Vol. 80/No. 3 January 25, 2016
(front page)
Colonial plunder of toilers deepens
as debt crisis grows in Puerto Rico
“There’s a crisis across all of Puerto Rico and it’s because of the savage capitalism we face as a U.S. colony,” retired construction electrician Miguel Sánchez told the Militant by phone from Florida, Puerto Rico, Jan. 12.
Puerto Rico’s gross domestic product has dropped more than 14 percent since 2006; 12,000 businesses and factories have closed; and 225,000 jobs have been eliminated, including 25,000 government workers laid off.
The island has a net loss of 1,200 people every week, as youth especially head to the United States looking for work.
The government defaulted on a $36 million interest payment owed Jan. 4, but paid more than $850 million on other debt service the same day. Debt service is projected to equal nearly 40 percent of government revenue by the end of this year.
To pay the bondholders, the government last year raised the sales tax to 11.5 percent. Pensions for government workers have been reduced, the retirement age raised and social services cut. In addition the government has delayed giving out tax refunds, slashed annual year-end bonuses, delayed paying suppliers and dipped into cash reserves.
Yet capitalist companies still see dollar signs when they look at the island.
Daniel Solender, lead portfolio manager at Lord Abbett investment company, told Bloomberg News the same day as the default that “there are good opportunities” to make money on the Puerto Rico bond market, citing interest rates of up to 30 percent.
The Wall Street Journal reported Jan. 4 that retailers H&M, Nordstrom, and Saks Fifth Avenue all debuted on the island in the last year or will do so soon. While 20,000 fewer cars were sold in Puerto Rico in 2015 than in 2013, more luxury cars are sold per capita in San Juan “than almost anywhere else in the U.S.,” the Journal said.
“When the governor says that he’s going to stop paying the debt, he’s not speaking seriously,” Roberto Pagan, president of Puerto Rican Workers Union Local 1996, an SEIU affiliate that organizes board of education workers, said in an interview. “When he said that he’s going to put the people of Puerto Rico first before the bondholders, that’s false.”
Edwin Morales, vice president of the Federation of Teachers of Puerto Rico, said from San Juan Jan. 10 that due to emigration and a drop in the birth rate, the number of students has dropped from 700,000 in 2008 to 379,000 today. “But the class rooms are overcrowded,” he said, because the government has shut down schools and laid off teachers. “There were 1,527 public schools in 2008. Now there are 1,330. They want to cut that in half.”
“Emigration has been an escape valve for the government,” Morales said. “If it weren’t for that, there would have been a social explosion.”
Carrying off Puerto Rico’s wealth
About 40 percent of the population receives food stamps or other public assistance from U.S. government programs.“The false idea that the U.S. maintains Puerto Rico is widespread,” Ángel Figueroa Jaramillo, president of the electrical workers union UTIER, told the Militant. “But every year the U.S. companies take out tens of billions of dollars in profits. They are carrying off Puerto Rico’s wealth. And that’s why Washington wants to keep Puerto Rico as a colony.”
The government averted a collapse of the health care system in December when the U.S. Congress approved 100 percent parity for Medicare payments for Puerto Rico’s hospitals — which had previously been reimbursed at a much lower rate than in the 50 states. But it’s the insurance companies that benefit the most from the increase, Figueroa said.
“I retired about 15 years ago after the government of [former governor Pedro] Roselló sold the hospitals to private companies,” Luis Epardo, a former hospital worker, told the Militant Jan. 12 from Aguadilla. “They sold the hospitals at a ridiculously low price, but kept hold of the debts.”
“All over Puerto Rico you can see empty houses in every town,’ he said. “They look like ghost towns. The malls, Walmart, Sears, J.C. Penney have gotten all the business and the small business can’t compete.”
The Puerto Rican government with the support of President Barack Obama is pushing for Congress to change federal law and allow 18 different Puerto Rican government agencies and utilities to declare bankruptcy to “restructure” the debt, which would give control of all government finances to a U.S. court-appointed financial review board.
Epardo, a supporter of independence of Puerto Rico, is opposed to the bankruptcy plan. “Even the supporters of statehood for Puerto Rico are against this,” he said. “It would be like giving the bondholders war booty.”
Puerto Rican political prisoner Oscar López Rivera, jailed in the U.S. for the last 34 years for his activities in favor of independence for the island, wrote in early January that instead of paying the debt, the people of Puerto Rico should demand “indemnization for all the pain, exploitation, repression, persecution and destruction we have experienced since 1898, when the United States invaded and militarily occupied Puerto Rico.
“We are poor,” he said, “but we are workers and we have the right to say no to the demands that Wall Street and Washington try to impose on us.”
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