Puerto Rico Protests Against Higher Ed Cuts Follow Long Fight Against Austerity

This February, President Luis A. Ferrao Delgado of the University of Puerto Rico resigned after attempting to suspend 64 educational programs. The measure targeted core disciplines such as history, philosophy and comparative literature, stunning the university community and provoking bitter opposition. Eleven days of protests followed, compelling Ferrao to reverse the decision before stepping down.

The university showdown is the latest chapter in a two-decade struggle against austerity, as Puerto Rico grapples with a debt crisis and economic stagnation. Since 2016, a fiscal control board has managed the U.S. colony’s finances. Repeatedly, board members have frozen university funding to secure spending cuts and encourage “operational efficiency,” whittling down academic departments, salaries and employee pensions.

Reportedly, Ferrao proposed his reform to unlock $102 million in public revenue that the board is withholding from educators. Authorities had long pressured him to reduce operating costs in exchange for access to basic funding. During his resignation, Ferrao denounced looming “draconian measures” for threatening the university’s “stability and educational mission,” implying that the board is squeezing the budget.

The debt crisis and struggle over education reflect both the failure of U.S. colonialism and capitalist development in Puerto Rico. For decades, officials in Washington, the local elite and foreign financiers have blamed the colony’s fiscal problems on profligate social spending. But these arguments stand reality on its head. In large part, Puerto Rico’s fiscal crisis is the foreseeable result of policies that U.S. leaders have imposed from the outside: a model of economic development that relies on tax exemptions and low wages while prioritizing the rights of foreign investors over the well-being of residents.

Colonial Capitalism

During the Cold War, the U.S. government planted the seeds of the current crisis when it launched Operation Bootstrap to develop Puerto Rico’s economy. The modernization program aimed to attract investment by advertising tax exemptions and the territory’s cheap labor. By the 1950s, the international financial press portrayed Puerto Rico as a “bounty for industry” and “taxpayers’ paradise.” Gulf Caribbean and other petrochemical giants constructed factories, and apparel makers like Newberry Textile Mills turned the archipelago into a floating sweatshop: the single largest supplier of clothing to the U.S. market.

Leftists and independence activists noted that Bootstrap allowed corporations to shirk their fiscal responsibility and exploit workers while making the archipelago dependent on foreign capital. Yet authorities ruthlessly suppressed such criticism. For decades, U.S. officials illegally surveilled over 135,000 civilians to defend a highly unstable model of colonial capitalism.

One target was the independence leader, Juan Mari Brás, who denounced the “colonial-capitalist system” for enabling foreign corporations to absorb the “largest share” of Puerto Rico’s wealth. In response, the FBI allowed right-wing extremists to attack his party’s offices, newspaper press and daycare for young children. In a letter to the FBI director, a bureau agent celebrated Mari Brás’s heart attack in 1964, claiming that its harassment campaign was responsible for his brush with death.

Authorities began spying on his socialist colleague, Manuel de. J. González, when he was still a teenager. Eventually, the police enlisted two neighbors, his landlord, a postman and the local security guard as informants to monitor his activities. Decades later, González discovered that “almost every meeting that I attended is documented.”

The experiences of Mari Brás and González were not unusual. Defending U.S. rule and private investment, the CIA and FBI systematically persecuted dissent, compiling “a list of names” of political activists, spying on U.S. citizens, and intercepting “mail to and from Puerto Rico.” An undercover FBI agent even became the lover of Commander Gloria Fontanez of the Young Lords Organization, which promoted socialism in the colony. While physically abusing Fontanez, he helped engineer the group’s collapse.

Across Latin America, U.S. officials touted Operation Bootstrap as a model for emulation, but neglected a key detail: Repression was the heart of the economic program. Through the 1960s, foreign investment propelled growth in Puerto Rico. Yet wages stayed low, and policymakers promoted emigration to mitigate appallingly high levels of unemployment. As socialists observed, the economy remained dependent on foreign capital: a foundation that would vanish if investors chased profits elsewhere.

