Human Rights and External Debt: Case Study Spain

Abstract

The research analyses the relationship between adjustment programs and human rights violations, through the elimination of welfare state and other social and economic rights. The government has either eliminated or reduced some welfare services, making some services not accessible to the poorest sectors. The paper conducts an analyses of the changes introduced by the government to solve the debt problems through its adjustment programs that have weakened economic and social rights expressed in the declaration of human rights and the European convention on human rights. The paper concludes that the adjustment programs represent a violation on basic rights of the European citizens and should be modified to incorporate the externalities of these programs on the poorest sectors.

Resumen

La investigación analiza la relación entre programas de ajuste y violaciones de derechos humanos, por la eliminación de estado de bienestar y de otros derechos sociales y económicos. Pues el gobierno ha eliminado o ha presionado a algunos servicios de bienestar, haciéndolos no accesibles a los sectores más pobres. El escrito advierte sobre los cambios introducidos por el gobierno para solucionar los problemas de deudas, ya que los programas de ajuste han debilitado al conjunto de los expresados en la declaración de derechos humanos y la convención europea sobre derechos humanos. El texto concluye que los programas de ajuste representan una violación a los derechos básicos de los ciudadanos europeos y deberían ser modificados para incorporar externalidades para los sectores más pobres.

Introduction

The current high debt levels and their repercussions on the living standards of citizens in Spain have revived the historical debate over the effects of government's external debts on the human rights, particularly: economic, civil, political, social and cultural rights. Spain's high debt levels appeared simultaneously along with deteriorations of rights due to the loss of income.

The Kingdom of Spain is a developed country, located on the Iberian peninsula in southwestern Europe, with a 28 364.51 Gross Domestic Product (gdp) per capita in the 2013, using purchase parity purchase (ppp, constant 2005 us$). This value is 8.7% less than the gdp per capita ppp of year 2007. During the same period the debt¹ to gdp ratio increased by 160.6% and in 2013 had an obligation of payment equivalent to 94.59% of its gdp and its Human Development Index grew by 1.25% to be 0.885 in 2013.

The economic distress has seriously lowered welfare aids, repudiating the state's ability to recognize human rights, specifically: the right to work; to health, to social security, housing, poverty and inequality in favor of creditor rights of full repayment of their investment. This represents a clear violation of the humanitarian principles as represented in the un charter, the Universal Declaration of Human Rights, the European Charter of Fundamental Rights and international covenant on economic, social and cultural rights.

My interest was the product of empirical and theoretical literature that linked the effects of debt (cetim, 2007) and austerity (Abouharb & Cingranelli, 2007) on human rights. This link was recognized by the un since 1991: 13²un resolutions and decisions of the Human Rights Council, 11³ resolutions of the Commission on Human Rights and 34⁴ related reports, and 31⁵ Annual Reports confirm this claim. One of the latest contribution is the publication of a guiding principles handbook on foreign debt and human rights (UN, 2013) and expert report (un, 2014) exposing the effects of foreign debt on human rights and how the present debt management should incorporate a respect of human rights.

The investigation conducts an applied research to determine whether the high debt levels and its mechanisms in the light of the debt overhang theory has undermined human rights in Spain, for the period 2007 to 2013. The research aims to confirm the existence of a link between debt overhang and human rights and identify the mechanisms though which external debt and human rights in the case of Spain. The intent of this paper is to identify economic distress created by relative high external debt burden that created detrimental effects to human rights standards.

The organization of this study is the following: Section 2 reviews the theoretical and empirical literature that binds human rights and external debt. Section 3 presents the evolution of the debt crisis and the economic distress in Spain. Section 4 conducts the case study of Spain, analyzing the status of the compliance of human rights. Section 5 presents the policy recommendations and conclusions.

2. Literature review: External Debt and Human Rights

The research will try to link that the high debt levels are affecting the human rights through the debt overhang mechanisms – macroeconomic instability, political instability, higher interest rates, and capital flight, less investment, higher inflation, lower demand and lower productivity- affecting economic growth. Economic distress generates the conditions that make governments cut social spending, lower the labor standards and limit the right to strike due to the need to attract new investment by lowering the cost of production of enterprises, generating the condition for economic growth.

