Puerto Rico’s Debt Crisis: Greece Isn’t Alone in Struggling Against Austerity

Over the past several years, global headlines have frequently been dominated by the ongoing financial crisis in Greece. Far less has been heard about a similar crisis that has been unfolding during this same time period in Puerto Rico, which officially remains a colony of the United States. Despite the different political status of the two nations, the crises in both Puerto Rico and Greece bear similar hallmarks. The political and economic responses to the crises have also been remarkably similar, involving the implementation of strict austerity measures, privatizations of key public assets and the threat of further cuts in the future.

Déborah Berman-Santana is a retired professor of geography and ethnic studies at Mills College in Oakland, California. Throughout her academic career, she has closely studied the forces of colonization and neoliberalism and their impact on Puerto Rico and other nations, and has taken part in the struggle for the freedom of Puerto Rico. She spoke to Truthout recently about the current crisis in Puerto Rico, its colonial roots and its many similarities to the crisis in Greece, a country she recently visited, while also describing her own personal process of decolonization as a Puerto Rican.

Michael Nevradakis: Share with us a brief history of the colonial exploitation of Puerto Rico.

Déborah Berman-Santana: Puerto Rico [and] Cuba were the last of Spain’s colonies in the Western Hemisphere and were both on their way to independence. Puerto Rico had an autonomous situation and Cuba was winning a war against Spain when the US intervened in the Spanish-American War of 1898. Cuba received a conditional independence, and Puerto Rico was outright given to the US. It was, you might say, war booty, and since then, the United States has enforced strategies of exploitation of the natural and human resources of Puerto Rico. First with the sugar cane exploitation, then after World War II, the world’s first third-world development via [an] export-led industrialization program, known as “Operation Bootstrap,” which depended on generous exemptions to foreign (mostly US) corporations.

In the 1990s, there was a transition to eliminate some of these exemptions, which was completed in 2006, and with the end of those exemptions, a lot of corporations left, but there was a tremendous expansion of big-box corporations such as Walmart. Puerto Rico actually has more Walmarts per square inch than anywhere else in the world, and before that it was the world capital of pharmaceuticals.

The latest method of exploitation is through the debt and the demands of the creditors, who are now mostly vulture funders, to impose the harshest austerity and privatization regime on Puerto Rico.

Puerto Rico has been referred to in the press as the “Greece of the Caribbean,” while Greece has also at times been referred to as the “Puerto Rico of the Mediterranean.” Describe for us the so-called debt crisis in Puerto Rico as it is manifesting itself today, who is actually responsible for it and what the people are being told about it.

If you listen to the media, you will think the government has been spending beyond its means, it has taken on much more debt than it could pay for and the people of Puerto Rico are simply not industrious enough. [You would believe] that we have expensive first-world tastes but third-world pockets, and that now we have to take some “bitter medicine.”

But if you actually look at the crisis you will see that it is a very small percentage of those in Puerto Rico who have benefitted, mainly the local oligarchy and the big corporations, mostly from the US. If we did an audit, they would probably find that much of the debt is odious and/or illegal, but I would say that since we are a colony and don’t have sovereignty, the United States is responsible for this debt.

One of the ironies here is that when the United States took over colonial control after defeating the Spanish, it refused to take over the debt that had accumulated under Spanish colonial rule. Now the United States is insisting that the people of Puerto Rico burden this new debt. Is this indeed the case?

Yes, it is. When they were negotiating the terms of the Treaty of Paris, Cuba was supposed to become independent, and the Spanish insisted that the Cuban government had accumulated a tremendous amount of public debt. The US argued that [the debt] had been accumulated under a colonial regime and therefore was odious debt, and therefore should not be paid by Cuba, and in effect it was not paid.

This is part of the basis for the whole idea of odious debt, unsustainable debt, that we see the anti-debt movements use. It’s ironic that the US helped Cuba to not pay that debt with that argument, but there’s not even discussion of anything similar happening with its own colony, Puerto Rico.

What has the official response to the debt crisis been on the part of Puerto Rico’s government and on the part of Washington? It seems similar to what has happened in Greece, with new austerity measures and authority granted to unelected technocrats.

We have two alternating colonial parties, one that says that we can improve the current political status, while the other says that we need to become a [US] state. The current government has said that the debt is not sustainable and we need to find a way out of this. Washington says that it can “help” with some technical assistance, but that it’s not their problem.

What they mean by “technical assistance” is they will tell the government of Puerto Rico to contract certain “experts” from the US to take care of this problem. Of course, it is with the Puerto Rican people’s tax monies that we’re paying for these “experts.” Who are these “experts”? To give an example, Puerto Rico is not an independent country, so we don’t deal directly with the IMF [the International Monetary Fund]. However, one of the more important reports that have come out recently is called the “Krueger Report,” from Ann Krueger, a former chief official of the IMF. She is now working on her own and has other former IMFers that have been contracted by the government of Puerto Rico to prepare a report. It’s very lucrative for these top firms in New York.

