GENEVA (5 October 2012) – A group of United Nations independent experts on extreme poverty, external debt and equitable order reminded European Union governments that economic reforms must be crafted in line with the human rights obligations of States, following the release of a European-wide flagship study on the structure of the EU banking sector.
Responding to the ‘Liikanen report’, which recommends a set of regulatory measures to shield taxpayers from future bailouts and avoid shocks to the financial system, the human rights experts urged EU authorities to ensure that vital public funds are not used on collapsing financial firms in the future.
“States have obligations to take steps to the maximum of their available resources to ensure the respect, protection and fulfillment of rights,” said the UN Special Rapporteur on extreme poverty and human rights, Magdalena Sepúlveda. “This includes making certain that adequate resources are raised and used for the realization of the human rights of persons living in poverty.”
“Therefore,” she stressed, “States must protect budgetary resources from being compromised by future bailouts and commit to creating a regulatory framework that ensures such resources are not directed to failing financial firms.”
From 2008 to 2011, European countries committed EUR 4.5 trillion (equivalent
to 37% of EU economic output) in rescuing their financial institutions. “Such levels of extra and unforeseen spending have pushed governments into debt sustainability crises and, in many cases, created unbearable hardship for citizens, especially people living in poverty, through austerity plans which have often contradicted States’ legal obligations to realize economic, social and cultural rights,” Ms. Sepúlveda said.
“States’ duty to promote human rights requires that they establish the conditions within which these rights can be fully realized by all without distinction of any kind,” added the UN Independent Expert on foreign debt and human rights, Cephas Lumina. “Addressing the excesses of the financial sector - which have contributed to the current crisis - through effective regulatory measures would assist States in discharging this duty.”
Mr. Lumina noted that “while it is widely accepted that the current Eurozone sovereign debt crisis is largely a consequence of huge banking system bailouts, other financial sector actors, such as credit rating agencies, financial speculators and hedge funds, have played a central role in fuelling the crisis.” In his view, “it is important that proposed regulatory reforms are not exclusively focused on the banking system but extend to other financial sector actors.”
The Independent Expert on the promotion of a democratic and equitable international order, Alfred de Zayas, expressed concern at “the tendency in EU countries to fail to address the root causes of the problem and merely resort to so-called austerity measures that compromise not only the welfare of the population today, but also that of future generations.”
“There are perfectly viable alternative solutions to the financial crisis, such as reducing the so-called 'defense' budget and significantly reducing all military expenditures. We should not look for a quick-fix or a short-term scheme that will only aggravate matters in the long run. It is imperative to avoid future undemocratic bailouts and set up a regulatory framework for the banking system – one that actually works,” Mr. de Zayas emphasized. “All persons in the EU and worldwide have the right to a social international order in which their rights and freedoms can be fully exercised.”
Without mechanisms to avoid disruption to vital banking activities while restructuring or dissolving collapsing financial firms, some bailouts could again be necessary in the future, creating further negative impacts on human rights, the independent experts warned.
Learn more, log on to:
Extreme poverty and human rights: http://www.ohchr.org/EN/Issues/Poverty/Pages/SRExtremePovertyIndex.aspx
Foreign debt and human rights: http://www.ohchr.org/EN/Issues/Development/IEDebt/Pages/IEDebtIndex.aspx
Promotion of a democratic and equitable international order: http://www.ohchr.org/EN/Issues/IntOrder/Pages/IEInternationalorderIndex.aspx
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