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Unlike drugs, gold is easy to launder, making it especially valuable to transnational organized crime groups, including drug mafias. With the global price of gold high and on the rise, illegal mining and illicit gold trafficking will continue to expand, furthering the interests of transnational organized crime for the foreseeable future.
The criminal, economic and political dynamics behind the illegal gold rush in Venezuela and Ecuador were very different, but both countries illustrate the same trend: that illegal mining has become the fastest growing criminal economy wherever there are deposits. to explote.
Over the past decade, illegal mining has come to compete with drug profits in the mineral-rich corners of South America. The bonanza of illegal mining took off in Peru and Colombia, and the criminal dynamics that emerged there has been a formula for its expansion in Ecuador, Venezuela and Brazil.
In Ecuador, the accidental discovery of a gold deposit has fueled a massive illegal economy, luring numerous workers, including desperate Venezuelan migrants, to rudimentary mines that have also become hotbeds of sexual exploitation, drugs and violence.
In Venezuela, illegal gold rents have reinforced the irregular armed groups present in the country, from Colombian paramilitaries and guerrillas to local unions or mafias. Gold profits have also promoted the rise of other illegal actors, such as the Venezuelan mega-gangs - large gangs that have settled on the outskirts of Caracas and have now moved to take control of the mines in remote parts of the country.
Venezuela's illegal gold industry has generated enormous illicit wealth for corrupt state officials and has helped prop up the government as other legal economies are on lockdown and the economy remains in free fall.
Venezuela and Ecuador's move to illegal gold - following similar trends in Peru and Colombia - offers lessons for other countries in the region, illustrating how this illegal economy spreads like cancer and strengthens criminal groups.
In Ecuador, illegal mining replaced the FARC
Ecuador is experiencing a new illegal gold rush along its northern border with Colombia. Although much of the bonanza was the result of an accidental discovery, the emergence of mining as a new growing criminal economy in this region is no coincidence: there was an economic vacuum to fill and illegal mining became the ideal industry.
At the end of 2017, thousands of treasure hunters arrived in the Buenos Aires district of Imbabura province after a gang of construction workers unearthed gold in a rural road project.
By the beginning of 2019, the area had been taken over by up to 10,000 miners, who opened about 1,000 rudimentary mines and established around 200 processing plants. The newcomers had the support of lords from the mining mafia in the south of the country, who offered initial capital that would be paid for with sacks of ore, which were later sent to the south to be processed in their own plants.
Soon, the riches attracted criminal gangs who began extorting money from miners and businesses that sprung up around the extraction fields, including bars, restaurants, and brothels. The initial wave of criminal groups came from the Esmeraldas province, on Ecuador's western border with Colombia. However, these local criminals were expelled by Colombian armed groups, who took control of the region with high-powered weapons and a tendency to use extreme violence.
In July 2019, thousands of police and military deployed to the region to clear the mines. Although the future of the area has not been decided, there can be little doubt that the Buenos Aires boom represents only the most visible face of a much deeper problem.
Illegal miners in Buenos Aires have already made inroads to other nearby areas in search of new gold deposits to mine. Additionally, mining is booming along the entire Ecuador-Colombia border, as previously low mining areas in the Esmeraldas, Carchi and Sucumbíos provinces have seen a continuous increase in the size of existing mining operations and a expansion to new areas.
The engine of this new gold rush is a collapse of another illegal economy that previously sustained the border region: supplies for the Revolutionary Armed Forces of Colombia (FARC). The guerrilla war against the Colombian state offered job opportunities in all aspects, from the supply of food, clothing and equipment to its combatants, to the smuggling of precursor chemicals for its cocaine laboratories. With the demobilization of the FARC in 2017, the income and employment opportunities that were anticipated for these poverty-stricken areas vanished.
With no signs of a legal economy to fill the void, the inhabitants turned to illegal mining. The gold rush attracted newcomers from all over the world: When Ecuadorian forces advanced to Buenos Aires, they discovered more than 1,000 Venezuelans and almost the same number of Colombians.