The research pretends to undertake two principle tasks in this section. First, a broad introduction of findings of human rights violations exposed by the un derived from debt and structural adjustment programs. Second, to develop the link between human rights and debt.

The first traces of the link between human rights and external debt appeared in 1991. The preliminary un report of Danilo Turk 7 (un, 1991) and its final version (un, 1992) led to a formal acknowledgment of structural programs as a barrier upon the realization of human rights with the un resolution 1991/27 and 1992/29 of the Submission on Prevention of Discrimination and Protection of Minorities. The structural adjustments were in response to the economic imbalances which manifested itself in the debt crisis.

Economic progress generates the conditions to attribute high opinion for human rights of citizens and it can be attributed that the government needs resources to protect all human rights, and requires proper personal, legislation and means to enforce them (Abouharb & Cingranelli, 2007). High debt levels undermine economic growth and development since it generates a debt overhang problem. A debt overhang is defined as “the presence of an existing inherited debt sufficiently large that creditors do not expect with confidence to be fully repaid” (Krugman, 1988, pp. 1-2).

To solve the debt crisis it requires the elimination of the debt overhang and this is achieved by the application of structural adjustment policies (Diwan & Rodrik, 1992, pp. 6-16). The objectives of these measures are: i) reduction of inflation; ii) re-establishment of equilibrium in the balance of payments; and ii) promotion of growth (un, 1995, p. 4). They are intended to apply a sequence of economic policies to “export their way out of the crisis” through liberalization, deregulation and reduction of the role of the state in the economy.

The un report E/CN.4/Sub.2/1992/16 stated that the common components of adjustments are: i) devaluation of the local currency, ii) decrease of government expenditure on public services, iii) abolition of price controls, iv) imposition of wage controls, v) reduction of trade and foreign Exchange controls, vi) restrictions on domestic credit; vii) reduction of the role of the state in the economy; viii) increasing the basis for the export economy ix) decreasing imports and x) privatization of public enterprises.

The austerity measures generated economic stagnation (Easterly, 2001), lower standards of human rights (Abouharb & Cingranelli, 2006a) and workers’ rights (Abouharb & L. Cingranelli, 2006b), hence creating concerns among scholars and the international community. The applications of structural adjustment programs have jeopardized rights to: i) food; ii) education iii) shelter; and iv) health (UN, 1999).

The un resolution 1994/11 of the office of the high commissioner for human rights exposed the effects on the full enjoyment of human rights of the economic adjustment policies arising from foreign debt on the implementation of the right to development. It affirms that debt payments should not take precedence over the basic rights of the people of debtor countries to food, shelter, clothing, employment, health services and a healthy environment (un, 1994, p. 2).

The un report of the Economic and Social Council (un, 1997a) identified constraints posed by adjustment programs to the fulfillment of economic, social and cultural rights contained in the universal declaration of human rights and in the international covenant on economic, social and cultural rights in developing countries. The programs are meant to conduct a series of economic policies to “export their way out of the crisis” through liberalization, deregulation and reduction of the role of the state in national development.

Since 2001 there have been several resolutions addressing the effects of structural adjustment policies and foreign debt on the full enjoyment of all human rights, particularly economic, social and cultural rights (see Table 1). The latest report by Dr. Cephas Lumina to the un establishes the link between debt and human rights: “excessive debt burdens reduce the maximum resources available to states for the fulfillment of human rights… and to establish and strengthen the institutions that promote and protect civil and political rights” (UN, 2014a, p. 7). The Resolution of Human Rights Council 26/16 acknowledges that “excessive debt servicing has severely constrained their (countries) capacity to promote social development and provide basic services to create the conditions for realization of economic, social and cultural rights” (UN, 2014b, p. 2).

Table 1.

Resolutions and decisions of the Human Rights Council.

