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Powerless Puerto Rico

Dusty Sklar
October 10, 2017

by Dusty Sklar

HURRICANE MARIA has destroyed Puerto Rico's electricity, along with just about everything else, but Puerto Rico itself has been powerless for decades.

The U.S. invaded the 3,435-square-mile Caribbean island in 1898 and established a unique relationship. Puerto Rico is a territory and a commonwealth of the U.S. Its 3.4 million people have never managed to gain complete sovereignty or complete independence. They are U.S. citizens, but they're not represented in Congress, apart from the honorary position of resident commissioner in the House of Representatives, and they don't have the right to vote in our presidential elections.

They've been mired in recession for the longest time and were reeling from years of financial missteps and struggles before Hurricane Maria. Favorable business tax treatment by the U.S. government for much of the 20th century served to subsidize the Puerto Rican economy, but in 1996 President Clinton signed legislation that gradually did away with important parts of those laws over a ten-year period, ending in 2006. This caused many corporations to abandon the island, which eventually led to tax shortfalls.

At first, the Puerto Rican government did its best to try making up for the shortfalls by issuing an unusually. large number of bonds. Financial institutions like UBS, Citigroup, and the Santander Bank of Spain dubiously underwrote the bonds, eventually causing such a great debt burden that Puerto Rico wasn't able to pay the interest on the bonds.

Most residents of Puerto Rico don't have to pay federal personal income tax. If the land were to become a 51st state, that benefit would cease — one of the reasons why referenda on statehood have never broken that way. On the other hand, no more than 5 percent of Puerto Ricans support actual independence for their land, according to recent polls.

Yet the status quo may be insupportable. The Puerto Rican labor force has shrunk to the lowest level in thirty years, and the territory is $74 billion in debt (President Trump at first suggested that his administration would wipe the slate clean on Puerto Rican debt, then welched on the offer). The U.S. Navy tested bombs in the Vieques region for decades, causing fallout and other forms of pollution that have led to high rates of cancer and other illnesses.

All Puerto Rico needed was back-to-back hurricanes.

THE ISLAND'S infrastructure has been nearly demolished. The electrical system was already compromised, but now they've lost nearly all their power and are struggling to get food, water, gasoline, and household items. As of Friday, the island's drinking water was available for 55.5 percent of its inhabitants, and power was restored for 10.7 percent. "Because Puerto Rico imports over 85 percent of its food, food security on the island has always been fragile," writes Lauren Lluveras at Salon. "The U.S. territory has been rationing supplies since Hurricane Irma ... but according to Puerto Rico’s former secretary of agriculture, it may have just one month’s worth of food on hand." The island will ultimately have to be totally rebuilt, but their huge debt will make it impossible for Puerto Rico's government to match funds as other states normally do after disaster.

Elon Musk, the CEO of Tesla, has offered to have his solar-power unit rebuild Puerto Rico's electric grid. "The Tesla team has done this for many smaller islands around the world, but there is no scalability limit, so it can be done for Puerto Rico too," Musk wrote. Tesla is one of a number of American companies providing solar panels and batteries to the island.

Into the midst of all this comes President Trump's feud with Carmen Yulin Cruz, the mayor of Puerto Rico's capital city, San Juan. It began immediately: Cruz made a desperate plea for help, expressing the despair felt by the island's residents and criticizing acting Homeland Security Secretary Elaine Duke, who had declared Washington's response to the crisis "a good-news story in terms of our ability to reach people." Cruz argued in televised interviews that conditions were anything but good news, with people scrounging for food and fearful for their lives. She claimed that the federal response had "collapsed . . . People are dying in this country. I am begging, begging anyone that can hear us to save us from dying. If anybody out there is listening to us, we are dying and you are killing us with the inefficiency and bureaucracy."

As might be expected, President Trump responded with tweets: "The mayor of San Juan, who was very complimentary only a few days ago, has now been told by the Democrats that you must be nasty to Trump."

One of his most obnoxious tweets so far was: "Such poor leadership ability by the Mayor of San Juan, and others in Puerto Rico, who are not able to get their workers to help. They want everything to be done for them when it should be a community effort. 10,000 Federal workers now on Island doing a fantastic job."

Trump's visit to the island was even worse than his tweets. As he told the assemblage: "Every death is a horror, but if you look at a real catastrophe like Katrina, and you look at the tremendous -- hundreds and hundreds and hundreds of people that died, and you look at what happened here, with really a storm that was just totally overpowering, nobody's ever seen anything like this. What is your death count as of this moment? 17? 16 people certified, 16 people versus in the thousands. You can be very proud. Everybody around this table and everybody watching can really be very proud of what's taken place in Puerto Rico."

Mayor Cruz called Trump's gaffe-filled visit "insulting" and referred to him as "miscom-municator-in-chief." The image of him throwing rolls of paper towels into a crowd of people, she thought, was "terrible and abominable."

He, of course, had a different take on his visit. It had been a "great day" in Puerto Rico, he tweeted.

After Trump's departure, Puerto Rico's Governor Ricardo Rosello announced that the death toll had risen to thirty-four, and after Trump's comments on the island's massive debt, Puerto Rican bonds, which had been yielding 8 percent, plunged to 36 cents on the dollar.

Puerto Rico has been dealing with a shrinking population in the past few years. Between 2010 and 2016, it shrunk by 8.5 percent, according to the U.S. Census Bureau. Now there's no doubt that it will shrink even more.

Dusty Sklar, our contributing writer, last appeared here with "Fighting Back Against Big Oil."