[News] New Puerto Rico Debt Plan Is a False “Solution” Crafted to Benefit Capitalists

[Anti-Imperialist News]

orinocotribune.com
<https://orinocotribune.com/new-puerto-rico-debt-plan-is-a-false-solution-crafted-to-benefit-capitalists/>
New
Puerto Rico Debt Plan Is a False “Solution” Crafted to Benefit CapitalistsBy
Sarah Molinari & Marisol LeBrón – Jan 30, 2022

On January 18, Judge Taylor Swain of New York’s Southern District confirmed
Puerto Rico’s eighth amended Plan of Adjustment (POA), setting into motion
the closure of the largest municipal debt restructuring deal in the history
of the United States. The POA modifies approximately $33 billion of the
central government’s debt as part of Title III — the bankruptcy-like
process established under the Puerto Rico Oversight, Management, and
Economic Stability Act (PROMESA
<https://puertoricosyllabus.com/syllabus/explosion-of-the-debt-crisis/#section2-unit4>)
— which has already cost Puerto Ricans $1 billion
<https://www.reuters.com/legal/transactional/puerto-rico-gets-green-light-end-five-year-bankruptcy-2022-01-18/>
.

Since its announcement, the POA has been touted as putting an end to five
years of brutal structural adjustment. For instance, Natalie Jaresko,
executive director of the unelected Financial Oversight Board that has
dictated Puerto Rico’s finances since 2016, celebrated the POA as a “new
chapter in Puerto Rico’s history
<https://www.elnuevodia.com/negocios/economia/notas/junta-de-supervision-hoy-comienza-un-nuevo-capitulo-en-la-historia-de-puerto-rico/>
.
<https://www.elnuevodia.com/negocios/economia/notas/junta-de-supervision-hoy-comienza-un-nuevo-capitulo-en-la-historia-de-puerto-rico/>”
Gov. Pedro Pierluisi suggested that while the POA is “not perfect
<https://www.nytimes.com/2022/01/18/us/puerto-rico-bankruptcy.html>,” it
ultimately protects Puerto Rico’s vulnerable public sector. In contrast, a
multisectoral coalition of teachers, labor, pensioners, students and
activists expressed immediate rejection
<https://us14.campaign-archive.com/?e=__test_email__&u=263fea93846093c2f609dc23f&id=8a35923369>
of
what they call the “plan del tumbe <https://www.plandeltumbe.com/>” (the
shakedown plan). These groups have long been demanding a comprehensive debt
audit, calling attention to the POA’s everyday implications, and resisting
its confirmation by mobilizing online, in the streets, the legislature and
the courts.
[image: Hundreds of protesters march at the federal court in San Juan,
Puerto Rico, on November 8, 2021, in rejection of the Plan of
Adjustment.]Hundreds
of protesters march at the federal court in San Juan, Puerto Rico, on
November 8, 2021, in rejection of the Plan of Adjustment. SARAH MOLINARI

Rather than a “new chapter,” the POA affirms a debt that has not been
meaningfully audited <http://www.auditoriaya.org/proceso/> and that
forecloses the pursuit of legal action against banks and underwriters as
well as debt illegalities
<https://news.littlesis.org/2021/03/17/7-billion-in-cash-for-vulture-funds-in-oversight-boards-new-debt-adjustment-plan/>
that
the Financial Oversight Board itself previously challenged in court.
Despite rhetoric from powerful political and financial elites in Puerto
Rico and the United States, the POA will bring little relief to Puerto
Ricans struggling under the weight of crushing austerity in an archipelago
that is increasingly geared towards attracting foreign capital and
incentivizing the settlement of wealthy North Americans in Puerto Rico as a
means of boosting an anemic local economy while Puerto Ricans are
increasing forced to migrate in search of economic stability.

