Puerto Rico's Crisis? Let's Look At Our U.S. History

Aug 6 2015, 9:34 am ET 

Opinion: Puerto Rico's Crisis? Let's Look At Our U.S. History 

by Victor M. Rodriguez 

There's a new kid on the block - Cuba has become the darling of US economic and political interests. In contrast, Puerto Rico continues to be the unwanted child that is more of a nuisance and for whom there is no love lost.

Ironically, the histories of Puerto Rico and Cuba were intertwined since before the Spanish-American War, when the last colonies of Spain in the Americas fell into United States control. The Cuban Revolutionary Party, which led the Cuban war of independence, had a Puerto Rican section and its platform included the struggle to free Puerto Rico and Cuba from Spain.

While the countries' flags are similar, their colors are inverted. And now their paths are diverging in dramatic ways. At one point after the Cuban revolution in 1959, Puerto Rico was showcased as a democratic model. Now Cuba's possibilities are in the spotlight.

Yet whereas Cuba's present events are seen in the context of history- primarily the last 54 years of the embargo - history is missing in the efforts of American and Europeans pundits to make sense of Puerto Rico's crisis.

While political action committees supporting the lifting of the blockade against Cuba (with support from U.S. businesses) are sprouting in the nation, other lobbying organizations are also being formed around Puerto Rico's crisis with the purpose of not allowing Puerto Rico to get the tools it needs to pull itself out of the weight of a $73 billion dollar debt. 60 Plus, a conservative lobbying organization that is partially funded by the Koch brothers, has mounted a vigorous campaign to deny Puerto Rico a bailout. In fact it has supported placing the island under a financial control board which will further limit the scarce options Puerto Rico has as an "unincorporated territory" of the United States.

Our history as a useful - but unincorporated - territory
 
Contrary to the experiences of Hawaii, Arizona and Alaska, Puerto Rico did not become a territory -the legal space for lands conquered by the United States which could then become a state. Puerto Rico instead became an "unincorporated territory," meaning it "belongs to but its not part of the United States."

Puerto Rico cannot go to international banks because it does not have international standing as a colonial possession. It also can't increase its trade and reduce the cost of its trade because it is forced by an archaic law - the Jones Act enacted in 1920 - that forbids the island from using any other ship except the U.S. merchant marine. Some studies have indicated that the use of the U.S. merchant marine increases the cost of living in Puerto Rico by $200 million (lowest estimate).
Even worse, the U.S. Congress imposes life and death decisions on Puerto Rico, yet the commonwealth only has one "resident commissioner" who has a voice but no vote in Congress. 3.6 million Puerto Ricans are powerless and basically voiceless in probably the most critical time in its 117 year relationship with the United States.

For those who question why Puerto Rico finds itself in this "territorial" situation, it is worth remembering that the island did not have a choice; Puerto Rico served a strategic military interest for the U.S. going back to the 19th century as one of the "coaling" stations around the world. In fact, the U.S. built the largest naval base outside of the United States in Puerto Rico. German ships roamed the Caribbean (both in WWI and WWII) and the U.S. felt it needed to buttress its fortifications.
In 1941, lands were expropriated in the eastern part of Puerto Rico in a town called Ceiba and in the island of Vieques. The deep-water port that was created in Roosevelt Roads was large enough in case the British Navy was in danger of falling into the hands of Nazi Germany.

During the Cold War, Puerto Rico was the launching pad for troops that invaded the Dominican Republic in 1965, and provided logistical assistance to many other military interventions in Latin America including the invasion of Panama in 1989. Other military installations like the naval center in Sabana Seca were also used for electronic surveillance of Latin America. It wasn't until 2003 that the U.S. Navy left Vieques and closed Roosevelt Roads in 2004.

Uneven playing field
 
In 1984, Congress took away (no explanation provided) the possibility of Puerto Rico using the bankruptcy process in order to restructure its debts. Puerto Rico's legislature, whose powers are also limited by Congress, recently passed its own bankruptcy law to help its public corporations use the process to reorganize and alleviate the weight of the large debt. But the law was repealed by the federal courts because it was unconstitutional. Puerto Rico cannot make decisions on its own, only with the approval of Congress, where it does not have a meaningful presence.

