Debts, Human Rights, and the Poor: From London 1953 to Present Human Rights Violations

Abstract

The London Debt Agreement’s 70th anniversary provides an occasion to compare present “debt management” with the extremely generous debt reduction Germany received in 1953. After triggering two World Wars, Germany's creditors, among them developing countries, allowed a German national to tell them how much Germany should pay — an absolutely unique feature in the history of sovereign debts. Arbitration for any arising disagreement and a limit on payments were stipulated while massive social expenditures were allowed. Naturally, Germany's role in the Cold War explains this unique agreement.  This example contrasts most sharply with so-called “Structural Adjustment” programs forced on debtor countries since 1982, in which social expenditures have been cut and debt service payments have been maximized, violating debtor protection, human rights, and the Rule of Law as creditors have acted as judges in their own cause. Economies and especially the poor have suffered horribly. Creditors alone have decided. Only NGO pressure has introduced trace elements of debtor protection, all arbitrarily decided by creditors. Meanwhile, the Bretton Woods Institutions (BWIs) have played an especially wicked role as debt administrators. After describing the London agreement and Indonesia’s similarly politically motivated debt relief around 1970, this paper will analyze the glaring differences in debtor treatments. Germany, an adamant hardliner, was especially vile on Spain and Greece, two benefactors who had forgiven German debts in 1953. After itself benefitting from relief, still not having fulfilled all stipulated obligations, Germany turned arguably into the staunchest opponent against treating other sovereign debtors (including countries that had generously forgiven German debts) in a decent, Rule-of-Law and human rights-based manner. This is difficult to understand – unless German governments after 1945 still believe that different rules should apply to Germans than to everyone else.