May 28, 2017
Radical Political Economy
By Héctor Reyes,
Puerto Rico has been a U.S. colony since 1898. Arguably, the two most exacting moments for the Puerto Rican people under the U.S. boot had been: (1) the actual moment of the 1898 invasion of the Island when the U.S. placed it under direct military rule for the following three years, causing profound economic, social and political dislocation and uncertainty; (2) the 1930s, when the Island—then the poorest territory in the Caribbean archipelago (poorer than Haiti)—was devastated by the Great Depression, not only because of the depression itself, but because the Island’s economy had been grossly neglected and manipulated to become a huge sugarcane plantation for U.S. interests.
Yet, as severe as the two crises described above were, the current crisis that Puerto Rico is facing can perhaps find a more adequate comparison by referring to a much earlier era, the time in which Christopher Columbus brought his hordes of colonial settlers at the turn of the 15th century. The net result was that the native inhabitants of Puerto Rico, the Taíno Indians, were dispossessed of their land, and wiped out as a people.
The response of the U.S. ruling class to current economic crisis has the potential to generate in the long run a similar type of devastation for the Puerto Rican people, who developed as a nation over the course of the 400 years of Spanish colonialism. The combined onslaughts of neoliberal policies and the exhaustion of the colonial project revamped by the U.S. in the 1950s have run their course; the Island is drowning under the weight of a relatively astronomical debt that it cannot repay. It owes $73 billion in bonds, mostly to U.S. investors, and an additional $50 billion in unfunded pension liabilities. Over half of the $73 billion is not principal but capitalized interest.
The loan sharks collect their money
On May 3, in what certainly was a coordinated effort with the infamous Junta, the government declared bankruptcy under Title 3 of the PROMESA Act. PROMESA (a cruel joke since in Spanish it means promise) is a law enacted last year as a joint effort between the Republican Congress and the Obama administration. The law mandated a Financial Oversight Board (known by Puerto Ricans as “la Junta” )  with absolute powers over every aspect of governance within the Island. It makes a mockery of the claims that Puerto Rico is not a colony, for the Junta can override any law, regulation and government action, to the extent that it can prosecute and imprison any government official that refuses to follow its dictates.
The board is made of seven individuals, nominated jointly by Obama and the Republicans in the U.S. Congress, who have been shown to be directly linked to either the financial institutions that issued the debt through Wall Street (e.g., Banco Santander and Banco Popular) or to those that applied for it as officers of the Puerto Rican government’s bank. They are complemented by a group of Wall Street hustlers and water carriers, one who has lobbied for years in favor of the privatization of the U.S. social security system, another an expert on slashing the funding of public education in California. They are the unelected rulers of Puerto Rico, making the newly elected governor, legislature, and mayors into their employees, and thus rendering the minimum of Puerto Rican democracy that existed under colonialism into an overt farce.
Not content with the glaring conflict of interests personified by the Junta, at the end of March it appointed as its executive director the former Finance Minister of Ukraine, Natalie Jaresko—who is receiving a base compensation of $625,000 per year over four years, in addition to a personal chauffeur, paid tickets between Kiev and San Juan once per month, and other conventional perks awarded to financial assassins. Yves Smith, contributor to Naked Capitalism (a site devoted to exposing U.S. financial cronyism) has described Jaresko as a U.S. political operative in Ukraine’s government: “The new finance minister of Ukraine, Natalie Jaresko, may have replaced her US citizenship with Ukrainian at the start of this week, but her employer continued to be the US Government, long after she claims she left the State Department. US court and other records reveal that Jaresko has been the co-owner of a management company and Ukrainian investment funds registered in the state of Delaware, dependent for her salary and for investment funds on a $150 million grant from the US Agency for International Development [my emphasis]. The US records reveal that according to Jaresko’s former husband, she is culpable in financial misconduct.”
Soon after the Puerto Rican government declared bankruptcy, the Chief Justice of the U.S. Supreme Court, John Roberts, appointed a U.S. District Court (Federal) Judge, Taylor Swain, to oversee the bankruptcy proceedings. Title 3 bankruptcy is an invention of the U.S. Congress that does not apply anywhere else outside Puerto Rico, under the PROMESA Act. The appointment of a Federal judge is a clear indication that the U.S. government was not going to allow a municipal court bankruptcy judge to handle its debt collection in Puerto Rico.
