• Investigations
  • Opinion & Analysis
  • Cartoons
  • Podcasts
  • Videos
  • Language
    • 中文
    • русский
    • Español
  • National News
  • Foreign Affairs
  • Elections
  • Civil Liberties
  • Environment
  • Health & Lifestyle
  • Media & Culture
  • MyMPN Announcements

Puerto Ricans Suffer As Creditors Feast On Debt Colony

February 17, 2016 by Matt Peppe Follow @PeppeMatt @PeppeMatt

In this July 29, 2015 file photo, the U.S. flag flies in front of Puerto Rico’s Capitol in San Juan, Puerto Rico. The government released on Tuesday, Feb. 17, 2106 a long-awaited draft of its financial report that warns of solvency issues as it pushes to obtain a restructuring mechanism from U.S. Congress to deal with its public debt. (AP Photo/Ricardo Arduengo, File)

In this July 29, 2015 file photo, the U.S. flag flies in front of Puerto Rico’s Capitol in San Juan, Puerto Rico. The government released on Tuesday, Feb. 17, 2106 a long-awaited draft of its financial report that warns of solvency issues as it pushes to obtain a restructuring mechanism from U.S. Congress to deal with its public debt. (AP Photo/Ricardo Arduengo, File)

Just an hour before my wife an I landed in her native Puerto Rico last month, the island’s government had defaulted on $1 billion in bond interest payments. It was the second default in five months for the cash-strapped government whose debt now totals $72 billion.

None of this was evident as we waded through the crowds in Rafael Hernández airport in Aguadilla, which had been converted into a civilian airport after the closure of Ramey Air Force Base 40 years earlier. People hugged their relatives, welcoming them back home or bidding them farewell. It was a normal scene you’d see at any airport in the world.

But the situation in Puerto Rico is not normal, and you don’t have to spend long there to see how regular people are suffering more every day under the crushing burden of debt.

You notice every time you make a purchase at the store or get the check at a restaurant. The sales tax in Puerto Rico now stands at 11.5 percent, after being raised 64 percent in July from 7 percent. The measure was approved by the island’s governor, Alejandro García Padilla, in conjunction with a package of austerity measures to raise money to pay the interest on the island’s debt to creditors.

This might not sound like an astronomical amount, but the impact is felt more in Puerto Rico than it would be in any of the states. Sales taxes are regressive. People with lower incomes spend more of their earnings on things that are taxed than those who can afford to store their income as savings. This means the lower your income, the harder you will be hit by the sales tax.

Puerto Rico’s median average income is less than $20,000, 50 percent less than the poorest American state. For families already struggling to pay the bills on such meager earnings, the additional sales tax burden is eating away their little disposable income, or worse, forcing them to borrow to pay for their basic necessities.

Outside a beachfront restaurant in Aguada, I noticed an SUV with a bumper sticker that summed up the feelings of many Puerto Ricans:

The debt is not ours, it belongs to the Empire.

Many people may believe this represents Puerto Ricans failing to take responsibility for running up a tab they now can’t pay. But this would falsely assume that Puerto Rico exercises independent control over the conditions that created the debt. In reality, Puerto Rico is a colony whose political and economic structures are determined by the dictates of the empire they belong to.

Constrained by the neoliberal capitalist system of the United States, Puerto Rico is unable to chart its own course for independent economic development. The Interstate Commerce Clause of the Constitution makes it impossible for Puerto Rico to protect its own industries. They must allow American businesses equal access to Puerto Rico’s markets. The Cabotage Laws make shipping to and from Puerto Rico prohibitively expensive, impeding demand for exports and driving up prices on imports.

The detrimental effects of U.S.-imposed restrictions on Puerto Rico’s economy have forced them to incur debt to pay for social spending. Unlike every other industrial country in the world, the United States does not provide universal health care to its citizens. The federal programs that are supposed to guarantee insurance for the poor and the elderly do not apply equally to Puerto Rico.