RELATED CONTENT: Puerto Rico Gov’t Passes Controversial PC1003 Debt Bill
<https://orinocotribune.com/puerto-rico-govt-passes-controversial-pc1003-debt-bill/>

The Plan of Adjustment
<https://drive.google.com/file/d/12voJuGgS7N5QLK8fAC0CWrwSLo9dJ0JB/view>
impacts
Puerto Rico’s general obligation bonds (a type of municipal bond backed by
the general revenue of the issuing entity), the Public Buildings Authority,
the Employee Retirement System and the Convention Center District Authority
bonds. The restructuring deal reduces $33 billion in public debt to about
$7 billion and includes an exchange of bonds. However, this supposed “80
percent cut” is misleading because certain bondholders will receive a $7
billion *immediate cash payout* as well as additional payments through a
“contingent value instrument” based on future economic improvement measures
<https://www.washingtonpost.com/business/puerto-ricos-bankruptcy-is-ending-what-comes-next-quicktake/2022/01/26/44215fa6-7ea0-11ec-8cc8-b696564ba796_story.html>.
By and large, the POA does not make significant cuts to bonds held by
“vulture” investors
<https://www.elnuevodia.com/opinion/punto-de-vista/confirmacion-del-plan-de-ajuste-de-la-deuda-quienes-ganan-y-quienes-pierden/?fbclid=IwAR23sELVhDBqSFQ1Wve_nVtPwp726ZDeDi6gq0OKwUeFa6lhH-QvDXlLa8A>
who
bought up Puerto Rico’s distressed debt for pennies on the dollar in the
hopes of a lucrative payout — another example of how the restructuring
process has privileged Wall Street’s speculative desires.

As a result of persistent public pressure, the confirmed POA does not cut
public retirees’ pensions
<https://www.bondbuyer.com/news/puerto-rico-oversight-board-agrees-to-ax-pension-cuts-for-current-pensioners>as
earlier versions had proposed, but it does freeze defined benefit pensions
for active public school teachers and judges. Additionally, despite
Governor Pierluisi’s comments that the POA protects the public sector,
there is no doubt that since the passage of PROMESA, Puerto Rico’s public
sector has been significantly scaled back and weakened in order to service
the debt in a process that the POA upholds and enshrines. Hundreds of the
archipelago’s public schools have been closed and the public university’s
future remains uncertain, while teachers, police, doctors and nurses have
been leaving in record numbers for the continental U.S. due to stagnant
wages, cuts to benefits and dwindling resources. For example, in Puerto
Rico lost nearly 12 percent
<https://www.prb.org/articles/puerto-ricos-population-declined-by-12-percent-between-2010-and-2020-where-did-they-go/>
of
its population between 2010-2020. The slow-motion collapse of the public
sector certainly predates the POA and even PROMESA, but it is important to
note that the POA does nothing to rebuild or stabilize the public sector.
The gutting of the public sector and the failure to address it once again
reveals that the POA is not about improving everyday life for Puerto Ricans
by protecting them from the effects of predatory debt or austerity. Rather,
it is about protecting Puerto Rico’s profit-generating capacity (mostly for
those outside of the archipelago and a small class of Puerto Rican elites — the
“criollo bloc”
<https://www.researchgate.net/publication/326151245_San_Juan_the_Fragile_City_Finance_Capital_Class_and_the_Making_of_Puerto_Rico's_Economic_Crisis>)
and (eventually) restoring its ability to borrow unencumbered.

