Complicity of International Financial Institutions in Violation of Human Rights in the Context of Economic Reforms

Abstract

This Article demonstrates that the introduction of austerity measures does not contribute to economic recovery, but instead has negative consequences in terms of economic growth, debt ratios, and equality, and routinely results in a series of negative human rights impacts. There is therefore a solid legal basis to make the case for a prima facie inconsistency between the imposition of austerity policies in times of recession and the enjoyment of human rights.

Because of the circumstances in which States usually find themselves when seeking assistance from international financial institutions, lender institutions often impose conditionalities that have not necessarily been negotiated with borrower States. States’ populations are even less involved than their governments in the associated consultations, discussions, or negotiations. The broad scope of such conditionalities, which has been continuously expanded over recent decades, helps to explain their pervasiveness and omnipresence in key sovereign businesses. These conditionalities are even seen in the context of the COVID-19 pandemic.

According to standards of international law, international financial institutions may be held responsible for complicity in the imposition of economic reforms that violate human rights. The causal link between the assistance provided by international financial institutions (in the form of loans, surveillance and technical assistance, and attached conditionalities) in the commitment of an internationally wrongful act (complicity) and the harm done (human rights violations) is evident and well documented. An institution’s knowledge of the wrongful nature of the act can be presumed if, even when advancing the implementation of economic reforms that normally lead to human rights violations, no ex ante impact assessment is undertaken. Legal responsibility for complicity raises obligations in terms of cessation, non-repetition, and reparation.