Statement by Alfred-Maurice de Zayas, Independent Expert on the promotion of a democratic and equitable international order at the 72nd session of the General Assembly

Distinguished Chair,
Excellencies, Ladies and gentlemen,

This is my sixth and final report to the General Assembly in my function as Independent Expert on the promotion of a democratic and equitable international order.

The report responds to the invitation contained in General Assembly Resolution 71/190 “to continue [my] research into the impact of financial and economic policies pursued by international organizations and other institutions on a democratic and equitable international order, in particular by the World Bank and the International Monetary Fund”. While my report to the Human Rights Council, presented on 13 September 2017, focuses on the policies of the World Bank Group, the present report to the General Assembly is devoted to the International Monetary Fund and its loan conditionalities . Both reports should be read together.

As you know, the Bretton Woods institutions were established in 1944, even before the San Francisco Conference, the adoption of the United Nations Charter and of the Universal Declaration of Human Rights. Admittedly, the World Bank and the IMF  do have association agreements with the United Nations, but in practice they operate independently from—and not always in tandem with—the General Assembly, ECOSOC, UNCTAD and other UN organs. 

In my reports, I call on both institutions to amend their Articles of Agreement so as to better serve the Purposes and Principles of the United Nations, precisely because, as I document in my reports, some of their activities have entered into conflict with the human rights and development goals of the United Nations.

It is time for the General Assembly to propose practicable measures to bring the World Bank and IMF on board, so that they work for development and human rights and assist the world community in the achievement of the sustainable development goals, and solving global problems including pandemics, climate change and sovereign debt.

Article 103 of the UN Charter stipulates that its provisions should prevail over all other treaties and international agreements of Member States. However, both in structure and in practice, the international financial institutions are not subordinated to the United Nations. This has generated tension between the commitment of States, as UN members, to respect and promote human rights and their agreements and activities, as IMF members, which sometimes have adverse human rights impacts. Given this incoherence and the consequences it has had on the international order, I recommend that the IMF request an Advisory Opinion from the International Court of Justice on the primacy of the Purposes and Principles of the United Nations over the actions of all international financial institutions.

In my report, I also call on the IMF to abandon its misguided prioritization of economic growth above all other considerations, including human rights and the environment. Indeed, there is evidence that, within the institution, broader considerations, including income and gender inequalities, are already being discussed. In June 2016, the research department of IMF produced a paper, entitled “Neoliberalism oversold?”, in which it questioned the efficacy of the current guiding ideology of IMF. The paper begins with the ominous finding that: “Instead of delivering growth, some neoliberal policies have increased inequality, in turn jeopardizing durable expansion”, and concluding that the current policies did not deliver as expected . Tardy as they are, these ‘wake-up calls’ may yet bear fruit, although many in the IMF suffer from groupthink and still breathe the philosophy that any ‘growth’, including such which only benefits the rich, will eventually benefit everyone, through the elusive – actually imaginary -- ‘trickle-down’ effect, reminiscent of the objectivist ethos of Ayn Rand. 

Notwithstanding enlightened papers and seminars by experts at the World Bank and IMF, both institutions continue pushing the “market fundamentalism” which Joseph Stiglitz has so often decried. As Naomi Klein recalls in her seminal work, The Shock Doctrine, the main problem remains the institutions’ commitment to Milton Friedman’s Chicago school economics, characterized by the almost religious belief that privatization and deregulation will advance GDP, notwithstanding endemic boom and bust cycles and the consequent adverse human rights impacts.  Correct diagnoses, good recommendations and ten years later still no implementation. On the contrary, in 2016 a renewed focus on mega-infrastructure projects, a greater reliance on public-private partnerships, and a continued effort to impose so-called labour flexibilization and other obsolete conditionalities on borrowing States illustrate the well-known inertia that characterizes the institution.

