Below are some articles that discuss how Puerto Rico can strengthen its economy. US banks used the currency advantage to consolidate Puerto Rico’s agricultural economy. More than 60% of Puerto Ricans receive Medicare or Medicaid. The US viewed Puerto-Rico as an ideal military outpost as well as a convenient nation from which to dump excess productive goods. An aging population means less tax revenue and greater expenditures. Both pro-independence and right-wing parties in the country rejected the notion that Puerto Rico’s economy should be placed in the hands of the very vulture capitalists and banks that underwrite the nation’s debt. Solving the economic puzzle will determine whether Puerto Rico will be for the U.S. what Greece was for the European Union. "#$%&'()*+ M LKLYHS[ H_J YLKP[Z … It has since presided over the privatization of key public services after the city filed for bankruptcy for failing to pay debts owed to the likes of Barclay’s bank. Puerto Rico’s destiny is ultimately tied to the worldwide struggle against global imperialism. Over this period, Washington has privileged the profits of US-based multinational corporations over the national development of the Puerto Rican masses. Experts say the island’s economic crisis is rooted in[PDF] twentieth century legislation that encouraged Puerto Rico’s reliance on debt to fill federal funding gaps. Moreover, the population that Puerto Rico has managed to retain is aging rapidly. Puerto Rico's Economic Crisis A Story Map by Sarah Small. The Puerto Rican government-debt crisis is a financial crisis affecting the government of Puerto Rico. Washington proposed to resolve the crisis through the institution of a Financial Control Board in 2015. Bond values plummeted amid concerns Puerto Rico will never be able to repay its debt. Puerto Rico has been shedding residents since 2005. Another serious problem stems from Puerto Rico’s underfunded social safety net. Unemployment in Puerto Rico is alarming. An aging population, mounting costs of social programs, and a declining population have exacerbated debt problems as well. Since 2008, Puerto Rico has contributed 58 billion to the US capitalist economyfrom food imports, corporate profits, and subsidies to US firms. Puerto Rico's ongoing debt crisis is on an unprecedented downward spiral, and no one can say how much farther out of control things will get. The US has contributed just 4.6 billion to Puerto Rican development in return. Jones-Shafroth exempted Puerto Rican municipal bonds from all three levels of taxation. About 40% of its residents live in poverty , and the median household income in 2017 was $19,775 . As a matter of policy, the US forced Puerto Rico’s public schools to teach in English only. The median household income is around $20k compared to almost $58k in the mainland, while the poverty rate is above 43% (Puerto Rico N.d.). Puerto Rico's debt is huge -- about $70 billion. The people of Puerto Rico resisted US domination from day one. The economic decline that resulted was tantamount to what Detroit experienced during the darkest days of the Big Three auto slump. These corporations pushed Puerto Rican farmers into the city to labor for starvation wages while the subservient colonial government fixed prices to make US imports unaffordable for most Puerto Ricans. In 1941, the US military occupied the island of Vieques and used it to conduct Naval-bombing exercises that included the use of napalm, Agent Orange, and depleted Uranium. In 1981, FALN leader Oscar Lopez Rivera was arrested during a traffic stop for the same seditious conspiracy charges that placed eleven FALN leaders in prison for fifty-plus years in 1980. How Puerto Rico's Debt Created A Perfect Storm Before The Storm For years, the nation's largest banks made millions off Puerto Rican debt as the island approached financial … How Puerto Rico's financial crisis erupted: Population loss. Puerto Rico Economic Growth The economy is set to recover mildly in FY 2021 (July 2020–June 2021), as growth is not expected until the second half of the year due to lingering uncertainty over the evolution of the pandemic and its associated measures weighing on activity. The crisis is a product of the unequal economic relationship between Puerto Rico and its colonial master. In 1934, Campos