By TEO INGA
As Hurricane Fiona leaves the Caribbean and the first reports of the damages and loss of life from the bourgeois media pop up, it is important to understand how the severity of this climate-induced crisis is the direct result of Puerto Rico’s history as a U.S. colony and tax haven for the capitalist class. Hurricane Fiona left 358,000 Puerto Ricans without clean water and 928,000 still without power five days after the storm. Some areas received up to 30 inches of water, causing catastrophic flooding and landslides.
Fiona, having come five years after hurricanes Irma and María, is considered to have a “compounding effect” on the economy and various communities of Puerto Rico by Rachel Cleetus, the policy director for the Climate and Energy Program at the Union of Concerned Scientists. This “compounding effect” is most likely worsened by the privatization of the power grid and other austerity measures put in place after María. PROMESA is another colonial rule placed upon the island with a long history of colonial oppression, a history which shines a light on the current debt crisis.
In the 1901 insular cases, the U.S. Supreme Court stated that “[Puerto Rico] is a territory appurtenant and belonging to the United States, but not a part of the United States.”(1) This wording was deliberately roundabout and inexact. Initially, the insular cases’ designation of Puerto Rico as an “unincorporated territory” was used as a way to legally deny the benefits of U.S. statehood to the island, since U.S. territories must be classified as “incorporated” to be eligible for statehood. The designation of “unincorporated territory” on an island with a population larger than some U.S. states is unclear, bureaucratic, and colonial. However the insular cases also presented very clear language on how the capitalist class would view the island, owned by the United States and open for business.
By 1917 this colonial designation, denying Puerto Rico access to federal funding and constitutional rights, caused pro-self-rule coalitions to form and to demand greater local control. This led to the passage of the Jones–Shafroth Act, which gave Puerto Ricans U.S. citizenship, organized the island’s government into three branches, and laid the foundation for its current debt crisis with triple-tax-exempt municipal bonds.
Pro-independence/sovereignty/socialist organizations continued to develop on the island as Puerto Ricans felt the contradictions of capitalism grow without the meager protections offered by the U.S. Constitution or the federal funding provided to a state as opposed to a colony. The various independence movements endured the infamous Law 53—a.k.a. “La Ley de la Mordaza” (the Gag Law)—and won concessions from the U.S. by threatening the country with the loss of its colony and self-rule for the Puerto Rican people. It wasn’t until 1950 that Harry Truman “allowed” the island to draft its own constitution, to be revised and approved by the U.S. Congress in 1951.
Even with these partial victories, the continued purchasing of the island’s municipal bonds by capitalists abroad was adding fuel to a possible debt crisis. This was facilitated by U.S.-imposed tax credits, such as those allowed by Law 936, which allowed corporations to write off most, if not al,l of their income tax burdens for having subsidiaries on the island. These policies were enriching the capitalist class while causing greater debt levels within the government and keeping Puerto Rican wages down. It wasn’t until the various corporate tax credits lapsed in 2006 that Puerto Rico’s debt began to be “unmanageable” for its bureaucratic and political class. From that point on the economy was in recession, with contractions year ater year as more capital was pulled from the island.
This is where Puerto Rico’s status as a U.S. “commonwealth,” as opposed to a sovereign nation or U.S. state, was setting up the island for failure. As a commonwealth, Puerto Rico lacks the ability to declare bankruptcy, prioritize public spending/investment over debt repayment, change the triple exemption status on its own municipal bonds, or control the way tax credits are structured.
This was a fiscal and social crisis, and then hurricane María struck. The storm caused the deaths of about 3000 people once counts were updated from the original count of 65. The storm destroyed much of the island’s electrical infrastructure and caused much of the island to be without power for months. María allowed the capitalist class to demand even greater austerity and higher levels of privatization from the Puerto Rican working class while stamping a cutesy name—PROMESA (“PROMISE”)—on the continued and strengthened colonial oppression.
PROMESA, signed as a “relief” bill, put much of Puerto Rico’s fiscal policy into the hands of eight people in exchange for economic relief. The “board” is made up of seven people appointed by the U.S. president and one appointed by the Puerto Rican governor. These unelected people essentially exist to ensure that the capitalists who hold Puerto Rico’s debt continue to receive profitable returns. These were deep cuts, with a report made by the Center for Popular Democracy finding that the “the Board’s austerity cuts directly hampered the island’s ability to respond. The public utility previously employed over 2000 linemen. Following austerity cuts, that decreased to 700 workers. Today [after privatization], LUMA Energy only employs 300 workers responding to this outage.”
The privatization of electrical power was a direct attack on Puerto Rico’s working class and only served to enrich capitalists abroad. With public spending slashed at every turn, the island’s recovery was slow and shaped largely by the needs of capital rather than by concrete material needs. One can only assume that the decreased number of linemen will also slow the island’s recovery in the wake of Fiona.
PROMESA did much more than deprive the working class of pensions and public benefits. Its central privatization scheme put the publicly owned electrical grid in the hands of capital—and what were the results? We are seeing them play out now. There were no improvements; the island went dark. Where did all the money go that could have been used to pay for climate change adaptation, to improve the grid’s resiliency, and to assure an adequate supply of food and medicine in a nation that imports most of its food and exports most of its medication? Where did the value go that was created by the Puerto Rican working class? All that value went to a group of hedge funds and private interest groups to pay off a debt that was ordered to exist by the United States.
What is the solution to the crisis? The formation of a mass movement that calls for the complete cancellation of debts “owed” by Puerto Rico and all other nations in the global South that are caught in similar debt loops, in the name of reparations for the ongoing and worsening climate crisis. But this alone won’t be enough; the whole of society must be reorganized by the working class with all heavy industry and needed utilities placed under workers’ control for the benefit of all.
Cancel the debt now! Self-determination for the people of Puerto Rico! Nationalize the electrical grid!
Photo: Reuters
Sources:
- https://www.npr.org/2022/09/23/1124345084/impact-hurricane-fiona-puerto-rico
- https://ccrjustice.org/home/blog/2021/10/20/colony-colony-colony-puerto-rico-and-courts
- https://dbpedia.org/page/Jones%E2%80%93Shafroth_Act
- https://taxfoundation.org/tax-policy-helped-create-puerto-rico-fiscal-crisis/
- https://www.cnn.com/2022/09/19/weather/hurricane-tropical-storm-fiona-monday/index.html
- https://www.cadtm.org/Who-Owns-Puerto-Rico-s-Debt-Exactly-We-ve-Tracked-Down-10-of-the-Biggest
- https://www.populardemocracy.org/sites/default/files/%5BENGLISH%5D%20PROMESA%20Has%20Failed%20Report%20CPD%20ACRE%209-14-2021%20FINAL.pdf
- https://ccrjustice.org/home/blog/2021/10/20/colony-colony-colony-puerto-rico-and-courts
- https://www.aafaf.pr.gov/wp-content/uploads/PR-FactSheet-Updated.pdf
- https://oversightboard.pr.gov/about-us/