[News] Wall Street Vultures Descend On Debt-Ridden Puerto Rico

[Anti-Imperialist News]

http://www.mintpressnews.com/wall-street-vultures-descend-debt-ridden-puerto-rico/219562/ 



  Wall Street Vultures Descend On Debt-Ridden Puerto Rico

Michael Nevradakis

‘Any “bailout” that might occur … seems directed only at the Wall Street 
vultures who now control most of the debt,’ Déborah Berman-Santana tells 
MintPress News in a sprawling interview about the debt crisis in Puerto 
Rico.

*ATHENS, Greece — *Despite only making headlines in recent months, the 
economic crisis in Puerto Rico has been developing and worsening for the 
past several years, a crisis which has led to Puerto Rico being dubbed 
“the Greece of the Caribbean.”

In this interview, Déborah Berman-Santana, professor emeritus of 
geography and ethnic studies at Mills College in Oakland, California, 
analyzes the latest developments in Puerto Rico.

Berman-Santana is the author of “Kicking Off The Bootstraps: 
Environment, Development, and Community Power in Puerto Rico,” a 
detailed analysis of “Operation Bootstrap,” a post-World War II 
industrial program launched by the United States that was one of the 
very first of its kind in the world.

Speaking to MintPress News, Berman-Santana analyzes the long history of 
colonial exploitation of the island, how the current economic crisis 
developed, and why the latest “bailout” of the island is only a bailout 
for the vulture investors who have taken possession of much of Puerto 
Rico’s debt and who now have their sights set on the island’s valuable 
assets and resources. She also draws comparisons with the economic 
crisis and subsequent “bailouts” that have been seen in Greece, a 
country where she has spent extensive time over the past year.

*MintPress News (MPN): Describe for us the history of the economic 
exploitation of Puerto Rico. What has the impact of colonialism been on 
Puerto Rico’s economic viability?*****

*Déborah Berman-Santana (DBS):*Colonies exist so that the colonizer will 
benefit economically and politically. Since the U.S. invaded and 
occupied Puerto Rico in 1898, it has extracted profit in numerous ways: 
First, through converting it into a sugar colony. After World War II 
Puerto Rico was transformed through “Operation Bootstrap” into a special 
economic zone to benefit U.S. corporations under the guise of 
“development via export-led industrialization.” As a captive market, 
Puerto Rico also became the home to the most Wal-Marts per square meter 
in the world. Finally, Puerto Rico’s colonial “neither U.S. state nor 
independent state” political status allowed the U.S. bond market to give 
special exemptions to investors, which has brought Puerto Rico to its 
current debt “crisis.”

During the 1930s, the anti-imperialist congressman Vito Marcantonio 
sponsored a study which revealed that since 1898, U.S. corporations had 
extracted as much as $400 billion in profits from Puerto Rico. Recently, 
independent researchers in Puerto Rico have estimated that since the 
1950s, more than half a trillion dollars has been extracted from Puerto 
Rico. Both estimates encompass the free usage of Puerto Rican resources 
and the restriction, via U.S. cabotage laws, requiring all imports and 
exports to use U.S. merchant marine ships and U.S. crews. It would not 
be an exaggeration to say that the U.S. has taken more than a trillion 
dollars away from its colony, which certainly dwarfs Puerto Rico’s $73 
billion public debt.

*MPN: How did this ongoing exploitation contribute to the present-day 
“debt crisis” in Puerto Rico, and what has been the role of Washington, 
Wall Street, and the “vulture funds” in perpetuating this crisis?*

*DBS: *With the eventual elimination of industrial tax incentives 
beginning in the 1990s, Puerto Rico’s governments increasingly looked to 
loans to balance its budget and continue practices of rewarding 
political cronies with contracts for large infrastructure projects. 
Subsequently, President Clinton’s elimination of the Glass-Steagall Act 
allowed for investment bankers to increasingly engage in bond market 
speculation. Puerto Rico received “triple exemption” because of its 
colonial status, which meant that every pension fund and every municipal 
and state government, among others, bought Puerto Rico bonds, ignoring 
the fact that its economy began shrinking once the special industrial 
exemptions were completely eliminated in 2006.

