Opening statement by Ms. Flavia Pansieri Deputy High Commissioner for Human Rights on Foreign Debt and Human Rights

4 March 2015

Excellencies, distinguished delegates and participants,
Colleagues and Friends

On behalf of the United Nations High Commissioner for Human Rights, I am delighted to address you at this side event on Foreign Debt and Human Rights taking place during the 28th session of the Human Rights Council.

I would like to thank Ambassador Alberto D’Alotto, Permanent Representative of the Republic of Argentina, for opening this event, the Permanent Missions of Cuba and Argentina for co-hosting it, and Ambassadors Anayansi Rodríguez Camejo, the Permanent Representative of Cuba and Abdul Samad Minty, the Permanent Representative of South Africa, for joining me on this high-level panel.

Ladies and Gentlemen

According to the Secretary-General, human rights are “the birthright of every human being” and should guide our development goals and objectives. Economic growth, the achievement of development objectives and the realization of human rights are interconnected. Without adequate resources, there will not be inclusive, rights-based development for all persons as demanded by a variety of human rights instruments - including the United Nations Declaration on the Right to Development. But States, acting jointly and collectively, including through international financial institutions, are not yet fulfilling their commitments to mobilize maximum available resources and to promote an internationally enabling environment for development.

As we consider the world’s progress toward the Millennium Development Goals and look forward to the post-2015 development agenda and the 3rd International Conference on Financing for Development that will take place in July of this year, it is an ideal time to re-examine these commitments in the context of foreign debt.

In this regard, the mandate of the United Nations Independent Expert on the 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 has made an important contribution to deepening our understanding of the human rights implications of foreign debt. These implications are manifold. – as you will no doubt hear from Juan Pablo Bohoslavsky who has joined us here today.

From the very outset, let me make clear that not all debts are bad. Taking on external debt can help States weather economic shocks and fund development and human rights objectives at times when domestic resources are limited.

However, some States service grossly unsustainable debts – debts that threatens their ability to realize development objectives, fulfil human rights, or to promote long-term economic growth.

The December 2014 Statistical Update of the Heavily Indebted Poor Countries Initiative and Multilateral Debt Relief Initiative, helps illustrate these connections. The Report shows that the 35 HIPC completion point countries have met less than 15% of the ten MDG targets examined in the report and are on target to meet less than 25% by 2015.

Unsustainable debts should not be permitted to thwart development and the progressive realization of economic, social and cultural rights in this way. Yet, this problem persists and indeed, continues to grow.

For States caught in the lingering throes of the 2008 financial crisis, sovereign debt problems have become increasingly more pronounced and their impacts have been felt in developed and developing countries alike.

Efforts to address and avert sovereign debt crises have relied heavily upon austerity measures. According to the 2014 World Social Protection Report of the International Labour Organization, 122 governments cut public spending in 2014 alone and further cuts are expected in the future.

In the wake of such measures, Greece for instance has seen salaries drop by 35 percent since 2008 while unemployment increased by 28 percent.

While this situation is undoubtedly extreme, it mirrors a larger pattern of austerity that threatens economies, employment and the enjoyment of human rights throughout the Eurozone and the world. The ILO estimates that austerity measures have impacted 123 million people in the Eurozone alone, many of whom are children, women, older persons and persons with disabilities.

Even in some States that have experienced economic growth since the crisis, inequality continues to rise. For example, in the United States, a study by economists Thomas Piketty and Emmanuel Saez found that 95 percent of the gains from the economic recovery in the US went to the top 1 percent and more than 60 percent of the gains went to the top 0.1 percent, people with annual incomes of more than $1.9 million.

These figures reinforce recent reports of the High Commissioner, the special procedures mechanisms of the Human Rights Council and others, reporting that austerity measures have significant and disproportionate negative impacts upon the disadvantaged such as the poor, women, children, persons with disabilities, older persons, people with HIV/AIDS, indigenous peoples, ethnic minorities, migrants and refugees.

The imposition of austerity in response to the financial crisis and/or as a condition for debt relief threatens government expenditures on development when and where they are most needed and contributes to rising inequality.

As if this is not sufficiently bad in itself, according to recent IMF research, higher inequality correlates with lower long-term economic growth – meaning that inequality itself contributes to a vicious circle of poor economic progress that impacts all persons.

To choose austerity when increased social welfare expenditures, improved delivery of social services and additional spending on needed infrastructure is needed both to realize basic human rights and simultaneously stimulate the global economy is not advisable. As World Bank Group President Jim Yong Kim has put it, inclusive growth “is both a moral imperative and a crucial condition for sustained economic development”.

Therefore, in times of economic crisis, austerity is not and must not be the answer. The General Comments of the Committee on Economic, Social and Cultural Rights make it absolutely clear that deliberately retrogressive measures constitute a prima facie violation of the International Convention on Economic, Social and Cultural Rights. Yet, austerity has resulted in retrogression and largely remains the solution of choice for international financial institutions and States seeking to address debt crises.

Ladies and Gentlemen,

There are alternatives. For example, the forthcoming report of the Independent Expert on foreign debt on his visit to Iceland describes a State that weathered its financial and sovereign debt crises better than most, while largely complying with its international human rights obligations. Notably, Iceland protected its core social welfare system, made efforts to ensure citizen participation in decision-making processes, and sought to establish political, administrative and judicial accountability for the crises.

The last year has seen renewed efforts by the international community to address sovereign debt crises. Two resolutions, adopted by the General Assembly in September and December, establish an intergovernmental ad hoc committee to negotiate a multilateral framework on debt restructuring. The Human Rights Council, in its resolution 27/30, invites States to ensure that this framework is compatible with existing international human rights obligations and standards.

There is a clear need to promote responsible sovereign lending and borrowing that is directed toward the promotion of human rights and development objectives. There is a need to regulate against vulture funds whose actions threaten sovereign debt resolution, and for investors and creditors to assume their responsibilities to respect human rights in the context of their activities. According to the Guiding Principles on Business and Human Rights, responsible investment should do no harm and respect human rights. This means that investors should act with due diligence to safeguard against negative human rights impacts posed by their investments.

Pursuant to the Guiding Principles, the responsibility of enterprises, including investors, to respect human rights applies independently of a State’s own duty to protect human rights, and over and above compliance with national law.

Ladies and Gentlemen,

It is clear that urgent measures are necessary to address the vast inequities of a financial and economic world order that permits massive bailouts for the private sector to coexist with drastic cuts in public expenditure; to mitigate the impacts of simultaneous financial and debt crises that according to World Bank estimates in 2010, had left 114 million more people living in poverty; and to establish a permanent, fair and effective sovereign debt workout mechanism that will free additional resources for development.

The time is now for all States, international financial institutions, relevant United Nations agencies, funds and programmes and the private sector, to cooperate in preventing sovereign debt crises by agreeing to guidelines that ensure sustainable, transparent lending and borrowing that benefits and is accountable to people and take into consideration the guiding principles on foreign debt and human rights endorsed by the United Nations Human Rights Council. As participants in today’s discussion, I welcome all of you to contribute to further analysis of this important subject, to listen with open minds to the contributions of all those present, and to support concrete, rights-based actions to resolve foreign debt crises while protecting the rights of people in particular the most vulnerable.

Thank you.