While the world’s attention focuses on the economic crisis in Greece, another financial debacle looms closer to home for the United States.
Puerto Rico is now being called “the next financial catastrophe,” and the territory’s outstanding debt is being compared to that of Greece.
Financial pundits are rushing to declare that both Greece and Puerto Rico are on the verge of financial collapse.
Perhaps the Puerto Rican government, like the Greek government, bears some responsibility for its financial crisis.
But a closer look shows how the Greek and Puerto Rican cases are very different. Moreover, Puerto Rico’s fiscal woes cannot be resolved independently by its government.
Only changes in US territorial policy toward its Caribbean possession can help fix the problem.
Why Puerto Rico isn’t Greece
Some facts are truly alarming.
Puerto Rico’s per capita income is lower than any state in the union; its unemployment rate has hovered at 13% for years; since 2006 it has suffered a steep drop in manufacturing; and its revenue base is rapidly eroding since many working-age Puerto Ricans are leaving for the United States.
The territory’s US$73 billion public debt is a higher per capita debt than any state in the nation, even higher than Greece’s.
Keep in mind, however, that Greece is a sovereign nation and Puerto Rico is a territorial possession of the United States – in effect, a colony – with very limited powers to represent the interests of its people. The US Congress can impose federal laws on the island and can veto any legislation enacted by the Puerto Rican government.
Moreover, unlike Detroit and states in the Union, Puerto Rico is barred from declaring bankruptcy and restructuring its debt.
For Puerto Ricans, who in 1917 became US citizens, an undeniable feature of colonialism is that they are not allowed to elect representatives or senators to represent them in the nation’s capital.
Puerto Ricans are profoundly dissatisfied with their current political status, and in a November 2012 referendum made it very clear they want a change: 54% voted against the current “commonwealth” setup.
But Puerto Ricans are also voting against the current situation with their feet, as scores of thousands emigrate to the United States every year.
The back story: rapid growth despite its ‘colony’ status
Despite its colonial status, Puerto Rico experienced rapid industrial development and widespread modernization for most of the second half of the 20th century, and it escaped the debilitating poverty of the 1930s and 1940s.
After World War II, Puerto Rico abandoned …
To read full story: http://theconversation.com/puerto-ricos-long-fall-from-shining-star-to-the-greece-of-the-caribbean-43097