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  5. Economic, Social and Cultural Rights and International Financial Institutions*

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FOCUS December 2000 Volume 22

Economic, Social and Cultural Rights and International Financial Institutions*

Andre Frankovits

The international financial institutions have come under concerted criticism in recent years. Structural adjustment programs are designed to move countries toward outward-looking economic development models by emphasizing export-led growth and smaller government. These resulted in smaller budget deficits and elimination of hyperinflation in many developing countries. The criticism from NGOs focuses on economic, social, political and environmental problems together with the lack of transparency in negotiations between lenders and the government. Governments, on the other hand, take issue with the single economic model that is the condition for the granting of loans. Some argue that the imposition of conditions is an interference with national sovereignty. This conditionality now includes good governance criteria aimed at curbing fungibility and straight out corruption.

Undoubtedly, the emphasis on controlling government budget deficits resulted in the downgrading of basic services in many instances. And the NGO criticism resulted in proposals for better social impact assessment mechanisms of structural adjustment programs. There is some weight to the argument that the imposition of a single economic model by some institutions goes against the principles of self-determination and international coope-ration outlined in the International Bill of Rights.

In the face of this mounting criticism, the proposal for relieving the debt of the least developed countries is to be welcomed. However, the international financial institutions must begin to realize that some of the fall-outs of their policies lead directly to a denial of the economic, social and cultural rights of many. It is time that some accountability for the realization of human rights be better understood and accepted by these institutions.

Too much reliance on deregulation associated with "small government" is another challenge for the structural adjustment approach. This is a similar issue that confronts states that have been decentralizing their services and administration. If it is governments that ultimately stand accountable for the realization of human rights, how will they go about meeting their obligations in situations where they have lesser oversight of service delivery providers because of decentralization or privatization?

Governments have a legitimate and primary role in the fostering of social and economic equity within our community. Governments cannot ignore or contract out their responsibilities for the maintenance of a fair and inclusive community. Markets are no substitutes for government responsibility. 1

The need remains for the international financial institutions to collaborate more closely with the UN's human rights mechanisms. Since these institutions are far more powerful in promoting development, this is a challenge facing human rights organizations as much as recipient governments.

In this context, the World Bank-chaired consultative groups that gather together donors to pledge grants and loans for developing countries provide a golden opportunity to engage in a dialogue on the best ways to promote and protect human rights in poorer countries. The Bank has seen a number of changes in its global policies in recent years.

The World Bank's Comprehensive Development Framework

The CDF approach is anchored in the following key principles: country ownership of the policy agenda; partnerships with all stakeholders; taking a long-term, holistic approach built on national consultations; and treating social and structural concerns equally with macroeconomic and financial issues - not a blueprint but a compass that reflects the growing convergence of views on an approach to development. 2

January 1999 saw a breakthrough in global approaches to development thinking. The President of the World Bank, James Wolfensohn circulated "A Proposal for a Comprehensive Development Framework" for discussion within the Bank. In the CDF, as it has become known, James Wolfensohn posited a new holistic approach to development and a "better balance in policy-making by highlighting the interdependence of all elements of development - social, structural, human, governance, environmental, economic, and financial. "3

The document was produced, in part at least, in response to criticism of World Bank policies and projects, not only from NGOs but, increasingly, from economists and government officials in developing countries. The Bank's own Independent Inspection Panel had taken a critical look at some of the Bank's activities and had been recommending changes for some time.

The economic crisis, which affected the Asia-Pacific region in the late nineteen-nineties, brought home as never before the vulnerability of state economies and the human cost of the structural adjustment policies of the international financial institutions in times of economic upheaval. Many Asian countries whose economies had been climbing suddenly saw the gains of recent years suddenly reversed and poverty skyrocketing.

The effect of these upheavals, as always, has been greatest on the poor and the disadvantaged. This brought home as never before the need for social safety nets through the provision of social security. The Bank was in fact quick to offer support for this purpose to some of the worst affected countries in Southeast Asia.

There are a constant themes running through the CDF. These include:

  • the concept of partnership whereby it is essential to include civil society as a means of giving voice to the poor,
  • the importance of coordination that involves all development players collaborating on activities based on a common understanding of problems to be addressed,
  • the necessity of ownership of the development process by each respective country based on decisions that include all stakeholders, especially the poor.

It is amazing but not unexpected that the description of the processes required for the CDF parallels so closely those of human rights development planning.

The recognition of the need for extensive national consultation, agreement based on negotiation and dialogue, reliance on national priorities, the need for appropriate benchmarks echo the human rights approach as the following quote demonstrates:

Building country ownership is a time-consuming process that requires mutual trust between the government and domestic stakeholders, and between the country and its external partners. It also calls for an inclusive approach through national consultations to define the national vision or framework and build reasonable consensus around it. It requires dialogue on benchmarking and diagnosis with the aim of increasing the country's room for maneuver. 4

A note on conditionality

In his report to the Commission on Human Rights on the effects of structural adjustment policies on the enjoyment of human rights,5 the Independent Expert, Fantu Cheru, recommended that to ensure that loans to developing countries are used for sustainable growth and poverty reduction, conditions should be placed on recipient governments on how the loan is to be spent. He argued for greater transparency and accountability on the part of the lenders as well as recipient governments, and for monitoring of how loans are spent by representatives of government, donors and civil society. A number of bilateral donors have also advocated that the provision of development assistance should be linked to the human rights performance of the recipient country. Most often this has been framed exclusively in terms of respect and protection of civil and political rights.