led a mass strike of agricultural workers across the country. These combined factors have reduced its tax base substantially; not only has the territory taken on increasing debt in the 21st century, but it has less revenue coming in to pay that debt. Put your trading skills to the test with our FREE Stock Simulator. Compete with thousands of Investopedia traders and trade your way to the top! At the present time the rate is 14%, almost three times the national average (5.5%). Follow the latest news in the aftermath of Hurricane Maria in Puerto Rico, including the Jones Act, devastating lack of water, how to help, and more. The US also exercised full control over Puerto Rico’s legislative capacity. He is a member of the Financial Oversight and Management ... proposal filed on Sept. 27 that could help solve Puerto Rico’s debt crisis. The US military has occupied the island ever since and currently controls 13 percent of Puerto Rico’s arable land. The struggle for self-determination in Africa and Asia nearly ended the system of colonialism worldwide. The territory’s constitution also allows Puerto Rico to balance it… From 1930-1970, one-third of women in Puerto Rico were sterilized with US-produced contraceptives. FIGURES, has contributed 58 billion to the US capitalist economy, American Exceptionalism and American Innocence: A People’s History of Fake News-From the Revolutionary War to the War on Terror, 12/02/20: Press Secretary Kayleigh McEnany Holds a Press Briefing, Israel behind assassination of Iranian scientist: US official, EU Gives AstraZeneca Unprecedented Exemption From Liability For COVID-19 Vaccine, Catholic Priest Dies After Receiving Moderna’s COVID Vaccine That Utilizes Aborted Fetal Tissue, Israel threatens to shut down new TV channel for preaching ‘gospel of Jesus’, Trump’s Landslide Meets the Politics of Electoral Fraud in America. This failed to cause major problems for many decades. Hurricane Maria in 2017 delivered another blow to Puerto Rico. 0 D:ƃ�I`Ya0� Economically, the US immediately forced Puerto Rico to use the US dollar (USD) as a national currency and devalued its former currency, the Peso, to just 60 percent of the USD. Bond investors from all 50 states took advantage of this benefit by purchasing Puerto Rican bonds. h�bbd```b``��5 �� Ellie Ismailidou is a reporter for Debtwire Municipals Most Popular on TIME The island’s population is also aging. By 1930, US corporations owned over half of Puerto Rico’s arable land. Any fiscal and economic crisis Puerto Rico is facing is its own fault. Its economy was sustained for decades by the presence of technology and service-oriented companies that were located on the island due to its favorable tax treatment. The emergency manager, Kevin Orr, possessed deep links to the anti-union and pro-corporate law firm, Jones Day. Puerto Rico has lost about 10% of its population over the last decade, sparking an economic crisis that worsens by the day. Both organizations faced heavy FBI repression and surveillance. However, it proved unsuccessful, and former Governor Ricardo Rossello moved the crisis … With over $70 billion in bond obligations and $49 billion in unfunded pensions at the time, it was the largest government to seek bankruptcy in U.S. history. However, it is important to recognize that the U.S. war on Venezuela is part of a broader war in Latin America. The Monroe Doctrine proclaiming Latin America the “backyard” of the U.S. is no clearer than in Puerto-Rico. One of these stipulations involved Puerto Rican municipal bonds and the ways in which they would be treated differently than bonds issued by states. An economic decline in Puerto Rico led to widening budget deficits over the years. When a government issues bonds, it is effectively lending money, with interest, to bondholders. Puerto Rico is in a debt crisis because the government has overspent for years while the island's economy has shrank. In 2017, Hurricane Maria devastated the island after flattening neighborhoods and taking down power grids. The sustained slump in the economy has contributed to the island’s fiscal challenges, and Puerto Rico’s fiscal challenges have in turn added to the difficulty it faces attracting private investment and restarting growth. Poverty in Puerto Rico has decimated the population, as