Like any other bankruptcy court judge, Judge Swain will be allowed to make decisions such as the evisceration of the already paltry government pensions. The average government pension annuity is just over $1,000 per month, with close to 40,000 retirees making $500 per month. The Junta has proposed a ten percent cut to pensions, while the administration of Gov. Ricardo Roselló is projecting to stagger the cuts, gradually increasing them to 15, and then 20 percent. The pension fund will run out funds by 2019, in large part because the government used them as a piggy bank, and to make partial payments on its bond debt.
Although the bankruptcy proceedings will provide another layer of official legitimacy, and thus shield for the imperial plunder pursued by the Junta, the truth is that Judge Swain will operate under a different set of rules. As USA Today reported: “Similarly [to Chapter 9], PROMESA dictates that the court may not “interfere with” the island’s “property or revenues,” without the oversight board’s consent.” Inadvertently, USA Today hit the nail on the head, for the Junta is the ultimate arbiter in this colonial context, and the PROMESA Act allows it to put any Puerto Rican asset on the chopping block.
Among the lowlights of PROMESA is the freedom to lower the minimum wage of Puerto Ricans (aged 20 to 24) to $4.25 per hour. However, this is only one of many bloodletting provisions, for the ultimate of price that this legislation intends to exact from ordinary Puerto Ricans is devastating. Early on, the Junta made it clear that its only mission in Puerto Rico was, not to help it recover from its decade-long economic crisis, but to guarantee the reorganization of government finances in order to have the debt repaid. According to one of its own projections the Island’s GNP may drop by a whopping 16 percent in 2019.
The Junta has preferred to operate behind the scenes, making the new governor and his party impose most of the economic attacks, in order to shield itself from the rage of the people. In early January, just after he took office, Gov. Ricardo Roselló imposed a new labor law that cut vacation days by 50 percent, reduced overtime pay by 25 percent, extended the probationary status of new employees from 6 months to between 9 and 12 months, among other injuries inflicted on workers. The Junta then demanded that the budget of the whole University of Puerto Rico system be cut by $300 billion over the course of two years, but then Roselló increased the cut to $450 billion by 2021, anticipating additional cuts to be demanded by the Junta in the future. Think of the recurrent waves of cuts demanded by the troika of the European Commission, the IMF and the European Central Bank in Greece, over the course of its own economic crisis.
The current UPR budget is just below $900 billion, thus the overall cut proposed by the Governor will be more than 50 percent of the system’s budget, which was already cut by $348 in the previous three years. Students, faculty, staff, and many sectors of the population believe that this will be a mortal blow to the university system. In all likelihood, 8 of the 11 campuses will disappear in one form or another. In addition, the UPR Board of Trustees is proposing to increase tuition to $120 per credit. Given the low income low wages (about 60 percent of the U.S. average) and poverty rate (ca. 50 percent of the population) this increase will price out of higher education thousands of students.
On another front, the government scheduled the closure of another 179 public schools. Added to the closures of the previous two administrations, a total of 324 schools will have been closed since 2010. The list of egregious and harmful attacks seems endless, and increases by the week.
The Junta has indicated that it intends to compensate debtors with earnings from the sale of Puerto Rican assets such as the publicly owned power company, the water company, etc. Already one highway, and the San Juan international airport have been privatized to repay the debt. Ominously, the previous colonial administration, in its desperation to jump-start the economy, approved two laws in 2012 luring the rich and corporations to the Island that allows to pay almost no local taxes. One of these laws, the millionaires’ law, has attracted wealthy real estate speculators such as the billionaire John Paulson who has already bought $1.6 billion worth of hotels, corporate buildings, and resort villas across the Island. Paulson predicts that Puerto Rico will become the next Miami.
What the Junta intends to do is to become the pimp of a massive land grab on coastal areas, all around the Island. Many of these lands are protected by the Puerto Rican Natural Resources Department, while others have agricultural potential, and have been used as such in the past. The reality of colonialism is such that Puerto Rico imports most of its food, making it expensive. But recently, due to the long crisis, a new generation of college educated Puerto Ricans has been trying to reinvigorate agriculture with modern methods. This will be all for naught if these agricultural lands are sold to speculators to build villas, resorts, Airbnb properties, and posh homes for wealthy Anglos.