Puerto Rico status and lack of power arise from long-held stereotypes about Puerto Ricans that are deeply rooted in American culture. In 1909, President Taft said Puerto Ricans were given more power than was good for them. More recently, some stories in the media have reaffirmed that view of Puerto Ricans. In a July 2014 Wall Street Journal column under the title "Puerto Rico's Borrowing Bubble", Mary Anastasia Grady paraphrased Margaret Thatcher, "Here we go again: Another big government paradise is running out of other people's money."

Set Up for Failure: A Manufactured Crisis
 
It is crucial to understand that Puerto Rico exists in a particular legal context completely created by the United States. Unfortunately, while the United States provided modernity to the old colonial institutions - particularly for labor - in terms of self-governance it was a step back. In the last few years of Spanish colonial rule, Spain granted autonomy to Puerto Rico in 1897. The island was able to have a customs system to place tariffs on foreign goods and protect its local production, it was able to enter international treaties, and also had an elected parliament with two chambers - the house of representatives (all had to be born in the island) and the administrative council. It was able to have representatives in the Spanish parliament with vote and voice. It did not grant total sovereignty but it had more tools to develop its economy than Puerto Rico's present status.

After World War II, when decolonization processes where taking place around the world, the United Nations was questioning Puerto Rico's colonial status.
In alliance with Puerto Rico's governor Luis Muñoz Marín, a former socialist and supporter of independence, the U.S. created the so-called "Commonwealth" (the Estado Libre Asociado, or Free Associated State) which was presented to the United Nations as a non-colonial solution.
A consequence of this "ruse" led the United Nations to approve removing Puerto Rico from the list of nations which had not achieved self-determination. Puerto Rico was able to draft its own constitution but the constitution was subordinated to the U.S. Since there were some progressives in the Popular Democratic Party they in fact inserted the International Bill of Rights into that constitution, including the right to education.

Since the U.S. Congress had plenary powers it deleted that and other parts of the constitution that would have strengthened the educational process and given rights to Puerto Rico that even states did not enjoy.

While Puerto Rico had no international presence, the U.S. used some Puerto Rican intellectuals to create a good image of "autonomy" and equal partnership. One of the leading Popular Democratic Party (the party that supported the commonwealth status) intellectuals, Teodoro Moscoso was the architect of the island's industrialization program and was named director of President Kennedy's Alliance for Progress.

But efforts to 'enhance" the "Estado Libre Asociado" failed, despite the fact that in 1967 and 1993 the "Commonwealth" supporters won the referenda asking to enhance the powers of Puerto Rico. On both occasions, despite promises, the U.S. Congress ignored the results. The "Commonwealth" has remained the same since the 1950s.

Even progressive economist Paul Krugman misses the point when he writes in a New York Times column that "There was a time when Puerto Rico did quite well as a manufacturing center," or "Puerto Rico then, is in the wrong place at the wrong time."

The reality is that the place where Puerto Rico is currently was created by American policies and institutions, and it's a place set up for failure, not success. This "manufacturing center" was already failing by the 1970s, according to economist James Dietz, author of "Puerto Rico: Negotiating Development and Change."
 
By the 1970s the industrial model of Krugman refers to began to sputter and the wage convergence (wages in Puerto Rico and the United States growing together for some time) that was used to say the model was doing well for Puerto Rico ended. It is also when the local government began to borrow because it felt it could not raise more revenues as the economy was cooling off.

Moving forward
 
The only solution to the Puerto Rico's crisis is to have the tools it needs to increase its economy. Austerity measures will deepen the crisis and could likely create political and social instability.
Yet despite Puerto Rico's indebtedness, no changes are even suggested to its current colonial status. One reason is that the "unincorporated territory" is profitable for a sector of American business. Last year, (2014) about 36 million dollars were repatriated by Puerto Rico-based corporations. The other reason is that there is an escape valve for the frustration - people can vote with their feet and leave.
But the pressure cooker cannot withstand more austerity. A qualitative change in the relationship between the United States and Puerto Rico - with more sovereign powers to develop its economy and break the economic dependence - are necessary. Puerto Ricans don't want handouts, they want the possibility of creating an economy that works, not one that is based on smokes and mirrors.