	Session	Symbol	Title
1	25th Session 2013	A/HRC/RES/25/16	Mandate of the independent expert on the effects of foreign debt and other related international financial obligations of States on the full enjoyment of all human rights, particularly economic, social and cultural rights
2	25th Session 2013	A/HRC/RES/25/9	The negative impact of the non-repatriation of funds of illicit origin to the countries of origin on the enjoyment of human rights, and the importance of improving inter- national cooperation
3	23rd Session 2013	A/HRC/RES/23/11	The effects of foreign debt and other related international financial obligations of States on the full enjoyment of all human rights, particularly economic, social and cultural rights
4	22nd Session 2013	A/HRC/RES/22/12	The negative impact of the non-repatriation of funds of illicit origin to the countries of origin on the enjoyment of human rights, and the importance of improving inter- national cooperation
5	20th Session 2012	A/HRC/RES/20/10	The effects of foreign debt and other related international financial obligations of States on the full enjoyment of all human rights, particularly economic, social and cultural rights
6	17th Session 2011	A/HRC/RES/17/7	Mandate of the independent expert on the effects of foreign debt and other related international financial obligations of States on the full enjoyment of all human rights, particularly economic, social and cultural rights
7	16th Session 2011	A/HRC/RES/16/14	Mandate of the independent expert on the effects of foreign debt and other related international financial obligations of States on the full enjoyment of all human rights, particularly economic, social and cultural rights
8	14th Session 2010	A/HRC/RES/14/4	The effects of foreign debt and other related international financial obligations of States on the full enjoyment of all human rights, particularly economic, social and cultural rights
9	12th Session 2009	A/HRC/DEC/12/119	The effects of foreign debt and other related international financial 2009 obligations of States on the full enjoyment of all human rights, particularly economic, social and cultural rights
10	11th Session 2009	A/HRC/RES/11/5	The effects of foreign debt and other related international financial 2009 obligations of States on the full enjoyment of all human rights, particularly economic, social and cultural rights
11	7th Session 2008	A/HRC/RES/7/4	Mandate of the independent expert on the effects of foreign debt and other related international financial obligations of States on the full enjoyment of all human rights, particularly economic, social and cultural rights
12	5th Session 2007	A/HRC/RES/5/1	Institution-building of the United Nations Human Rights Council
13	2nd Session 2006	A/HRC/DEC/2/109	Effects of economic reform policies and foreign debt on the full enjoyment of all human rights

Source: (UN, 2014a)

The identified violations of international treaties related to human rights are:

i) Articles 23 and 25 of the Universal Declaration of Human Rights. The first one mentions that “everyone has the right to work…and protection against unemployment” and that the wage of the workers has to ensure his and his families an “existence worthy of human dignity and supplemented if necessary by other means of social protection”. In articles 25 “Everyone has the right to a standard of living adequate for the health and well-being of himself and of his family, including food, clothing, housing and medical care and necessary social services, and the right to security in the event of unemployment, sickness, disability, widowhood, old age or other lack of livelihood in circumstances beyond his control.”;

ii) Article 7 and 8 of the International Covenant on Economic, Social and Cultural Rights. According to article 7, “the right to everyone to the enjoyment of just and favorable conditions of work which ensure in particular, a remuneration which provides all workers, as a minimum with iii) a decent living for themselves and their families.” the second states that “States should undertake, at the national level, all necessary measures for the realization of the right to development and shall ensure, inter alia, equality of opportunity for all in their access to basic resources, education, health services, food, housing, employment and the fair distribution of income;

iii) Paragraph 13 of the Vienna Declaration expresses that states must “eliminate all violations of human rights and their causes as well as obstacles to the enjoyment of these rights”.

Debt overhang constrains economic growth, and economic growth is linked to improvements of human rights, this makes us infer that economic contraction constrains human rights. Krugman's early theory of debt overhang has been further developed, now some authors have provided systematic ideas of the transmission mechanisms of the effects of external debt on growth.