Rebooting the System

During the mid-1970s, a prolonged recession gripped Puerto Rico and discredited Operation Bootstrap. Unemployment rates and budget deficits climbed, as corporations began leaving the archipelago to exploit cheaper labor elsewhere in Latin America. The economist Iyari Ríos González registers roughly $16 million in capital flight for 1960, yet estimates that Puerto Rico hemorrhaged over $3 billion in 1980.

Once more, officials adopted fiscal incentives to lure foreign investment. In 1976, the U.S. Congress slotted Section 936 into the tax code, exempting corporate profits in Puerto Rico from federal taxes.

Repression remained a central feature of economic policy. Above all, Gov. Carlos Romero Barceló attacked social spending and workers to attract foreign capital, balance the budget and reverse deindustrialization. In 1977, his administration drafted a secret memo calling for a “carefully conceived plan” to permit the “participation of law enforcement agencies” in labor disputes. That year, police strangled the union leader Juan Rafael Caballero to death. Police also bludgeoned and shot striking workers. Meanwhile, authorities tacitly allowed firms like General Gases and Esso to ram trucks into picket lines and assault employees during labor disputes.

By battering the labor movement, Puerto Rican leaders kept wages flat and cultivated a pro-business climate for foreign investors. The combination of fiscal incentives and bare-knuckled repression stimulated investment and economic growth.

But it also infused the economy with dangerous contradictions. Corporate tax exemptions and high unemployment rates – which routinely surpassed 14 percent of the workforce – prevented Puerto Rico from developing a stable tax base. Government debt rose from 35 to 57 percent of GNP between 1970 and 2000. Increasingly, officials relied on bond sales to underwrite spending, as the public sector confronted revenue shortages.

Decadence and Austerity

By 2006, the North American Free Trade Agreement and expiration of Section 936 had undermined Puerto Rico’s appeal as a labor market, prompting the mass exodus of industry from the archipelago. It marked the definitive failure of the U.S.-imposed model of colonial capitalism. The territory’s already insufficient tax base migrated overseas, and the economy severely contracted.

Over the following decade, Puerto Rico spiraled into the worst municipal debt crisis in U.S. history by selling bonds to cover budget deficits.

The financial crisis and government response has reflected the deeper chaos of the colonial order. Since 2006, every governor’s office has combined austerity measures with visible corruption – cutting public services to reduce the debt, while embezzling funds for political gain.

Before pioneering austerity, Aníbal Acevedo Vilá oversaw an illegal campaign financing scheme to win the gubernatorial election in 2004. The leadership of the Puerto Rico Manufacturers Association and a network of “collaborators” laundered over $7 million for him in illicit contributions. Under legal pressure, suspects admitted to wrongdoing in return for light sentences.

The legacy of corruption continued. Aníbal Vilá’s successor, Gov. Luis Fortuño, laid off thousands of public employees to pay foreign bondholders. Afterward, he retired to the law firm Steptoe & Johnson, while promoting Puerto Rican bond sales. The watchdog group Hedge Clippers acidly noted that Fortuño exited the government to advise “Wall Street types on how best to pillage his former homeland.”

Corruption then reached conspicuous heights under Gov. Alejandro García Padilla in 2013. His campaign manager, Anaudi Hernández Pérez, exploited personal connections to win government contracts, engage in influence laundering and practice extortion. A flamboyant businessman, Hernández raised funds for the Popular Democratic Party by holding drug-soaked parties with sex workers, nude revelers, fireworks and live music at his mansion.

In 2015, federal authorities swept up Hernández and other members of the García Padilla administration in an anti-corruption probe. Losing his patience, the FBI chief in Puerto Rico openly demanded García Padilla “clean the house of parasites… that have bled Puerto Rico dry and left it in critical condition.”

The scandal allowed the gubernatorial candidate Ricardo Rosselló of the New Progressive Party to win office in 2017, while promising to purge the government of corruption and stabilize the territory’s finances. To reduce Puerto Rico’s debt, his administration closed over 400 public schools. Yet in 2019, federal authorities arrested his secretary of education, Julia Keleher, for misappropriating government funds.