Unfortunately, the Popular Democratic Party may not be able to lead this process since it is enmeshed with the debtors. The New Progressive Party - whose leader, Pedro Pierlusi, is the non-voting Puerto Rican Resident Commissioner in Congress - is trying to use the occasion to ask for statehood. Unfortunately, he is not aware of our historical context. Puerto Rico's status was not created for statehood but for perpetual colonization or independence.

Victor M. Rodriguez is Professor and former Chair of the Department of Chicano and Latino Studies at California State University of Long Beach. Among his published works is Latino Politics in the United States: Race, Ethnicity, Class and Gender in the Mexican American and Puerto Rican Experience in the United States (Kendall-Hunt, 2012). He can be reached at: victor.rodriguez@csulb.edu.or his website.

Historical Context: The Key to Make Sense of Puerto Rico’s Social, Economic and Political Crisis

Historical Context: The Key to Make Sense of Puerto Rico’s Social, Economic and Political Crisis

Victor M. Rodriguez is Professor and former Chair of the Department of Chicano and Latino Studies at California State University of Long Beach. Among his published works is Latino Politics in the United States: Race, Ethnicity, Class and Gender in the Mexican American and Puerto Rican Experience in the United States (Kendall-Hunt, 2012). He can be reached at: victor.rodriguez@csulb.edu.or visit Victor's website

Puerto Rico, is not usually portrayed in any meaningful way in the mainstream media of the United States. When the news about Puerto Rico’s impending economic crisis began to timidly trickle into the front pages in 2011, the December 17 2014 news about rapprochement between Cuba and the United States quickly pushed Puerto Rico into the background. Ironically, the history of Puerto Rico and Cuba was intertwined since before the Spanish-American War when the last colonies of Spain in the Americas, fell into United States control. The Cuban Revolutionary Party which led the Cuban war of independence had a Puerto Rican section and its platform included the struggle to free Puerto Rico and Cuba from Spain. Its flags are similar with the colors inverted. But their paths have diverged in dramatic ways. At one point after the Cuban revolution in 1959, Puerto Rico was showcased as a democratic model. Now Cuba as the new kid in the block has become the darling of US economic and political interests. In contrast, Puerto Rico continues to be the unwanted child that is more of a nuisance and for whom there is no love lost.

While history is part of the news narrative about the United States and Cuba, with many references to the last 54 years of the embargo, history is missing in the efforts of American and Europeans pundits to make sense of Puerto Rico’s crisis. While political action committees supporting the lifting of the blockade against Cuba (with support from U.S. businesses) are sprouting in the nation, other lobbying organizations are also being formed around Puerto Rico’s crisis with the purpose of not allowing Puerto Rico to get the tools it needs to pull itself out of the weight of a $73 billion dollar debt. 60 Plus, a conservative lobbying organization, partially funded by the Koch brothers has mounted a vigorous campaign to deny Puerto Rico a bailout. In fact it has supported placing the island under a financial control board which will limit even more the scarce options Puerto Rico has as an “unincorporated territory” of the United States. Contrary to the experiences of Hawaii, Arizona, Alaska, Puerto Rico as the result of a series of Supreme Court decisions called the “Insular Cases” at the beginning of the XX century, (almost the same court that wrote the Plessy v. Ferguson decision which legitimated segregation in 1896) did not become a “territory.” A territory is the legal space for lands conquered by the United States which could then become a state. Puerto Rico instead became an “unincorporated territory” it “belongs to but it is not part of the United States.”

 Puerto Rico cannot go to international banks because it does not have international standing as a colonial possession. It also can’t increase its trade and reduce the cost of its trade because it is forced by an archaic law, the Jones Act 1920, that forbids Puerto Rico, an island, from using any other ship except the U.S. merchant marine. Some studies have indicated that the use of the U.S. merchant marine increases the cost of living in Puerto Rico by $200 million (lowest estimate). But even worse, congress makes life or death decisions on Puerto Rico yet Puerto Ricans only has one “resident commissioner” who has voice but not vote in congress. 3.6 million Puerto Ricans are powerless and basically voiceless in probably the most critical time in its 117 year relationship with the United States.   

