Gaby Oré Aguilar is Deputy Executive Director at CESR
Three years ago, in April 2012, the Spanish government issued Royal Decree 16/2012, declaring the need to adopt “urgent measures to guarantee the sustainability of the national health system.” This effectively put an end to the universality of health service provision that this country had previously enjoyed. One of the principle measures contained in this decree was the suspension of all health services to undocumented migrants living in the country, with the exception of emergency services for children and pregnant women.
As a consequence of this decision, the government revoked health cards – the documents that ensure access to public health services in Spain – for more than 870,000 people, thereby excluding them from access to health services and medications, including treatments for serious and infectious diseases.
“We are willing to take a step”
Yesterday Spain’s Ministry of Health announced in an interview with a news agency that undocumented migrants in the country would once again be provided primary health care by the National Health System (SNS), but it also announced that the health cards revoked in 2012 would not be restored. As such, universal access to health care has not been restored. Moreover, it affirmed that the decision was a response to “matters of public health”, to “not saturate emergency rooms” and because “it’s more practical”.
The reluctant tone of the announcement and the restrictions expressed by the Ministry have provoked skepticism, particularly among organizations working for the protection of migrants’ health, associations that protect public health services, and unions, which have highlighted the insufficiency and opportunism of the move.
The measure is a step in the right direction and, for many undocumented migrants; it represents a potentially life-saving opening to access health services, but without health cards, access to specialized treatments, medications, nor any guarantee of continuity. As such, restoration of the right to health of this sector remains a pending task in Spain.
As has been affirmed by Red ACOGE, “the right to health care is still not guaranteed in Spain.” Médicos del Mundo has meanwhile stated that “this measure in no way represents the restitution of the universal model of our health system, nor does it restore the rights which were eliminated by RDL 16/2012”.
Furthermore, the Spanish government has not explained why the exclusion of undocumented migrants was deemed both urgent and necessary for the sustainability of the national health system, nor indeed why it is now prepared to backtrack for reasons that have little to do with the motives of austerity and economics that were previously cited.
National and international pressure
The Spanish government’s u-turn has not come about by chance. It has found itself obliged to give in – albeit in a partial manner – as a result of two preponderant factors: the sustained and growing pressure, at both the national and international levels, about the discriminatory and regressive character of the measure; and the current pre-electoral political context in Spain. The opposition and new political actors which have emerged from the popular discontent generated by austerity measures, have made it clear that they will include the restoration of universal health in their electoral agendas.
The adoption of RDL 16/2012 by the Spanish government has been repeatedly and severely criticized by various United Nations bodies, such as the Committee on Economic, Social and Cultural Rights, Special Rapporteurs and Independent Experts; by the European Committee on Social Rights, and most recently by more than a dozen countries participating in the Human Rights Council. These voices have repeatedly denounced the discriminatory and regressive character of the health exclusion of undocumented migrants as a violation of international human rights law.
Since 2012, the Center for Economic and Social Rights has worked together with a broad coalition of organizations to generate the evidence and arguments necessary to provoke recommendations and directives from international human rights mechanisms regarding the negative impacts of austerity policies in the country. Similarly, it joined the efforts of its national partners – Médicos del Mundo, Red ACOGE and Amnesty International – to denounce the exclusion from health services of one of the most vulnerable and hardest hit sectors in the context of the economic crisis. The joint campaigns and advocacy actions of these organizations have placed these concerns firmly on the political and media agendas, and more recently on the electoral agendas of the political parties.
RDL 16/2012 has also been brought before the courts. Various autonomous communities – the Basque Country, Navarra, Asturias and Andalucía – have considered that this law violated the Spanish Constitution, that it invaded their territorial competency, that it was not justified as an emergency measure, and consequently filed complaints in opposition to the decree. These complaints are now pending a ruling by the Constitutional Court.
Recently, Red ACOGE and CESR presented a demand against a Ministerial Order issued by the Ministry of Health, Social Services and Equality (SSI/Orden 1475/ 2014) which establishes fees and requirements for persons excluded from the public health system by Royal Decree 16 to buy alternative health insurance giving them access to basic care through “special agreements” with the health administration. The petition argues that said norm was unconstitutional, in the same way as the Royal Decree from which it is derived (RDL 16/2012). The fees established by the norm are comparable to those of private health insurance. The government did not take into account the impact that the charges would have on the population at which it was targeted. Moreover, the norm introduces tougher access requirements than the law which created these “special agreements”. The National Court admitted the claim, which is now pending resolution before the same body.