Many on the ground question the feasibility of fulfilling an estimated $3.4
billion in annual debt service
<https://www.bloomberg.com/news/articles/2022-01-18/puerto-rico-bankruptcy-judge-approves-debt-restructuring-plan>
and
pension obligations in the midst of overlapping climate, economic and
public health crises that render daily life a struggle for working people.
As the new year begins and the POA is set to take effect in March, Puerto
Ricans are facing ongoing precarity, including a potential additional wave
of public school closures
<https://periodismoinvestigativo.com/2022/01/educacion-planifica-nueva-ola-de-cierre-de-escuelas/>,
a 16.8 percent hike in domestic electric bills
<https://www.elnuevodia.com/noticias/locales/notas/negociado-de-energia-aprueba-aumento-de-168-en-la-factura-de-luz-para-el-primer-trimestre-de-2022/>
and
an increase in road tolls
<https://www.elvocero.com/gobierno/los-conductores-ver-n-un-aumento-en-los-peajes-a-partir-del-1-de-enero/article_e641fc14-6965-11ec-90f0-83789eec19ef.html>.
An influx of wealthy investors — particularly cryptocurrency enthusiasts
<https://www.elnuevodia.com/negocios/turismo/notas/el-criptomagnate-brock-pierce-compra-por-183-millones-el-hotel-w-en-vieques/>
—
have contributed to local displacement and real estate speculation as they
acquire property and use Puerto Rico as a tax haven
<https://www.bloomberg.com/news/articles/2022-01-19/tax-breaks-for-crypto-millionaires-stir-outrage-in-puerto-rico>
facilitated
by incentives such as Acts 20, 22 and 60
<https://time.com/5955629/puerto-rico-tax-haven-opposition/>.


*A “Resolution”? *Debt service projections rely upon a mix of structural
and fiscal reforms (austerity) and an economy propped up by the
anticipated disbursement
of federal funds
<https://grupocne.org/2021/09/15/the-threefold-challenge-to-the-puerto-rican-economy/#poa>
to
address the hurricanes, earthquakes and the pandemic that the Puerto Rican
government does not control. Furthermore, economic indicators point to
Puerto Rico returning to budgetary deficits by 2036
<https://aldia.microjuris.com/2022/01/24/advierten-nefastas-consecuencias-del-plan-de-ajuste-de-la-deuda/?fbclid=IwAR1AlRkP7lRduoPhY7W7DCINa6BN2hgCglQkzhNPgRUciJdiCg1jI89aOO8>.
All this throws into question the sustainability of a POA projected 25
years into the future and Puerto Rico’s ability to fulfill basic public
services. Nonetheless, mainstream media portrayals present the POA as a
necessary “resolution
<https://www.nytimes.com/2022/01/18/us/puerto-rico-bankruptcy.html>” to the
bankruptcy and a step toward Puerto Rico’s recovery. A quick search of news
related to the POA will show headlines peppered with laudatory phrases
proclaiming the imminent end of Puerto Rico’s financial woes. It has even
been framed as a crucial step towards Puerto Rico’s political and financial
sovereignty.

The POA will bring little relief to Puerto Ricans struggling under the
weight of crushing austerity in an archipelago that is increasingly geared
towards attracting foreign capital.

In an op-ed for the *Wall Street Journal*
<https://www.wsj.com/articles/puerto-rico-financial-house-in-order-economic-recovery-pension-payments-resolved-debt-restructuring-11643062049>,
Natalie Jaresko and David Skeel, the executive director and chairman of the
Financial Oversight Board, position the POA not only as a resolution to
Puerto Rico’s bankruptcy but also its indeterminate political status.
According to Jaresko and Skeel, “Congress is unlikely to step in to make a
determination on status until Puerto Rico gets its financial house back in
order. Puerto Rico’s crushing debt load has been one of the biggest
obstacles to achieving this. That obstacle now has been removed.” Behind
the façade of benevolent concern, Jaresko and Skeel’s op-ed makes clear the
POA is part of a colonial infrastructure that simply hands down decisions
that shape Puerto Rico’s future seeks to strip Puerto Ricans of their
political agency. The imposition of mechanisms for financial capture and
debt coercion is not a way of resolving Puerto Rico’s colonial status — it
is its continuation.

Perhaps the greatest issue with the POA that should not be lost in
discussions about whether the plan will lead to a financial recovery for
Puerto Rico is that the POA charts a future largely absent the input of the
Puerto Ricans who will be most impacted by its devastating effects for
generations to come. The POA was conceptualized by the Financial Oversight
Board, or “*La Junta*” as locals call it, and facilitated by the Puerto
Rican legislature.