record numbers of Puerto Ricans consistently migrate away from the economic devastation. Campos was a Harvard graduate who organized farmers, peasants, and the poor toward the goal of national liberation. Puerto Rico and its more than 3.5 million residents are in crisis. The government borrowed from investors and U.S. banks through the sale of bonds until they racked up an enormous debt, which in 2015 surpassed the island’s GDP. The financial crisis in Puerto Rico had been in the making since the 1990’s when the island’s government began to borrow billions of dollars in order to pay its bills. *(Top image credit: Working Families Party/ flickr)Puerto Rico. Out of the oppression of US colonialism emerged a strong nationalist movement led by Pedro Albizu Campos. The good news is that history shows that the Puerto Rican people will continue to struggle for independence and liberation. The oversight board certified a fiscal plan that states that the commonwealth unemployment insurance fund could run out by December as jobless claims remain higher than before the crisis. To understand the crisis in Puerto Rico, we must examine its root causes. The US maintained direct military control of the island until 1900. Compounding the issue is the fact that Puerto Rico receives far fewer federal dollars to assist with social spending than states with comparable populations. Z�\�����t�F�o7�&�P6�\j%�*k|����>��v��nz��A�kNlNJ+�䲍���ى8v�|o��S� INk�wb�8��$����l�Z�C�e�E6��}d'��q�_Н:qȚtR[3�kcliq�|�u>��7g��c7���2��BK_k�M�w���s,�?���'�'x,�hu(�ִ���FӼ-驳�g0U�h�α�q�V�3�l��"�DQH�|�4���kf�!�5�zj�yX�yvdG1����>s�.ɟ��2���I3�Yi�vzd��MQ1~�M����QC��t�����%�N�Dd��h���S��fZԬ����lt�fk��k�N�V�-Vo�C�Ťn1��� �գ,�b\�`�0c�+�K�Lv�74�lL��E��^�̢�X��䣳�����մ�ZدH��\���yb�z��i�Y��������bQ_�$E�]c�qG�*8�_��f����A�zO|2�Y�rFA��N��E3]��S�5@Ck2�:��3y�ʧ�Vdߗ���h�S�V�y�6�3v��4]w�[�n�����u���q��L��u������[�fh0Z�7'42;��#�,�W�7t�V��8��Nð�;��Y�/3~j[��C�\uv��̚�1�VNJܳh����Ӵ�L䑭�����E��w���x~�F5��^��+��i�׍z����gL;H��Ih����o���y��̉�d3h������y�>�z�p�W{��[��ܣ��?�|L����蟲�1o�W~��m�q�c�� ;m+�`�a���W��݂7ت�6$�L�2}����봾����q���i}t�݆$�f�X?#y?�C]��"�U�=;�ݰ��{Uۋ�v +5m̉M��d�N�cNچ蘶����V�{���V)дK�Џ{��mVp�i��� �7:?r?-�0��`����n|/���L����K\-"'goỹ햎A��b�,�. As they expired over time, many companies elected to discontinue their Puerto Rican presence. Puerto Rico faces a severe fiscal crisis, but this is merely a symptom of Puerto Rico’s primary disease: a lack of economic growth. h�b```�ZV�� ��ea�h8 ��p�y�{�`i�w N�E��޺ Q�b���ZU���ً~�(.��e�+��5R��J9��v~�u��o��� +�� �Ⰰ6��U@��r -�b`[���`�� � ��������������,��@��o�~�j�5����>��0�o���x�ý���~�H3�� �K! This means that Puerto Rico can neither file bankruptcy nor ask for foreign aid unless sanctioned by the US. Emergency management eliminated local governance in the city. An aging population, high costs for social programs, and an exodus of many of its residents are also adding to Puerto Rico’s debt problems. Corporate media in the US have demonized Puerto Rico for the supposed damage that the economic crisis has done to the American taxpayer. The executive director of the Puerto Rico Financial Oversight and Management Board (FOMB), Natalie Jaresko, said last week that the island’s unemployment rate may be close to 40 percent. Detroit was placed under the rule of a financial manager in 2013. Required fields are marked *. During the 1970s, however, the territory’s government started using bond investment money to balance its budget, despite it being borrowed funds and not actual revenue. Many of Puerto Rico’s tax advantages, however, were ephemeral. US colonialism in Puerto Rico has driven the nation into a debilitating crisis. Puerto Rico’s Political and Economic Crisis Deepens This month has seen massive protests against austerity, bankruptcy proceedings, and the return of a prodigal hero. Puerto Rico has been a colony of the US for over a century. The Puerto Rican debt crisis has many origins. The bad is that it is uncertain if, and when, the people in the US will join them and condemn the forces that have left Puerto Rico in shambles. The release of Rivera in 2017 is a testament to the ongoing struggle for Puerto Rican independence. %PDF-1.5 %���� %%EOF Danny Haiphong is the co-author of the book American Exceptionalism and American Innocence: A People’s History of Fake News-From the