Rethinking Bretton Woods | Tue, Feb 12, 2013
This article comments on a draft resolution the European Parliament is discussing to address impacts of the financial crisis on human rights.
An important initiative that would advance the recognition of the links between finance and human rights is under way at the European Parliament. A proposed resolution “on the impact of the financial and economic crisis on human rights“ is being considered by a committee of the European Parliament in charge of Foreign Affairs. Another committee, the European Parliament Committee on Development, also weighed in on the matter by submitting a series of suggestions to be incorporated into the original motion. It is expected that once approved by the Committee on Foreign Affairs, the proposed resolution will go to Plenary for a vote.
The overall tenor of the draft is that the financial and economic crisis has done more harm to those in our society who are the most vulnerable and that the European Parliament has an obligation to do something to help those in such situation and to take steps to prevent such a crisis from happening in the future.
The draft states that not only economic and social rights are affected by the crisis, but also political rights “when governments in some cases limit freedom of expression or association in the context of growing discontent and economic hardship” and refers to the protests spreading through North Africa and the Middle East in 2011. It also mentions that “inequality has increased in one quarter of developing economies, thus limiting access to education, food, land, and credit.”
The Committee on Foreign Affairs’ proposal provides 39 separate actions steps (though some will surely overlap) to which the Committee on Development proposes 8 additional steps. These steps range in scope from a broad reiteration of an obligation to protect human rights down to a specific recommendation of a financial transactions tax.
The Committee on Foreign Affairs’ language includes proposals that focus on the importance of financial regulations and social protection schemes and draw a connection to human rights concerns. Some of the proposals are noted with a commentary below.
- (14) Calls on developing countries to devise economic policies which promote sustainable growth and development, place vulnerable social groups at the forefront of policy responses, and base development on a sound fiscal system.
Drawing this connection shows an important understanding that growth for the sake of growth can put those who are most vulnerable at risk. It is crucial that developing countries be allowed to implement regulations in order to safeguard social stability and human rights. The only thing problematic with this statement is that it lacks specificity with regard to what a "sound fiscal system" would look like, allowing interpretations that might read it as a call for “fiscal consolidation” measures.
- (18) Welcomes refocusing of EU aid to developing countries. Urges middle income countries to increase funding to social protection schemes.
- (22) Urges developing countries to elaborate social protection.
- (25)Urges governments not to cut or limit food subsidies since these subsidies can limit the prevalence of hunger and improve nutrition in recipient households
The three preceding recommendations focus on expanding (or maintaining) and funding the social protection schemes in developing countries. This is an important goal which should help to protect the less fortunate in society should another crisis occur. Such recommendations do not do enough on their own, as more is needed from the regulation standpoint to try to prevent crises which tend to effect the poor and vulnerable to a greater extent.
- (27) Expresses support for global introduction of financial transactions tax.
Among the advantages of this proposal are not just its ability to raise revenue but that it can help combat the financialization of food and other commodities, thereby supporting price stability and protecting the poorest and most vulnerable.
- (35) Calls for transaction costs for remittances to be reduced.
Remittances play a big role in helping to alleviate poverty and promote development in developing countries. Transaction costs on these remittances stifle these forces, so a reduction of these costs is welcome.
- (37) Considers post-2015 framework should prioritize human rights and take into consideration the impact of financial and economic crisis on the poor and vulnerable.
The links between finance and human rights are undeniable, and making this a priority should be the starting point for preventing future crises. The resolution could however go further. To prioritize the human rights of the poor and vulnerable who have been harmed the most by the financial and economic crisis, the post-2015 framework will have to put an end to one of the main causes of the crisis--financial deregulation—but the proposed language does not call for financial regulation reforms
It is also worth noting some suggestions coming from the Committee on Development’s proposal:
- (2)The crisis showed that social protections increase poor people’s resilience and effective taxation also helps.
By implementing the proper social protection and taxation schemes, countries can ensure that the poorest members of society can weather times of crisis.
- (5)Stresses that crisis showed that deregulation, liberalization, and privatization worsened poverty and inequality, and that more effective, transparent, and progressive tax systems are needed.
This provision would represent an important recognition of the negative impacts that arrangements that force deregulation, liberalization, and privatization on developing nations have on poverty and inequality, and a call to avoid them in favor of alternatives that ensure the human rights of all.
- (7)Urges Commissioner and member states to ensure human rights are genuinely protected in trade and investment agreements.
Building human rights protections into trade and investment agreements is crucial to ensuring that human rights are enforceable and they can also help prevent attempts to exploit developing countries through these agreements.