What remains to be done
Access to universal health care is a human right that must be restored in Spain. This means providing health cards to those from whom they were revoked in 2012, in order that they have access to health services whether these be primary or specialized. From a legal standpoint, it means repealing or modifying Article 3 of Royal Decree 16/2012 which divides the population among insured and beneficiaries, and excludes undocumented migrants from accessing health services. The government, through its spokesperson in the Ministry of Health, Social Services and Equality Alfonso Alonso, has not shown any inclination to implement any of these steps.
On the contrary, in announcing the restoration of primary health care services for undocumented migrants the Minister has declared himself to “be opposed” to undocumented migrants having access to health cards, saying that this would give them a right that “no other country in Europe” provides.
The Minister overlooks the principle of universality contained in the European Charter of Social Rights, which obliges member states to provide access to health care to the entire population without discrimination and independently of their administrative status. The European Committee on Social Rights reminded Spain in 2014 that RDL 16/2012 transgressed Article 11 of the Charter, to which the country is a signatory, indicating that said article obliges states to ensure universal access to health. That is to say, that the health system must be accessible to the entire population without discrimination of any form.
In the immediate term, it is important to make sure that the implementation of the restoration of primary health services is effective and compliant with the fundamental rights of this collective. In the medium and long term, CESR will continue working with its national partners for the restoration of the rights of universal access and health coverage in Spain.
Posted by Gaby Oré Aguilar on April 2nd, 2015
That young people represent the future may seem like a hackneyed platitude, but in an age when their human rights are under siege as a result of the economic crisis and the austerity measures imposed in its wake, it is deserving of renewed consideration. This is not lost on the Council of Europe’s Commissioner for Human Rights, Nils Muiznieks, who has warned that the continuing assault on young people’s economic and social rights following the crisis may lead to a ‘lost generation’ of Europeans, and serious consequences for social cohesion and political stability.
Drawing on the recently-published Council of Europe issue paper ‘Safeguarding Human Rights in Times of Economic Crisis’, commissioned from CESR, Muiznieks issued a statement this week highlighting how young people have been one of the groups hardest hit by the economic crisis in Europe. Youth unemployment, described as "the most common pathology of many countries implementing austerity measures", is now twice as high as the overall average in the EU, with particularly hard-hit countries, such as Greece and Spain, showing youth unemployment levels of over 50 per cent. Unjust cuts to education, health and other public services are likewise prejudicing youth and older persons disproportionately. What’s more, young people’s right to participation in political life has also been eroded, both through opaque policymaking and a crackdown on dissent in many countries, leading many young people to lose faith in current structures of governance.
The Commissioner calls for ¨a rights-based approach [to] replace the current neglect of young people in discussions about the crisis.¨ Citing the recommendations of the recent issue paper, he argues that measures tackling youth and long-term unemployment should be given priority in labour policies and that any temptation to lower labour standards and social protection when employing young people must be resisted. He stresses the role of national human rights commissions and equality bodies as a channel through which state institutions can be made more responsive to the concerns and grievances of young people and others hit hardest by the crisis. The Commissioner also highlights how new and existing legal instruments can strengthen protection against age discrimination and safeguard the rights of all people across the life course.
The statement is a welcome follow up to the CESR-commissioned issue paper, which warns that cuts to social spending, regressive tax hikes and the weakening of labor protections in the face of the crisis are in many cases incompatible with international human right law, and are penalizing the most vulnerable sectors unfairly. Safeguarding Human Rights in Times of Economic Crisis also proposes a set of actionable recommendations for governments to align their economic recovery policies with their human rights commitments, for example through progressive tax reforms, the implementation of human rights and equality impact assessments, the provision of adequate social protection and ensuring access to justice.
The economic logic of austerity is increasingly being challenged, as continued waves of cutbacks fail to deliver meaningful improvements in national economies. Being mindful of the potential long-term consequences, Europe’s decision-makers would do well to question the logic and legality of trampling on young people’s human rights as well.
- ‘Safeguarding Human Rights in Times of Economic Crisis’ is available in English, Spanish, French and Greek.
- To learn more about CESR's work on human rights and the economic crisis, see here.
