Committee for the Abolition of Illegitimate Debt

“The human rights dimension in lending can no longer be ignored,” Alfred de Zayas, Independent Expert on the promotion of a democratic and equitable international order, told the UN General Assembly in New York.

Unveiling a series of proposals for change, Mr. de Zayas said it was time for “smart” lending policies which encouraged States to honour their human rights and development commitments, rather than hindering the process.

“I deplore the fact that the lending practices of the international financial institutions sometimes go against the aims of the United Nations, not just in the field of human rights, but also in achieving the Sustainable Development Goals,” said Mr. de Zayas, presenting his full report.

“The IMF IMF
International Monetary Fund Along with the World Bank, the IMF was founded on the day the Bretton Woods Agreements were signed. Its first mission was to support the new system of standard exchange rates.

When the Bretton Wood fixed rates system came to an end in 1971, the main function of the IMF became that of being both policeman and fireman for global capital: it acts as policeman when it enforces its Structural Adjustment Policies and as fireman when it steps in to help out governments in risk of defaulting on debt repayments.

As for the World Bank, a weighted voting system operates: depending on the amount paid as contribution by each member state. 85% of the votes is required to modify the IMF Charter (which means that the USA with 17,68% % of the votes has a de facto veto on any change).

The institution is dominated by five countries: the United States (16,74%), Japan (6,23%), Germany (5,81%), France (4,29%) and the UK (4,29%).
The other 183 member countries are divided into groups led by one country. The most important one (6,57% of the votes) is led by Belgium. The least important group of countries (1,55% of the votes) is led by Gabon and brings together African countries.

http://imf.org currently imposes conditions which discourage social spending and therefore hinder States’ fulfilment of their human rights obligations. Often these conditions increase unemployment, lower standards governing labour, health and the environment, and reduce access to free quality education.

“From this point forward, the World Bank World Bank
WB The World Bank was founded as part of the new international monetary system set up at Bretton Woods in 1944. Its capital is provided by member states’ contributions and loans on the international money markets. It financed public and private projects in Third World and East European countries.

It consists of several closely associated institutions, among which :

1. The International Bank for Reconstruction and Development (IBRD, 189 members in 2017), which provides loans in productive sectors such as farming or energy ;

2. The International Development Association (IDA, 159 members in 1997), which provides less advanced countries with long-term loans (35-40 years) at very low interest (1%) ;

3. The International Finance Corporation (IFC), which provides both loan and equity finance for business ventures in developing countries.

As Third World Debt gets worse, the World Bank (along with the IMF) tends to adopt a macro-economic perspective. For instance, it enforces adjustment policies that are intended to balance heavily indebted countries’ payments. The World Bank advises those countries that have to undergo the IMF’s therapy on such matters as how to reduce budget deficits, round up savings, enduce foreign investors to settle within their borders, or free prices and exchange rates.

and the IMF must work in tandem with the UN system, including with the specialised agencies, funds and programmes, such as the UN Conference on Trade and Development and the ILO.”

The Independent Expert urged the IMF to abandon its “outdated” insistence on “Wild West” privatization, market deregulation and austerity in social services, which he argued had failed to ensure economic stability, had engendered human rights violations and had to be seen as “failed policies”.

Instead, Mr. de Zayas proposed an important set of seven conditions which countries should have to accept before receiving loans.

These include a moratorium on military spending, except salaries and pensions, and new laws to tackle individual and corporate tax evasion and fine citizens who illicitly keep money in offshore accounts.

Taxes would also have to be imposed on financial transactions, and it would be unlawful for IMF loan money to be used to pay claims by “vulture funds Vulture funds
Vulture fund Investment funds who buy, on the secondary markets and at a significant discount, bonds once emitted by countries that are having repayment difficulties, from investors who prefer to cut their losses and take what price they can get in order to unload the risk from their books. The Vulture Funds then pursue the issuing country for the full amount of the debt they have purchased, not hesitating to seek decisions before, usually, British or US courts where the law is favourable to creditors. ”, which target situations where debt default is likely, or claims by debt restructuring mechanisms such as holdouts, which also target situations in or near default.

Countries would also have to outlaw tax havens, ensure that all corporations paid tax, ban “profit Profit The positive gain yielded from a company’s activity. Net profit is profit after tax. Distributable profit is the part of the net profit which can be distributed to the shareholders. -shifting” - which sees corporations move profits on paper to the lowest tax jurisdiction - and finally pass and enforce anti-corruption laws.

“These proposals will ensure that States generate the revenue they need to pay back IMF loans, which is in the interest Interest An amount paid in remuneration of an investment or received by a lender. Interest is calculated on the amount of the capital invested or borrowed, the duration of the operation and the rate that has been set. of creditors and currency stability,” said Mr. de Zayas.

“The current policies and practices of the World Bank and IMF have an enormous impact on the lives of millions of people, notably the most vulnerable, the young and the elderly.”

He called on the IMF to revisit its Articles of Agreement to ensure that good financial planning also promoted development and human rights.

“No international financial institution, transnational corporation or trade agreement is above international law. All must respect the overarching international human rights treaty regime. These institutions should also address the concerns of civil society, and the pragmatic recommendations of UN Special Rapporteurs and other independent experts on human rights,” the Independent Expert said.

“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,” he concluded.

ENDS

Mr. Alfred de Zayas (United States of America) was appointed as the first Independent Expert on the promotion of a democratic and equitable international order by the Human Rights Council, effective May 2012. He is currently professor of international law at the Geneva School of Diplomacy.

The Independent Experts are part of what is known as the Special Procedures of the Human Rights Council. Special Procedures, the largest body of independent experts in the UN Human Rights system, is the general name of the Council’s independent fact-finding and monitoring mechanisms that address either specific country situations or thematic issues in all parts of the world. Special Procedures’ experts work on a voluntary basis; they are not UN staff and do not receive a salary for their work. They are independent from any government or organization and serve in their individual capacity.