Days later, journalists published a Telegram thread exposing the Rosselló administration’s cronyism. One government whistleblower asserted that an “institutional mafia” held the reins of power in a key agency.

Two weeks of protests forced Rosselló to resign. Yet the ruling class’s combined commitment to austerity and personal enrichment endured. Bribery charges plagued Rosselló’s successor, Wanda Vázquez, after she left office. And her successor, Pedro Pierluisi, profited from both sides of the debt crisis: As a corporate lawyer, he helped Puerto Rico issue new bonds, before winning a federal contract to restructure these very debt obligations.

For two decades, the rituals of democracy in Puerto Rico have served to legitimate its colonial orientation and unpopular austerity measures. Elections offered voters candidates instead of options, as both major parties preached a gospel of fiscal discipline and shared sacrifice that they mocked in practice.

Blood in the Streets

During the same period, new grassroots movements emerged to resist the belt-tightening reforms and corruption. Every governor faced popular backlash as the debt crisis worsened. A discernible pattern took root, as government repression incited further waves of mobilization and undercut the legitimacy of the colonial order.

In September 2005, the FBI laid siege to the home of Filiberto Ojeda Ríos, a socialist activist who had organized a 1983 heist to raise funds for the independence movement. Since 1990, the elderly revolutionary had lived in hiding after removing a tracking device from his ankle. In a provocative display of force, a swarm of FBI agents invaded his neighborhood before triggering a shootout. Afterward, the bureau airlifted an injured agent to a hospital, while leaving Ojeda Ríos to die from a gunshot wound. Amnesty International called his death an “extrajudicial execution.”

The brutal raid occurred on the anniversary of the Grito de Lares – Puerto Rico’s equivalent to Independence Day – and turned Ojeda Ríos into an instant symbol of national resistance. Students forced the University of Puerto Rico to declare an “academic recess,” and the Puerto Rico Bar Association awarded Ojeda Ríos posthumous honors. The outpouring of grief and anger revealed a powerful undercurrent of frustration over the structural inequality and violence of the colonial order.

Immediately, Ojeda Ríos’s death galvanized a new wave of anti-colonial activism. Resurgent social movements largely focused on combating cuts to education, health care and other public services, while confronting the repressive power of the colonial government.

Student activists quickly assumed the vanguard of the struggle against austerity. In 2009, students at the University of Puerto Rico contested tuition hikes and gutted budgets by organizing protests that immobilized the campus.

Governor Fortuño in turn unleashed the police. Police boasted on social media about plowing through students with pepper spray and billy clubs, while acting as the shock troops of austerity. Addressing his colleagues, officer José Rosado openly fantasized about making blood “run” in the streets: “Dinner is served, boys… it’s time!” Other policemen celebrated the opportunity for “emptying” their rifles into crowds and promised to beat back “the mobs that don’t want to study.”

Police brutality led the mainstream Daily Sun to editorialize that the behavior of security forces was “comparable only to the acts of the dictatorships we all denounce.” The Department of Justice itself concluded that “constitutional violations” were “pervasive and plague all levels” of the Puerto Rico Police Department, unveiling a “staggering level of crime and corruption.”

Despite the repression, students have repeatedly mobilized to prevent the government from dismantling public services. In the spring of 2017, colonial authorities proposed slashing $450 million in funding for the University of Puerto Rico. Experts warned that the reform meant “the end of UPR.” And again, students launched a massive strike that police met with indiscriminate violence.

Then in September, Hurricane María slammed the archipelago. The warnings of student activists appeared prescient, as the natural disaster exposed the man-made scars left by over a decade of austerity politics. Puerto Rico’s weakened health care system, decaying infrastructure and anemic social programs collapsed. Ultimately, the legacy of austerity proved deadly: The New England Journal of Medicine estimated that 4,645 Puerto Ricans died in the hurricane’s wake.