Debt overhang constrains economic growth, that leads to less protection of human rights. According to the existing research there are 6 mechanisms through which debt can affect economic growth, the casual mechanisms are the following: i) macroeconomic instability (Dornbusch & de Pablo, 1990) (Elmendorf & Mankiw, 1998, pp. 15-22) (Hjertholm, 1999, pp. 15-16) (Sutherland, Hoeller, Merola, & Zieman, 2012) ii) political instability; iii) investment; iv) interest rate (Baum, Checherita-Westphal, & Rother, 2012) (Laubach, 2007). (Elmendorf & Mankiw, 1998, p. 18) (Dornbusch, 1989, p. 334); v) capital flight (Pastor, 1990) (Ajayi, 1997) (Boyce J. K., 1992) (Fofack, 2009) (Ajayi, 1997) y and (Boyce J., 1990) (Fry, 1993), (Ndikumana & K. Boyce, 2003, p. 109) (Dornbusch, 1985) (Eaton, 1987) and (Khan & Ul Haque, 1985); vi) inflation (Ardagna, Caselli, & Lane, 2006), (Engen & Glenn Hubbard, 2004) y and (Laubach, 2009) (Elmendorf & Mankiw, 1998, p. 19) and; vii) poverty. The following explains the casual mechanism of political instability, investment and poverty with debt overhang that are most related to human rights violations. An overview of them is followed:

i Political Instability

The scholars (Alesina & Guido, 1989) and (Servén, 1997) identified the connection between high debt and political instability. In countries facing economic distress due to high external debt payments the private sector fears changes in the fiscal policy, tax increases, due to the high financing need of the government that might upset negatively their wealth. This scenario entails a variety of measures that affect the wealth of citizens; a few examples of these measures can be the rise of taxes or the introduction of new taxes, currency devaluation, expropriation of private enterprises and the capital flow control measures. All of the measures exposed previously promote a legal uncertainty towards investors.

The emergence of the high debt burden linked to the idea of higher debt service obligations undermines the political foundation of the tax system, because it compromises the limited state resource and undermines public spending. The economic situation leads to a drop in public investment and public services for citizens. These measures are because of popular discontent that can lead to critical levels, strikes, public manifestations of the various groups affected groups, a situation that exacerbates states fiscal stance subsequently paralyzing economic activity and undermines the social support of the government.

This creates a dilemma: on one hand the increase of popular discontent towards the ruling party puts it into to question, but on the other hand if they continue to pay creditors they will lose further support for the next political elections. The future of the political party in office next elections and by the other political parties trying to benefit political gaining public support exacerbates these fears. This dilemma generates fear of suspension of debt payments and unpredictable public policies.

ii. Investment

If the level of external debt of a country is believed to exceed their ability to pay the expected costs of debt service will discourage private investment (Savvides, 1992), public investment (Seriux & Yiagadeesen, 2001) and (Clements, Bhattacharya, & Nguyen, 2003) foreign direct investment, causing a slowdown in economic growth as noted by (Krugman, 1988), (Sachs, 1989), (Cohen, 1993) (Green & Villanueva, 1991) (Servén, 1997) and confirmed this linkage.

The effect on private investment is double since because we have to take into account that generally speaking the private and public investments are complementary intensifying the financial impact since the lack of one can affect the efficiency of the other as exposed by (Lora, 2007) and (Kumar & Woo, 2010) the marginal productivity of private investment (Nguyen, Bhattacharya, & Clements, 2003).

The volume of investment is altered by investors who may prefer to wait -in- uncertainty scenarios with irreversible investment projects, hoping to get more information, and to avoid costly mistakes (Garciandía Garmendia, 2011). This is based on the principle that an uncertain environment discourages investment fixed fixed investment, because if it is impossible to reverse the investment there is an incentive to postpone financial obligations pending more information.

iii. Poverty

The relationship between debt and poverty was exposed by (Kemal, 2001), (Loko, Mlachila, Wallari, & Kalonji, 2003) and (Maier, 2005). They found that the high external debt level increases poverty. (Maier, 2005, pp. 7-11) identified the following mechanisms. First a highly leveraged impact on poverty through the state budget, the increase in debt service leads to changes in priorities and the level of public investment to the detriment of the most vulnerable sectors of the population. In other words, the state budget constraint requires changes in public investment, further hurting the poor.

