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<a class="gmail-domain gmail-reader-domain" href="https://orinocotribune.com/new-puerto-rico-debt-plan-is-a-false-solution-crafted-to-benefit-capitalists/">orinocotribune.com</a>
<h1 class="gmail-reader-title">New Puerto Rico Debt Plan Is a False “Solution” Crafted to Benefit Capitalists</h1>By Sarah Molinari & Marisol LeBrón – Jan 30, 2022</div><div class="gmail-content"><div class="gmail-moz-reader-content gmail-reader-show-element"><div id="gmail-readability-page-1" class="gmail-page"><div>
<p>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 (<a href="https://puertoricosyllabus.com/syllabus/explosion-of-the-debt-crisis/#section2-unit4">PROMESA</a>) — which has already <a href="https://www.reuters.com/legal/transactional/puerto-rico-gets-green-light-end-five-year-bankruptcy-2022-01-18/">cost Puerto Ricans $1 billion</a>.</p>
<p>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 “<a href="https://www.elnuevodia.com/negocios/economia/notas/junta-de-supervision-hoy-comienza-un-nuevo-capitulo-en-la-historia-de-puerto-rico/">new chapter in Puerto Rico’s history</a><a href="https://www.elnuevodia.com/negocios/economia/notas/junta-de-supervision-hoy-comienza-un-nuevo-capitulo-en-la-historia-de-puerto-rico/">.</a>” Gov. Pedro Pierluisi suggested that while the POA is “<a href="https://www.nytimes.com/2022/01/18/us/puerto-rico-bankruptcy.html">not perfect</a>,”
it ultimately protects Puerto Rico’s vulnerable public sector. In
contrast, a multisectoral coalition of teachers, labor, pensioners,
students and activists <a href="https://us14.campaign-archive.com/?e=__test_email__&u=263fea93846093c2f609dc23f&id=8a35923369">expressed immediate rejection</a> of what they call the “<a href="https://www.plandeltumbe.com/">plan del tumbe</a>”
(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.</p>
<img src="https://truthout.org/wp-content/uploads/2022/01/2022_0128-puerto-rico-2-scaled.jpg" alt="Hundreds of protesters march at the federal court in San Juan, Puerto Rico, on November 8, 2021, in rejection of the Plan of Adjustment." style="margin-right: 25px;" width="392" height="253">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
<p>Rather than a “new chapter,” the POA affirms a debt that has not been meaningfully <a href="http://www.auditoriaya.org/proceso/">audited</a> and that forecloses the pursuit of legal action against banks and underwriters as well as <a href="https://news.littlesis.org/2021/03/17/7-billion-in-cash-for-vulture-funds-in-oversight-boards-new-debt-adjustment-plan/">debt illegalities</a> 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.</p>
<p><a href="https://orinocotribune.com/puerto-rico-govt-passes-controversial-pc1003-debt-bill/" target="_blank" rel="noopener">RELATED CONTENT: Puerto Rico Gov’t Passes Controversial PC1003 Debt Bill</a></p>
<p>The <a href="https://drive.google.com/file/d/12voJuGgS7N5QLK8fAC0CWrwSLo9dJ0JB/view">Plan of Adjustment</a> 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 <a href="https://www.washingtonpost.com/business/puerto-ricos-bankruptcy-is-ending-what-comes-next-quicktake/2022/01/26/44215fa6-7ea0-11ec-8cc8-b696564ba796_story.html">because certain bondholders will receive a $7 billion <em>immediate cash payout</em> as well as additional payments through a “contingent value instrument” based on future economic improvement measures</a>. By and large, the POA <a href="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">does not make significant cuts to bonds held by “vulture” investors</a> 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.</p>
<p>As a result of persistent public pressure, the confirmed POA <a href="https://www.bondbuyer.com/news/puerto-rico-oversight-board-agrees-to-ax-pension-cuts-for-current-pensioners">does not cut public retirees’ pensions </a>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 <a href="https://www.prb.org/articles/puerto-ricos-population-declined-by-12-percent-between-2010-and-2020-where-did-they-go/">lost nearly 12 percent</a> 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 — <a href="https://www.researchgate.net/publication/326151245_San_Juan_the_Fragile_City_Finance_Capital_Class_and_the_Making_of_Puerto_Rico's_Economic_Crisis">the “criollo bloc”</a>) and (eventually) restoring its ability to borrow unencumbered.</p>
<p>Many on the ground question the feasibility of fulfilling an <a href="https://www.bloomberg.com/news/articles/2022-01-18/puerto-rico-bankruptcy-judge-approves-debt-restructuring-plan">estimated $3.4 billion in annual debt service</a> 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 <a href="https://periodismoinvestigativo.com/2022/01/educacion-planifica-nueva-ola-de-cierre-de-escuelas/">wave of public school closures</a>, a <a href="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/">16.8 percent hike in domestic electric bills</a> and an <a href="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">increase in road tolls</a>. An influx of wealthy investors — <a href="https://www.elnuevodia.com/negocios/turismo/notas/el-criptomagnate-brock-pierce-compra-por-183-millones-el-hotel-w-en-vieques/">particularly cryptocurrency enthusiasts</a> — have contributed to local displacement and real estate speculation as they acquire property and use Puerto Rico as a <a href="https://www.bloomberg.com/news/articles/2022-01-19/tax-breaks-for-crypto-millionaires-stir-outrage-in-puerto-rico">tax haven</a> facilitated by incentives such as <a href="https://time.com/5955629/puerto-rico-tax-haven-opposition/">Acts 20, 22 and 60</a>.</p>
<p><strong>A “Resolution”?<br>
</strong>Debt service projections rely upon a mix of structural and
fiscal reforms (austerity) and an economy propped up by the anticipated <a href="https://grupocne.org/2021/09/15/the-threefold-challenge-to-the-puerto-rican-economy/#poa">disbursement of federal funds</a> 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 <a href="https://aldia.microjuris.com/2022/01/24/advierten-nefastas-consecuencias-del-plan-de-ajuste-de-la-deuda/?fbclid=IwAR1AlRkP7lRduoPhY7W7DCINa6BN2hgCglQkzhNPgRUciJdiCg1jI89aOO8">budgetary deficits by 2036</a>.
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 “<a href="https://www.nytimes.com/2022/01/18/us/puerto-rico-bankruptcy.html">resolution</a>”
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.</p>
<p>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.</p>
<p>In <a href="https://www.wsj.com/articles/puerto-rico-financial-house-in-order-economic-recovery-pension-payments-resolved-debt-restructuring-11643062049">an op-ed for the <em>Wall Street Journal</em></a>,
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.</p>
<p>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 “<em>La Junta</em>” as locals call it, and facilitated by the Puerto Rican legislature.</p>
<p>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.</p>
<p><a href="https://orinocotribune.com/puerto-rico-resistance-against-luma/" target="_blank" rel="noopener">RELATED CONTENT: Puerto Rico: Resistance Against Luma</a></p>
<p>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.</p>
<p>The Plan of Adjustment provides Puerto Ricans with more uncertainty than resolution, especially since the <a href="https://tintalimon.com.ar/public/x2aajtw1zgx4u2c3gkvgowfl4se5/quien%20le%20debe%20a%20quien.pdf">temporality of debt</a> 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 <a href="https://www.dukeupress.edu/colonial-debts">colonial</a>,
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.</p>
<p><em>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.</em></p>
<p><em>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.</em></p>
<p><em>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</em></p>
<p>(<a href="https://truthout.org/articles/new-puerto-rico-debt-plan-is-a-false-solution-crafted-to-benefit-capitalists/" target="_blank" rel="noopener">Truthout</a>)</p>
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