For the better part of the last 10 years, Puerto Rico has gone through one of the worst economic crises the island has ever seen. As a territory of the United States, Puerto Rico does not have the same financial protections as American states and cities, which means it is sinking into a debt hole for which there is no bottom. The island’s debt currently sits at about $72 billion.
Normally, a U.S. state, city or other municipality in the same financial situation could declare bankruptcy and begin the process of halting the debt and figure out how to get out of it. In 2013, the city of Detroit filed chapter 9 bankruptcy and was allowed to shed $7 billion of their debt and begin the process of bringing back services and spend 1.7 billion in order to do so. Another way to address the debt would be with a bailout, the way the U.S. did for the banking industry and then the auto industry back in the late 2000’s.
According to an article out by NPR, Monday was the last day for a deal to be made before creditors began filing lawsuits. No deal was made, and as of Tuesday May 2nd, the lawsuits began to pour in. On Wednesday, Governor Ricardo Rosselló, petitioned for relief under Title III of a new federal law, but it’s a law that has never been used and requires approval from a judge, which has yet to happen. Either way, it’s a sticky situation.
And it doesn’t seem like President Donald Trump’s administration plans to do anything about Puerto Rico.
During his presidential campaign in 2016, Donald Trump made it sound like he and his business friends saw Puerto Rico’s debt crisis as a great opportunity to be cashed in on.
“I’m the king of debt, I love debt.” It sounds like he had no plans then to help Puerto Rico directly, and it seems like he still has no plan now.
Recently Trump tweeted about what he thinks is going on in Puerto Rico.
Democrats are trying to bail out insurance companies from disastrous #ObamaCare, and Puerto Rico with your tax dollars. Sad!
— Donald J. Trump (@realDonaldTrump) April 26, 2017
Apparently to scare tax-payers into thinking they were on the hook.
Former mayor of Puerto Rico Hernán Padilla responded to Trump directly.
3.5 million US Citizens who live in PR deserve equal treatment. We do not ask for a bailout, but need help to provide access to health care
— Hernán Padilla (@hernanpadilla51) April 27, 2017
This has been a typical Trump tactic, using the fear that foreigners, outsiders or “others” are taking tax dollars from the American public. He’s counting on people who still don’t know that Puerto Rico is part of the U.S. or that Puerto Ricans are born citizens, to rally sentiments against doing what is right, which would be to help the Island of Puerto Rico.
A proposed referendum that could have helped Puerto Rico was nixed when Attorney General Jeff Sessions denied the island the $2.5 million needed for it.
Credit: Gage Skidmore / Flickr
Teen Vogue reported last week that Sessions and the Department of Justice decided to withhold the $2.5 million that Puerto Rico would need to hold a referendum. The vote would have decided Puerto Rico’s relationship status with the U.S. “It’s complicated” doesn’t appear to be cutting it anymore.
The referendum ballots would have allowed people to vote for either independence from the U.S. or Statehood –“commonwealth” was removed as an option. If the vote would have gone through, it could have allowed Puerto Rico to get out of limbo. If statehood won the vote, Puerto Rico could get help from the U.S. If independence won the vote, Puerto Rico would be able to decide its own fate.
The referendum could have been a major turning point, as the U.S. currently has the Fiscal Control Board (or “la junta” as it’s known) in place overseeing all major financial decisions on the island.
Many fear that this board favors creditors over the people and they have ultimate control over decisions that affect human rights, like health care. The group is formed under what is called PROMESA the “Puerto Rico Oversight, Management, and Economic Stability Act” and has ultimate financial power, capable of undermining choices made by elected officials, which has led some, including Rep. Luis Gutiérrez of Illinois, to call it a “wholly undemocratic activity.”
Its executive director, Natalie Jaresko, worked to help improve Ukraine’s financial crisis. The difference is she’s Ukrainian, she speaks the language and even holds dual citizenship with Ukraine. Many have argued that a Puerto Rican elected official should be charged with helping right Puerto Rico’s financial future. Ethical questions have also been raised of Jerasko, including questions about how she handled a $150 million tax-payer financed investment fund. The Nation reported on another questionable member of “la junta” saying: “There is popular awareness that board member Carlos García was a past head of Puerto Rico’s Government Development Bank and an executive of Banco Santander, which underwrote deals worth up to $61.2 billion of the island’s debt.”
With the referendum to decide Puerto Rico’s independence de-funded, a financial board many feel doesn’t represent the people and a president who is inciting fears, students have taken to the streets.
Students Are Now Leading the Resistance to Austerity in Puerto Rico https://t.co/LRePEDBVm9
— The Nation (@thenation) April 27, 2017
According to The Nation, since taking over in January, the Fiscal Control Board has cut $512 million in funding from the University of Puerto Rico through 2025, which students feel puts the university in serious jeopardy. According to the article, a first year law student named María de Lourdes Vaello, said it best while protesting last week: “The purpose of the university is to provide a high-quality education to the middle and lower classes, but now we’re facing cuts that threaten the very existence of the institution.”
A change is still possible though.
Credit: boricua491000 / Flickr
According to Teen Vogue, although Sessions and the DOJ are withholding funds, a vote will still be going through with “independence,” “statehood,” and “territory” as possible options on the ballot. With the financial and political crises on the island at an all time high, people are hopeful that a definitive status between Puerto Rico and the U.S. will begin to change things for the better. It’s understandable that for the 3.47 million still living on the island, with a 11% unemployment rate, who have had to live under these conditions for over a decade, the light at the end of the tunnel must seem dim AF.