Posted by Luke Holland on June 5th, 2014
Just this week, the UK Parliamentary Commission on Banking Standards—hardly a bastion of radical thinking—supported robust judicial accountability and personal responsibility for senior bankers involved in financial misconduct. The US Securities and Exchange Commission for its part finally decided to require those involved in egregious financial misconduct to actually admit wrongdoing, rather than just pay a nominal fee. Could these be baby steps towards justice for prompting the deepest economic crisis in a generation?
Much has also been made of the role of de-regulation, or rather biased regulation favoring financiers over working people, in undercutting the ability of governments to implement their duty to protect people against both individual financial abuses, like predatory lending, and systemic risks posed by poorly regulated financial actors.
Yet, the systemic lack of accountability of financial actors—while related to regulation—is less discussed for its role in sparking the financial crisis. Moral hazard, flawed incentives and the abdication of personal or institutional responsibility for the downside costs of financial activities is no doubt a related contributing factor to the financial crisis. Financial actors feared no meaningful sanctions or corrective actions enforced either by the market or the State. Financial industry professionals assumed correctly that the State would ultimately assume the downside hazards for the risks inherent in their financial dealings, while they would continue to enjoy the upside gains. The failure of government to establish an effective and predictable system of risk and remedy management and accountability systems to prevent and deter extreme risk-taking further exacerbated this problem by freeing financial actors from having to directly bear the costs of their own misconduct. Financial sector players felt free to leverage themselves to excessive levels, to an extent they never would have had there been predictable consequences. The financial market actors responsible for aggressive speculation, unethical lending practices, and promoting the type of de-regulation which fuelled the crisis have by and large not been held to account for their actions, certainly not criminally. Even where proper regulations were in place, such as criminal offences or fraudulent malpractice (e.g. in the writing of sub-prime mortgages), regulatory agencies lacked the will or capacity to effectively enforce them, leading to a dearth of meaningful accountability. Even the most powerful attorney in the world, US Department of Justice Secretary Eric Holder, more or less admitted that big banks were too-big-to-jail, a position which the Dodd-Frank financial regulation bill did little to change. Justice, in other words, is not blind.
So, it was not only the inadequacy of pre-distributive, redistributive and regulatory policies that were at the root of the crisis. It was also the absence of robust mechanisms of accountability and predicable punishments and remedies for misconduct that could have preempted the displacement of private risks onto public accounts, obliged risk-takers to absorb the consequences of their own actions, and protected those groups who too often find themselves at a disadvantage, particularly low- and middle-income taxpayers who have been forced to bear the brunt of the crisis.
In this sense, effective remedy for the social costs of the financial crisis is not only about making those responsible pay the price for their role. Justice and accountability is essential in order to prevent foreseeable harms financial institutions will continue to pose in the years to come.
If we are going to get real about preventing another systemic financial collapse, concerted action by governments—individually and in cooperation—to exercise their regulatory, redistributive and remedial roles in the economy is now more important than ever.
This blog article, by CESR Senior Researcher Niko Lusiani, was originally written for the joint civil society initiative Righting Finance: A Bottom-Up Approach to Righting Financial Regulation. Photos courtesy of Scott Lynch (Flickr).
‘True compassion is more than flinging a coin to a beggar; it comes to see that an edifice which produces beggars needs restructuring.’ - Martin Luther King, Jr., 1967
‘The difficulty lies not so much in developing new ideas as in escaping old ones.’ - John Maynard Keynes, 1935
If he were not assassinated while building a cross-racial, nationwide Poor People’s Human Rights Campaign for decent work and a living wage for all, Martin Luther King Jr would have turned 84 this week. As a testament to his legacy, President Barack Obama will be sworn in upon King’s very own copy of the Bible. But do the iconic human rights leader’s principles inform the President’s priorities? King’s last years were dedicated to economic justice for all, and he would surely be turning in his grave at the sight of private financial actors running roughshod over working people worldwide. What will President Obama—the one man ultimately responsible for holding Wall Street accountable, and with decisive voting power in the world’s primary public financial institution, the IMF—do to stem the tide of deepening deprivation and disparity at home, a European continent mired in the black hole of austerity, and a globalized financial system using US territory to concentrate wealth and power at the top? Is this too tall a task for an administration facing severe domestic constraints?
It would seem the International Monetary Fund has been experiencing something of an epiphany lately. Or so the story goes.
