The roots of Puerto Rico’s economic disaster lie in its political status.
Puerto Rico cannot declare bankruptcy. Unlike the municipality of Detroit and the sovereign nation of Greece, Puerto Rico has no independent political identity. It is an “unincorporated territory” of the United States of America.
Ever since this Caribbean island-nation was invaded by the United States in 1898, it has been ruled under the territorial clause of the U.S. Constitution. The U.S. Congress exercises authority over Puerto Rico.
The much-celebrated birth of the island’s commonwealth status in 1952 changed nothing. It was just a U.S. move to make the United Nations believe that Puerto Rico’s territorial issue had been resolved. The United States went on to parade the island as a showcase of democracy and prosperity to demonstrate to Latin America the benefits of U.S. tutelage.
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Well, the show’s over. Puerto Rico’s prosperous economy was a house of cards, built on debt over debt. The public debt has ballooned to a current $72 billion.
Puerto Rico Gov. Alejandro Garcia Padilla has admitted the obvious truth: The debt is unpayable.
Instead of confronting the U.S. government, however, he called Anne Krueger, a former International Monetary Fund economist, for suggestions. Krueger’s recommendations are to eliminate the minimum wage and Christmas bonus for workers, privatize the energy utility, increase taxes, and slash school and college budgets.
Such measures have not worked elsewhere, and they will not work in Puerto Rico. They will only push Puerto Rico further into the abyss and encourage massive migration to the United States.
Alternatively, Garcia could confront the creditors and demand a moratorium on the territory’s debt. He needs to renegotiate and try to get as much of the debt written off as possible.
But he can’t do that unless there’s a change in Puerto Rico’s status. Currently, Washington has to OK any negotiation or settlement with creditors. Only a sovereign people can assume a debt and take responsibility for it.
The United States can no longer ignore this issue. It’s been 117 years already. Puerto Rico needs a debt moratorium and self-determination – now.
Carmelo Ruiz is a Puerto Rican author and journalist. He directs the Latin America Energy and Environment Monitor. He lives in Ecuador. ©2015 Carmelo Ruiz
©2015 Carmelo Ruiz
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