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Austerity and human rights II May 15, 2013

Posted by Tomboktu in Austerity, Human Rights, Social Policy.
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This is the second of two posts on the topic of austerity and human rights. Yesterday I reported on a recent set of five cases taken against Greece. Today, I examine the possibility of applying EU law to challenge the way in which austerity is imposed by the troika.

Yesterday’s post was a report, with some analysis and views, on five cases that have been successful. Today’s is different: it is entirely speculative, but it might prompt action.

Two paragraphs in the Greek pension decisions contain important points. One reports the Greek government saying that it had to restrict the pensioners’ rights because of its obligations to the EU instituions and the IMF for the loans it was getting. The second quotes the ILO (referred to as the “High Level Mission” in the following paragraph):

[...] the Government indicated that data from ELSTAT showed that approximately 20 per cent of the population was facing the risk of poverty but that it did not have an opportunity, in meetings with the Troika, to discuss the impact of the social security reforms on the spread of poverty, particularly for persons of small means and the social security benefits to withstand any such trend. It also did not have the opportunity to discuss the impact that policies in the areas of taxation, wages and employment would have on the sustainability of the social security system.

The Greeek government is not alone, and the question is: can the troika — or key members of it — also be challenged legally. This post deals only with with the two European members of the troika: the ECB and the European Commission.

A legal challenge would need
(a) to identify the obligations that either of these bodies have that could be used in a legal challenge, and
(b) to identify how the legal challenge could be mounted — who has the right to take a case.

A number of legal obligations are potentially relevant. The key document here is the Lisbon Treaty. (An aside: after Lisbon, there are now essentially three fundamental legal documents governing the EU: (a) the Treaty on European Union (TEU); (b) the Treaty on the Functioning of the European Union (TFEU), and (c) the EU Charter of Fundamental Rights (EUCFR). They are available in a 408-page PDF here.)

The first obligation is set out in the TEU. The European Commission is required to “act within the limits of the powers conferred on it in the Treaties, and in conformity with the procedures, conditions and objectives set out in them” (Article 13(2) of the Treaty on European Union). It is that word “objectives” that provides the potential for action. Those objectives apply also to the ECB, so it is useful to summarise its obligations under Lisbon.

The basis for holding the ECB accountable is a little bit more convoluted, but gets to the same obligation. The ECB’s primary mandate under Lisbon is the objective of controlling inflation, and it has additional banking tasks concerning monetary policy, foreign exchange, etc. That mandate is set out in Article 127 of the Treaty on the Functioning of the European Union (emphasis added, original is on page no. C 83/102 of the PDF here) (thanks to Merijn Knibbe on the Real World Economics Review Blog for pointing this out):

Article 127
The primary objective of the European System of Central Banks (hereinafter referred to as ‘the ESCB’) shall be to maintain price stability. Without prejudice to the objective of price stability, the ESCB shall support the general economic policies in the Union with a view to contributing to the achievement of the objectives of the Union as laid down in Article 3 of the Treaty on European Union.

The point of the emphasis is that the ECB does indeed have a legal responsibility in relation to the objectives of the EU. The text on the ESCB points us to source of those objectives. The objectives set out in Article 3 cover both the neo-liberal economic free-market objectives and social objectives. Paragraph 3 of that Article contains the relevant text (page no. C 83/17), again with emphasis added:

3. The Union shall establish an internal market. It shall work for the sustainable development of Europe based on balanced economic growth and price stability, a highly competitive social market economy, aiming at full employment and social progress, and a high level of protection and improvement of the quality of the environment. It shall promote scientific and technological advance.

It shall combat social exclusion and discrimination, and shall promote social justice and protection, equality between women and men, solidarity between generations and protection of the rights of the child.

It shall promote economic, social and territorial cohesion, and solidarity among Member States.

It shall respect its rich cultural and linguistic diversity, and shall ensure that Europe’s cultural heritage is safeguarded and enhanced.