In a much-lauded study released by the IMF’s head economist this month, the institution admitted its fault for miscalculating how bad austerity-based economic policies would be for countries in crisis; two to three times as bad as previously estimated for Greece, Ireland, and Portugal, for example. Not only did every dollar of budget cuts or tax increases rob people of around a buck and a half of economic growth, the regressive policies also depressed investment and consumption even more than recognized, especially at the early stages of the crisis. This is not an academic exercise, let’s remember. IMF forecasts on growth determine to a large degree the price governments have to pay to borrow money in a crunch, and thus the cost of essential public services like health, education, jobs programs, unemployment insurance, and food assistance which are so necessary to prevent an even deeper human rights crisis in times of recession. Let’s leave aside for a moment the regressive conditionalities set by the IMF in its deals to bail out Ireland and Greece. By advising many other governments to roll back essential public services in dire economic circumstances, inaccurate IMF estimates cost people their livelihoods, and, in some cases, their lives.
Much damage has already been done. But let’s call a spade a spade, and extend a tentative bravo to IMF researchers for inching the organization toward shelving this antiquated ‘cut-to-grow’ myth. Indeed, this recent mea culpa precedes a body of work questioning a series of its most-cherished institutional positions, for example on capital controls, inflation targets, macro-prudential financial regulation, the effect of many free trade agreements on the ability of governments to regulate their financial markets, along with the role of income inequality in driving financial instability.
While attending the International Monetary Conference in Savannah, Georgia—not far from where Martin Luther King Jr. was born and lived most of his life—a deeply disappointed John Maynard Keynes spent what were to be his final days watching as his intellectual children, the International Monetary Fund and the World Bank, went awry in their 1946 inauguration, captured he feared by the might of the US’ newfound economic and military superiority. Inspired by the performance of the Sleeping Beauty he’d recently seen, Keynes wished some mythical fairy-godmothers would grant Master Fund and Miss Bank three gifts: first, a rainbow coat ‘as a perpetual reminder that they belong to the whole world’; second, vitamins to encourage ‘energy and a fearless spirit, which does not shelve and avoid difficult issues, but welcomes them and is determined to solve them’; and lastly, ‘a spirit of wisdom … so that their approach to every problem is absolutely objective.’
Will the IMF become an evolving, creative, evidence-based, wise, and truly global institution with everyone’s interest in mind, and a firm determination to fight back against the fiscal fallacies reproducing poverty, inequality and economic strife? Or will it continue to succumb to the inertia of old ideas, and remain a guardian of an ideologically-captured economic edifice owned by and acting for the economic elite, with only charitable crumbs for the poor?
Let us hope on this day that King’s legacy speaks across the ages to inspire the institution’s biggest vote-holder, Barack Obama, to make Master Fund’s fundamental aim the realization of economic and social rights for all.
This blog by CESR Senior Researcher Niko Lusiani was originally written for the Righting Financial Regulation website.
Posted by Niko Lusiani on January 20th, 2013
Europe’s much talked-about financial transactions tax has come one step closer after a coalition of 11 countries – including France, Germany, Italy and Spain – agreed to move ahead with the initiative despite the opposition of several other states. A number of countries, such as Britain and Sweden, remain opposed to the ‘FTT’, but at a meeting of European Union finance ministers on Tuesday its proponents decided to avail of the EU’s ‘enhanced cooperation’ facility, thereby clearing the way for officials to begin designing the mechanism.
Much work remains to be done if the FTT is eventually to become a more widespread reality, however, as certain key states remain reticent. Indeed representatives of the world’s largest economy have been accused to trying to convince other countries not to go ahead with it. In a joint letter to US Secretary of State Hillary Clinton and Secretary of the Treasury Tim Geithner, CESR joined a large group of US civil society organizations such as ActionAid, Friends of the Earth US, Grassroots Global Justice Alliance, National Nurses United and Tax Justice Network USA to call on the US government to stop discouraging other nations from considering an FTT. The letter was issued after a US official made misleading statements, insisting that the FTT was not feasible. Paul Bodnar—a member of the US climate negotiating team—argued at a recent UN meeting on climate change financing that it would be all but impossible to implement the FTT globally, and that financial traders would find ways to circumvent it anyway. He also affirmed that finance for climate change mitigation — one of they central motivations cited by those advocating for the FTT – should be directly linked to emissions. His arguments are rebuffed in the joint letter, which was signed by some 63 civil society organizations. Such taxes do not have to be global to be effective, as demonstrated by the fact that they are already up and running in many countries, and international financial transactions are actually relatively easy to monitor. The idea that a tax must be directly linked to the source of taxation, meanwhile, is patently erroneous. The weight of the civil society initiative, led by Friends of the Earth, was reflected in extensive media coverage as influentia institutions such as Bloomberg reported on the letter.