In 1984, congress took away (no explanation was provided) the possibility of Puerto Rico using the bankruptcy process in order to restructure its debts.  The local legislature of Puerto Rico, whose powers are also limited by congress recently passed a “Creole Bankruptcy Law” to help its public corporations use the process to reorganize and alleviate the weight of the large debt. The law was repealed by the federal courts because it was unconstitutional. Puerto Rico cannot make decisions on its own, only with the approval of congress where it does not have a meaningful presence.  

Puerto Rico status and lack of power arise from long held stereotypes about Puerto Ricans that are deeply rooted in American culture. President Taft in 1909 said about Puerto Rico that “Puerto Ricans were given too much power than it was good for them.” More recently, some stories in the media have reaffirmed that view of Puerto Ricans. In an article in the Economist in November 23 2013, speaks about Puerto Ricans in a way being irrational because despite the crisis they were still filling the shopping malls. In the Wall Street Journal, Mary Anastasia Grady a column titled “Puerto Rico’s Borrowing Bubble” on July 6 2014 wrote “Here we go another big government paradise is running out of other people’s money.”

Set Up for Failure: A Manufactured Crisis

Having a systemic historic perspective, is essential to understand Puerto Rico’s present crisis. Unfortunately, many analysts have written about Puerto Rico’s crisis without having knowledge of the historical context. Others have written individualistic narratives about what is happening in individuals, those who leave the island and those who stay. Unfortunately, even when these narratives are written with empathy because of their focus on the trees they miss the forest. It is crucial to understand that Puerto Rico exists in a particular legal context completely created by the United States. Unfortunately, while the United States provided modernity to the old colonial institutions, particularly for Labor, but in terms of self-governance it was a step back. In the last few years of Spanish colonial era, in 1897, Spain granted autonomy to Puerto Rico. Puerto Rico was able to have a customs system to place tariffs on foreign goods and protect its local production, it was able to enter international treaties, and also had an elected parliament with two chambers the house of representatives (all had to be born in the island) and the administrative council. It was able to have representatives in the Spanish parliament with vote and voice. It did not grant total sovereignty but it had more tools to develop its economy than Puerto Rico’s present status.

After World War II, when decolonization processes where taking place around the world, the United Nations was questioning Puerto Rico’s colonial status. The U.S. in alliance with, Luis Muñoz Marin, a former socialist and supporter of independence were able to create a farce, the so-called “Commonwealth”   (Estado Libre Asociado-Free Associated State) which was presented to the United Nation as a non-colonial solution. A consequence of this ruse led the United Nations to approve removing Puerto Rico from the list of nations which had not achieved self-determination. Puerto Rico was able to draft its own constitution but the constitution was subordinated to the U.S. Since there were some progressives in the Popular Democratic Party they in fact inserted the International Bill of Rights into that constitution, including the right to education. Congress, since it had the plenary powers deleted that and other parts of the constitution that would have strengthened the educational process and given right to Puerto Rico that even states did not enjoy. Also, while Puerto Rico had no international presence the U.S. used some Puerto Rican intellectuals to create a good image of “autonomy” and equal partnership for Puerto Rico. One of the leading Popular Democratic Party intellectuals Teodoro Moscoso and the intellectual architect of the industrialization program of Puerto Rico was named director of President Kennedy’s Alliance for Progress. But efforts to ‘enhance” the “Estado Libre Asociado” failed despite the fact that in 1967, 1993, the “Commonwealth” supporters won the referenda asking to enhance the powers of Puerto Rico. On both occasions despite promises congress ignored the results. The “Commonwealth” has remained the same since the 1950s.

In addition to the economic interest the U.S. has had in Puerto Rico is the strategic military interest that goes back to the 19^th century with the need to have “coaling” stations around the world for the U.S. navy which was a core piece of the United States expansionary policy. For example, the U.S. built the largest naval base outside of the United States in Puerto Rico. German ships roamed the Caribbean (both in WWI and WWII) and the U.S. felt it needed to buttress its fortifications. In 1941, lands were expropriated in the eastern part of Puerto Rico, a town called Ceiba and in the island of Vieques. The deep-water port that was created in Roosevelt Roads was large enough in case the British navy was in danger of falling into the hand of Nazi Germany. The plans were to bring the entire navy and berth it in Roosevelt Roads. Also during the Cold War Puerto Rico was the launching pad for troops that invaded the Dominican Republic in 1965, and provided logistical assistance to many other military interventions in Latin America including the invasion of Panama in 1989. Other military installations like the naval center in Sabana Seca were also used for electronic surveillance of Latin America. The military have always been until 2003, when popular movements got the U.S. to close Roosevelt, very much against any changes in Puerto Rico’s status because of fear that more powers to the Puerto Ricans would limit the military use of Puerto Rico.     