Election of a protégé of the Koch Brothers, Luis Fortuño, as Puerto 
Rico’s governor in 2008 resulted in a “bitter medicine” law that 
eliminated tens of thousands of public jobs, which accelerated the 
descent of an economic recession into a depression. By 2011 the major 
credit agencies began degrading Puerto Rico’s ratings, with the result 
that it increasingly resorted to short-term, high interest loans similar 
to “payday loans.” Bondholders increasingly unloaded their Puerto Rico 
bonds in the secondary bond market, which were then swooped up by 
vulture funders such as Paul Singer and John Paulson – often at 10 to 20 
percent of the bond’s value. Today, these vulture funders possess up to 
50 percent of Puerto Rico’s public debt, and are the creditors who are 
least willing to renegotiate the terms of the loans. They have been the 
major lobbyists for the Congressional law known as “PROMESA” that 
recently became law.

*MPN: “PROMESA” been touted by some as a “bailout” for Puerto Rico. What 
does this bill mean for Puerto Rico, in your view, and what is the 
significance of the acronym “PROMESA”?*

*DBS: *The new law, which President Obama signed on June 30, is entitled 
the “Puerto Rico Oversight, Management, and Economic Stability Act” 
(PROMESA). In Puerto Rican popular parlance, a “promesa” is a pledge 
that someone makes when dealing with a family crisis. The person 
promises to do something for the community if the crisis is resolved. 
Often this is an annual fiesta, including traditional music, food and 
drink, and may last for decades. That the U.S. Congress would give this 
name to a law that strips away any pretense of self-governance, [it] has 
caused a tremendous amount of resentment in Puerto Rico.

This law allows President Obama to appoint a seven-member board — paid 
for by the Puerto Rican people — which will take control of the budget, 
eliminate environmental laws, dismiss public employees, abolish public 
agencies, cut the minimum wage by half for young workers, close schools 
and hospitals, increase utility bills, and cut pensions. These measures 
are justified by the priority of making payments on the public debt. 
There is no provision for economic development or restructuring of the 
public debt, let alone canceling it. There is no acknowledgment that 
such measures are likely to greatly increase emigration of working age 
Puerto Ricans while severely deteriorating quality of life for those who 
remain. Any “bailout” that might occur as a result seems directed only 
at the Wall Street vultures who now control most of the debt.

*MPN: Much has been written about the economic crisis in Puerto Rico 
recently, including a report by the Committee for the Abolition of 
Illegitimate Debt (CADTM). What do you make of these reports, and were 
any Puerto Rican economists given the opportunity to provide their own 
input?*

*DBS: *CADTM’s article was odd in that there did not appear to be any 
effort to read up or try to understand Puerto Rico, but simply to use 
information from Europe and change names where needed. For example, it 
referred to Puerto Rico as a member of the “Commonwealth of the United 
States,” an entity that does not exist (unlike, for example, the British 
Commonwealth). Puerto Rico is defined by the U.S. as a “territory 
belonging to, but not part of, the United States”, with not a single 
iota of sovereignty. A White House report on Puerto Rico in 2006 claimed 
that the U.S. could give Puerto Rico away to another country should it 
choose to do so. The term “commonwealth” is used for Puerto Rico to give 
the illusion that Puerto Rico achieved some form of self-governance in 
1952, which resulted in the United Nations removing it from their list 
of colonies. There has been a movement to get Puerto Rico reinstated to 
that list for decades.