At the same time the cost of living has skyrocketed, with recurring utility rate increases that have forced customers to pay hundreds of dollars per month in electrical bills, and over a hundred dollars per month in water bills. In addition to income tax, a few years ago the government imposed a sales tax that has increased over the years to reach more than 11 percent. In 1996, President Bill Clinton set on a ten-year gradual phase out the elimination of tax exemptions for U.S. capital in the Island (the so called 936 IRS code), as part of his neoliberal globalization crusade. Over the next decade, businesses fled, until the Island crashed into recession in 2006. The loss of jobs, the increase in taxes, fees, utility rates, etc. has forced more than half a million Puerto Ricans to emigrate to the U.S.—out of a population that now is barely 3.4 million. The foreclosure rate in the Island is the second highest in the U.S., with plenty of owners literally handling the keys of their homes to the banks, as they head to the airport.
As fleeced and jobless Islanders flew away, millionaires, and regular Anglos (retirees, bartenders, restaurant servers, construction workers) have been slowly finding their way to Puerto Rico. In the surfer-paradise town of Rincón (on the west coast) the Anglo population has increased to such an extent that ca. 50 percent of the businesses located around its downtown plaza are owned by Anglos, and in extensive segments of Rincón’s beachfront, almost all of the houses and small apartment buildings are owned by Anglos.
In an article describing how the economic crisis and Puerto Rican emigration have created real estate convulsions, CNN Money nonchalantly covers it like a sale at KMart: “And it’s a buyers market right now. You can get a 3-bedroom home near the beach for under $100,000.” Then it describes how a wealthy Connecticut investor has bought a 312-unit apartment building, plans to buy two more, and even relocated his own family from Greenwich to Puerto Rico.
We seem to have a new Hawaii in the making. For in Hawaii colonial settlers and business sharks managed to take control of the sovereign government as part of a process that took off during the last quarter of the 19th century and was fully consummated during the first half of the 20th century. Eventually, the Native population was turned into a small, dispossessed and marginalized minority. This time it is the Puerto Rican people who have to dig their trenches and do fierce battle in order to avoid a similar fate.
Not without a fight
All these attacks have not gone uncontested. Puerto Ricans have a long and proud tradition of struggle. For example, as the colonial model entered the threshold of this current crisis, Puerto Rican workers, their unions, and ordinary people, that came spontaneously from the street, joined the picket lines of the largest battle against neoliberalism in the 1990s, during the 1998 strike against the privatization of the telephone company. This struggle culminated with an inspiring general strike supported by over 500,000 workers out of a one-million labor force . The level of police repression of the picket lines was such that on the day of the general strike workers took the highway leading to the San Juan international airport with bats and chains. This time, the police was compelled to retreat.
However, due to a confluence of factors the strike was defeated. Afterwards, successive administrations enacted increasingly draconian labor laws to weaken the tradeunions and their solidarity. Furthermore, the U.S.-based international unions became accomplices in this attack, a practice termed by Puerto Rican union activists as colonial unionism. The effects on the labor movement were profound, as today the labor union is fragmented and its leadership is hesitant and fears taking bold actions.
Nonetheless, the extent of the current attacks, the anger and frustration of its members, and the contrasting boldness of the UPR student movement compelled the labor movement to declare a general strike this past May Day. Sparked by the students of the largest campus in the UPR system, located in the neighborhood of Río Piedras in San Juan, the new student movement has grown in numbers, sophistication and legitimacy, and has managed to maintain links and coordinate actions with the students of the other 10 campuses in the Island. This is a new crop of students that are new to the struggle, for the last strike movement of UPR students was on 2011. The lessons of this strike, and of that of 2005, have been learned quickly by today’s students, particularly the need for close communication and coordination with the students across the UPR system.
To this extent, most of the other campuses have remained closed since the current student strike started at the beginning of April. The strike has fluid dynamics, as several campuses have temporarily ceased their stoppage, only to resume it days later. The stakes are so high, that even if the overall strike process came to a halt this summer, it will be a matter of time before it sprung again with renewed anger and the incorporation of previously passive student sectors. Any coherent assessment of the ultimate consequences of the proposed cuts has to come to the following conclusions: (1) six to eight of the 11 campuses will cease to exist, (2) the surviving campuses will suffer the wholesale elimination of departments and programs, (3) enrollment will be cut drastically, beyond the attrition caused by the tuition increases. This will result in the widespread loss of jobs by staff, adjunct faculty, and tenured faculty as well.