Civil society has also targetted World Bank President Jim Yong Kim in a joint letter, calling on him to use his position to champion the ‘Robin Hood Tax’, as it has come to be known. CESR added its voice to that of 57 other organizations by signing the communiqué, which provided yet more evidence of the growing civil socity consensus on the practicality and importance of the FTT. The viability of the financial transaction tax is further underlined by the backing it has received from many prominent economists and political actors. Support from leading business figures like Bill Gates and Warren Buffett is mirrored in the endorsement of political and diplomatic leaders such as Kofi Annan, Al Gore and even IMF boss Christine Lagarde.
In a time when multiple crises are exacting a devastating toll on the wellbeing of ordinary people everywhere, political leaders would also do well to remember the human rights principles underpinning calls for the financial transactions tax. The measure would go some way to integrate a modicum of equality and progressivity into a system where these are sorely lacking. Keeping in mind the role high-frequency trading has played in provoking the food and fuel crises, not to mention ongoing economic quagmire in which the world finds itself, the FTT could also help in preventing human rights abuses by third parties, as is required by international human rights law.
But perhaps most obviously, the FTT is precisely the kind of common-sense measure that would help governments comply with their obligation to mobilise the “maximum of available resources” for the protection of economic and social rights. It is estimated that the European FTT could raise in excess of €57 billion (US $75 billion) a year for the protection economic and social rights, while an FTT rolled out across the G20 group of nations could mobilise in excess of $250 billion.
Photograph of FTT demonstrators in Belgium courtesy of Oxfam Belgium
Amidst the deep economic crisis in which it currently finds itself, the Spanish state has an important date with the United Nations on May 7 and 8 at which it must explain the human rights repercussions of its social and economic policies. When Spain appears before the Committee on Economic, Social and Cultural Rights (CESCR) for the first time in eight years it will be obliged to respond to the international community for its handling of the crisis and for the severe austerity measures adopted to confront it, which are putting the enjoyment of economic, social and cultural rights at risk.
The Committee is one of the international system’s mechanisms for defending and guaranteeing human rights. Lamentably, these are often unknown to much of society. The mission of the Committee on Economic, Social and Cultural Rights is to supervise the application of provisions in the International Covenant on Economic, Social and Cultural Rights by states that have ratified it. This international treaty – ratified by Spain in 1977 – includes binding legal obligations that states must respect, protect and fulfill with regard to the rights to decent work, social security and protection, protection of the family, and an adequate standard of living, along with the rights to housing, education, health, culture and rights at work. The Committee evaluates the degree of compliance with the Covenant, not only in terms of the national legal framework, but also with regard to the translation of these norms into public policies, the resources deployed and the corresponding impact of government action on the full enjoyment of these human rights.
Since the last time Spain appeared before the Committee in 2004, the situation of economic and social rights in the country has suffered a series of reverses, with the economic crisis as a backdrop: unemployment has reached historic levels, affecting almost 24 per cent of the population and half of young people under 25; child poverty is besieging one in four boys and girls; mortgage repossessions have multiplied, resulting in thousands of families losing their homes, and cutbacks are exacting a heavy toll on health and education.
For its part, civil society has produced a number of alternative reports providing evidence of this situation. One particularly strong example is the Parallel Report delivered by a coalition of 19 Spanish NGOs. Some of the organizations which participated in this coalition presented their conclusions and recommendations to the ESCR Committee in Geneva on May 7, in advance of Spain’s examination.
The conclusions of this report point to an extremely worrying situation, confirming the pernicious effects on economic and social rights of the austerity measures adopted by Spain to confront the economic and financial crisis. Similarly, it has become clear that inequality in the distribution of resources in Spain, which in turn leads to differences in and threats to these rights according to geographic location, has increased, while there is a marked absence of specific measures to protect the most vulnerable populations (women, immigrants, persons with disabilities, the Gitano community and children). The report also provides evidence of deficient accountability of the Spanish state and the absence of effective mechanisms to promote real and effective civil society participation in economic and social matters.
