DEBT AND DEPENDENCY: THE CASE OF PUERTO RICO

The Commonwealth of Puerto Rico is a United States (US) territory located between the Atlantic Ocean and the Caribbean Sea. The whole territory is about 13790 km and includes the main island of Puerto Rico and other smaller islands. The country is divided in 78 municipalities. The capital is San Juan, which is located in the northeast.

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The island of Puerto Rico is currently facing the worst crisis of it history. The country is $72 billion in debt. It’s a massive debt load for such a small territory. This situation is causing increases in electrical and water costs, cuts in pensions, public workers being laid off and increases in the price of education. But this is not new; it is something that the island has been carried out since 1898.

In 1898, after the Spanish-American War the island of Puerto Rico became part of the United States. From this same year, the dependency of Puerto Rico on the US started to become stronger.

When the US “liberated” Puerto Rico from Spain, the economy of the island was based on the harvesting of coffee, tobacco, sugar and fruit. But, in 1899, after Hurricane San Ciriaco, millions of dollars in property and nearly the entire year’s coffee crop were destroyed. This was a big opportunity for US banks. They started to loan money to affected coffee farmers and buy land at a steep discount.

As the coffee sector fell, sugar became the dominant export by 1901, transforming Puerto Rico into a one-crop economy selling almost exclusively to the US. By 1930, most of the output from the sugar mills came from four US corporations. During this period, most of the farmers left for the principal cities looking forward a better life away from rural areas, where the monopoly of the US corporations was being implemented.

In 1920, the Jones Act established that every product that entered or left Puerto Rico should be carried on US ships. From 1970 to 2010, the Jones Act cost Puerto Rico $29 billion. In the 1970s, to promote investment, US companies were allowed to operate on the island without paying corporate taxes at all, attracting especially pharmaceutical companies. The tax break expired almost a decade ago and manufacturers started shutting down operations on the island with the consequent spike in unemployment. According to the Government Development Bank for Puerto Rico by 2014, the unemployment rate was 14% and more than 40% of the families were living below poverty levels. In addition, about one-third of the island’s GNP is repatriated back to the US.

With these incentives for US enterprises the Puerto Rican economy passed quickly from an economy based on the primary sector to an economy based on manufacturing and services sectors. This decline in the primary sector caused a high food insecurity that is still present today. According to the Agriculture Department, by 2014 more than the 90% of the food that Puerto Rican citizens consume is imported. However, Puerto Rico has a rich diversity in types of soils. This means that the island has high potential in terms of agriculture and they are not taking advantage of it.

To summarize, and as Alexandra Lúgaro says in her campaign video (2015), the US government controls all of Puerto Rico’s foreign relations, immigration, customs, postal service, communications, television, radio, commerce, social security, maritime laws, military service, judiciary, tariffs, banks, currency, trade laws, shipping industry and cabotage laws. And, in spite of all of this, the population still cannot vote for the president of the United States or have voting representation in the US congress.

By analyzing all the consulted information, we can say that it is a fact that Puerto Rico is facing a situation that is no longer sustainable. This crisis is generating a massive brain drain in the country. There are more Puerto Ricans living in the US than on the island. A lot of professionals are emigrating to US looking for a better quality of life. And this will be a huger issue in the long term. Puerto Rico is an island with an enormous development potential and if the territory does not have enough qualified professionals it would be impossible to recover from the current crisis situation. The US is allowing the population of Puerto Rico to find a better life in their territory but with the limits that they are setting in the island they are not allowing the people that want to stay on there to improve their lives.

The legacy of the Jones Act means that the prices today are higher in Puerto Rico than in US. According to The New York Times Car prices are typically $6,000 higher in Puerto Rico than in mainland United States. Some products, like unprocessed food items, cost twice as much as on the mainland. The cost of living is higher in Puerto Rico, even though per-capita income is less than half that of Mississippi, the poorest state”. The island has more Walmarts, Walgreens and fast food franchises per square mile than in US. The constantly increasing influence of big US corporations in economy has led to an economic marginalization of local businesses. Because of this dependence on the US, Puerto Rican citizens are living beyond their means. This is definitely an unsustainable situation and one that must change in order to overcome the crisis. Furthermore, Puerto Rico is an island, and islands are considered fragile eco-systems due to their special characteristics, limited space and resources. In the long-term, Puerto Rico, cannot possibly have the same life style as a big country like the US.

