Vol. 77/No. 39      November 4, 2013

Puerto Rico, with 3.7 million residents, owes $87 billion to holders of government bonds. According to the Oct. 7 New York Times, for the last six years the Puerto Rican government has been issuing hundreds of millions of dollars of new debt just to maintain minimum payments on older debt. The island’s gross domestic product has shrunk by nearly 14 percent since 2006.

Until six months ago, Puerto Rico was referred to as the “belle of the bond markets” by propertied U.S. ruling families cashing in on high interest payments. As a “U.S. territory,” Puerto Rican bonds are tax-exempt. Enshrined in the island’s U.S.-imposed constitution is the promise that bondholders will always get paid first.

The Times reports that Puerto Rico has now been shut out of the bond market and has been taking out short-term loans and using bank credit at ever higher rates of interest.

Puerto Rico’s governor, Alejandro García Padilla, denied that the government is near bankruptcy. “We will do everything, and I repeat, everything that is necessary for Puerto Rico to honor all its commitments,” he said in an Oct. 15 conference call with investors.

García has continued in the footsteps of previous Gov. Luis Fortuño, who laid off as many as 30,000 government workers before losing the election in 2012.

García has raised the retirement age to 67 from 60 for newest workers, increased from 8 to 10 percent what government workers pay into their retirement funds, increased taxes, jacked up sewage rates by 67 percent and cut annual bonuses. The governor sold control of the international airport to foreign corporations for 40 years and a 40-year concession for operating two major toll roads to U.S.-based Goldman Sachs and Spanish-based Albertis.

U.S. rule over the island has guaranteed high profits for U.S. corporations, while fostering a culture of dependency on federal welfare programs among working people.

Drawn by lower wages, tax exemptions, and a “pro-business” environment, pharmaceutical companies have made the island the world’s fifth largest drug-manufacturing center. According to Caribbean Business, workers on the island are paid 30 to 35 percent less than in the U.S.

Labor participation is at just over 40 percent of the population, one of the lowest in the world. Official unemployment is at 15.5 percent, twice the U.S. rate. Puerto Rico has an average per capita income of $15,203, less than half that of Mississippi, the poorest U.S. state. More than one-third of the population is dependent on food stamps.

Declining birth rates and a murder rate more than six times higher than in the U.S. and nearly a quarter more than in Mexico add to a picture of growing social crises.

The population of the island has decreased from 3.8 million in 2000 to less than 3.7 million in 2012. There are now more Puerto Ricans living in the U.S. than in Puerto Rico.

“The problem is the colonial system. They say that we live off them, but they live off of us,” long-time independence leader Rafael Cancel Miranda said in a phone interview Oct. 19. “The money that fills the pockets of the bondholders comes from us. U.S. imperialism has made Puerto Rico into an economic base and they take everything.”  
 
 
Front page (for this issue) | Home | Text-version home