Subject: Structural adjustment programmes and debt, as items of consideration under Item 10 – economic, social and cultural rights – of the provisional agenda of the United Nations Commission on Human Rights, fifty–sixth session (March – April 2000).
Prepared by: Derek MacCuish, Social Justice Committee, Montreal, on behalf of the Halifax Initiative Coalition. The Social Justice Committee is a development and human rights organization established in Montreal twenty five years ago. The Halifax Initiative, now in its fifth year, is a national coalition focused on international economic democracy. Members include the Canadian Council for International Cooperation; Canadian Labour Congress; CUSO; Ecumenical Coalition for Economic Justice; Inter–Church Coalition on Africa; International Centre for Human Rights and Democratic Development; Oxfam Canada; RESULTS Canada; World Interaction Mondiale.
Debt and structural adjustment
The damaging impact of third world indebtedness on living conditions is now broadly accepted. The report by the Independent Expert, Mr. Fantu Cheru, on "Effects of structural adjustment policies on the full enjoyment of human rights", submitted to the fifty–fifth session of the Commission, joins many other documents in describing how "the crisis takes its toll on human beings with a brutality that is difficult to capture in words".
Recognizing the crisis situation that exists in heavily indebted poor countries, creditor governments and institutions have moved to write down debts and, more recently, reduce debt service paid.
The government of Canada has been one of the more progressive in responding to the debt crisis. The 2000 budget, just released, indicates that the program to reduce poor country debt to Canada will be expanded so that eligible countries will receive 100% cancellation. This program could provide relief to about eleven countries over the next three years.
Debt relief does not come without a price. Canada and other creditors will not provide this assistance to countries that do not complete the debt reduction program of the IMF and World Bank, the Heavily Indebted Poor Country (HIPC) Initiative. HIPC Initiative relief has its own conditions – three to six years of compliance with structural adjustment programs once a country is deemed eligible to enter the program. Eligibility is not based on poverty or living conditions of the people, but on macroeconomic indicators like the debt to export ratio. In this way, debt and structural adjustment have been explicitly linked together by the international financial institutions.
The adjustment conditions that must be met prior to debt relief go beyond short term macroeconomic stabilization. The IMF requires that these include the privatization and deregulation of industry and finance, and the reduction of the role of the state in directing economic policy and providing public services.
Adjustment programs have been criticized for years for their negative impact on human rights – the dismissal of workers and the dismantling of unions, the silencing of journalists, and the imprisonment and execution of people who dare to voice their dissent. When the IMF or World Bank enters into an agreement with a governments with a history of rights abuse, does it not have a responsibility when people who voice opposition to the arrangement are imprisoned or otherwise punished by agents of the government? The environmental destruction that has accompanied so many of these programs, especially in their encouragement of export growth through mining, logging or oil extraction, for example, has been devastating for communities. Social and cultural rights are not part of the analysis of the financial institutions, yet their programs affect access to necessities of life, like health, education, clean water, livelihood and land.
Honduras, for example, has been seeking debt relief for over a year in its continuing efforts to recover from the impact of Hurricane Mitch. The World Bank and IMF are delaying debt relief until structural adjustment requirements are met, even if they have little or nothing to do with the reconstruction, macroeconomic stability or poverty. One of the main requirements in its adjustment program is the privatization of telecommunications. Beyond the obvious questions about what this has to do with debt relief or poverty reduction, this requirement touches on questions of human rights in ways that have not been looked at, let alone addressed. A similar process in neighbouring Guatemala brought the immediate dismissal of 1,500 unionized workers, despite assurances that they would keep their jobs. Local rates went up by thousands of percentage points, and coin phones were replaced by ones requiring the use of a card. The cheapest cards cost the equivalent of about a day's wages, so that basic communication is now out of the reach of the poor.
The partnership of the World Bank and the IMF in setting debt and structural adjustment requirements has just been re–formalized in the establishment of a joint "poverty outcome" approach to their policies in poor countries. Economic policy at the country level is now to be set out in "Poverty Reduction Strategy Papers" (PRSPs). Drafting and implementing a PRSP is now a prerequisite to debt relief. PRSPs do not replace standard structural adjustment requirements, however, but are additional. The adjustment programs of the past continue unchanged, framed by the "Washington Consensus" policy guidelines that have nothing to do with human rights or poverty reduction.
