As Puerto Rico enters its second decade of economic depression with an unsustainable debt of over US$70 billion (more than 100 percent of GNP, not counting pension deficits of US$41 billion), residents in the island are wondering if their political leaders are capable of tackling the severe socio-economic problems they are facing. With a 45 percent poverty rate, massive unemployment, mass migration to the United States and inequality soaring, the political class of the island has retreated to what it knows best: immobility masquerading as action. To do this, they have resorted to the question of the status of Puerto Rico again.
In the minds of most Puerto Ricans, politics has been reduced to choosing a preference among status quo options, represented by three main parties, to solve the present-day colonial relationship with the United States. Statehood, represented by the New Progressive Party (PNP), independence (Puerto Rican Independence Party, PIP), and the commonwealth, (Popular Democratic Party, PPD) have guided the political orientation of most Puerto Ricans. From this status perspective, the political spectrum of left and right has been defined with independence identified with leftist politics, statehood with the right, while the pro-commonwealth position as occupying the liberal center.
It’s not surprising that the apparently imminent approval by the U.S. Congress of H.R. 5278, or PROMESA, imposing a Fiscal Control Board (FCB) with ample powers to “solve” Puerto Rico’s problems, has strengthened the traditional political approach outlined above. Discussions regarding the causes and solutions to the double whip of the fiscal crisis and the economic depression have become hostage to the status issue. While it is true that one cannot comprehend fully Puerto Rico’s situation without taking into account its colonial status, it is also true that a change of status by itself does not necessarily address the power relations within the island and with the United States. Neocolonialism with independence or internal colonialism with statehood could leave power relations untouched.
As the details of what H.R. 5278 could entail for the country are revealed and opposition mounts, the positions of the major parties towards the FCB are changing from the inevitable (PPD), or best option (PNP), to viewing it, according to PPD’s governing board resolution made public on Monday, as unacceptable, anti-democratic and against the best interest of pensioners, the working class and local business.
A debate on May 31 between PNP governor candidates Pedro Pierluisi (resident commissioner in Washington, D.C.) and Ricardo Roselló (son of former governor Pedro Roselló) left Mr. Pierluisi as the sole supporter of H.R. 5278, with Mr. Roselló making clear his opposition to the project for being an unfair colonial imposition that hinders the path towards statehood. Mr.Pierluisi painstakingly tried to explain why the bill would not result in unfair treatment—even with the possibility of a lower minimum wage for youth, and the possibility of revising public pensions. Both candidates agreed that statehood would be the definite solution to the crisis. For the PIP the relationship between colonialism and the crisis is direct, while for the PPD a sense of needed reform of the commonwealth status is catching up.
It is hard to predict the future. If Mr. Roselló wins Sunday’s primaries, opposition against the bill will be complete among all major electoral parties. However, beyond opposing H.R. 5278, none of these parties is publicly putting forward initiatives to avoid default with the next debt service payment of almost $2 billion on July 1st, plus others forthcoming. A clear strategy for managing default is needed.
In a deliberate manner, the crisis has become an intractable problem. The powers that be are lobbying for initiatives requiring action from all three federal branches of government arguing that, as a colony, Puerto Rico is not responsible for, nor has the powers to solve the crisis by itself. This stance completely ignores the degree of self-government attained by the commonwealth precisely in fiscal policy matters.
Furthermore, the agenda of capital’s representatives, like the Coalición del Sector Privado (Public Sector Coalition), pushes for a restructuring process with more corporate welfare (i.e. credits and tax incentives local and federal), lower nominal wages, privatization, and other policies that will further deteriorate the fragile economy.
There is a cosy relation between the state and capital in Puerto Rico with a generous system of corporate welfare and with national and international capitalists enjoying a myriad of subsidies and cheap labor. The set of corporate subsidies has kept growing amidst the crisis. This arrangement is what the two governing parties are protecting as representatives of the neoliberal regime of accumulation in the island, whereby profits are assured and privately appropriated, and crumbs left for the rest. This is the essence of the crisis masqueraded by status discussions.
Although governing parties may oppose H.R. 5278, none has a strategy for preventing more structural and regressive adjustments taking place as the government falls deeper into default. The structure of the 2017 budget reveals that a default is being partly managed but, in the absence of a fiscal overhaul that changes distributive shares tilting it towards the people instead of capital, the ongoing course of action will bring more austerity upon a crumbling economy and anguished society, be it by H.R. 5278, federal courts or other mechanisms.
Puerto Rico's Debt Crisis
Groups outside the coordinates of the status issue, like unions, environmental organizations, and new political parties (e.g. the Working People’s Party, PPT in Spanish), are organizing in a common front against the imposition of H.R. 5278, but their impact on the masses is still marginal. Escape valves like emigration, the informal economy and federal funding have mitigated what in other countries could have translated into a social upheaval. However, those valves create more obstacles for sustainable long-term development, with the loss of young population and the impoverishment and accelerated aging of those who remain.
As the PPD, PNP, and Democrats prepare for primaries on June 5, no significant changes are expected as a result of that process. Most of the electorate in Puerto Rico is Democrat, although less than 400,000 voted as such in 2008 out of a total electorate of almost 2 million. Participation in Republican primaries diminished from 128,966 in 2012 to 41,196 this year. As the political debate evolves and opposition to H.R. 5278 grows, it's logical that a progressive, anti-austerity option should emerge to face the crisis. Unfortunately, it appears that’s not the case in Puerto Rico. Despite the crisis, federal funding, upon which close to half the population and beyond is dependent, remains intact. Furthermore, most of population sees additional federal funding (especially for health, where a fiscal cliff is near) as a bankruptcy mechanism and debt restructuring as necessary options coming from the federal government to palliate the crisis.
Electoral culture here has it that the vote should not be wasted. Regarding presidential hopefuls, Puerto Rican Democrats will probably favor Hillary Clinton over Bernie Sanders, although the latter has a more progressive stance on the island’s issues. The 2008 Democratic primaries in Puerto Rico gave Clinton a victory by a two to one margin over Barack Obama. Among the pro-independence and socialist left there is an ongoing debate about whether participating in Democratic primaries and voting for Sanders is a good and acceptable option. People supporting this alternative understand that with Sanders there is a greater possibility of starting a decolonizing process. Pro-independence leaders see the status solution as the only way of solving the crisis too.
With mounting default, continued stagnation, status maneuvering and lack of capacity for articulating a consensus for a progressive solution while waiting for the federal government to solve the crisis, the people of Puerto Rico are—to paraphrase Werner Herzog’s Kaspar Hauser—left in a state of “everyone for himself and god against all.”
Argeo T. Quiñones-Pérez is a professor in the Department of Economics at the University of Puerto Rico, Río Piedras.
Ian J. Seda-Irizarry is an assistant professor in the Department of Economics of John Jay College, City University of New York.