The colonial policies imposed on the island throughout over the past century by the US, have led Puerto Rico to the actual crisis situation. A change in the island’s policies is now needed, as the system that dominates everything in Puerto Rico is not working. The limits that the US has imposed on the country during its history have generated a dependency that makes self-organization a challenge while the brain drain that the island is facing constrains its possibilities to overcome the crisis.

It is supposed that the US “liberated” Puerto Rico in 1898, but from my point of view, since this date, the US has behaved like this strict father that does not give any freedom to his child but expects everything from him. It is true that Puerto Rico has some advantages that other countries in the Caribbean do not have, like the security or the life style. But, what is the price that Puerto Rico is paying for have these preferences? Now, they are facing a horrible crisis and the controversial debate about their dependence on the US has started. Even so, the problem started in 1898 when the US took advantage of the weakness of Puerto Rico and started to implement laws that cut the freedom and the autonomy of Puerto Rican citizens. If we look for the definition of Paternalism, we will find that it means “the behaviour, by a person, organization or state, which limits some person or group’s liberty or autonomy for what is presumed to be that person’s or group’s own good”.

After reading this blog post, we should not have any doubt about what happens in Puerto Rico is a perfect example of Paternalism. However, we cannot be negative, because there is an open door for the country to address the current situation. I spent six months in an exchange program at Puerto Rico University and I can say that the people that live there are willing changes in the island. From the University, the students are fighting to build a better country because they know that they live in a unique region with more than a big potential to be proud of.

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“Those who keep holding on to the weird idea that Puerto Rico is self-governed, simply do not go by the same compass as the rest of the well-informed world”

Trías Monje, J. Puerto Rico: The trials of the Oldest Colony in the World.

SOURCES:

Carrillo Martín, F. (2013). “¿Ciudad sin ciudadanos? Mapas coloniales de Puerto Rico” in  Revista CIDOB. Barcelona center for international affairs.                   http://www.cidob.org/es/articulos/revista_cidob_d_afers_internacionals/104/ciudad_sin_ciudadanos_mapas_coloniales_de_puerto_rico

Dietz, J. (1989). Historia Económica de Puerto Rico. Ediciones Huracán.

Granados, O. (2014). “Puerto Rico, una economía en vilo” in EL PAÍS.     http://economia.elpais.com/economia/2014/04/04/actualidad/1396636853_834670.html

Picó,F. (1988). Historia General de Puerto Rico. Huracán Academia Series.

Denis, N. (2015). “Free Puerto Rico, America’s colony” in The New York Times. http://www.nytimes.com/2015/08/06/opinion/free-puerto-rico-americas-colony.html?_r=0

Campoy, A. (2015). “End no longer meet in Puerto Rico” in The Wall Street Journal. http://www.wsj.com/articles/ends-no-longer-meet-in-puerto-rico-1435880300

Spanish American War. http://www.history.com/topics/spanish-american-war

Carroll, R. (2015). “U.S  shippers push back in battle over Puerto Rico import costs” in Reuters. http://www.reuters.com/article/us-usa-puertorico-shipping-idUSKCN0PJ2TF20150709

No name (2015). “Expuesto Puerto Rico a una crisis alimentaria” in El nuevo día. http://www.elnuevodia.com/negocios/consumo/nota/expuestopuertoricoaunacrisisalimentaria-1717099/

Krogstad, J.M. (2015). “Puerto Ricans leave in record numbers for mainland U.S” in Pew Research Center. http://www.pewresearch.org/fact-tank/2015/10/14/puerto-ricans-leave-in-record-numbers-for-mainland-u-s/

Mercado Díaz, M. (2015). “El pueblo murió: la crisis económica de Arecibo” in 80 grados.  http://www.80grados.net/el-pueblo-murio-la-crisis-economica-de-arecibo-puerto-rico/

Lúgaro, A. (2015). Message from Puerto Rico to the U.S Government.


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