The POA contradicts everything that Puerto Rico’s most vulnerable
populations — those most likely to be affected by austerity related to debt
servicing — have demanded in order to make life more livable, healthy and
safe in Puerto Rico. And this has been made clear during the countless
protests that have often accompanied La Junta’s meetings in both Puerto
Rico and the diaspora where Puerto Ricans and others in solidarity have
attempted to make their voices heard in the rooms where Puerto Ricans’
futures are being decided without them. Additionally, Judge Swain was
appointed to oversee the debt restructuring process despite having no
experience with Puerto Rico and has shown little willingness to take
seriously the concerns being expressed by Puerto Ricans about debt
restructuring process.

RELATED CONTENT: Puerto Rico: Resistance Against Luma
<https://orinocotribune.com/puerto-rico-resistance-against-luma/>

Every step in the path to the POA’s confirmation has functioned to further
remove decision-making power from the hands of Puerto Ricans. The POA’s
failure to listen to, let alone address, Puerto Ricans’ very real concerns
contributes to the feelings expressed by many that the debt, the failed
disaster recovery and all of the financial chicanery devised to lure
millionaires to the archipelago have seemingly combined to create a Puerto
Rico without Puerto Ricans. In other words, the POA helps bring into being
a future where if Puerto Ricans aren’t actually absent, their ability to
have a say politically has been severely curtailed.

The Plan of Adjustment provides Puerto Ricans with more uncertainty than
resolution, especially since the temporality of debt
<https://tintalimon.com.ar/public/x2aajtw1zgx4u2c3gkvgowfl4se5/quien%20le%20debe%20a%20quien.pdf>
does
not resolve — but rather complicates — the relationship between past,
present and future obligations. The POA renders impossible a comprehensive
debt audit or an economic plan that responds to working people’s needs, all
while endorsing illegal debt and failing to hold the individuals and
institutions responsible for indebting the public accountable. Ultimately,
the POA leaves colonial <https://www.dukeupress.edu/colonial-debts>, social
and environmental debts unresolved and fails to bring a true people’s
“resolution” to the debt crisis. Rather than technical solutions
adjudicated in the courts among consultants, unelected overseers and
lawyers, real resolution might take shape through a reckoning process that
interrogates what is owed to whom and the United States’ debt to Puerto
Ricans for more than a century of colonial violence and exploitation. A
true resolution to Puerto Rico’s so-called debt crisis would include debt
cancelation and reparations for historical harms, not payouts for Wall
Street vultures who treated the archipelago like a casino.

*Sarah Molinari is an anthropologist and Postdoctoral Research Associate at
Florida International University. Her research focuses on the lived
experiences of debt and disaster recovery processes in Puerto Rico. She is
also a co-creator of the Puerto Rico Syllabus, a digital humanities project
about the Puerto Rican debt crisis.*

*Marisol LeBrón is associate professor in Feminist Studies and Critical
Race and Ethnic Studies at the University of California, Santa Cruz. She is
author of Against Muerto Rico: Lessons from the Verano Boricua (Editora
Educación Emergente, 2021) and Policing Life and Death: Race, Violence, and
Resistance in Puerto Rico (University of California Press, 2019). Along
with Yarimar Bonilla she is the co-editor of Aftershocks of Disaster:
Puerto Rico Before and After the Storm (Haymarket Books, 2019). She is also
one of the co-creators of the Puerto Rico Syllabus, a digital humanities
project about the Puerto Rican debt crisis.*

*Featured image:  Activists and Puerto Rican community members protest
against Steven Tananbaum, a board member of the Museum of Modern Art
(MOMA), for his involvement in a hedge fund that owns over $2 billion of
Puerto Rico’s debt, outside of the newly renovated and reopened MOMA in
Midtown Manhattan on October 21, 2019, in New York City. DREW ANGERER /
GETTY IMAGES*

(Truthout
<https://truthout.org/articles/new-puerto-rico-debt-plan-is-a-false-solution-crafted-to-benefit-capitalists/>
)


<https://orinocotribune.com/author/yullma/>
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