Revolutionary War to the War on Terror. Holy Land – Crimes Under Cover of Darkness: Night Arrests of Palestinian Minors by Israeli Security Forces in the West Bank…. The U.S. territory of Puerto Rico has made many attempts to reduce its debt burden and save its economy. ¥ The decline in manufacturing QVIZPUK\JLKI`[OLLSPTPUH[PVUVM! To this day, all laws passed in Puerto Rico must receive the approval of its colonial master. The island took a direct hit from the Category 4 storm: knocking out power grids, flooding streets, and flattening entire neighborhoods. Congress approved Promesa—a law that will allow a U.S. territory to seek bankruptcy—in 2016. Add your image or video. Tap to read full story. These insufferable conditions were supported by a US-sponsored cultural and political genocide. When that began to happen, companies fled the island, eviscerating its economy. Puerto Rico is an island territory of the United States with a population of 3.41 million. Puerto-Rico’s history and current struggle must be honored amid ongoing U.S. threats in Latin America so that we can be best prepared to confront the empire’s exploitative ventures. In response to Puerto Rico's fiscal crisis, Congress passed the Puerto Rico Oversight, Management, and Economic Security Act (PROMESA) in 2016, which included a provision for GAO to review Puerto Rico's debt. The tiny territory has a population the size of Connecticut’s but owes $72 billion to lenders, a figure that exceeds the debt of … This crisis has been worsened by the natural disaster hurricane Maria, which only increased the povertyand hardship by the people of Puerto-Rico. The majority of the island’s residents receive Medicare or Medicaid. These tax advantages, however, were not permanent. Because of the slow perspectives of the economy, some 50,000 emigrate annually. Puerto Rico Syllabus is a list of resources for teaching and learning about the current economic crisis in Puerto Rico. The struggle for Puerto Rican independence continued both on the mainland and inside of the US during the 1960s and ’70s. As a result, in 2019, the U.S. territory asked approval from the courts to slash its ballooning debt through bankruptcy protection. Puerto RicoÕs economy entered into a recession earlier than the U.S., HUKMHJ[VYZV[OLY[OHU[OLNSVIHS ÄUHUJPHSJYPZPZ^LYLH[WSH` ([SLHZ[three major structural factors trig - gered the current economic crisis in 7\LY[V9PJV! Rivera was imprisoned for 55 years on the original charges and for another 15 years for conspiracy to escape in 1987. Why is Puerto Rico's economy so bad? Unlike most states in the U.S., Puerto Rico has never, in its history, sustained a strong economy on the back of manufacturing or producing goods. US corporations began to take business, and jobs, elsewhere. African revolutionary Kwame Nkrumah fathered the theory of neo-colonialism to explain this phenomenon. However, the US has always played by a different set of rules. &��`v�t�,)`�z0��d|63H2����I�L��=`q�AD�g`d|` ��c The U.S. territory of Puerto Rico has made many attempts to reduce its debt burden and save its economy. US colonialism in Puerto Rico, from the political imprisonment of Oscar Lopez Rivera to the continued corporate plunder of the island, has steeped the Caribbean nation in deep economic crisis. Although Puerto Rico is one of the last colonies under US possession, its position as a military and economic outpost of the imperialist order is one shared by much of the Global South. Reduced corporate presence led to GDP declines, worsening the island’s debt-to-GDP ratio and hastening its credit downgrade. Politically, the US denied the people of Puerto Rico the ability to exercise any rights under the US Constitution. By 2017, bond values had mostly returned to levels seen in 2014-2015 but then fell again in 2019 under the proposal that would allow Puerto Rico to reduce debt under bankruptcy protection. The Treaty of Paris, established after Spain’s military defeat, officially handed Puerto Rico into the colonial grip of the United States. Puerto Rico’s colonial status must receive special attention, however, as it disallows the people of the nation to join forces with the shift toward integration in Latin America currently being threatened by US war maneuvers against Venezuela or assert any act of