The impact on poverty of debt are due to lower economic growth, inflation, unemployment, government revenues fall amid falling economic activity and increases in regressive taxes and restrictive fiscal policies.

Fiscal contraction of social spending, further harms the most vulnerable. The education and health coverage affect human capital assets and transfers: grants, unemployment insurance, etc.

The government employs macroeconomic policy adjustments in order to balance the external imbalance resulting from the high level of indebtedness, among them we can mention the labor reforms in order to lower the employment cost and unemployment benefits and currency depreciations that would lead to a more balance budget.

3. Debt Crisis: The Origins of the Structural Adjustments

The financial crisis of 2007 in United States contaminated the European financial sector, forcing the state to intervene and compromised substantial public resources. The financial crisis lead to sizable losses in the balance sheets of financial institutions but also enterprises which affected the economic activity. The economic crunch led to housing problems in Europe that exacerbated the crisis and the economic recession with high deficit and debt levels which evolved into to a debt crisis, Spain among them.

This section provides a brief review of this process and insight key stages of its evolution and its scope for the Spanish economy. This loss of income of the state lead to an additional burden to tax payers since the government has to increase taxes or borrow additional resources to balance its account in the fiscal year (Petrakis, 2012). This exposed view follows the idea that “the sovereign debt crisis is a consequence of interactions between sovereign problems and banking problems that caused a severe economic slowdown” (Moro, 2013).

The Spanish economy slowed its growth from 4.07% in 2006 to 3.45% in 2007 (real ppp terms). the first signs of contagion of the us financial crisis were identified in Europe in August 2007. The reason of the lower economic growth was the contraction of real estate sector investment, consumer demand drop, consumer solvency deterioration, restrictive credit conditions, higher interest rates, financial turmoil, reprising of risk, increase in public debt yields and the substantial increases in international oil and food prices, conditions that had already begun more restrictive but from the second half of 2007 it intensified with the bankruptcy of Bearn Stearns aggravating the us financial crisis (Banco de España, 2008, pp. 109-135).

The government balance⁶ was 2% of the gdp and the there was a reduction of debt⁷ to gdp ratio to 36.3%. The bond yields increased interest rates slightly making the government pay more when compared to previous period. The government spending increased 9.6%, and was invested in the states policy priorities that were social spending, infrastructure, education and research.

In year 2008 the economic growth was below 0.9% (real ppp terms), the internal constraints in the real state sector shrunk, and the unfolding of the financial crisis into the real economy aggravated the reduction exports and investment. The Spanish Central Bank exposed that channels through which spread were the higher default ratios of enterprises, less domestic consumption, fall in financial asset and real estate prices, higher unemployment, the tightening of financial conditions crisis of confidence fall in wealth, decline of trade flows, and increase perception of risk (Banco de España, 2009, pp. 3-24).

During this year (2008?) there was a change in trend of the government finances as a result of the rapid stop in activity, the statistics had to adopt fiscal stimulus measures to counter the effects of the financial crisis. The situation activated the automatic stabilizers, unemployment benefits and a decline in tax revenue, which contributed to the progressive reduction of household disposable income. The economic downturn was illustrated by an increase in the debt to gdp ratio and an negative budget balance, by the end of the year the debt to gdp was of 40.2% and a government budget to the gdp was -4.5%.

The economy contracted 3.8% in 2009, mainly to the severity of the housing sector problem combined with the financial crisis contagion, and deteriorated the macroeconomic key figures. The loss revenue; according to data the public revenue to gdp ratio was reduced 6.7% from the level of 2007, the 6.7% increase in unemployment, real estate sector prices drop and sudden stop in productive sector (Banco de España, 2010, pp. 21-36).

