Episode 6 — Money, assets, and “external sovereignty”

How reserves, oil proceeds, CITGO, and SDRs become the real bargaining chips

6.1 The central proposition

In a contested transition, the decisive arena often shifts outside the country. Whoever can lawfully instruct banks, commodity traders, insurers, courts, and multilateral institutions acquires a form of “external sovereignty” even if domestic control is incomplete. Venezuela’s experience since 2019 (and the post-3 January 2026 arrangements described in your scenario) illustrates how recognition, sanctions licensing, and litigation determine who can actually spend money. (Reuters)

6.2 The three “gates” that control state money abroad

Across the Venezuelan case set, three gatekeepers recur:

Banks and correspondent channels (payments, escrow, reserves custody)
Sanctions regulators (principally OFAC, via general and specific licences)
Courts and enforcement agencies (asset freezes, attachment, creditor auctions)

The 2026 oil-proceeds mechanism reported by Reuters is a clear example: proceeds from sales were structured to settle into U.S.-controlled bank accounts, including an account located in Qatar, to allow U.S. oversight and mitigate seizure risk. (Reuters)

6.3 Oil revenue is not “cash”: it is a compliance chain

Oil monetisation depends on a chain of compliance-sensitive counterparties (trader → shipowner → insurer → port/terminal → refiner → bank). Under U.S. sanctions architecture, the key operational lever is not the barrel itself but permission to transact.

Reuters reporting (January 2026) describes:

U.S.-licensed trading houses (e.g., Vitol and Trafigura) leading initial shipments under a post-capture supply arrangement;
slow execution due to logistics and buyer pricing reluctance; and
around $500 million in first-round proceeds being routed into a controlled fund structure. (Reuters)

This is why “recognition” statements alone do not unlock revenue: markets look for licensing certainty and bankability.

6.4 Overseas reserves: the Bank of England gold litigation as the archetype

Venezuela’s foreign reserves disputes show how recognition becomes “financially real” in court.

In the long-running UK litigation over Venezuelan central bank assets:

the Bank of England was reported (in the English High Court materials) as holding approximately US$1.95 billion in gold for the Central Bank of Venezuela (BCV), alongside other disputed sums (including proceeds linked to a Deutsche Bank arrangement); and
the legal question became which competing “board” could lawfully instruct institutions in the UK. (Courts and Tribunals Judiciary)

The UK Supreme Court case materials and commentary underline the constitutional significance of executive recognition in English courts when determining who speaks for a foreign state in relation to its assets. (Supreme Court)

Practical implication: once assets are held abroad, domestic coercion cannot access them. Control is mediated by foreign public law (recognition), private law (bank mandates), and litigation management.

6.5 IMF SDRs: recognition as a multilateral access key

The IMF provides a separate, highly consequential channel: Special Drawing Rights (SDRs).

Reuters (15 January 2026) reports the IMF position that restoring ties with Venezuela depends on whether a majority of IMF members (by voting share) recognise a successor government, and that Venezuela’s access has been effectively frozen since 2019, including access to about $4.9 billion in SDRs. (Reuters)

This is a textbook example of “external sovereignty”: even where a government exercises effective control internally, multilateral dis-engagement can deny it liquidity at precisely the moment it needs stabilisation finance.

6.6 CITGO: the “crown jewel” problem—creditors, courts, and OFAC approval

CITGO (via PDV Holding / CITGO Holding) is the most litigation-exposed Venezuelan asset abroad and shows how creditor rights collide with sanctions governance.

Reuters (9 January 2026) describes the Delaware court-supervised sale process for CITGO as a mechanism to pay Venezuela’s creditors, and notes that the transaction requires OFAC approval to close. (Reuters)

This produces two strategic consequences:

Any transitional authority inherits legacy creditor warfare, regardless of its political narrative; and
OFAC becomes an effective veto point—even if a court orders a sale, compliance permissions can shape timing, bidders, and settlement feasibility. (Reuters)

6.7 Sanctions design: why licences are governance instruments, not technical footnotes

OFAC’s Venezuela programme and licences demonstrate that sanctions are not binary (on/off). They are programmable constraints—tightenable or relaxable to reward compliance or penalise deviation.

OFAC’s programme page aggregates general licences and guidance that authorise or restrict specific transaction types involving PDVSA-linked entities and subsidiaries, including CITGO structures. (OFAC)
The GL 44 → GL 44A shift (April 2024) illustrates how the U.S. can recalibrate oil-and-gas permissions based on political conditions and compliance assessments. (OFAC)
Legal analysis of the 2019 U.S. measures (including Executive Order 13884) explains how blocking the property of the Government of Venezuela and associated licensing created a broad compliance perimeter around state-linked assets. (Debevoise)

6.8 A consolidated map of the “external money system”

6.9 What Episode 6 concludes

Political authority inside Venezuela and financial authority abroad can diverge sharply.
Sanctions licensing and bank settlement design can function as interim governance tools, effectively substituting for direct trusteeship while keeping revenue off-limits to unauthorised actors. (Reuters)
Legacy disputes (gold, CITGO, SDRs) are not side issues; they shape the feasible bargaining space for any “reconstruction” agenda because they determine the first liquid dollars available. (Reuters)

Next episode (Episode 7) will move from “money outside” to “money inside”: currency stability, central banking constraints, and why inflation/FX controls become political weapons during contested transitions.

References

Debevoise & Plimpton (2019) ‘United States Sanctions the Venezuelan Government, Blocks Property and Issues Additional General Licenses’, 8 August. (Debevoise)
HM Treasury, Office of Financial Sanctions Implementation / U.S. Treasury OFAC (n.d.) ‘Venezuela-Related Sanctions’ (programme and general licences). (OFAC)
Holland & Knight (2024) ‘OFAC Revokes General License 44 Related to Venezuela’s Oil and Gas Sector; Issues GL 44A’, 18 April. (Holland & Knight)
Office of Foreign Assets Control (2024) ‘Venezuela General License 44A’ (PDF), 17 April. (OFAC)
Reuters (2026a) ‘Money from sale of Venezuelan oil to be held in US-controlled bank accounts, Energy Dept says’, 7 January. (Reuters)
Reuters (2026b) ‘US completes first Venezuelan oil sales valued at $500 million, US official says’, 14 January. (Reuters)
Reuters (2026c) ‘Venezuelan oil exports under supply deal with US progressing slowly, documents and data show’, 21 January. (Reuters)
Reuters (2026d) ‘IMF needs voting majority of members to recognize Venezuela government to restore ties’, 15 January. (Reuters)
Reuters (2026e) ‘Citgo on the brink: Conflicts, creditors and control of Venezuela’s crown jewel’, 9 January. (Reuters)
UK Judiciary (2020) Maduro Board v Guaidó Board (judgment PDF). (Courts and Tribunals Judiciary)
UK Supreme Court (n.d.) ‘Maduro Board of the Central Bank of Venezuela v Guaidó Board…’ (case page). (Supreme Court)
Twenty Essex (2021) ‘Appeal victory for Guaidó in Venezuelan gold dispute’, 20 December. (Twenty Essex)