In accordance with Article 2 of ICESCR, Spain committed to adopt measures “to the maximum of its available resources, with a view to achieving progressively the full realization of the rights recognized in the present Covenant by all appropriate means”. It can be affirmed, as indeed it was by the United Nations High Commissioner for Human Rights Navi Pillar at the opening of the 48th session of the Committee, that “at a time of dwindling resources and shrinking national budgets, we must insist that such obligations be carried out. (The) Committee has a vital role to play both in discouraging the adoption of retrogressive measures that may negatively impact on people’s social rights, and in helping to find viable responses to the crises in respect of international human rights law.”
Spain faces a crucial examination to determine whether it is complying with the human rights obligations by which it is bound; it must give account of its progress, or deterioration, in the field of ESC rights.
For more information, see the Joint Submission to the Committee on Economic, Social and Cultural Rights of the United Nations, presented by the Center for Economic and Social Rights and 18 other Spanish civil society organizations in May 2012. The sessions will be broadcast on the internet at: www.treatybodywebcast.org.
Photo of anti-austerity protesters courtesy of Olmo Calvo.
We live, it has been said, in an age of rights. Undoubtedly, the world is in many ways a more rights-respecting place now than when the Universal Declaration of Human Rights was adopted 63 years ago to the day. Thanks to the tireless efforts of local human rights defenders and global movements such as Amnesty International, today’s governments are much less likely to imprison people for their beliefs or opinions, subject them to the death penalty or allow perpetrators of political killings and atrocities of war to escape justice. Human rights have become a marker of legitimate governance, and are a central point of reference in the foreign policy and justice system of practically every country across the globe.
But we also live in an age of austerity, in which many governments are rolling back social welfare gains, weakening labour protections and curtailing economic and social rights in the wake of the greatest global recession since the 1930s. How to balance the fiscal deficit, regulate the volatile financial sector and promote sustainable economic recovery are among the key policy challenges of our time, with profound human rights implications. Yet human rights are largely absent from the debate on these issues, whether at national level or in recent international forums such as the G20, the Busan conference on aid effectiveness or the EU Summit discussions on the European debt crisis.
When it comes to economic and social policy, our leaders seem more concerned to heed the will of the markets than to protect the economic and social rights of their people. In the words of the UN High Commissioner for Human Rights, “political leaders seem to have forgotten that health care, education, housing, and the fair administration of justice are not commodities for sale to the few, but rather rights to which all are entitled without discrimination. Anything we do in the name of economic policy or development should be designed to advance these rights and, at the very least, should do nothing to undermine their realization.”
Economic and social rights are neither new nor optional. The 1948 Universal Declaration proclaimed the right of everyone to an adequate standard of living, including food, housing, health and social security, as well as the right to education and to decent work in just conditions, placing these rights on an equal footing with civil and political freedoms. Its drafters sought to consign to history the abysmal levels of poverty, preventable disease and chronic hunger of the post-war world, as lethally tyrannous and crushing of human dignity as conflict, dictatorship and political repression. They would surely be shocked to see the scale of deprivation and inequality that persists amid the unprecedented affluence of the 21st century.
All states have ratified at least one of the core international treaties addressing economic, social and cultural rights, thereby committing to honour the binding legal obligations these set out. Many have enshrined these rights in their national constitutions. Over the last 20 years there has been steady progress in claiming and enforcing the rights to health, education and housing (among others) through domestic courts and international bodies. The impact of legal enforcement has been literally life saving. A new UN complaints mechanism on economic, social and cultural rights, adopted three years ago today, is likely to enter into force next year - a major sign that states are committed to closing the gap in legal protection afforded to these rights.
But economic and social rights must be realized through policy as well as law. Ministers of finance and other key economic and social policymakers seem oblivious to the economic and social rights commitments their countries have signed up to. Yet these must serve as guiding principles of any economic recovery strategy. At the very least, human rights mark a set of red lines which should not be crossed even in times of economic recession: policy efforts should not have discriminatory effects or represent deliberate backsliding on rights; available resources should be maximized through progressive tax reform as well as more equitable spending; and certain minimums, such as guaranteeing a universal social protection floor, must be safeguarded and prioritized in all circumstances.
