Photo credit: www.globalresearch.ca
David Medina
Special to CTLatinoNews.com
By now, you know that Democrats and Republicans in the U.S. Congress are gridlocked over how to address Puerto Rico’s inability to repay the $72 billion it borrowed from U.S. bondholders over the years to cover the cost of essential services.
While the lawmakers dicker over a compromise plan, the unemployment rate on the island continues to climb to more than double that of the United States; the number of residents living below the poverty line encompasses nearly half the island’s population; the sales tax is up to 11.5 percent; property values are in free fall; foreclosures are up 89 percent; as those that can are fleeing in record numbers; schools are closing; water is being rationed and the tax base dwindles.
The Republicans, led by House Speaker Paul Ryan, proposed a bill to create what they refer to at various times as a federal oversight board or a financial control board, made up of six appointed members with the authority to set Puerto Rico’s economic affairs in order — meaning to do whatever it takes to compensate the bondholders.
What the proposal really does is replace Puerto Rico’s elected government with a dictatorial junta, answerable to no one, that would have broad powers of the kind that Americans wouldn’t tolerate if Congress tried to impose them on the U.S. mainland.
“La Junta”, as it is derisively called on the island, would oversee and restructure Puerto Rico’s legislature, the courts, the police department, public authorities, the pension system, all leases and union contracts. More specifically, the junta would be able to impose additional taxes, fire employees, cut pensions, eliminate or privatize public services and suspend minimum wage laws. It would also be able to incur additional debt by issuing its own bonds, all of which would be collateralized by Puerto Rico’s infrastructure: its schools, prisons, water supply, bridges, highways, transportation system, electrical system, parks and its beachfront, which is considered public land. One more thing, the junta would have the power to prosecute and jail anyone who stands in its way. How’s that for democracy?
The Democrats, led by Connecticut’s U.S. Sen. Richard Blumenthal, have embraced the more patronizing option of amending Chapter 9 of the federal bankruptcy code so that Puerto Rico’s municipalities can restructure their debt (in other words, refinance the mortgage) in the same way that U.S. towns and cities are allowed to do now. This course of action simply postpones the final day of reckoning until the missionaries, who are proposing it, have gotten past the current presidential election year. Strangely enough, Puerto Rico had Chapter 9 protection from 1933 until 1984, when, for some still unexplained reason, the same Congress that is now haggling over what to do about the debt crisis changed the bankruptcy law to specifically prohibit Puerto Rico from taking advantage of it.
The problem with both solutions is that they’re based on preserving Puerto Rico’s standing as a colony of the United States, which is what got the island into this mess to begin with. In fact, the concept of Puerto Rico as anything other than a colony — or an “unincorporated territory,” as Congress euphemistically calls it — is foreign to most American lawmakers, Democrat and Republican. The idea of fundamentally changing that relationship to solve the debt crisis is even more foreign.
Colonies, by definition, exist solely to be bled of their economic resources, without their consent, so that the larger power that rules them can benefit financially. That’s it. It doesn’t get any deeper than that. That’s what the British did to the original 13 American colonies before the Revolution. That’s what the Spaniards did in all of Central and South America. And that’s what the U.S. continues to do to Puerto Rico. Its residents can’t vote in American elections, but must comply with legislative ploys, such as the aforementioned junta to solve the debt crisis and the exclusion from Chapter 9 protection, that drain their local economy.
To illustrate this point further, one of the most sensible recommendations made by numerous experts, including the World Economic Forum and the Federal Reserve Bank of New York, for getting Puerto Rico out of debt and kick-starting its economy has been to exempt the island from the requirements of the Jones Act of 1920. Congress concocted The Jones Act to protect U.S. shipping companies from foreign competition by banning foreign ships from delivering goods from one U.S. port to another and specifically from delivering to U.S. territories, such as guess where?.
For Puerto Rico, it creates a financially insane situation whereby foreign ships that are carrying cargo bound for the island, have to unload it in Jacksonville, FL, where the goods are then reloaded on to U.S. ships that deliver it to Puerto Rico. Naturally, the residents of Puerto Rico bear the entire expense of this legally mandated loading and unloading in the form of vastly higher than normal shipping costs, which translate into higher prices on the goods when they go to market. If compliance with the Jones Act were eliminated, experts say, the tens of billions of dollars that Puerto Rico spends to satisfy its obligation would revert back to the island and there would be no debt crisis.
But the esteemed members of the U.S. Congress are loath to even consider such a proposal. First of all, federal lawmakers are probably too beholden to the shipping industry to cut it off from a fat guaranteed revenue stream — a congressionally authorized monopoly, if you will — that has existed for nearly 100 years. And secondly, allowing Puerto Rico to negotiate foreign shipping deals on its own would take it a step closer to — dare I say it — independence, a fundamental break away from the colonial relationship that Congress has grown so enamored of. And that’s unthinkable. What’s the point of having a colony, if you can’t cash in on it, after all?