As seen in Buenos Aires, opportunities also extend to armed groups, gangs and mafias, who finance and extort mining operations, following a pattern firmly established in neighboring Colombia. As a result, the border region of Ecuador has entered a new era, based on a new illegal economy and new underworld lords.
The results of this gold bonanza can be devastating both for the environment and for communities in gold-rich areas grappling with social problems caused by incursions of illegal mining. Unless authorities understand that the mining explosion is the response of a population with few legal alternatives, illegal gold could prop up the local economy in the same way as it has taken root in Colombia, Peru and elsewhere in the region.
Criminal groups and the Venezuelan government profit from illegal gold
Gold has become a vital support for the government of President Maduro in the aftermath of Venezuela's economic collapse. Given that oil production is stagnant and exports have been decimated by international sanctions, the state is in dire need of revenue and has few legal resources to exploit.
Despite US sanctions hitting Venezuelan gold in November 2018, Venezuela has continued to cultivate alternative relationships with international buyers, such as Turkey and Dubai. The pressure from the Maduro administration to replenish its dwindling gold reserves has created a dynamic of dependency between the government and criminal groups. At least 80 percent of Venezuela's gold is illegally mined. The state-owned mining company Minerven does little extraction on its own behalf, and instead funnels the gold to the Central Bank of Venezuela (BCV), gold that comes from the plethora of armed groups that control mining throughout the south of the country.
In March, the United States Department of the Treasury applied sanctions aimed exclusively at the company and its president, accusing them of "supporting the illegitimate Maduro regime."
Maduro's arrangement with the interests of illegal mining is convenient for the criminal actors involved. The regime remains afloat, while criminal groups make huge profits without interference from the state, and the country's economic crisis provides an incessant flow of exploitable labor. The local army gets its share by collecting protection from illegal mine operators.
Higher up in the hierarchy of the state, those loyal to the government also profit. Among the Venezuelan officials allegedly implicated in the illegal gold trade are the country's minister of industries and national production, Tareck el Aissami, and even the president's son, Nicolás Maduro Guerra. In June, the US Treasury sanctioned Maduro Guerra after former Venezuelan intelligence director Christopher Figuera accused him of creating a resource exploitation company that sold illegally mined gold to the BCV at inflated prices.
On the ground, relations between criminal groups are tense. The mining states of Amazonas and Bolívar have seen outbreaks of violence over disputes between rival groups over control of precious mineral deposits. Many of these clashes are associated with the rapid expansion of the Colombian guerrilla army National Liberation Army (ELN) in Venezuela. In the state of Bolívar, the ELN has expanded its criminal empire by seizing mines from local mafias known as “syndicates”, committing massacres, and subjecting local miners to dangerous conditions.
In an International Crisis Group report published in February 2019, a former ELN commander said that the group derived 60 percent of its income from mining in Venezuela and Colombia. Aside from gold, the group is said to control the coltan mines in Parguaza and several diamond mines in San Vicente de Paúl. These economies have contributed to the rapid evolution of the ELN, which has gone from being a Colombian insurgent group to becoming a Colombian-Venezuelan army, with a presence in at least 13 states of Venezuela.
Venezuelan mega-gangs, such as the Tren de Aragua, have also used illegal mining to expand their power. From its territory in Aragua, the gang has spread its tentacles south of Bolívar, where it now controls several deposits of the mineral and exports gold and coltan to Brazil. This diversification has provided the gang with new sources of income at a time when the country's impoverishment makes street crime less profitable. Today, the Aragua Train is arguably the biggest internal criminal threat in Venezuela, and a looming regional threat, with its expansion to Colombia, Peru and Brazil.
Dissidents from the Revolutionary Armed Forces of Colombia (FARC) have regrouped in the state of Amazonas, in southern Venezuela, and turned to illegal mining to finance their expansion. The Acacio Medina Front is active in the Yapacana mines, a region that has been considered a “giant money launderer” by the civil rights group SOS Orinoco, which tracks illegal mining in the Amazon regions. and the Orinoco, in Venezuela. There, the guerrilla groups invest the drug profits in the extraction of gold, launder those profits easily, and thus obtain higher returns. In the last year, these rents have allowed the ex-FARC Mafia to expand their operations to at least eight Venezuelan states.
