"Enhancing coherence and consistency of the international monetary, financial and trading systems in support of development"
19 March 2010, UN Headquarters, New York
The International Network for Economic, Social and Cultural Rights (ESCR-Net) is a collaborative initiative of over 200 organizations, social movements and individuals from around the world working to secure economic and social justice through human rights. Since the break-out of the financial and economic crisis, we have sought to provide a semblance of coherency between government's economic policy and human rights norms and imperatives. Our most recent report "Bringing Human Rights to Bear in Times of Crisis: A human rights analysis of governments responses to the economic crisis" was released this month and is available in the back of the room.
As governments and international institutions begin to grow complacent, arguing that the worst of the crisis is over, we aim to bring civil society voices into the debate which attest to a different reality-a reality of deepening unemployment and underemployment, further disenfranchisement of the most vulnerable, the breakdown of social safety nets and protection systems and the associated increase in unpaid work done mostly by women, increasing hunger and repression of human rights defenders, and limited fiscal and policy space, particularly for developing country governments, to act take the necessary actions to avoid and prevent economic and social breakdown.
Economic policy is public policy. And so it is logical that we bring human rights to bear here, just as we do other forms of public policy, to ensure that economic policy-at the local, national and global levels-be carried out in accordance with the body of standards and principles offered by international human rights treaties. Lest we forget, human rights is a fundamental pillar of the UN system. Women's rights, worker's rights and the right to a decent job, the rights of indigenous peoples, the rights to education, health, adequate housing-these are all fundamental human rights which lay at the heart of the UN system.
As a result, ensuring coherency of economic policy at the global level in our view requires that the norms and principles of human rights underpin our fragmented international economic order.
So, what would it mean to enable this sought-after coherency through human rights principles?
It means that at a minimum, a set of 4 principles would lie at the heart of the processes to reform the international monetary, financial and trading system: Participation and transparency; equality/equity and non-discrimination; accountability and the centrality of human rights in economic policy.
Cooperation in the realization of human rights is an obligation of States. Despite the far-reaching consequences of financial policy measures, the inter-governmental bodies setting the agenda and designing financial reforms, such as the Basel Committee on Banking Supervision, the Financial Stability Forum and the G-20, limit participation from the majority of the world. The International Monetary Fund and the World Bank for their part continue to be ruled by principles that confine developing countries to a marginal role, and limit transparency in decision-making. Equally important, other international organizations which have the express mandate to protect human rights-in particular the Office of the High Commissioner for Human Rights-are largely excluded from the design of economic policy responses.
Therefore, we agree that only the United Nations-perhaps in part through the creation of a Global Economic Coordination Council-has the power to convene all actors in an open, democratic, transparent and legitimate manner. In this vein, we propose that representatives from inter-governmental organizations or special rapporteurs with an explicit human rights mandate be appointed to the ECOSOC panel of experts on the world economic and financial crisis and its impact on development once this body is established. We would like to see human rights experts invited to engage actively in the ad hoc Working Group of the General Assembly to ensure coherency between this Group's work and the human rights protection regime. Further, decisions on aid and financing for development should continue to engage all relevant stakeholders, including workers, farmers and peasants, indigenous people, women's and human rights organizations, older persons and others with much at stake, in an open, democratic and participatory manner.
2-Equality/equity and non-discrimination
The human rights principle of non-discrimination requires that States when acting within international fora ensure that all adopted economic policy measures avoid disproportionate effects, and that deliberate, targeted measures are put into place to secure substantive equality of access to basic services across countries and population groups. Disadvantaged members of society must be protected and uplifted as a matter of priority, even in times of severe resource constraints.
In this respect, it is troubling that so many policy responses to date have narrowly targeted formal and paid workers and the "productive" sector, with no emphasis on a significant proportion of people who work in informal and sometimes unpaid work arrangements. Unpaid care work should have a central place in macroeconomic models and analyses informing international policy. If not, the differentiated impacts of the economic policies on certain groups and the additional burdens the most vulnerable take on is obscured. This bias towards the formal and paid sectors not only fails to reach a key section of people facing the brunt of the crisis. It is also likely in conflict with the immediate human rights obligation to cease discrimination.
Furthermore, financial sector reforms should preserve the space for national governments to regulate banking services to ensure that financial market actors do not discriminate against the poor or disadvantaged, but instead serve the interests of society by ensuring access to credit for all. If state-provided banking services are considered a better option for achieving those purposes, they should not be restrained by inter-governmental actors.