The Dictatorship of Capital

The dialectic between resistance and repression continues to define Puerto Rican reality. Despite the austerity program, Puerto Rico’s debt rose from $35 to $72 billion between 2005 and 2017. In response, U.S. officials curbed local control of the archipelago’s debt, delegating authority to foreign financial institutions and, inadvertently, fueling movements that demand economic justice.

Since 2016, a fiscal control board appointed by the U.S. Congress has managed Puerto Rico’s finances. Residents simply call it the “Junta” – alluding to its undemocratic character and past Latin American dictatorships.

Tellingly, the first Treasury official to oversee the debt crisis, Antonio Weiss, previously received a $21 million retirement package from Lazard Frères, a firm heavily invested in Puerto Rican bonds. Federal officials stocked the Junta with foreign bankers and corporate lawyers. Their professional backgrounds made them unsympathetic to Puerto Rico’s plight. Indeed, before assuming her post, Director Natalie Jaresko of the Junta pocketed $1.7 million in bonuses while helping Ukraine navigate its own economic turmoil.

Board members have doubled down on austerity, further hollowing out social programs to pay foreign creditors. Yet the nonprofit group Espacios Abiertos demonstrates that the Junta has routinely overestimated the savings gained from cutting public services. Its 2018 fiscal statement predicted that such reforms would secure $193.9 billion in government savings over the next 30 years. By 2022, the board had lowered its forecast to $49.7 billion, before suspending predictions altogether. Ironically, the Junta itself aggravates the territory’s debt by managing a restructuring process that has cost over $1 billion.

This February, the Center for Investigative Journalism in Puerto Rico published an exposé revealing that the board refuses to leave the territory. After nearly a decade, Puerto Rican officials call the Junta a “leviathan,” explaining that “we have complied” with its demands only to receive additional ultimatums. Recently, the board released a report that admits spending cuts have devastated an “overburdened healthcare system.” Nonetheless, members remain confident in their leadership and have announced 50 new preconditions before the archipelago can regain its sovereignty.

The obstacles to its removal are formidable. Congresswoman Nydia Velázquez (D-NY) reports that financial lobbyists have “repeatedly delayed and opposed efforts” to dissolve it and enjoy a stranglehold on Congress. Even Ivy League universities such as Harvard, Princeton and Yale have invested in Puerto Rico’s debt through hedge funds like the Baupost Group, profiting from the destruction of its educational system.

Yet grassroots movements are fighting back. As in 2009 and 2017, opposition erupted at the University of Puerto Rico when its president, Luis Ferrao, announced program cuts this January. The mass mobilization lambasted not only the Junta but U.S. colonialism. One leftist group, the Fighting Student Collective, asserts that “it is no coincidence” that cutbacks target the humanities since “a people that does not know its own history is easy to keep subjugated.”

A new governor, Jenniffer González, helped replace Ferrao with a political crony and appointed a lobbyist for bondholders as her chief of staff. What’s more, President Donald Trump’s federal funding cuts further undermine the viability of the colony’s education system, while extending political repression to the U.S. mainland. His attack on universities dramatizes the importance of solidarity in the struggle against austerity, which now threatens the very schools that have profited from Puerto Rico’s debt.

In short, the ongoing crisis reflects the contradictions of U.S. colonialism and capitalist development in the Global South. For decades, elite policymakers and investors have dismantled Puerto Rico’s economy, then cited the resultant debt crisis to shred its social safety net. Perversely, their own mistakes have become a justification for further exploitation, while the Junta and foreign capital attempt to milk a shrinking corpse. But such violence continues to inspire resistance, as social movements mobilize to combat austerity – again resurrecting the Puerto Rican nation in the struggle for a democratic and sovereign future.

Jonathan Ng is a postdoctoral fellow at the John Sloan Dickey Center for International Understanding at Dartmouth College.

The author would like to thank Sarah Priscilla Lee of the Learning Sciences Program at Northwestern University for reviewing this article.