Jun 20, 2017
Last June, Sunday the 11th, the population of Puerto Rico was asked to vote in a referendum about the status of the island. Either the island of Puerto Rico, in the Caribbean, should become America’s 51st state, or become independent (in a free association with the U.S. or not) or remain with the current status of an “unincorporated territory of the United States.” 97% of the votes – that is, half a million people – were in favor of statehood, while 7,600 voted to be independent and 6,700 to maintain the current status. The very high level of abstention was striking: 77%. And this cannot be explained only by the fact that the referendum was boycotted by several opposition parties. Being disoriented by the severe crisis Puerto Rico is undergoing, a large part of the population did not see the referendum as a means to get out of the crisis. This referendum, the fifth one on that question, took place in a context where the population is confronted with the worst economic and social crisis ever in this territory.
These last months, Puerto Rican workers and students have been demonstrating mainly against the policy of austerity of which they are the main victims. For the students, this policy consisted in big cuts in the university budget. On April 6, they stopped attending classes and since then have been demonstrating and sometimes confronting the police during the demonstrations
On May 1, a demonstration was called by the unions of workers and by the opposition parties. The police attacked the demonstrators very quickly, in particular near the hospital which was on strike. U.S. flags were burnt, the new governor of the island, Ricardo Rossello, was booed, accused of “selling Puerto Rico.” This governor, associated with a non-elected commission sent by the U.S. administration, is imposing austerity measures on the population in order to pay off a debt of more than 73 billion dollars to big American financiers. But everyone knows that the working class is not the one that spent this money. Thus, it should have no responsibility for the debt and no reason to pay for it.
So, this past May 1, thousands of Puerto Ricans took to the street in San Juan, the capital, with posters and slogans to protest. They organized big blockades and closed a number of workplaces. On ten out of eleven college campuses, the students had already been fighting for three weeks. The demonstrators had to confront the police. The unions of the island had called for a general strike for May 1. Part of the demonstrators expressed their anger very strongly because they have been victims for several years of an austerity policy which strangles the workers and the poor.
That day the anger targeted the Banco Popular of Puerto Rico, the premises of which were damaged by the demonstrators. It was a very symbolic action. The banks, the financiers, are indeed the ones, helped by the American and Puerto Rican governments, who want the workers and the population to pay very dearly for a gigantic debt through a series of taxes and measures that strongly impact their standards of living. On May 3, Ricardo Roselle officially and publicly announced the bankruptcy of the state. They cannot reimburse the more than 73 billion dollars debt and, it should be added, 47 billion dollars of unpaid pensions.
Puerto Rico is a 5320-square-mile island in the West Indies. It is the smallest of the Greater Antilles, situated near the Dominican Republic and Haiti. Three and a half million people live on the island and five million more Puerto Ricans live in the U.S. It was a Spanish colony before it became occupied by the U.S. and then acquired by the U.S. from Spain after the Spanish-American War in 1898. Since 1952, Puerto Rico has been an unincorporated U.S. territory. Its inhabitants have the right to circulate freely in the U.S. but they have no right to vote in U.S. elections except in the presidential primaries.
The 1967, 1993 and 1998 ballots on the status of the island gave a majority in favor of maintaining the current status. But in the 2012 ballot, only 33% voted to maintain this status, 5.5% voted in favor of independence and 61% voted to become America’s 51st state. But up to now the U.S. government has not taken into account this majority in favor of the incorporation of Puerto Rico as a state member of the U.S. federation. One of the hypocritical arguments was the low turnout. Will it be the same this time? In fact, the U.S. government has already postponed the process that would result in integrating in the U.S. hundreds of thousands of poor people.
The Puerto Rico bankruptcy is caused by the most enormous debt of any local authority of the U.S. or linked to the U.S. It is bigger than the debt of Detroit which was 18 billion in 2013. Up to now, Puerto Rico, which is not an American city or state, had no right to file for bankruptcy. But last year, when Obama was president, the U.S. Congress passed a rescue law that can allow the Puerto Rican government to reschedule its debt under the authority of a supervision committee.
The government hopes to lower this debt to a level where it would have to reimburse only ... 800 million dollars each year, according to a new schedule. And this gigantic figure nonetheless represents an 80% reduction compared to the previous planned reimbursement. The issue will be decided by the U.S. courts. Meanwhile, since the moratorium on the reimbursements has been lifted, Puerto Rico creditors now demand to be paid back, and threaten to go to court. Those creditors are banks, pension funds, speculators. For a number of years, this debt has become a very attractive investment for speculators who buy and sell Puerto Rican debt, as they did with the Greek debt a few years ago.
In the past, Puerto Rico was called the Greece of the Caribbean, for its numerous beautiful beaches. Today, it is rather because of its debt that it is still compared to Greece, which has become unflattering.