Matters of economic policy are not the sole preserve of technocrats. They cannot be shielded from citizen scrutiny and participation. There is an increasing clamour for a fairer alternative to the prevailing policy orthodoxy which dictates austerity measures for the majority while protecting the privileges of economic elites. Policymakers must heed these calls for a rights-centred approach to economic and social policy. If they do not, the age of rights may not survive these times of austerity.
The views expressed in this blog are those of the author and do not necessarily reflect the official position of CESR.
By CESR Senior Researcher Niko Lusiani.
It’s time for the self-selected rulers of the economic and financial universe to meet once again, this time in Cannes, France, to debate amongst other things financial regulation. So what’s at stake for economic and social rights?
In the midst of growing public resistance to rising inequality and an economic recovery biased toward the financial elite, the Group of 20 governments will meet later this week to thrash out several issues of fundamental importance to economic and social rights, perhaps most importantly financial regulation. As part of our ongoing efforts to defend against austerity-driven cutbacks and promote human rights-centered economic policy alternatives, my organization the Center for Economic and Social Rights (CESR) has joined the Center of Concern, Social Watch, CIVICUS and over 180 other social justice organizations from 54 countries to urge G-20 governments to meet their legal obligations to respect, protect and fulfill human rights by endorsing human rights-centered stimuli measures, preventing speculative activity that undermines the enjoyment of human rights, and preventing future financial collapse from harming public resources needed for human rights fulfillment. As part of their human rights duties, G-20 governments should also ensure financial institutions pay for the human rights costs of the crisis, and cooperate in increasing transparency and mutual accountability in the raising of revenue.
Human rights-centered economic stimulus measures
The global recovery so feted six months ago is now teetering, if indeed it ever really stood on its own feet. As we approach the brink of another global recession - this time driven largely by fiscal austerity policies and continuing financial instability - peoples’ access to such basic rights as food, clean water, employment, affordable housing, quality education, social security, and a decent retirement - all of which are already under severe strain - are facing an ominous future. Participatory, transparent, accountable and non-discriminatory economic stimulus measures, on the other hand, can boost demand for goods and services (and thus economic activity) by putting resources into the pockets of people who have no choice but to spend them because of the immediate economic and social deprivations they face. In restoring economic activity (and thus revenue), stimulus measures can also provide the conditions to later pay down any unsustainable public deficits, while also contributing to the building of social, physical and human assets which are the pillars of a productive economy. And the options available to G-20 governments are not hard to find. They include gender- and environmentally-sensitive public infrastructure programs, transformational universal social protection systems, debt restructuring programs to relieve people of onerous housing or student debt burdens, and measures to increase the disposable income of the poor.
Gambling on famine: financial market speculation in commodities
Since the financial crisis, prices in certain commodities - oil and food in particular - have become more and more volatile. As a result, governments and the people they work for have been facing serious economic and social rights challenges, as more and more people are driven into hunger and malnutrition, thus eroding even further the prospect of achieving the MDGs by 2015. The 2008 food crisis, for example, was driven to a large extent by opportunistic commodity trading. The question that begs to be answered, therefore, is from whence has this volatility come? Study after study after study have shown that speculation in commodity derivative markets by globally-significant financial institutions like Goldman Sachs is a significant cause of this rights-threatening volatility. Even the UN Special Rapporteur on the Right to Food has attested to the links. While the US has taken some tentative regulatory steps to lightly reign in this speculation, a concerted global approach is needed. G-20 governments can make a start on meeting their obligations to prevent rights infringements stemming from financial speculation by bringing over–the-counter derivatives to public exchanges, establishing meaningful position limits on commodity derivatives, setting up of circuit-breakers, compulsory delivery or altogether banning certain types of derivatives trading in exchanges under their jurisdiction.
Which are too systemically important to fail: banks or human rights?
Over four years after the deepest financial crisis in 50 years, governments - and in particular the US administration - are no closer to guaranteeing that financial institutions will not pose a repeated threat to the global economic system. Will governments once again be forced to bail out banks with public funding at the expense of human rights? Large and complex financial firms, some of them operating in dozens of jurisdictions, have successfully resisted calls to reduce their complexity or size. They are able to profit from the tax and regulatory arbitrage that such a position makes possible, while their intricacy and enormity limits the chance they can be successfully resolved without disrupting vital banking activities in the event of a collapse.