Even progressive economist Paul Krugman, misses the point when he writes in an August 3, 2015 column in the New York Times “There was a time when Puerto Rico did quite well as a manufacturing center….” Or in his comment “Puerto Rico then, is in the wrong place at the wrong time.” The reality is that the place where Puerto Rico is was created by American policies and institutions, a place set up for failure not for success. This “manufacturing center” was already failing by the 1970s, according to economist James Dietz author of Puerto Rico: Negotiating Development and Change. By the 1970s the industrial model of Krugman refers to was created by Luis Muñoz Marin, founder of the Popular Democratic Party (the party in power today) began to sputter. The wage convergence (wages in Puerto Rico and the United States growing together for some time) that was used to say the model was doing well for Puerto Rico ended. It is also when the local government begins to borrow because it felt it could not raise more revenues since the economy was cooling off.

The only solution to the Puerto Rico’s crisis is to have the tools it needs to increase the economy, austerity measures will deepen the crisis and could likely create political and social instability. But despite the indebtedness of Puerto Rico no changes are even suggested in its colonial status. One reason is that the “unincorporated territory” is profitable for a sector of American business, last year, (2014) $36,052 billion in income were repatriated by Puerto Rico based corporations. The other reason is that there is an escape valve for the frustration, people can vote with their feet and leave. But the pressure cooker cannot withstand more austerity, the previous pro-statehood governor Luis Fortuño experienced significant social strife to the extent that the U.S. Department of Justice issued a scathing critique of how the Police Department of Puerto Rico violated human rights in how it handled the social protests. A qualitative change in the relationship between the United States and Puerto Rico, with more sovereign powers to develop its economy and break the economic dependence are necessary. Puerto Ricans don’t want handouts, they want the possibility of creating an economy that works, not one that is based on smokes and mirrors. Unfortunately, the Popular Democratic Party may not be able to lead this process since it is enmeshed with the debtors, the New Progressive Party, whose leader, Pedro Pierlusi, the non-voting Puerto Rican Resident Commissioner in Congress, is trying to use the occasion to ask for statehood. Unfortunately, he also is not aware of the historical context. Puerto Rico’s status was not created for statehood but for perpetual colonization or independence.    

#PuertoRicoDignityoverDebt NYC Committee for Dignity over Debt in PR

After Greece, Puerto Rico: Another Crisis Created by Capitalism

Saulo Colón and Daniel Vila for the NYC Committee for Dignity over Debt in PR
 
        In 2013 teachers took over the legislature
  On Monday June 29, the Governor of Puerto Rico, Alejandro García Padilla, delivered a live message to the people of Puerto Rico stating that the government’s $73 billion debt is unpayable. The governor stated, “The public debt, considering the present level of economic activity, is unpayable”.

  Several analysts in the corporate media, and also on the liberal left  who are not very familiar with Puerto Rico, have stated that his message came as a shock to the country. This is not true.  Articles and editorials in El Nuevo Día, El Vocero and Primera Hora, the country’s three major newspapers as well as television and radio broadcasts in the days subsequent to the Governor’s message express the general consensus that the people of Puerto Rico were not surprised by his words.
 What did shock many was the payment of almost $1 billion two days later to pay off debt fees. An article in El Vocero July 3 goes into this matter.

  This is a fabricated crisis.
 The colonial government of Puerto Rico is simply bowing to the demands of international financial forces which, like in Greece, have been demanding that taxes on working people be increased, that the labor rights enjoyed by some be eliminated and that remaining productive sectors still in hands of the government be privatized.

  Since the privatization of the Puerto Rico Telephone Company in 1998, the people of Puerto Rico and in particular the working class have been resisting countless efforts by the two ruling political parties, the Popular Democratic Party and the New Progressive Party, to eliminate labor and democratic rights in order to tighten the screws of neoliberal economic policy and maintain wealth accumulation for a small predator elite.