independent development generally. The territory’s remote island location, tiny land area, and lack of natural resources precluded it from ever developing a strong manufacturing base. RELATED: No Bailout for Puerto Rico Advertisement Puerto Rico’s problems are symptomatic of irresponsible budgeting and careless overspending, and the only remedy is long-term financial reforms. In June 2015, Puerto Rico’s Governor Alejandro García Padilla declared that the Commonwealth’s $72 billion debt was “not payable.” He further declared that Puerto Rico needed help from the U.S. government and creditors to restructure the debt and create a plan for sustainable economic growth. Washington has been immune from consequences despite being the greatest purveyor of violence around the world. US occupation of Puerto-Rico subjugated cultural, political, and economic life on the island under the dictates of Washington. Real President Gives Us 46 Minutes of Pure and Unadulterated TRUTH in New Video! It seems Puerto Rico has chosen to perish. The tiny island is ill-equipped for the manufacturing and production of goods. The resulting debt snowball comprises a large part of the territory’s current crisis. The Puerto Rican government was thus compelled to default on the 73 billion dollar debt that it owned owed to Wall Street. This development ignited anti-colonial rebellion across the world. The Young Lords, comprised of mostly former street gang members in urban and working-class Puerto Rican communities, modeled themselves after the Black Panther Party and saw Puerto Rico’s independence as an essential component of the international struggle for social justice. Island officials will also be reviewing the debt adjustment plan. However, compared to other states with high percentages of poor residents, such as Mississippi, Puerto Rico receives a tiny fraction of federal funds to assist with social spending. This was especially attractive to technology and service-oriented companies, for which Puerto Rico’s remote location and dearth of resources posed few challenges. Moreover, recurrent earthquakes pose a downside risk to the outlook. Both the history of US colonialism and the contemporary dominance that the US exerts over the island Puerto Rico must be examined together to truly understand the current crisis. However, it proved unsuccessful, and the Governor, Ricardo Rossello, moved the crisis to a form of bankruptcy court in 2017. The end of World War II marked a watershed moment in world history. endstream endobj startxref Puerto Rico Crisis. The U.S. territory Puerto Rico has been plagued with recurring debt issues, which were compounded by a credit downgrade in 2012. For his leadership of the Puerto Rican masses, Campos was placed under 24-hour FBI surveillance, jailed, and experimented on in prison for a total of 24 years beginning in 1935. His case has inspired people all over the world to fight not only for Puerto Rico’s independence, but also for the freedom of all political prisoners inside of the US. The U.S. tax code called for these advantages to expire over time. It also spelled out a number of stipulations defining the territory’s relationship with the U.S. mainland. International law has long declared colonialism a violation of the self-determination of nations and of peoples’ fundamental human rights. Most notably, investors in Puerto Rican municipal bonds received favorable tax treatment for years. It can’t even ask for credit or other financial assistance from the parasitic institutions of the World Bank and IMF. As a result, residents of all 50 states and other U.S. territories could invest in Puerto Rican bonds without paying interest on the income. Your email address will not be published. Today, the people of Puerto Rico are facing a devastating economic crisis made in the USA. For Sama – The Denial of the Real Victims of War on Syria, Rachel Correi and Gaza: An American peace activist was crushed to death by an IDF bulldozer; a British peace protester was shot in the head by an IDF sniper and remains in a coma; and a British cameraman was shot dead by the IDF. Prompted in large part by this tax advantage, Puerto Rico issued too much bond debt and began relying on borrowed funds from bond issuance to balance its budget.
2020 puerto rico economic crisis