The IMF is not a development institution. Although it's mandate is to help stabilize currency exchange and thus facilitate trade, it has become a permanent fixture in underdeveloped countries. It operates far outside its mandate in directing economic policy in these countries, but has no policy whatsoever on the human rights impact of its programs. The World Bank is a development institution, but has come to accept only one aspect of human rights in its operations – limited recognition of the rights of the child. The World Bank Operational Directives, with guidelines regarding Indigenous Peoples and Resettlement, are rarely complied with, and need to be improved in both scope and compliance. Neither institution has accepted the fundamental responsibility to assess and avoid the potential for human rights abuse in its programs. Although both institutions are to remain "apolitical" in their operations, this does not mean that they cannot ensure that their programs do not undermine international human rights commitments.
The 1997 UNDP Human Development Report pointed out that "relieved of their annual debt repayments, the severely indebted countries could use the funds for investments that in Africa alone would save the lives of about 21 million children by 2000".
In delaying debt relief and conditioning it on structural adjustment programs, the IMF, the World Bank, and creditor countries are contributing to human rights abuse throughout the third world.
The role of the UN Commission on Human Rights
The aspects of human rights abuse related to debt and structural adjustment were recognized in the establishment of a Working Group on structural adjustment and the appointment of Independent Experts on the two themes. These were positive developments which provide a basis for understanding the issues from a rights perspective. Unfortunately, they have not resulted in a heightened profile for human rights at the international financial institutions that are at the centre of the relevant policy discussions, and who are driving the processes of both debt relief and structural adjustment. The IMF and World Bank have linked debt relief and structural adjustment solidly together, and they have put together a new common framework of policy toward poor countries that excludes the UN system, and human rights considerations almost entirely. Broadly speaking, the international financial institutions, especially the IMF, seem to regard themselves as not having to comply with the International Covenant on Economic, Social and Cultural Rights.
Two aspects of the current situation are particularly evident:
- the predominant position of the World Bank and IMF in directing policies with respect to debt relief, structural adjustment and, more recently, poverty reduction, and
- the absence of adequate regard for human rights in related policy design and implementation, and the lack of involvement of any United Nations body in policy discussions. Recommendations
There are many aspects of the PRSP process that sound positive, including country "ownership" of the programs and stakeholder participation in program design and implementation. Unfortunately, the lack of regard for human rights aspects of debt and structural adjustment will render efforts to find sustainable solutions to poverty shallow and, in the long term, ineffective.
The de–linking of debt relief from structural adjustment conditionality is crucial. Structural adjustment is a topic of serious concern of its own; withholding or delaying debt relief in this way is an unjust manipulation of a crisis situation of human misery.
It would be completely appropriate for human rights considerations to be included in the HIPC Initiative and PRSP discussions, with representatives of appropriate UN agencies – like the ILO, UNDP, UNICEF, WHO – at the table from the outset of the design of structural adjustment programs.
The IMF and World Bank are now discussing how their new framework and the PRSP process are to be operationalized, with recommendations expected at their Spring Meetings in early April. A greater role for UN agencies concerned with human rights would provide considerable benefit to these discussions, and the ones that will follow.
The coming months provide several opportunities for UN agencies to work with the IMF and World Bank to see how human rights can be integrated into their work – the Spring Meetings of the World Bank and IMF, preparations for Copenhagen +5, the World Bank and IMF Annual Meetings in the fall. Consideration of core labour standards, for example, would be an appropriate component in the World Bank's promotion of good governance, or the IMF's assessment of economic stability and its concerns with crisis prevention. UN agencies like the ILO, UNDP and UNCTAD can assist in the preparation of country PRSPs, ensuring that civil society participation in the process is adequate and free of rights abuse, and assisting in developing civil society representatives' capacity to exercise their rights in participating. As the World Bank moves forward in incorporating its Comprehensive Development Framework into its operations, human rights concerns can be integrated into what is meant to be a holistic approach to development planning.
Support of these efforts by the Canadian government representatives at the fifty sixth session of the UNCHR would be of great value in the efforts to ensure human rights concerns are neither ignored nor dismissed in debt relief or structural adjustment program design and implementation, but are properly included and recognized as valid and important elements.