The second source of potentially useful obligations of the ECB and the European Commission is the EU Charter of Fundamental Rights (it starts at page no. C 83/389 of the PDF here.)

The EUCFR has 54 articles, 50 of which set out human rights or principles. Since the right to social protection has already been the basis of a finding of a breach of human rights law in the Greek penioners’ cases, it would probably useful to use a similar basis for a legal challenge in the EU system. The relevant part of that article is as follows

Article 34
Social security and social assistance

1. The Union recognises and respects the entitlement to social security benefits and social services providing protection in cases such as maternity, illness, industrial accidents, dependency or old age, and in the case of loss of employment, in accordance with the rules laid down by Union law and national laws and practices.
[...]

It is important to acknowledge that the wording of Article 34 of the EUCFR is different from the wording of the related article, Article 12 of the Council of Europe’s European Social Charter, which was the basis of the Greek pensioners’ case against Greece. However, the explanations of the EUCFR (PDF here) make clear that Article 34 EUCFR does draw on Article 12 ESC. Here is the relevant part of Article 12 of the ESC:

Article 12 – The right to social security
With a view to ensuring the effective exercise of the right to social security, the Contracting Parties undertake:

1 to establish or maintain a system of social security;

2 to maintain the social security system at a satisfactory level at least equal to that required for ratification of International Labour Convention No. 102 Concerning Minimum Standards of Social Security;

3 to endeavour to raise progressively the system of social security to a higher level [...].

Of course, the difference in the wording of the two legal texts could be a problem. The Greek pensioners’ case centred on paragraph 3 of the article they invoked: the requirement to progressively raise the system of social security to a higher level, which not found in the Article 34 EUCFR.  However, as noted in yesterday’s post, the European Committee of Social Rights described the reductions imposed on pensioners in strong language: “the adopted measures risk bringing about a large scale pauperisation of a significant segment of the population”. And the European Committee of Social Rights also noted that this has been observed by various international organisations, and the Committee pointed to findings by the ILO, the European Court of Human Rights, and Parliamentary Assembly of the Council of Europe. Given the serious nature of the cuts, the strong language of the European Committee of Social Rights, and the range of other bodies it has drawn on in reaching its legal findings, there must be a strong presumption that the situation is also a breach of the Article 34 of the EU’s Charter of Fundamental Rights, even if the exact point on raising the system of social security has not been transfered into the that EU Charter.

The final point to be made about the EU’s Charter of Fundamental Rights is that it applies to the European Commission and the ECB. The Charter makes that explicit:

Article 51
Field of application

1. The provisions of this Charter are addressed to the institutions, bodies, offices and agencies of the Union with due regard for the principle of subsidiarity and to the Member States only when they are implementing Union law. They shall therefore respect the rights, observe the principles and promote the application thereof in accordance with their respective powers and respecting the limits of the powers of the Union as conferred on it in the Treaties.
[...]

However, the fact that the EU’s Charter of Fundamental Rights applies to two members of the troika in principle does not mean it necessarily applies in the specific circumstances of a particular situation. That will depend on examining the details of what exactly the two troika members have done, which is beyond the scope of this post.

I do not know if there is established EU case law on the when institutions are liable. Would the EU Court of Justice need to find that the two EU troika members directed that the particular cuts to Greek pensions be implemented before they would be liable to a finding of having breached either the Treaty on European Union or the EU Charter of Fundamental Rights (or both)? Or would the EU Court find that although the Greek government had choices about how it would reduce its spending to comply with troika conditions for support, the two EU members of the troika are none the less liable because they had a responsibility to ensure that the cuts they demanded are not implemented in a way that breaches the rights of Greek citizens?