Another weakness of CADTM’s analysis was its use of secondary sources of 
statistics about Puerto Rico, such as the Pew Foundation, instead of 
Puerto Rico’s own government, or any of several Puerto Rican independent 
research institutes. Perhaps most egregious of all is that it does not 
mention the fact that, as a colony with no sovereignty, all of Puerto 
Rico’s public debt may be considered illegal. One might presume that an 
international organization dedicated to cancellation of debt would know 
that it was the successful insistence by the U.S. in 1898 that Cuba did 
not need to pay any of its debts because they were contracted by Spain, 
that helped shaped the concept of odious debt. I am not sure of the 
purpose of CADTM’s article — I hesitate to call it a “report” — other 
than to jump on the Puerto Rico misinformation bandwagon.

*MPN: In what ways has the colonial administration of Puerto Rico made 
the island economically dependent on the United States, and how does 
this dependency impact the national psyche of Puerto Ricans?*

*DBS: *There used to be a geography book, written by a North American 
named Muller, which was the first textbook studied in all Puerto Rican 
schools. The first sentence read: “Puerto Rico is a small, 
overpopulated, poor island, lacking in natural resources, which cannot 
survive without the United States.” Puerto Rico has served as a 
laboratory for generations of U.S. academics, most of whom were awarded 
government and foundation grants to prove that Puerto Rico and its 
people were geologically, biologically, and socially inferior. Their 
claims were often absurd, such as that Puerto Ricans were afraid of the 
sea and that there [are] hardly any fish in the surrounding Caribbean — 
both of which could easily be disproved — or that somehow Puerto Rico’s 
rich soils could not feed the population, which was not the case until 
most arable land was diverted to sugar cane and later covered in cement 
for the industrialization strategy.

Puerto Ricans were constantly told to look to the U.S. for all sources 
of innovation and progress, and warned that independence would be 
economically and socially disastrous. A favorite slogan was, “Where 
would we be without her?” alongside the U.S, flag. Never mind that all 
of the disastrous economic and social consequences about which we were 
warned, have occurred precisely because of our colonial relationship to 
the U.S. You simply cannot extract the amount of profits from a country 
that the U.S. has taken from Puerto Rico, plus restrict our ability to 
protect our own resources or capital, and expect to have a positive 
economic result.

*MPN: Describe for us the political system of Puerto Rico, the major 
political parties and to what extent the island enjoys “self-governance.”*

*DBS: *For the first 50 years after the U.S. invasion of Puerto Rico, 
the president named a governor and most directors of government 
agencies. Since the establishment of the “Associated Free State” 
(commonwealth) in 1952, Puerto Rico has elected its own governor and 
legislature, as well as a non-voting representative to the U.S. 
Congress. Elections are held every four years. The two majority parties 
are the pro-statehood New Progressive Party (PNP) and the Popular 
Democratic Party (PPD), which favors the current status with greater 
autonomy. The Puerto Rican Independence Party (PIP), once the 
second-largest party, has been relegated by decades of political 
repression and extreme factionalism among pro-independence and left 
organizations to the status of a small party that barely manages to 
elect some representatives at municipal and island-wide levels. There is 
also a Puerto Rican court system, using only Spanish and based on Roman 
law, as is true of Latin American countries, which, however, is 
subordinate to the English-only U.S. federal court, located in the U.S. 
federal building in San Juan, a concrete reinforced stronghold that is 
the official seat of U.S. colonial rule.

The Puerto Rican government has not had the power to truly protect local 
businesses against product dumping from U.S. companies, nor to make 
economic treaties with other countries without U.S. approval. However, 
it has had control over its budget and taxes, which both majority 
parties have used to curry political favor with contractors and 
corporate sponsors. This has encouraged a culture of corruption, which 
would appear to confirm the dominant narrative, that Puerto Ricans lack 
the capacity to properly govern themselves. But at no time since 1898 
has any Puerto Rican government been able to exercise sovereign 
decision-making against the wishes of Washington. That the so-called 
“commonwealth” did not change its status was confirmed by two rulings of 
the U.S. Supreme Court in June, one of which dealt with Puerto Rico’s 
exemption from use of Chapter 9 bankruptcy while at the same time nixing 
its government’s attempt to write its own bankruptcy law. Briefly, the 
Supreme Court affirmed that Puerto Rico lacked even the limited 
sovereignty that a U.S. Indian tribe might possess, and that Puerto 
Rico’s constitution had about as much validity as the Puerto Rican peso 
had after the U.S. takeover. In addition, President Obama said that 
“there is no alternative” to the PROMESA bill and the imposition of a 
junta, which of course means that Puerto Rico’s elected government, 
laws, and constitution mean nothing.