This situation represents a tragedy of the highest order, and is an offense to governments’ legal obligations to take legislative and other steps to prevent and protect against foreseeable systemic human rights infringements by the financial sector. In order to fulfill their duty to protect human rights by preventing further systemic risks, the G-20 governments must undertake measures to reduce the size and complexity of systemically important institutions. This would mean breaking up large firms through direct regulatory intervention, if necessary. Banks cannot be allowed to gamble other peoples’ life-savings away, and so proprietary trading must be firmly separated from traditional banking services.
Governments must make a simple choice. Which are too systemically important to fail: individual private banks or fundamental human rights guarantees?
Bank capital requirements to prevent human rights harms
Like much in the era of liberalization and privatization, governments continue to rely on banks themselves to monitor and police their own capital requirements, in keeping with a model that still holds sway under Basel III’s new global regulatory standard on bank capital adequacy. The regulatory blind-eye afforded to banks, enabling them to hide the true extent of their risks (both to themselves and the global economy), was a significant contributing factor in the 2007 financial crisis which reeked havoc upon human rights worldwide, causing over 400,000 deaths of children in 2009.
Discipline and human rights protection can and must be instilled. In the short to medium term, governments should see regulation of banking services as one essential tool to enhance enjoyment of human rights for all. Instead of giving breaks to manipulative private financial institutions, governments should use regulatory tools to ensure substantive financial equality by protecting the poor and disadvantaged, and, where necessary, allowing for direct state engagement in the provision of banking services.
In the long-term, governments are going to have to replace the existing Basel III requirements with a framework for banking regulation that fully recognizes the duty of states to prevent, protect against and provide effective remedy for human rights infringements caused by irresponsible private financial activity. Stronger capital requirements will no doubt eat into the record profits of the financial sector, and so we can expect them to continue to fight and even blackmail everyday people by withdrawing credit from the economy. Nevertheless, there is little justification for their grievances when these institutions continue to enjoy record profits, pay record bonuses, and claim to operate on a highly efficient basis due to their artificially large size.
Tax justice: raising available resources for economic and social rights
Ask any government why it’s failing to live up to its legal commitments to fulfill the human rights to health, education, social security, work, or any other economic or social right, and they’ll likely tell you they’re broke. Yet, sources of financing are abundant. Governments are in fact obliged to expand their fiscal space under the International Covenant on Economic, Social and Cultural Rights in order to deploy the “maximum of their available resources” either domestically or through international cooperation to fulfill economic and social rights. What’s more, this obligation does not apply only to the resources under their command now; it also considers those resources which can come under their command in the future via more progressive taxation or financial regulatory policy, for example.
Unfortunately, quite the contrary has occurred over the last three decades, as freedom of capital and investment has generally led to more indirect and regressive tax policies which by definition disproportionately affect poorer and middle-income households. Instead of being held financially accountable for their role in the ongoing financial crisis, governments have for the most part failed to take an obvious first step by making banking and investment institutions and the rich pay their fair share. A once-in-a-generation deal on financial transaction taxes supported by Germany and France could raise substantial sums for desperately under-resourced economic and social rights programs, if it weren’t for the United States, Canada and surprisingly India blocking it. Illicit financial flows - estimated to add up to $1-1.6 trillion per year (more than 10 times worldwide foreign aid) - meanwhile continue to starve governments of essential sources of funding. Those states which facilitate tax evasion and corporate tax holidays, house tax havens, enable secrecy jurisdictions or are otherwise complicit with such illicit cross-border flows should live up to their obligations to cooperate internationally by putting an end to actions or omissions which prevent governments from raising the resources needed to fulfill their human rights obligations and get the economy back on its feet again.
The G-20 countries must acknowledge their responsibility to protect people against the vagaries of an out-of-control financial system, and act before it’s too late.
Niko Lusiani is Senior Researcher with the Center for Economic and Social Rights. Photo of Wall Street protester by Runs With Scissors/Ken Stein Photography. Photo of Mumbai slum by Luke Holland. Photo of President Obama at previous G20 summit courtesy of Downing Street, London. Photo of Afghan child drinking from water tap courtesy of United Nations Photo.
The views expressed in this blog are those of the author and do not necessarily reflect the official position of CESR.
The statement signed by CESR and 185 other social justice organizations can be accessed below:
Posted by on