 Similar to the Greek peoples’ long struggle against austerity, two years ago teachers and other public sector workers and supporters occupied the Legislature building of Puerto Rico in response to the government’s decision to reduce the benefits for retirees. Videos and pictures of the dramatic takeover electrified the country as an example of popular resistance and indignation (see picture).

  Instead of supporting the people, Governor Padilla has been telling the country that the way to solve this crisis is to implement the recommendations in the Krueger Report, developed by a group of economists headed by Ann Kruger, a former bureaucrat for the IMF (the International Monetary Fund) the same financial institution that the Greek people rejected in their recent NO vote.

  This Report proposes that Puerto Rico:
 a) Reduce the number of hours worked by government employees;
 b) Privatize government owned agencies specifically the electric company (Autoridad de Energía Eléctrica), the water resources company (Autoridad de Aqueductos y Alcantarillados), the State Insurance Corporatio (FSE) and the public  education system;
 c) Reduce the minimum wage which is now $7.25 an hour;
 d) Reduce the number of sick days;

 In addition, the July 11 edition of El Nuevo Día says it has confidential information that the government intends to fire public sector employees. The previous governor already fired 20,000 workers.

 As evidence of the preference by elites to attack workers via "disaster capitalism" and Puerto Rico's inability to remedy its economy due to its lack of sovereign power, the colonial governor said, as quoted by El Vocero on July 3: “We will not get Puerto Rico out of this mess by taking sun on the beach.” With these words he was referring to his intention of reducing the number of vacation days won by public sector unions. However, regarding the corporate sector he has a different tone, putting forward a plan to grant multinational corporations even more tax breaks.

  This is what capitalism is, a plan of attack by Wall Street, by the hedge fund investors who profit off these debts and the misery they cause and by the international capitalist financial institutions like the IMF and the World Bank to dominate the economies of many countries thru imperialist debt.

 In his book, Confessions of an Economic Hitman, John Perkins states: “Economic hit men (EHMs) are highly paid professionals who cheat countries around the globe out of trillions of dollars. They funnel money from the World Bank, the U.S. Agency for International Development (USAID), and other foreign ‘aid’ organizations into the coffers of huge corporations and the pockets of a few wealthy families who control the planet's natural resources. Their tools included fraudulent financial reports, rigged elections, payoffs, extortion, sex, and murder. They play a game as old as empire, but one that has taken on new and terrifying dimensions during this time of globalization."

  He explains in detail that the goal of these hitmen is to first sink countries in debt. Then since the debt is not payable, the international loan agencies takeover and privatize a country’s public sectors and are also granted access to mineral deposits and given other corporate incentives or privileges.
  In a nutshell, that is what Wall Street, the banks and international finance institutions are attempting to implement in Puerto Rico.  But our fight has just begun!

 

Workers protesting in front of the Legislature

 Last week several labor leaders met with the governor. After the meeting, Pedro Maymi, President of the Puerto Rican Workers Central Union, declared that they have already given back all that they can. The new President of the Teachers Federation Mercedes Martínez urged teachers to prepare for a renewed fight against the privatization of schools in August.

  In the long run however, Puerto Rico, which was invaded by the USA in 1898, must break the chains of colonial capitalism. Puerto Rico is covered with shopping malls and fast-food chains. These corporations make more than $60 billion annually in profits and pay no taxes, unlike its low-wage workers who, contrary to capitalist myth, pay many local and sales taxes (just not federal).
 These corporations also receive many government subsidies. Capitalism makes billions in profits from the colonial status of Puerto Rico. That is why Puerto Rico is a colony of the USA: to transfer wealth from the people to the capitalists. This is why Puerto Rico needs independence.
 We believe resistance is the only solution. Only a militant and united fight back against the international capitalist gangsters who prefer profits instead of democracy can stop this corporate offensive against people and the planet. We therefore urge solidarity among all working people.
 We support the Greek and Black Lives Matter movements for dignity and life.
 Puerto Rico owes nothing.

 We will not pay. We will fight. #PuertoRicoDignityoverDebt