I am sure that an argument would be made by the EU bodies that since social welfare is primarily the responsibility of the Member States, and since the EU’s powers are severely limited to tasks that “support and complement the activities of the Member States” (Article 153 of the TFEU; PDF here), then the EU institutions cannot be held liable for any breaches of human rights in those areas. And I cite the situation of Greek pensioners only because there is a set of five cases with a legal finding that humn rights have been breached. It may be the case that the situation of a Portugese, Spanish, Cypriot or Irish citizen or group of citizens might make a more useful legal case against the ECB or European Commission. However, my objective is not to present a fully polished case, but to suggest how one might be constructed.

The final point that needs to be addressed is how to get a case to the EU Court of Justice. There are two ways of doing this. One is that a domestic case is taken, and referred by a national court to the EU Court of Justice for a ruling on preliminary questions. I do not know how you would construct a case like that to try to get a ruling against the ECB or European Commission.

A more useful approach, I think, lies in the powers of the European Parliament. Article 263 of the Treaty on the Functioning of the European Union (TFEU) gives the European Parliament to bring action to have the acts of the European Commission and of the ECB reviewed for legality by the Court of Justice of the European Union. One of the bases on which the Parliament can legally challenge the ECB and European Commission are “infringement of the Treaties or of any rule of law relating to their application, or misuse of powers”. That power is constrained. There is a time limit of two months, which means the decisions that lead to the Greek penioners’ cases are well out of time. And a further point that would need to be examined is whether the specific actions by the ECB and the European Commission in their roles as members of the troika come within the term “acts [...] of the Commission and of the European Central Bank”.

I may be missing some key legal rules, but based on what I have read, I would like to see the European Parliament examine how it can use its powers to bring a legal case to ensure that the two EU members of the troika are required to ensure their actions comply with EU human rights law. The ideal outcome would be a judgment that the Commission and ECB have breached EU law because of the effect of the cuts they have a role in imposing. But even second-best outcomes would be a significant step forward. For example, I noted yesterday that the European Committee of Social Rights, the less-well known sibling to the European Court of Human Rights, found that the lack of analysis of the impact of cuts on Greek pensions was a breach of human rights.

The task now is for MEPs to use the resources they have available to them — research staff, legal experts, etc. — to identify suitable case and initiate proceedings. A preliminary step could be for some MEPs to seek to have the Greek pension cases examined by a parliamentary committee with a view to determining if the facts and finding give rise to a need for the Parliament to examine the acts of the Commission and the ECB in light of their Treaty obligations and their obligations under the EU Charter of Fundamental Rights.

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Comments»

1. WorldbyStorm - May 15, 2013

“The task now is for MEPs to use the resources they have available to them — research staff, legal experts, etc. — to identify suitable case and initiate proceedings. ”

Great point, what is the sense that this is feasible given the disposition of forces available?

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Tomboktu - May 15, 2013

I would think it is feasible. The issue would not be the big political question of stopping auterity, but of austerity being applied in a way that breaches human rights.

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2. Tomboktu - May 16, 2013

Darren O’Donovan writes about the question of accountability of the EU’s institutions over on humanrights.ie today.

He argues for a different legal approach to the question, relying on (a) Article 41 of the EU Charter of Fundamental Rights:

Every person has the right to have his or her affairs handled impartially, fairly and within a reasonable time by the institutions and bodies of the Union.

and (b) Article 11 of the Treaty on European Union:

[...]

(2) The institutions shall maintain an open, transparent and regular dialogue with representative associations and civil society

(3) The European Commission shall carry out broad consultations with parties concerned in order to ensure that the Union’s actions are coherent and transparent

His analysis of the Pringle judgment suggests that there would be legal difficulties: the bail-out packages are under the European Stability Mechanism and therefore not subject to EU law.

Also says that if the European Committee of Social Rights is correct in its claim about the ILO’s finding that the troika did not discuss the proposed pension cuts with the Greek government, then the ECB and Commission acted illegally.

I like O’Donovan’s concluding sentence:

Certainly sending a burst of static back up through Union structures to reconnect certain institutions with the basics of democratic legitimation would be satisfying.

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