*MPN: What do you make of the recent visit of Bernie Sanders to Puerto 
Rico?*

*DBS: *Sanders’ primary campaign strategy was to attract independents to 
vote for him in the primaries. Even though Puerto Ricans and other 
residents of U.S. colonies do not vote for president and have no voting 
representation in Congress, they do have delegates to the Democratic and 
Republican conventions and so usually hold primaries. By far the largest 
of the colonies in terms of population is Puerto Rico, and so Sanders’ 
strategy was to encourage /independentistas/— supporters of independence 
who do not vote in U.S. primaries — to vote for him. In his 
congressional career Sanders had never appeared to be aware of Puerto 
Rico’s existence, yet suddenly he was promoted as a “savior” who would 
decolonize Puerto Rico, all based upon his criticism of Wall Street and 
a supposed reputation as a “radical leftist.” Sanders never could bring 
himself to mention the “c” word — colony — when speaking about his 
country’s relationship with Puerto Rico. More than once he referred to 
Puerto Rico as a “protectorate,” and his harshest words accused 
Washington of using the PROMESA bill to “treat Puerto Rico as a colony” 
— without, of course, admitting that Puerto Rico already is a colony! 
Unfortunately, colonies foster colonized mentalities, so Sanders did 
manage to divide /independentistas/yet again, when what is most needed 
at this time is unity.

Sanders introduced an alternative bill to PROMESA in the Senate after 
PROMESA had already been approved by the House of Representatives and 
endorsed by Obama, so his bill did not even get a hearing. The proposed 
bill itself was a hodgepodge of measures that may have been marginally 
better in economic terms, but it also included a section on holding yet 
another referendum on political status — though at least five have 
already been held. It provided detailed instructions on how to 
fast-track statehood, should that option win, but nothing about U.S. 
responsibility for ensuring free determination and indemnification for 
eventual independence. I should also add that many U.S. politicians, 
from George Bush and Ted Kennedy to Hillary Clinton and Barack Obama, 
have made extravagant promises while campaigning for Puerto Rican 
delegates to their parties’ conventions. In sum, Sanders used Puerto 
Rico exactly as have other U.S. politicians before him.

*MPN: How is the issue of independence viewed in Puerto Rico and how has 
Washington typically responded to the independence movement?*

*DBS: *There have been independence movements in Puerto Rico ever since 
the 19th century, when Spain was still the colonial power. Since the 
1898 invasion, Washington has combined violent repression of 
independence groups with selective co-option of broad sectors of Puerto 
Rican society, using church officials and entrepreneurs, politicians and 
civil society leaders to divide Puerto Ricans against each other while 
promoting Uncle Sam as benefactor. Neighbors were paid to spy and report 
on every aspect of the lives of independence supporters, while many lost 
their jobs or were expelled from universities. Leaders were often 
arrested on a variety of charges, and many served long prison sentences. 
Not even leaving Puerto Rico for the diaspora exempted them from 
persecution. For example, Oscar López Rivera is currently imprisoned, 
having served 35 years of a 55-year sentence for “seditious conspiracy 
to overthrow the U.S. government and its territories” — in other words, 
for struggling for Puerto Rican independence. Oscar grew up in Chicago, 
and has not been accused nor convicted of any violent act, yet his 
refusal to defend himself in a U.S. criminal court, and demand that he 
be tried as a political prisoner in an international tribunal helped 
lead to such a disproportionately long sentence.