What that means does not augur well for the future of the population of Puerto Rico. In Greece today the population is still squeezed to pay the Greek government’s debt, which it is not responsible for. And, in Puerto Rico, the supervision committee for the reimbursement of the debt will impose even more austerity measures and hardship on the population. Starting a few years ago, dozens of schools have already been closed, teachers have been dismissed, universities are threatened to be privatized. One can predict even more tax increases, a ban on the right to strike for state employees, a cut of the minimum wage for workers under 25. It would go down from $7.25 to $4.25 dollars per hour. Cuts in pensions are about to be implemented. The schools and the hospitals have run out of money, the roads are not repaired. 30,000 civilian state employees have already been laid off. At the beginning of the year, Ricardo Roselle signed a law increasing the mandatory hours of work, cutting the number of sick leaves granted to workers and shortening their annual vacation. On Friday, May 5, Puerto Rico’s government announced the closure of 179 public schools in order to save more than seven million dollars.
The unemployment rate is more than 14%. In 2013, 45.4% of the population were already under the poverty level and this percentage goes on increasing. Life in Puerto Rico is expensive. Not only do goods come mainly from the U.S., but since 1920 a law forces anyone who imports goods to bring them through the U.S. before reaching Puerto Rico, which increases their prices.
This situation results in more people leaving the island for the mainland. 500,000 people have left the island during the last ten years to try and find a job and a better life. This hemorrhage goes on at a rhythm of 200 departures per day. Beyond the human tragedy, one of the consequences of these departures is the reduction of the amount of taxes that go to the state treasury.
For many years, the massive tax breaks granted by the U.S. Congress to American companies that invested in Puerto Rico attracted big multinationals and boosted business activity. Small and middle size companies, especially pharmaceutical ones, also developed throughout the country. Everything produced in Puerto Rico was free of taxes. Capitalists raked in huge profits, the majority of which were sent back to the U.S. The population may have benefitted from more jobs, but with much lower wages compared to the wages of American workers. The stream of profits did not go to the workers.
But in 2006, the U.S. Congress put an end to those particular tax breaks for companies. Many companies closed or left the island. The result was a recession and the ballooning of the territory’s debt. Since then, Puerto Rico defaulted several times and sank more deeply into crisis.
The 2008 financial crisis came right afterwards, aggravating the recession. Financial speculation developed unabated. Hedge funds continued to buy Puerto Rican bonds which benefitted from no fewer than three tax breaks: at the level of the federal state, of the territory and at the local level. The capitalist rating agencies themselves considered these bonds among the most toxic ones. But hedge funds, which are among the riskiest speculative funds, can also reap big money very quickly for their owners. These speculative funds have already brought a lot of money to their owners and to the American bankers.
After Detroit went bankrupt, speculative vulture funds rained down on Puerto Rico, betting that privatization of public services would soon be implemented. The Puerto Rican state is not the only one to borrow money; local authorities do the same, as well as public services such as water and electricity services (the Prepa Company).
The population pays for the crisis. The measures that are proposed by the supervision committee – which the Puerto Ricans call the junta, as in a dictatorship – are always the same: always more cuts in the public services, lowering wages and raising all sorts of taxes.
The decision of the U.S. Congress to completely free companies from taxes in the past, and its decision in 2006 to withdraw this measure, were both aimed at benefitting financiers and speculators. The financiers and speculators are the ones who govern in reality and they take whatever decisions suit them. They do not care if people die a slow death, as long as they get richer as quickly as possible.
The American government is entirely led by billionaires, who are themselves vulture speculators, around Trump who is the billionaire-in-chief. It is a government of billionaires, of Goldman Sachs bankers, of profiteers from the crisis, of vultures out to serve themselves. Whether directed by Democrats or Republicans, U.S. governments are there to serve the rich people from the capitalist class.
The demonstrations of anger that are multiplying in Puerto Rico and the growing discontent of the population show that people do not accept this situation without reaction. Up to now, those in favor of independence, who used to be a small minority but who have been active for a long time, try to surf on this discontent. They claim that independence will protect the island from the crisis. The example of Greece proves that it is not the case. Tsipras, the Greek prime minister, was obliged to impose on Greek people drastic austerity measures dictated by the European Union in order to reimburse the debt owed to European financiers. These measures benefit mainly the financiers and the banks. Imperialism turned Tsipras into an instrument to strangle his own people.
Will the choice made on June 11, that is, becoming America’s 51 state, better protect the population from the consequence of the crisis? No. American citizens and in particular the workers and the less well-off layers of the population on the mainland are paying dearly for the general crisis of capitalism. A good number of Puerto Ricans would simply join the host of the poor, which are in no way protected from destitution by American citizenship. The bourgeoisie, the possessing classes, will always do well, whether they be Puerto Rican or become American. But for the exploited, for the poor, there is no solution within the framework of capitalism. There never will be. Compromising with imperialism can only result in losing out. By the way, this is exactly what the possessing classes of the colony of Puerto Rico have always done with the colonialist power. One can see today where that led the country, worsening the situation of the working classes and the poor.
Because they situated themselves only in the framework of imperialism, the parties and their various policies offer a dead end to the Puerto Rican masses. It is the same in Greece.
To find a way out, to offer a different perspective, depends mainly on the will of the workers and the poor masses to choose their own policy, independent from that of imperialism and its possessing classes, and on their strength to impose solutions that respect first and foremost their own class interests.