The bank of Spain bailout, a regional lender Caja Castilla-La Mancha, the government created a bailout fund for banks with a capital of 99 billion euros and forces financial restructuring and merges. The interest rate paid for the bonds decreased due to the search for safety of the us as an epicenter of the financial crisis and a drop of the interest rates of the main central banks to counter the crisis. Primary balance deficit increased 144% while external debt 6 The paper uses the Maastricht definition of government balance 7 The paper uses the Maastricht definition of gross government debt rose more than 34%. The debt to gdp ratio exceeded 54% and the primary balance to the gdp was 11.1%.

The economy contracted 0.2% in 2010. The financial crisis generated more tightening in the financial system that affected the lending standards and the perception of risk of the Spanish banking system, leading to increase in interest rates and bond yields spread against the German benchmark. Doubts about the commitment to tackle structural problems, higher unemployment rates, labor market dysfunctionalities, deteriorating public finances and weakness of the European institutional framework raised doubts about the course of public spending. (Banco de España, 2011, pp. 23-42).

The turmoil in the euro area sovereign debt markets lead to substantial increase in the prices of the European debt bond yields, Spanish among them. The high tension of the Greek (110 billion euros) and Irish (85 billion euros) financial support packages generated a contagion effect upon the risk of the Spanish economy and its debt bonds were down grade from aaa by Moody's and Fitch and Standard and Poor's. The country adopted a structural adjustment agenda, which implied among several issues a labor reform, Royal decree-law 10/2010. The debt to gdp ratio exceeded 61.7% and the primary balance to the gdp was -9.6%.

The negative international environment in 2011 in the Euro area undermined considerably Spanish growth, and it renewed a dip into recession. The European debt crisis continued to unfold with a bailout of Portugal (78 billion euros) and a second bailout in Greece (155 billion euros), this affected the risk of Spanish bond yields, increasing the interest paid up to that moment to record levels the interest paid up to that moment. This increased cost of lending generated serious economic distress to the economy forcing the European Central Bank had to buy bonds to cut down borrowing cost and prevent the contagion of the debt crisis (Banco de España, 2012, pp. 13-33).

The economic growth was 0.05%. The main export destination of the Spanish economy is the euro area countries which most are also undergoing economic adjustment, repressing consumption. Additionally the sluggish domestic demand has been limited by the negative financial outlook, affected by the repercussion of the sovereign debt crisis and the restructuring of the Spanish financial system, the an increase of job destruction, further collapse of real estate sector and spillover effects of government austerity plans, the debt to gdp ratio exceeded 70.5% and the primary balance to the gdp was -9.6%. The among the austerity agenda the parliament decided to increase the age of retirement, a constitutional amendment forcing government to keep balance budget and early general elections due to political tensions.

In 2012 the Greek government together with Euro area countries and the imf decided to conduct a debt swap of Greek government bonds, exposing that euro area countries government bonds were not risk free. Cyprus had economic problems due to its banking sector after considerable losses from investment in Greek bonds and had to request the euro area countries for a bailout of 10 billion euros. After this event investors again began to request higher risk premiums for euro area countries government bonds (Gruppe & Lange, 2013 (in Press), pp. 2-3). The bond rates of Spanish bond rose considerable amid fears of government bailout of its weak financial institutions that could lead to another country bailout (Banco de España, 2013).

The government approved another labor market reform, Royal decree-law 3/2012, to improve the economies competitiveness through lowering labor costs. The economy fell into recession, unemployment grew and they had to request to euro area members states 100 billion euros for the recapitalization of its weak financial institutions. This implied loan had a series of conditionality's and a new series of structural reforms designed by the EU state aid rules and imf (IMF, 2012, pp. 5-31). Spain had an economic growth of was -1.64%, its debt to gdp ratio exceeded 86% and the primary balance to the gdp was -10.6%.

The economic growth in 2013 was negative, 1.22%, but officially the 3^rd quarter of the year was the end of a negative economic growth trend. The execution of the financial sector assistance program was successful in stabilizing the Spanish financial sector and government continued its adjustment program agenda in pursuit of current account surplus (ECB, 2014, p. 69). T

The general government debt continued to grow, it the debt to gdp ratio exceeded 94.59% and the primary balance to the gdp was -6.77%. The continue contraction of revenue, internal demand, unemployment (27%) and higher social expenditures have led to a persistent macroeconomic imbalance. The government removed regulations that fragmented the domestic market, liberalized the professional services, cut government jobs and fostered new regulations for entrepreneurship (imf, 2013, p. 6).

