Looking at Dome's Beach from El Faro Park

Tuesday, May 10, 2016

Understanding the Puerto Rico Situation

All crises have their backstory and the key to responding to and eliminating any crisis is understanding how these things came to be.

The news reports on the PROMESA act and "bailout" of Puerto Rico, focus on the size of the debt and some even urge the US Govt to act to help Puerto Rico. But the true story of #PuertoRicoCrisis is Puerto Rico's situation and how it has been for the past 100+ years.

To have an opinion of whether or not the US Govt should help Puerto Rico resolve it's financial crisis without understanding Puerto Rico's recent history is like a doctor prescribing medication without examining the patient.

A quick recap of Puerto Rico's recent history:
- In 1897, Puerto Ricans finally won semi-autonomous government representation in Spain after centuries of repressed rights and colony rule only to lose that semi-autonomous status one year later as Puerto Rico became a colony of the United States at the end of the Spanish American War, with the signing of the Treaty of Paris.  The US allowed Puerto Rico to have a House of Representatives, but the Governor and Upper House were appointed by the US President, via the Foraker Act.

-The first Governor of Puerto Rico, appointed by President William McKinley was Charles Herbert Allen, a former secretary of the Navy and one of the most notorious robber-barrons of the last century.
 "The revenue for the island's government was raised internally, mostly from tariffs, sales taxes and property taxes. During Allen's tenure this annual budget equaled the 4.4 million pesos the Spanish had spent in 1897, but without expenses for a five-thousand man garrison or the former contributions to the Catholic church.  Due to this reduced overhead, the island should have had a substantial budget surplus, but Allen's administration did not provide many benefits for the people. He ignored the appropriation requests of the Puerto Rican House of Delegates, and refused to make any municipal, agricultural or small business loans. He built roads at double the old costs. 85% of the school-age population did not have schools. Instead of making needed infrastructure and education investments, Allen re-directed the insular budget to no-bid contracts for U.S. businessmen, railroad subsidies for U.S.-owned sugar plantations, and high salaries for U.S. bureaucrats in the island government" - Thomas Aitken, Jr.; Luis Munoz Marin: Poet in the Fortress, pp. 60-61; Signet Books/New American Library, 1965.
After resigning the governorship in 1901, and taking advantage of tax tariffs, water rights, railroad easements and foreclosures and land grants, Allen built the largest sugar syndicate in the world, now know as Domino Sugar.  This is the beginning of Puerto Rico exports going to the mainland, along with most of the profits, and being imported as a finished product, a trend that escalated throughout the next 100 years.

-In 1914, the Puerto Rican House of Delegates voted unanimously in favor of independence from the United States, but this was rejected by the U.S. Congress as "unconstitutional".

-In 1917 the US passed the Jones Act of Puerto Rico, whose effects are still with us today, granting Puerto Ricans US citizenship, allowing Puerto Ricans to elect their Resident Commissioner, and exempting Puerto Rican bonds from federal, state, and local taxes regardless of where the bond holder resides. "Through its passage, the Jones–Shafroth Act—via a combination of citizenship and the expansion of U.S. laws to Puerto Rico, including the aforementioned National Defense Act—imposed mandatory conscription into the U.S. military on Puerto Ricans, precisely at the moment that the United States entered World War I. As a result, more than 20,000 Puerto Ricans served in the U.S. armed forces during World War I." -

-This Jones Act should not be confused with the Jones Act of 1920 regarding merchant marine laws. It is this law that requires all good imported to Puerto Rico to come in on ships flying an American flag and built in the United States. It is this law that many argue has contributed to Puerto Rico's economic woes. It's hard to disagree.

-Operation Bootstrap was a plan to industrialize Puerto Rico by offering American business incentive to build factories on the island (low labor costs, no import tariffs and a promise of profits that could be transferred to the mainland free from federal taxation).  It succeeded in creating industry in Puerto Rico, however, as industry increased, the labor workforce decreased.  There were not enough jobs to replace those created by agriculture.  This resulted in a mass migration of Puerto Ricans to the United States.  Over 1 million people migrated to the United States between 1945 and 1970. (CarriĆ³n)  American business interests profited without taxation, funneling those profits out of Puerto Rico and into the US.

-In 1996 after many corporations exploited this loophole to funnel may of their profits through Puerto Rico, President Clinton signed legislation that phased out the incentive over 10 years, causing Puerto Rico to spiral into a recession starting in 2006.

 -Throughout the 20th century, Puerto Rico has been subjected to harmful environmental American military operations, government experiments including sterilization, and brutal oppression of free speech.

Which all leads us to its status.

Puerto Ricans are citizens of the United States when they are residing off their island, but on the island of Puerto Rico they do not have the same rights.  Puerto Rico does not have a voting representative in either the Senate or Congress, Puerto Ricans cannot vote in the Presidential Election, only in the primaries.  For further clarification of the inconsistencies and outright unjust situation the United States has placed upon Puerto Rico, I suggest you read Juan R Torruella's speech in the John Jay College of Criminal Justice from April 2016.  As a Puerto Rican born federal appeals court judge, sitting on the second highest court in the US, his knowledge of the law and the precedents for colonial rule and citizen rights offer meaningful insight.

And John Oliver has a nice way of pointing out the obvious;

The status of the island needs to be addressed as part of any bill or recovery plan.

PROMESA Promises to take Puerto Rico back in history to an even more oppressive status than it has enjoyed in the last half century.  It is carte blanche for the hedge funds and banks to get whatever they are owed without a balance of power or a consideration of the Puerto Rican people. Schools, healthcare and natural resources are all on the table for cuts and outright takeover.  Once again I suggest you read the bill to make your own judgment.

I am not overlooking the fact that the Puerto Rican government mismanaged its resources and has not made the necessary adjustments to prevent this crises.  Indeed, the ease at which they could borrow from the banks and the lack of support for any government cuts has only deepened the problem, but once again, as Hon. Torruella states,
"Although Puerto Rico's political entities have necessarily played a role, theirs has not only been a limited, parochial one, but, most importantly in my opinion, not a decisive one. Any distraction from that ultimate truth, that our colonial condition is the primary cause of the debacle we now face, detracts from efforts to find a solution"
So where is the solution?
- I believe, as I have stated before, that the solution starts with the status of Puerto Rico.  A U.S. congressionally-sanctioned and binding referendum where the Puerto Rican people decide on whether to become a state or an independent country needs to be the founding base of any plan.
- Should a territory with more than 45% poverty rate and childhood poverty rate at a staggering 56% with official unemployment more than 12.5% be forced into austerity measures?
- A forced negotiation of compromise and repayment that is fair to both sides or allow Puerto Rico public utilities to declare bankruptcy, a right allowed to all stateside "municipalities" of which public utility companies have long been included.
- As Senator Bernie Sanders has suggested, auditing Puerto Rico’s debt to investigate whether it was incurred legally. If any debt was issued to creditors in violation of Puerto Rico’s Constitution, it must be immediately set aside.

Puerto Rico is a beautiful country with considerate, hard working people who deserve to be treated with respect.  Puerto Rican soldiers have fought in every major U.S. military conflict during the past century.  In the United States, they are educators, business leaders, entertainers, scientists and even a Supreme Court Justice.  We cannot allow the current conditions to fall into humanitarian crisis and civil unrest, the United States owes them more.