Moreover, rebranding exercises as calling toxic structural adjustment programmes “Poverty Reduction and Growth” does not help, unless accompanied by macro/economic policies that allow an increase in social spending.  Much more is needed that IMF’s recently tooted “Inequality agenda”.  Oxfam has just released a 38-page study on IMF’s Article IV inequality pilots and concluded that they are not promoting the policies needed to reduce inequality.  I endorse Oxfam’s ten-point policy recommendations.

The strict and selective loan conditions imposed by the IMF, such as the requirement that States demonstrate rapid economic growth, discourages States from making long-term investments in health, education and public infrastructure. Further, the lack of a global consensus on sovereign debt restructuring means that States which are not in a position to pay back loans may fall into vicious debt crises. Together, these factors can increase unemployment, worsen working conditions, reduce access to free quality education and weaken environmental protection. In a systematic sense, they also diminish States’ capacity to guarantee rights and can lead to under-resourced public sectors which are vulnerable to breakdowns and emergencies.

At this year’s Spring meeting of the World Bank and IMF, I had the opportunity to discuss a variety of issues with lawyers and economists at both institutions.  I am persuaded that the IMF must change its priorities, give up the outdated loan conditions of privatization, deregulation of markets, and “austerity” in social services, which in the past have resulted in human rights violations, including in Greece, Argentina and Tunisia, to name but a few.

Bearing in mind that power dynamics are changing, it is time for the World Bank and IMF to discover a new vocation to promote development and human rights through “smart” lending practices that benefit not only banks and speculators, but billions of human beings.

Henceforth, IMF should make loans subject to a new set of conditions, including:

(a) A moratorium on military expenditure for the duration of the loan;
(b) Adoption of national legislation that ensures that national and transnational corporations pay their taxes, while profit-shifting and tax havens are outlawed;
(c) Adoption of legislation imposing fines on persons and corporations which evade taxes and obliging citizens who have moneys hidden offshore to repatriate their wealth within a defined period of time, or face penal sanctions;
(e) Adoption of legislation to prevent corruption and bribes, accompanied by effective monitoring mechanisms;
(e) Enactment of financial transactions tax legislation; and
(f) Assurances by borrower States that no part of any loan is used to satisfy claims by vulture funds.

These proposals would enable States to generate revenue to pay back IMF loans and satisfy the legitimate concerns of creditors. At the same time, it would ensure that States can continue to meet their human rights obligations and fulfil the SDGs.
Furthermore, I recommend that the IMF:

(a) Engage with and strengthen on-going initiatives on international tax cooperation such as the automatic exchange of information and the base erosion and profit shifting initiatives and the Platform for Collaboration on Tax, as indicated in the Global Policy Agenda of April 2017;
(b) Assist jurisdictions in developing capacities to tackle illicit financial flows;
(c) Contribute to public investments in education, the care economy, water and sanitation, as well as other quality public services;
(d) Support sustainable pension systems as promised in the Global Policy Agenda of April 2017;
(f) Provide advisory services and technical assistance to States, including in drafting tax legislation and general anti-avoidance rules; and
(g) Guarantee that, in cases of negative human rights impacts, victims have effective recourse and receive compensation, livelihood assistance and/or resettlement.

The human rights dimension in lending can no longer be ignored. No international financial institution, no transnational corporation and no trade agreement is above international law. All must respect the overarching international human rights treaty regime.

Implementing these recommendations will benefit the entire human family. Only through the concerted efforts of IMF and the World Bank—together with the United Nations—will a more democratic and equitable international order emerge.

Distinguished Chair, allow me to return to the beginning of my statement.

I wish to thank the Human Rights Council for creating this all-inclusive mandate on the promotion of a democratic and equitable international order, a universal goal that had already found expression in numerous General Assembly Resolutions following the historic Resolution 3201 on the Establishment of a New International Economic Order.

As the first mandate-holder, I have had the privilege to write twelve reports that address cross-cutting human rights issues, including various models of democracy, the right of self-determination, the social responsibility of business enterprises, bilateral investment treaties, free trade agreements, military expenditures, tax evasion, tax havens, tax competition, protection of whistle-blowers and human rights defenders, and the reform of the United Nations szstem.