Puerto Ricans as a whole do not support independence, at least not 
openly, because they have been taught that Puerto Rico has no choice but 
to be associated with the U.S., either as a state or in some kind of 
autonomous association. Yet every single environmental, social, 
political and cultural struggle and campaign has had independence 
supporters as key members. Puerto Rican pride and self-identification 
with a Puerto Rican nationality is much broader than open support for 
independence. It is obvious in sports, in music, in cultural 
celebrations, even in jokes and everyday life. Even many statehood 
supporters will often refer to Puerto Rico as their nation, as 
contradictory as that may sound to outsiders. Especially given the 
recent actions of the U.S. government — and the realization by many 
Puerto Ricans that Uncle Sam does not have their best interests in mind, 
it would be interesting to see if support for independence would 
increase, should a serious proposal include some indemnification by the 
U.S. for over a century of colonial rule.

*MPN: The PROMESA bill has triggered a wave of demonstrations in Puerto 
Rico. How are these protests taking shape?**
**
**DBS: *As soon as Obama signed the bill, a number of organizations set 
up a “civil disobedience encampment” in front of the main entrance to 
the federal building in San Juan. This is a very common feature of 
activism in Puerto Rico, as it serves as a semi-permanent focus for 
education, organizing, and resistance, and has been used to block 
environmentally dangerous projects as well as the U.S. Navy’s former 
bombing range on Vieques Island. The encampment has been continuously 
occupied since the end of June, and is a focus for seminars, cultural 
events, picketing, and “community building.” For now, the Puerto Rican 
police have said they do not plan to remove the protesters, although 
federal agents often conduct provocative actions, such as blasting 
diesel generators near the tents and walking bomb-sniffing dogs through 
the encampment.

Other protests include a massive and broad-based movement against a plan 
by the U.S. government to use military planes to fumigate all of Puerto 
Rico with dangerous pesticides, supposedly to kill mosquitos carrying 
the Zika virus. To this are added a large number of ongoing protests and 
campaigns, all of which now refer to the coming /junta de control/as 
possibly complicating even more the scenario. Activists in the large 
Puerto Rican diaspora also hold seminars and stage protests, many times 
in coordination with the groups in Puerto Rico. Of course, most Puerto 
Ricans are not protesters, and [they] try to go about their daily lives 
while listening with alarm, resignation, or both to the news. Puerto 
Rican activist organizations face many challenges as they try to work 
through decades-long factionalism and develop more effective ways to 
educate the public. Most of all, the challenge is to not burn out, and 
convince others that there is hope!

*MPN: Describe the difficulties in forming alliances in Puerto Rico 
today, within such a fractured and divided political landscape.*

*DBS: *Pro-independence organizations in Puerto Rico have always 
suffered from severe repression, including efforts by the colonizers — 
both Spain and the U.S. — to infiltrate and divide them. Some of the 
earliest campaigns by the FBI upon its establishment in 1908 included 
the criminalization and repression of independence activism in Puerto 
Rico, and such activities continue today. Recent examples include 
grabbing well-known activists in the street and forcing them to give DNA 
samples for supposed “ongoing terrorism investigations.” This operation 
included activists who had previously been imprisoned, and for whom the 
U.S. government would already have had DNA samples. This is just one 
example of a century-long campaign of repression that has included 
murders, disappearances, long incarceration, blacklisting, and spying. 
The Puerto Rican government has also been complicit in the 
criminalization of independence, including creating discord among 
activists and organizations.