In the Yapacana mines, local residents report that ex-FARC guerrillas work with the ELN in an implicit guerrilla alliance, according to SOS Orinoco. These pacts constitute a worrying model for closer criminal cooperation of these groups in the future, particularly in light of reported encounters between ex-FARC and ELN chiefs on the Colombia-Venezuela border.
In Amazonas, violent clashes have been reported between the ELN and the Bolivarian National Guard, reflecting developing tensions over the demand for extortionate payments to the army. In contrast, in the neighboring state of Bolívar, the Venezuelan deputy Américo de Grazia and the former governor of Bolívar, Andrés Velásquez, have denounced that the rapid expansion of the ELN is the result of a pact with the security forces to displace anarchic local mafias and impose order in the mining region.
In October, President Maduro announced that he would hand over a gold mine for each governor of his party to manage, with the purpose of financing their local governments. In November, a wave of atrocities swept through the El Callao mining region, shortly after the governor of Vargas visited the province to take control of his promised gold mine. A local mafia boss released a statement threatening local authorities for breaking their pact with the unions and allowing the ELN to enter the region. Local residents assured that this reconfiguration of powers obeys Maduro's plan.
Another emerging trend has been the commission of atrocities in mining regions. In the municipality of Gran Sabana, in the extreme south of Bolívar, the mineral deposits have historically been controlled by the Pemón indigenous group. Last year there were three lethal attacks against the Pemón communities, allegedly on the orders of the regional authorities, in Canaima, Santa Elena de Uairén and Ikabarú. Indigenous leaders believe that the massacres are the result of a deliberate strategy by the state to take control of indigenous mining operations.
The complex network of double criminal agreements and violence has a very high cost for the country.
Prospects for illegal mining
The illegal gold rush goes beyond Venezuela and Ecuador. In Brazil, mining has accelerated in the Amazon, as a result of which huge portions of the rainforest have been devastated. In the frenzy to find the deposits, Brazilian miners, known locally as garimpeiros, invaded indigenous reservations in 2019, setting swaths of land ablaze and even assassinating a local leader.
Brazilian President Jair Bolsonaro, who during his campaign promised to open the Amazon to commercial exploitation, has cracked down on efforts to combat illegal mining, which is estimated to bring in more than $ 1 billion annually, according to a report by New Yorker.
Neighboring Guyana and Suriname are also rich in gold… and biodiversity. Illegal mining has already devastated large swaths of the Amazon rainforest in Suriname. Criminal groups from Venezuela have settled along the border with Guyana, extorting local mining operations. Gold is freely smuggled between the two countries.
Smaller and less wealthy than their neighbors, Guyana and Suriname are ill-prepared to face incursions by armed actors in search of new mining operations.
Illegal gold smuggling has proliferated throughout the region. Bolivia has seen gold exports hit record levels in recent years, possibly due to smuggling from other countries. And the islands of the Dutch Caribbean have become a preferred transit point for clandestine gold exports from Venezuela.
In August, the owner of a tourist complex in the south of Bolívar, Venezuela, was identified as the coordinator of a trafficking network that laundered gold on the islands of Trinidad, Aruba, Curaçao and the Dominican Republic, in the Caribbean, taking it out by tracks clandestine landing sites.
Brazil is also a major exporter of illegal gold. A network exporting 1.2 tons of illicit gold - worth over US $ 55 million - was dismantled. Part of that gold was mined in southern Venezuela and shipped across the border with Brazil. The gold also came from illegal mining operations in the Yanomami indigenous reserve in Roraima, which straddles the border with Venezuela.
Venezuelan gold has also been smuggled directly into the United States. In September, authorities stopped a private plane in Miami carrying US $ 5 million worth of gold on its bow.
Unlike drugs, gold is easy to launder, making it especially valuable to transnational organized crime groups, including drug mafias. With the global price of gold soaring and high, illegal mining and illicit gold trafficking will continue to expand, furthering the interests of transnational organized crime for the foreseeable future.
By James Bargent and Cat Rainsford