the constitutional framework adopted by the people of that country, such as the courts in those countries,” says Mittal. The UK courts clearly have jurisdiction over such a dispute because the reserves are held here, he says.

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That means that in the event of a dispute in another country whose reserves are held in the UK, it is for the Bank of England and for the UK government to decide who the legitimate ruler of that country is. In the case of Venezuela, the UK has brushed aside the ruling of the Supreme Court of Venezuela that had confirmed Maduro as president.

India

Without looking to Venezuela or Afghanistan, India could be an example of the extent to which the fate of its wealth could be decided in Britain. A substantial amount of India’s gold reserves are held at the Bank of England, by some estimates half of India’s reserves. A fair portion is held also at the Bank for International Settlements in Basel in Switzerland. Elections in India have been conducted fairly and duly recognised but the possibility of a dispute raises questions what might be at stake.