4. Methodology: Case Study Spain

The investigation conducts a case study of the kingdom of Spain in order to comprehend how the debt crisis has influenced its the human rights of the country. The current situation of economic distress has made the government adopt changes in its economic and social policies and unable to prevent respect of its population rights violation from increase unemployment, poverty rates, homelessness, reduced access to public services and homelessness and reducing the dignity of excluded minorities such as pensioners, disabled by destining fewer resources to the respect and prevail of living with dignity.

The selection of this case was done because the information richness, its relevance to the human rights discourse in Europe, and the contextual factors such as their relative high respect of human rights before the crisis and its demise under debt distress. Owing to space limitations the investigation will only address the impact on rights to poverty and exclusion, civil, adequate housing, health, social security and work exposed in 3 groups: i) economic and social rights; 2) worker rights; and iii) civil liberties.

4.1 Economic and Social Rights

The economic imbalances have generated an increase of fall of income of citizens, mainly caused by the unemployment rate of 26.3% in 2013. The government has applied cuts in social spending in times of growth of the share of population at risk of poverty and social exclusion (28.2% in 2012) and decrease of healthy life years and life expectancy for men and women (Eurost, 2014).

The government in its quest to balance its budget conducted cuts in wages of public servants in 2010, layoff of personnel frozen the salary and intake of new personal. In 2010 the pay cut was between 0.56% to 7% for public servants, in average it was 5% (A. Navas, 2010). It is estimated that there have been over 325,000 layoffs since 2010 in the public administration and their purchasing power has fallen between 15% to 30% according to different studies of the labor syndicates (González, 2013).

Other measures have been applied to reduce spending like subsidies to basic services like transportation, heating and electricity. This policies not only affect the public sector but influences in negotiations of minimum wages, trying to stop the rise of wages in the private sector and reduced protection of workers to attract foreign direct investment.

The Spanish government in 2012 by the royal decree law 16/2012 suspends the right to free health care system to illegal immigrants. Now they have to pay to receive medical assistances, including primary assistances amnesty international considers that this constitutes a human right violation to the health of immigrants in Spain, representing a reversal and discriminatory prohibited by international standards by human rights. Amnesty International has identified the reforms affected more than 873,000 illegal immigrants and the rejection of medical assistance to illegal immigrants in specific regions in Spain, the Balear Island (Amnesty International, 2013).

The economic crisis has caused an increase of unemployment, pension's cuts and unemployment benefits cuts leading to a financial distress of families that has led to a default, forcing a rise of evictions of their houses. The unemployment rate was 26.3% in 2013 and above of 50% of them have been unemployed over 12 months. “Amnesty International has documented failures of the authorities to put in place all necessary procedural protections prior to carrying out evictions, in particular an absence of genuine consultation to identify alternatives and failure to provide adequate alternative housing to those who cannot provide for themselves” (Amnesty International, 2012, p. 16)

There have been 328,687 homes foreclosed from 2007 to 2011, representing a minimum of 657,374 people affected. Those people evicted are forced to move in with family members, friends, or live in on the street. The state has reduced the number of available places in centers for homeless; it decreased from 21,900 available places in 2005 to 13,701 in 2010.

4.2 Worker Rights

The relationship between government and labor rights are direct and indirect. The direct link is realized by the provision of national employment insurance, and indirectly by regulating the relationship between employer and employees, like establishing minimum wage and working conditions. Structural adjustment programs worsen protections for workers’ rights because they encourage a smaller role of the state in the economy, giving the employers more discretion over the terms and conditions of work.

The labor reforms are designed to make the economy more business friendly limiting the wages or wage increases to make exports more competitive. Spain has “raised the responsiveness of wage adjustments to labor market conditions by allowing firms in weak markets to deviate from collective bargaining outcomes and by reducing administrative extensions of collective agreements”. But as the report exposes this measure can increase to wage inequality among the working force (OECD, 2013, pp. 22, 65).