Puerto Rico only receives half the rate of federal healthcare funding as the 50 states, even though its residents pay the same rates in payroll taxes. This strain was further exacerbated last month when the U.S. government cut payments to Puerto Rico’s Medicare Advantage program by 11 percent. My in-laws told us how their prescription deductibles and their co-pays under their Medicare Advantage plans had increased. The Puerto Rican Healthcare Crisis Coalition (PRHCC) called the decision by the Centers for Medicare and Medicaid Services a “blow to the health of the entire Puerto Rican community.”

The Affordable Care Act (Obamacare), which is supposed to guarantee health insurance to the rest of the population, does not apply equally to Puerto Rico either. While Puerto Rico passed its own laws requiring features of Obamacare — such as prohibiting denial of insurance based on pre-existing conditions and caps on coverage — there is no individual mandate.

The result is a “death spiral” for private insurance plans. Elderly and sick people purchase coverage, while younger and healthier customers, who don’t need the same level of costly care, opt not to participate. This drives up premiums drastically, making plans prohibitively expensive for those who need them most.

With federal government spending and local tax revenue insufficient to meet the population’s health care needs, the Puerto Rican government must assume more debt to cover the difference.

 

People gather in front of the Puerto Rico’s Capitol building to protest against Gov. Alejandro Garcia Padilla's budget proposal for the next fiscal year in San Juan, Thursday, April 30, 2015. Legislators struck down a key part of a plan to overhaul the island's tax system early Thursday, raising concerns about the U.S. territory's economic future and its ability to pay off a heavy public debt. (AP Photo/Ricardo Arduengo)

People gather in front of the Puerto Rico’s Capitol building to protest against Gov. Alejandro Garcia Padilla’s budget proposal for the next fiscal year in San Juan, Thursday, April 30, 2015. Legislators struck down a key part of a plan to overhaul the island’s tax system early Thursday, raising concerns about the U.S. territory’s economic future and its ability to pay off a heavy public debt. (AP Photo/Ricardo Arduengo)

Privatization of public assets

Like countries across the global South who have found themselves indebted to U.S.-run institutions such as the World Bank and International Monetary Fund, Puerto Rico has been encouraged to privatize its public assets and use the money to pay its creditors.

Under former Governor Luis Fortuño in 2009, Act 29 was passed to allow government to enter into public-private partnerships for infrastructure and other projects. It created the Public Private Partnership Authority (PPPA) to “identify, evaluate, and select the projects that shall be established as Public Private Partnerships.”

The first target for private takeover of Puerto Rico’s public infrastructure was the island’s most traveled highway, PR-22. Autopistas Metropolitanas de Puerto Rico, LLC (Metropistas), was awarded a 40-year lease for $1.49 billion to operate both the PR-22 and PR-5 highways. The company is a consortium of a Goldman Sachs infrastructure investment fund and a Spanish toll concession company.

PR-22 runs from San Juan west through 12 municipalities towards Aguadilla. Metropistas recently raised the toll prices after the expiration of an initial period where they were prohibited from doing so. But apparently tolls are not the only way they are generating revenue.

A friend explained how the electronic toll collection system, AutoExpreso, had been malfunctioning and issuing fines for not having enough money in your account to pay the toll, even when the account did actually have money. He said that he received four separate fines, none of which was valid.

When he tried to contest the fines he was told that based on a technicality (not submitting an appeal in writing by an arbitrary deadline) the fines would stand, even though they should have never been issued in the first place. When he complained, he was told he had a choice to pay or to find another route. Of course, the only alternative for commuters in that heavily populated area of the island is to use inaccessible and inconvenient back roads.

Puerto Rico’s main airport, Luis Muñoz Marin in San Juan, was also recently privatized. The Mexican company Grupo Aeroportuario del Sureste SAB de CV and private-equity firm Highstar Capital received a 40-year lease to operate the airport. The deal was negotiated under the previous administration, but did not take effect until García Padilla took office. Unsurprisingly, the first time I visited after the privatization, I discovered the airport no longer offered free WiFi.