However, we cannot simply blame outside forces for the divided state of 
independence and left activism. Besides the personal antagonisms — many 
of which are due to the same societal ills that afflict leftist 
organizations, such as sexism — there are also ideological disputes, 
such as the roles of nationalism and socialism in colonial struggles. 
One new political party, for example, declines to take a position on 
Puerto Rican political status even though most of its leaders have been 
identified as independentistas. They expect that by doing so they can 
attract pro-statehood workers to vote for them. I would argue that it 
would repel more statehood supporters, because they would be seen as 
dishonest. Of course, this divides the votes of those who no longer want 
to vote for the two majority parties. The Puerto Rican Independence 
Party is running a full slate of candidates and is trying to position 
itself as the alternative. But they have in the past been quite 
sectarian and have alienated many independentistas. Despite such 
divisions, we have seen many activities that include representatives of 
both parties, as well as other independence and left organizations. This 
indicates that many understand that somehow we need to overcome our 
divisions, if not our disagreements.

*MPN: Puerto Rico has often been described as the “Greece of the 
Caribbean.” You have had the opportunity to visit Greece twice in the 
past year. How similar are the crises in the two nations in your view?*

*DBS: *I would say they are strikingly similar, and in fact that the 
same playbook is being used in both countries, despite the differences 
between them. For example, the acronym TINA, “There Is No Alternative” 
to continued policies of austerity, privatization, and increased taxes 
in order to pay off an unsustainable public debt, is constantly 
repeated, as is the myth that “There is no Plan B,” and that political 
independence for both (in Greece’s case, leaving the European Union and 
the eurozone) would be disastrous — as if U.S. and EU colonial rule is 
not already a disaster! In Greece there is already a/junta de control 
fiscal/named by the EU which must approve — and often even write — laws 
that the Greek government must implement, such as automatic budget cuts 
and further privatizations. While as a classic colony Puerto Rico cannot 
officially deal with the IMF, in practice the PROMESA bill follows the 
IMF playbook, as was prescribed by “former” IMF officials who were hired 
by the Puerto Rican government — as ordered by their masters in 
Washington — to produce a report with recommendations for dealing with 
the debt crisis. In addition, you see “vulture capitalists” such as Paul 
Singer and John Paulson swooping into both Greece and Puerto Rico to buy 
up assets such as banks and land, plus debt — at a discount. The fact 
that Puerto Rico is a classic colony actually makes the problems of lack 
of sovereignty much clearer. Greece is still officially an independent 
country, so for some people its /de facto/colonial status may not be 
quite as clear. Also, the problem of equating national sovereignty with 
fascism is particularly acute in Greece as a European country. In Puerto 
Rico we have some of that confusion, but it is not as strong since in 
general Latin Americans, including Puerto Ricans, understand the 
necessity for national sovereignty as part of anti-colonial struggles.

*MPN: In your view, what is the best solution for Puerto Rico and its 
people, economically and politically?*

*DBS: *The international community recognizes the right of all peoples 
to self-determination, including freely and unilaterally choosing their 
political status. There are three recognized statuses: first, union with 
another independent state under conditions of equality; second, 
association with another state, with the right to unilaterally change 
its status; and independence. The U.S. has historically added new states 
whose native populations have been reduced to a small and powerless 
minority. The three Associated Republics of Micronesia complain of a 
lack of sovereignty and the unwillingness of the U.S. to renegotiate 
their compacts. There is zero interest in the U.S. to add a new state 
comprised of Spanish-speaking people with a distinctly different 
culture, and which additionally has a per capita income less than half 
of Mississippi, the poorest state in the Union. I believe that political 
independence represents the only possibility for Puerto Rico to exercise 
its sovereignty, and it should be accomplished — with international 
pressure — as part of a negotiation that includes indemnification for 
more than a century of colonial exploitation. Certainly, Puerto Rico’s 
colonial debt belongs to the colonizer. Far from seeing independence as 
“separation,” I would argue that it would actually open up Puerto Rico 
to the rest of the world, instead of being chained behind the iron 
curtain of U.S. rule. There is a saying in Latin America that its 
independence will not be complete without Puerto Rico, and I believe 
that time is now.

-- 
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