Yet, the fulminant extent of the attacks has compelled other university sectors to mobilize themselves. The union representing the non-teaching staff, the Hermandad de Empleados No Docentes, has approved a strike vote that they intend to use tactically. But it is a sign of the times that significant sectors of the faculty have begun to organize beyond their longstanding associations that have been working for years to gain union recognition.
For example, in the Mayagüez campus, traditionally conservative because of the large weight of the engineering faculty, a group of professors formed the group PROTESTAmos (Professors Transforming Ourselves in Solidarity Turned into Action), which came together not only to support the students but to defend the UPR system itself. PROTESTAmos has several committees addressing a variety of concerns such as the working conditions of adjunct faculty (none of whom will be hired for the fall semester due to a freeze of temporary contracts issued by the administration across the system), coordination with the students, links with the community and public schools teachers, students and parents, etc. Similar faculty groups sprung in the Río Piedras and Cayey campuses last March.
After the latest wave of public school closures was announced, teachers, parents, and students mobilized right away. Another general strike has been proposed for June 11, the day of a plebiscite on the political status of Puerto Rico (vis-a-vis the U.S.) organized by Governor Roselló. Roselló and his party are obsessed with converting Puerto Rico into the 51st state of the U.S., yet the rest of the Island’s political parties and organizations have decided to boycott the plebiscite. Another general strike on the day of the plebiscite will be an astute exercise highlighting the farcical nature of the plebiscite while pushing forward popular demands.
The response of Roselló’s administration to popular protests has been to resort to repression, deploying the police, the riot squad, enacting repressive laws, while hiring a staff of marketing hacks to engage in a propaganda campaign to present the striking students as thugs and criminals. The police has used pepper spray indiscriminately, and on May Day used tear gas despite a consent decree negotiated by the American Civil Liberties Union that banned its use. Some students are facing prison terms of the order of years for the alleged crime of interrupting a meeting of the UPR Board of Trustees.
Then, after the May Day general strike, the government modified the penal code to make it a misdemeanor to interrupt a meeting at an education institution wearing a hoodie or a mask, to plainly interrupt a (governmental) public meeting, to hang signs or paint graffiti on public property, to “obstruct” touristic areas, and to recriminalize protests that interfere with construction (e.g., of hotels attempting to destroy natural resources or to privatize the public access to the beach).
The repressive forces of the U.S. federal government—which have a long history of persecution of pro-independence, tradeunion and socialist activists—have already been busy surveilling and intimidating people since last year. Last fall, two activists who were part of a coalition protesting the Junta, which had camped out in front of the Federal Court in San Juan, were detained by Homeland Security agents. Now the FBI has been harassing UPR students at their homes. This is just the tip of the iceberg. For we know that for decades extensive dossiers of tens of thousands of activists were generated by the Puerto Rican police in collaboration with the FBI. Dossiers that the Puerto Rican courts ruled illegal in the late 1980s.
As dramatic as the attacks of the Federal government on behalf of Wall Street have been, and as inspiring as the resistance of the students and other sectors is, this is a struggle that will unfold over the course of years. It is in the process of fighting to defend our schools, our standard of living, our land, this time in frontal battle against U.S. imperialism, that the Puerto Rican masses will connect our struggle for daily survival with the struggle to end our colonial domination. This will be a fight with many ups and downs.
A thick skin will be required that can allow us to maintain the eyes on the prize, while recovering from painful defeats or while keeping a sober outlook after partial victories. We will do well if we take as a source of inspiration our Palestinian brothers and sisters, who after decades of bloody and genocidal casualties, every time they stand up and resume their struggle.
*Héctor Reyes is a retired chemistry professor from the City Colleges of Chicago, and former chair of his faculty union at Harold Washington College. He has been a socialist activist for 35 years, since his days as a student activist and strike leader at the University of Puerto Rico in Mayagüez.
 This can also be interpreted as a cynical allusion to the Military Juntas that the U.S. government supported and funded in Latin America during the second half of the 20th Century.
 For more details, see my article “Puerto Rican Workers Strike Back,” published in NACLA.