My twelve reports evidence the added value of the mandate as a holistic directive to cast human rights in a coherent framework that invites cross-fertilization with other mandates.  I have built on the findings and recommendations of other mandate-holders including those on international solidarity,  extreme poverty, illicit financial flows and sanctions regimes. I have also endorsed new standard-setting initiatives such as the declaration on the right to peace , the declaration on the rights of peasants , a binding legal instrument on the social responsibility of transnational enterprises , the criminalization of environmental destruction , a global bill of rights, an international court on human rights and the creation of a world parliamentary assembly . My reports have shown democratic deficits in many fields, called for enhanced transparency and accountability by all players.  It bears repeating that any exercise of power, particularly economic power, should be subjected to some kind of democratic controls.

This is indeed a timely rapporteurship that demonstrates the inter-relatedness and inter-dependence of human rights, the natural convergence of civil, cultural, economic, political and social rights. By joining the dots, this hands-on mandate gives concrete expression to the Purposes and Principles of the United Nations and formulates pragmatic recommendations. In this spirit I have campaigned with diplomat friends for the creation of the new mandates on the right to development and on the right to privacy.

Today I call of the establishment of new rapporteurships on the right of self-determination and on the right to peace, both aimed at addressing grievances in a timely fashion so as to promote local, regional and international peace and development.

In future years the international order mandate will continue to unfold its potential. Of course, achieving a democratic and equitable international order requires overcoming formidable obstacles, including the wrong priorities by governments and international organizations, bias in favour of civil and political rights over economic, social and cultural rights, the prevailing demophobia in many countries, where governments refuse to listen to their citizens and ban referenda, the curses of positivism, selectivity and double-standards, the tendency to go for short-term solutions  instead of addressing root causes , the continued existence of secrecy jurisdictions, the impunity of transnational corporations and other private sector actors, and, of course, institutional inertia.. The mandate holder will  have to fight the good fight for sanity and human dignity. 

In addition to tackling these concerns, a future mandate-holder may wish to address the impact on a democratic and equitable international order of inter-governmental groupings such as the G7, G20, private associations like the World Economic Forum, the Bilderberg and the Trilateral Commission, sometimes perceived as promoting world government outside the United Nations context. Major global challenges that should be studied from the international order perspective include climate change, cultural imperialism, economic neo-colonialism, commodities speculation, vulture funds, and the unregulated activities of credit rating agencies and media conglomerates. It would also be important to explore how the great world religions and non-denominational humanist and ethical unions could proactively advance a more peaceful, more democratic and more equitable international order. The mandate holder may also wish to explore how Peoples’ Tribunals could break the blackout on war crimes by the powerful and contribute to ending impunity.

Excellencies,

It has been an honour to serve the Special Procedures of the Human Rights Council, which will continue to depend on the proactive support of States, civil society and international organizations, in addition to an institutional follow-up mechanism, lest we become an assembly of Cassandras whose recommendations are filed away and forgotten.

Mandate holders may draw inspiration from Horace's Epistles ,  Just these two words;  sapere aude, To use our judgment with the courage of conviction, unafraid of expressing politically incorrect views.  This philosophy of conscience and moral imperative was also championed by Immanuel Kant during the Enlightenment.

In our post-modern world of nuclear weapons, artificial intelligence and killer robots, we need judgment more than ever. Back in 1933 the League of Nations invited Albert Einstein to address the vital question “Why War” .  Answers are contained in a brilliant exchange of letters with Sigmund Freud, answers that are valid for the United Nations today.  Indeed, as our colleagues at the International Labour Organization have memorably enjoined us: if we want peace, we must cultivate justice – si vis pacem, cole justitiam! To achieve peace and justice we must revive multilateralism and international solidarity.

I thank you.

_________________________________ 

1./ http://www.un.org/en/ga/search/view_doc.asp?symbol=A/RES/71/190, para 22.