Governments agreed in Doha that "...solid and strong financial institutions at the national and international levels are essential pillars of a well-functioning international financial system."
The financial crisis has shown the degree of systemic fragility embedded in the pre-crisis status quo. The global financial meltdown was not only a consequence of irresponsible and profit-driven behavior of financial entities transferring the burdens of their risks to the most vulnerable in society. Specific government policies designed to deregulate the financial system en masse enabled the permissive environment lead to the collapse.
This collapse set us back in the enjoyment several key economic and social rights worldwide, both within the North and the South. 400,000 children died last year due to the financial crisis. It has stinted the fiscal capacity and access to credit needed by many government to protect and invest in economic and social rights just at the moment this is most needed.
Indeed, much if not all of the FfD agenda is a fool's errand (partial and insufficient) without ensuring the complementary regulatory architecture needed to protect against abuses in the financial markets. Without instilling discipline in the financial markets, we'll just be setting ourselves up for another catastrophe. In this respect, guaranteeing oversight, transparency and accountability of financial market actors is itself is a sine quo non in our efforts to enable human development.
Yet, since the crisis broke out, governments in general have prioritized returning to the status quo ex ante, rather than recuperating their regulatory responsibilities over financial market actors. Some governments in fact are now attempting to sabotage common-sense and meaningful financial sector reforms in other countries and regions.
We would argue then that governments-domestically and in concert with others-have obligations to adopt policy and legal measures to protect against abuses by private actors and to prevent banking and any other financial sector entities (such as hedge funds, private equity funds, derivative instruments and credit rating agencies) from actions which risk interfering with the realization of human rights. In this vein, mandatory clauses in the General Agreement on Trade in Services (GATS) and Free Trade Agreements (FTAs) on the liberalization of trade in financial services should be swiftly removed and the ability of developing countries to use a mix of trade and investment policy tools necessary for them to mitigate the impact of the global financial crisis on their real economies should be supported.
Further, governments should take serious action to ensure that those individuals whose rights have been affected enjoy accessible and effective remedies to seek redress. Those responsible for harms, including private actors, must be brought to justice, and future activities affecting human rights prevented. Ensuring accountability is not only important in the pursuit of justice. It is also fundamental in deterring abuses and setting the groundwork to prevent future crises from occurring.
4-Centrality of human rights in economic policy
In the spirit of the UN Charter and applicable international human rights law, States are required to contribute to international cooperation in the full realization of human rights. This means that governments should ensure that the design and implementation of trade, investment or finance commitments do not conflict with their human rights obligations. When acting within inter-governmental fora at the center of the global monetary, financial and trading systems, such as the United Nations, the World Bank, the IMF, and or other ad hoc meetings such as the G-20, States must guarantee that their policies are consistent and conducive to the realization of human rights.
Cooperation in the realization of human rights is impaired when intrusive policy conditions are demanded by international financial institutions and donors. One example of this helpfully mentioned in the Secretary General's note are the continuing pro-cyclical conditionalities imposed by the IMF. In these times of economic crisis, these conditionalities are robbing many governments of their ability to take concerted expansionary steps to fulfill their solemn economic and social rights obligations just at the time they are most needed.
States then should be empowered to assert that their human rights obligations take full priority over any other economic, trade or investment commitments. Developing countries should have policy space to implement economic policies that are best for their citizens, particularly the disadvantaged, now and in the future. Conditionalities-especially on pro-cyclical fiscal policy-imposed by international financial institutions should be removed. More macroeconomic flexibility should be included in advance of any commitments of new resources to the IMF, and a guarantee should be established that countries have the choice to implement counter-cyclical policies, irrespective of budget caps, should these be most effective fulfilling their economic and social rights obligations.
We agree with others on the proposal of a coordinated global macroeconomic policy response that focuses on counter-cyclical and expansionary monetary, credit and fiscal policies not only in developed countries, but in all countries. This might include the implementation of a global stimulus package for gender equitable economic growth, full and productive employment and decent work, social protection, investment in social infrastructure and food security.
Human rights provide a clear and universal framework for guidance in the design, implementation and monitoring of economic policies and programs. The human rights framework offers an inclusive set of norms, and a shared reference point for analysis, action and accountability.
Human rights-centered economic policies which generate real equal access to the benefits and ensure shared burdens from the harms of economic activity-protecting people and the environment-are not only necessary as a matter of morality and justice. They are crucial to ensuring a more sustainable, more equal, more resilient and more coherent global economic system in these times of great uncertainty and transition ahead.