There is no doubt that donor governments and lending institutions have obligations and responsibilities for the development assistance they deliver. If nothing else, they are all accountable in the first instance to their constituencies and political reality dictates that they use assistance wisely. Therefore conditionality has a place in development policy provided it is used responsibly and provided that the process is clear and transparent to the stakeholders in the recipient country. Governments should always retain the option to suspend or withdraw aid.

The principal flaw in the current policy is that it lacks a coherent and agreed framework. Consequently it remains susceptible to political manipulation on the part of both donors and recipients and engenders suspicion from the recipients as well. Negative conditionality undermines the notion that development involves a partnership between donor and recipient. For if the donor government can use aid as a condition for ensuring that its own priorities are adhered to, then the unequal footing of the two parties is highlighted. Once the rhetoric of partnership is brought into question, the recipient government is justified in questioning the willingness of donors to give both sides equal weight and the motivation behind the aid is also brought in doubt. Whether or not the rhetoric of partnership is reflected in the reality of other aspects of development assistance, the reliance on conditionality of this sort is inherently inimical to a fuller and more accurate recognition of human rights.

Nevertheless, while many governments decry the imposition or threat of imposition of conditions based on their human rights record, the reality is that conditions are always present in the donor-recipient relationship. General agreements on development assistance are arrived at through negotiation and the International Monetary Fund is a prime example of an organization which imposes conditions on its activities - conditions that often lead to the denial of the rights of the poor and marginalized who see their rights undermined by the withdrawal of basic services.

The UN Committee on Economic, Social and Cultural Rights has commented that development assistance should be applied toward the realization of human rights and in particular that of economic, social and cultural rights. To ensure that the principles of the Covenant with its emphasis on cooperation are followed it is important that donor policies on conditionality:

  • are explicit to avoid false expectations and arbitrariness,
  • are transparent so that they can be monitored,
  • clearly state the grounds on which negative conditionality might be invoked.

The Independent Expert on the Right to Development, Arjun Sengupta, has suggested that it would be useful "to invoke the concept of a development compact once again in working out programmes for implementing the right to development. "6 Such a compact might include:

  • the human rights policies of the donor organization and the recipient government - the specific human rights objectives of the programme,
  • including, of course, economic, social and cultural rights,
  • a clear and detailed statement on the donor government's position on conditionality - listing conditions under which the assistance would be suspended or withdrawn,
  • means of monitoring the articles of the compact that would include civil society.

The compact would not be legally enforceable but if it is transparent, that is if stakeholders on both sides of the relationship are aware of its terms, then public scrutiny would generate a stronger inclination to abide by the compact's terms. Here we see once again the benefits to be gained by providing the means for meaningful people's participation in the development process.

Concluding observations

The realization of the right to development and of civil, cultural, economic, political and social rights is a major challenge facing the international community in the twenty-first century. Cooperation between governments, United Nations agencies and the Bretton Woods institutions can lead to genuine progress in addressing poverty, inequity and discrimination if it is based on international human rights law.

Development can only be sustainable if all people are brought into the process and when all people can benefit from the fruits of development. This means that governments and international development players have an obligation to provide information and ensure transparency so that people can be involved in the decisions that affect their lives. The only guarantee for this is respect and protection for civil and political rights.

The state is responsible and accountable for the reali-zation of rights. Where resources are lacking, it is entitled to expect international assistance and technical cooperation. Any conditions placed on assistance should be negotiated in advance, include the views of civil society organizations and be monitored by independent parties. The obligations of states to respect, protect and fulfil human rights need benchmarks and indicators for the realization of each right. These form the basis for development initiatives by governments, UN agencies, the Bretton-Woods institutions and bilateral donors.

The human rights approach to development requires a human rights situational analysis, the setting of objectives in human rights terms, and monitoring and evaluation based on the analysis. Each of these steps requires bringing on board affected communities in a genuinely participatory manner.

The human rights situational analysis should be shared by the agency that drafts it with other development players. It should take account of national human rights action plans, the views of national human rights institutions, the reports to and comments from the UN Treaty Bodies and the views of civil society organizations.

The United Nations Development Assistance Framework provides a model for other development players in terms of coordination of efforts. The essence of the framework is collaboration with governments and civil society, and the integration of human rights. Other multi-lateral players in the development field should emulate this approach.

Andre Frankovits is the Executive Director of Human Rights Council of Australia, Inc. For further information please send communication to: "Andre Frankovits" <>

* This is an excerpt from the paper prepared by the author for the UN Inter-sessional Workshop on Economic, Social and Cultural Rights and the Right to Development in the Asia-Pacific Region held in Sana'a, Yemen, in February 2000.


  1. "Don't Contract Out Responsibility," Robert Fitzgerald former President of the Australian Council for Social Services, The Australian, January 2000.
  2. James Wolfensohn, A Proposal for a Comprehensive Development Framework, A Discussion Draft, January 1999.
  3. Comprehensive Development Framework Questions and Answers, World Bank, September 1999.
  4. Ibid.
  5. E/CN. 4/1999/50
  6. E/CN. 4/1999/WG. 18/2