Hold IFIs Accountable for Backing State-perpetrated Human Rights Violations caused by Austerity Measures!

The Annual Meetings of the World Bank Group (WBG) and the International Monetary Fund (IMF) began last October 14 amid protests in Ecuador against the government’s withdrawal of fuel subsidy as part of the austerity measures bundled with an IMF loan worth USD 4.4 billion.

The protests, which began in early October, have halted production and blocked roads. Protesters led by the indigenous peoples (IP) have successfully pressured President Lenín Moreno to negotiate with the IP leaders. According to reports, Moreno has agreed to rescind the IMF package covered in Decree 883.[i] However, until Moreno’s proclamation is formalized, Ecuadorans remain vigilant against possible deceptive moves.

The midyear release of United Nations Independent Expert on foreign debt and human rights Juan Pablo Bohoslavsky’s report[ii] about the complicity of international financial institutions (IFIs) in state-perpetrated human rights violations related to austerity measures is relevant to recent events. According to the report, there is a “causal link” in the financial assistance provided by IFIs to human rights violations resulting from austerity measures. IFIs can be held accountable by international law standards.

IFIs have deceptively endorsed austerity measures as a way to economic recovery. Austerity measures are attached conditionalities in the assistance provided by IFIs such as the IMF and the WBG. Majority of the attached conditionalities in the loans provided by IFIs cover core economic policies. But over the years, the scope of the conditionalities expanded into the privatization of State-owned enterprises, labor issues, institutional reforms and poverty reduction policies. States make arrangements with IFIs during times of economic/debt crises, and IFIs use the disadvantaged position of the borrowing states as a leverage to exert its influence on the states’ economic policies.

Austerity measures have been popularized by IFIs since the 2008 global financial crisis as a strategy for fiscal consolidation. Fiscal consolidation refers to the steps that a government takes to reduce its deficits and debt. IFIs widely peddled that fiscal consolidation would contribute to economic recovery; however, the experience of countries that imposed austerity disproves this. A study of a group of European countries that imposed austerity between 2009-2013 shows that the harsher the measures were, the lower the GDP growth rate was.

Out of the two-thirds of countries in the world that implemented austerity, only some experienced brief economic growth, while most did not experience any contribution to economic growth and were doubly burdened by the negative impacts of austerity. Most countries especially of the global South such as Egypt, Cameroon, and Chad in Africa, Mongolia, Angola, and Sri Lanka in Asia, and Colombia and Costa Rica in Latin America[iii][iv] experienced freezing or lowering of minimum wages, regressive economic measures such as indirect tax, and cuts in basic social services. The people, especially women and the poor, experience the harshest impacts of austerity despite having no hand in the arrangements between states and IFIs.

People Over Profit (POP), a campaign network that unites people’s movements and civil society organizations (CSOs) across the globe in challenging IFIs, free trade agreements and corporate plunder, assert that austerity measures exacerbate structural inequalities as these directly affect the poor and other marginalized sectors. For instance, regressive tax reforms such as the value added tax in Colombia, Costa Rica, and the Philippines largely affected low-income households. These also perpetuate the oppression of women and girls as cuts in social services such as education primarily affect them. Austerity also increases their burden of unpaid care work.

Aside from the negative impacts of austerity measures in the enjoyment of economic, social, and cultural rights, IFIs are also linked to “regime consolidation” of states that commit gross human rights violations. In 2012, a strike in South Africa against a platinum mine in Marikana, funded by the International Finance Corporation of the WBG, resulted in the massacre of 34 people by state police. In the Philippines, environmental activist Gloria Capitan, who opposed IFC-funded coal projects in the country, was murdered in 2016. In Ethiopia, Pastor Omot Agwa was arrested and detained for advocating the rights of the Anuak indigenous group who were threatened with displacement by the World Bank.[v]

Bohoslavsky’s report reiterates that IFIs have a “shared responsibility” with states in the human rights violations resulting from austerity measures and, therefore, can be held accountable according to international law standards. Legal responsibility for IFIs can include cessation, guarantees of non-repetition, and reparations.

POP supports the Ecuadoran people as they set a valuable example on the power of the people’s movement against neoliberal vanguards, the IMF and WBG. It calls on the international community to stand with people’s organizations and movements in holding IFIs accountable for facilitating state-perpetrated human rights violations. IFIs and state actors must be held responsible for their oppression of the people.

Shut down the IMF-World Bank, not the people’s dissent!

End corporate plunder!

Fight for people’s right to development!

Reclaim our rights and future!

[i] https://apnews.com/1a0ae2d37624412a8c1cc2b9d71cf7d0

[ii] Effects of foreign debt and other related international financial obligations of States on the full enjoyment of all human rights, particularly economic, social and cultural rights, available at https://undocs.org/A/74/178

[iii] Ibid., par. 53-55

[iv] http://www.cadtm.org/Crisis-deepens-as-global-South-debt-payments-increase-by-85

[v] https://www.brettonwoodsproject.org/2019/07/landmark-report-finds-attacks-on-human-rights-defenders-in-name-of-development-on-the-rise/

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