That Puerto Rico’s public assets have been turned into investment opportunities for American and foreign creditors should come as no surprise. Since its inception as a Commonwealth (a euphemism for colony), the interests of capital have taken priority over the general population. Puerto Rico’s Constitution grants creditors first priority for payment, ahead of even the population whose will the Constitution is supposed to represent.

Daliah Lugo explains this mystifying legal arrangement in her Opinion and Order blog:

That’s right: the entity we know as “Puerto Rico” was in fact set up by Congress and its allies as a corporation, its first duty always to its investors.

A political arrangement that does not prioritize the people who purportedly consent to it is farcical. Puerto Rico has never achieved self-determination, despite the fact the UN removed the island from its list of Non-Self-Governing territories in 1952.

The UN’s Special Committe on Decolonization has recognized this as recently as 2014 when they called on the United States to end their “subjugation” of Puerto Rico and allow its people to “fully exercise their inalienable right to self-determination.”

But the United States does not want to acknowledge that, having failed to grant sovereignty to Puerto Rico, they legally hold “the obligation to promote to the utmost … the well-being of the inhabitants of these territories,” according to Article 73 of the U.N. Charter.

Only the U.S. Congress — not Puerto Rico’s legislature — has the ability to change Puerto Rico’s political status. But they have never given any indication they intend to do so, despite a 2012 referendum in which Puerto Ricans decisively rejected the current colonial status.

Few Americans are aware of the social and economic crisis consuming Puerto Rico, which is rarely covered by mainstream news organizations (other than some notable exceptions). But as expenses rise — for housing, health care, groceries, utilities — and economic opportunities disappear, families find themselves in a more and more precarious situation.

The Puerto Rican people must finally gain the right to govern themselves in their own interest. That is the only hope to reverse the devastation wrought by 117 years as a debt colony.

 

Originally published at Just the Facts.

Content posted to MyMPN open blogs is the opinion of the author alone, and should not be attributed to MintPress News.

Filed Under: Civil Liberties, National News Tagged With: austerity, capitalism, debt, poverty, Puerto Rico

Leave a Reply Cancel reply

Your email address will not be published. Required fields are marked *

About MyMPN

MyMPN is MintPress News' community site. Anyone can participate by writing a diary and commenting on others' diaries.

Content posted to MyMPN is the opinion of the author alone, and should not be attributed to MintPress News.

MyMPN will cease publishing on January 15, 2017. Thank you for your support of our work.

  • More about MyMPN
  • Report site problems and bugs
  • MyMPN Comment Moderation

Follow Mintpress

RSSTwitterFacebookGooglePlus

Our Latest Posts

In The Age Of Trump, Peaceful Revolt Is Our Only Option

By Kevin Patrick Kelly January 11, 2017

Hafizah Geter Gives Moving Poetic ‘Testimony’ At Medgar Evers College

By José Negroni January 10, 2017

Gonzo Journalism Rejects The Myth Of The Neutral Media

By Dr. Milena Rampoldi January 9, 2017

Aleppo: How The US Manipulates Humanitarianism For Imperialism

By Steven Chovanec January 6, 2017

Why One ‘Remain’ Voter Now Supports A Hard Brexit

By Tara Lighten Msiska January 5, 2017

Hawaiian Kingdom, American Empire: An Interview With Professor Keanu Sai

By Dennis Riches January 4, 2017

War Against Rape In Karachi: Advocating For A Rape Free Society

By Dr. Milena Rampoldi December 30, 2016

What’s In A Name? From ‘Al-Qaeda’ To The ‘Kingdom Of Saudi Arabia’

By Nu’man Abd al-Wahid December 29, 2016

Popular Tags

activism Africa American imperialism Barack Obama Canada capitalism Climate change democracy Democratic Party Donald Trump Egypt election 2016 energy fracking history Human Rights inequality Iraq ISIS Islam Islamic State Israel journalism MENA Middle East mining nuclear oil Palestine police poverty prison propaganda racism Republican Party Russia Saudi Arabia Syria terrorism Texas United Kingdom United Nations Wall Street War water

Sign up for our Daily Newsletter

Copyright © 2022 Mint Press, LLC