Spain conducted one labor reform in 2010 and another in 2012. The latest reform gave more opportunities to firms to opt out from collective agreement redefinitions of conditions for fair dismissals, reduced monetary compensations of dismissals (OECD, 2013). There has been labor moderation as a result of adverse economic situation and public wage cuts, generating a negative impact upon workers living standards.

The unemployment benefits were modified in 2012, it reduced the quantity of money after the 7^th month from 70% of previous job to 50%. In 2013 the royal decree law 5/2013 increased the retirement age from 65 years to 67 required for a full pension and the does not take automatically the loss of purchasing power due to inflation. This implies a loss of purchasing power of the retirees and undermines the quality of living of workers that are in sectors that involve high physical demand like mine workers.

4.3 Civil Liberties

The causes why people in antigovernment protest and rebellion are multifaceted. It can be divided into 2 broad categories: the first can be attributed to political adversaries taking advantage of the government's political weakness and second, groups protesting against their government because they performed poorly under its economic policies (Abouharb & Cingranelli, Human Rights and Structural Adjustment, 2007, p. 150).

The economic crisis has manifested in the increase of public protests, manifestations of the deterioration of living conditions of citizens. In the year 2012, 14,700 manifestations were registered. This has challenged the governing party rule and legitimacy; in response it has repressed the right to peaceful reunion. Modifications of the law that regulates the proceeding of public manifestations have been introduced, primarily the introduction of fines to protestors and the denial of the permit to assembly (Amnesty International, 2014).

The amnesty international report of the right to protest exposes a series of limitations conducted by the government to limit the right to peaceful reunion. First the people who attend and organizers are identified and later are fined; the fine can range from 300 euros to 30 000 euros. There are plenty of law suits to the government exposing the repression of police and human rights violations of detainees by authorities. This has not been constrained to people who attended this these meetings but also are cases of these measures conducted to journalist and photographers covering these events, considered as an attempt to stop the free press.

The human rights violations conducted by security officers have gone immune. The first concerned is that security officers that intervene in the manifestations are not properly identifiable, violating the police protocols. The second is the inadequate investigations conducted by the internal investigation of the police and by the judicial system. The last concern is these practices stimulate human rights violations.

5. Policy Recommendations and Conclusions

High external debt impacts negatively human rights fulfillment and is not compatible with countries development goals. In order to help policy makers understand this relationship there has to be further study of debt management and debt sustainability frameworks to make them consistent with human rights. The World Bank and International Monetary Fund conducts assessments and policy advices to its members in debt related issues and their debt management tool to prevent and solve debt management problems, the debt sustainability framework, omits human rights issues by ignoring living conditions of their people in debt distress situations.

We find evidence in the case of Spain confirming the hypothesis by important scholars that external debt at certain levels undermines human rights standards. The investigation attempts to solve an important controversy in the literature of the externalities of the external debt since Human Rights issues have been overlooked in the frameworks by international organizations addressing this issue and contribute a systemic study to the problem.

Our contribution to the scholarly literature is increasing awareness of the implication external debt has on society and lead to a construction of an efficient tool for debt crises prevention and its externalities making casual inferences about debt and human rights. The study of External Debt and Human Rights is important for the political, social and economic life of citizens because it affects many lives and for preventing events that might harmful for society.

The study concludes that there is a negative relationship between external debt and human rights, limiting the government's capabilities to uphold the human rights of its citizens. Considerable amount of public money has been destined to prevent a collapse of the financial system that increased the financial distress of Spain. The approach taken to reach fiscal and debt sustainability is narrowly focused in debt repayment ignoring the socioeconomic distress the population is experiencing.

The lack of resources have undermined the government's ability to prevent measures to mitigate the impact of the crisis is particularly affecting the principles set out in the treaties of human rights to which Spain is a party. The investigation uncovers a decline of living standards with the rip to shreds of the welfare state and other economic reforms. The measures to reduce the public deficit are unsuited with social cohesion and the respect of international treaties relative to human rights.