They were paid half a million dollars to spend three to four months in Puerto Rico, interviewing some Puerto Rican economists and taking a report from the New York Federal Reserve, and they came out with, for their half a million dollars, a 26-page report that cherry-picked some information, only looking at Puerto Rico’s economic situation since 2000, and their recommendations all come from the IMF playbook. The judge who presided over the bankruptcy of Detroit has also been contracted by the government of Puerto Rico.

The Puerto Rican authorities have recently released their own “fiscal adjustment plan.” This phrase should be familiar to anyone who has followed the crisis in Greece. What are the similarities in the two cases?

I’ve taken a look at the memorandums and while there are certainly differences, I find a lot of striking similarities in the language. They speak about the “sustainability” of the debt and about the issue of making Puerto Rico more “competitive,” for example, reducing or eliminating the minimum wage for young workers. Also, streamlining the bureaucracy and making Puerto Rico a more “business-friendly” or “investment-friendly” environment, as if a colony isn’t friendly enough, and getting rid of the Christmas bonus for public employees, because that’s supposed to be a really terrible thing that’s very wasteful. Additionally, [they speak about] the “restructuring” and the privatization of the electric energy authority, the water and sewer authority and our highways. One of the highways has already been privatized, and guess who’s running it: It’s Goldman Sachs.

What has been the impact of “foreign investment” in Puerto Rico, and how has this also impacted local business and industry?

Walmart has received subsidies and tax incentives in order to establish itself in Puerto Rico, far more than the local businesses receive. As is true elsewhere in the world, where Walmart establishes itself, it tends to drive out local businesses. Instead of full-time employment, with circulation within Puerto Rico of our income and our spending, you have part-time workers with no benefits, and Walmart takes most of the profits outside of Puerto Rico.

I’ll say a bit about Donald Trump. He has this reputation of being a billionaire who, if he is interested, is going to bring in a lot of investment, and of course he gets heavily recruited. He was going to do the “Trump Estates,” a luxury golf resort. He [makes these investments] through his various businesses, and he didn’t actually invest his own money; he received a big loan from the Puerto Rico Development Bank. Not only did he not build this luxury investment, but that particular company went bankrupt and Puerto Rico cannot collect on that money. So Donald Trump can go bankrupt and owe Puerto Rico money, but Puerto Rico does not have the right to go bankrupt.

Additionally, there is some interest in trying to connect all of the islands of the Caribbean and to generate energy in Puerto Rico, more than we need, in order to sell to the rest. There is a project, which Puerto Ricans are fighting against, to build a giant incinerator, supposedly a waste-to-energy incinerator, which will fill up Puerto Rico with toxic waste. And, since we don’t have enough garbage, they would be looking to burn the garbage of other places.

What has been the impact of the cabotage rules [rules governing trade or transport in coastal waters or airspace or between two points within a country] being enforced by the United States in Puerto Rico?

Since the early 20th century, Puerto Rico has been forbidden from having anything come into or go out of the country except on US-registered ships with US crews. The US merchant marine is the most expensive, least efficient, most obsolete and least competitive on the planet. If we were able to do our business with anyone else, Liberia, Greece, anybody, it would immediately lower our costs for everything.

We have been lobbying for years to get this changed, and this is a point of agreement among all of the political persuasions in Puerto Rico. The US Virgin Islands don’t have this, and the reason why we have it is that the US merchant marine would probably disappear if it were not for Puerto Rico.

Something that is often heard in Greece is that the country does not produce enough food and resources in order to sustain its population, so that the country cannot survive without the European Union and the eurozone. Is this a narrative that is heard, even about issues such as food production, in Puerto Rico?

Absolutely. At the time that the US invaded and occupied Puerto Rico, Puerto Rico was not only self-sustaining, but was exporting to other islands as well. Nearly all arable lands were then taken over by sugar, and the local production of foods dropped dramatically. [As a result], the big corporations, for example California Rice, began to import into Puerto Rico to feed people. [We were told] that we need to industrialize, that our water resources weren’t that important, our soil wasn’t that important, that we needed to fill them up with cement, industrialize, urbanize, that we could import all of the foods we needed.

What has happened in Puerto Rico is a preference has been created for imported goods. To this day, somewhere between 70-80 percent of the food consumed in Puerto Rico is imported, and it’s not the good stuff. It is the eggs and the chicken that they can’t get rid of in the United States. Not coincidentally, the incidence of diabetes and cancer and all kinds of hypertension and gastrointestinal diseases has increased.

What is the political and electoral system like in Puerto Rico, what representation does the island have in Washington and what is the mentality of voters in Puerto Rico toward the political parties?

Puerto Rico has been defined by the Supreme Court as an “unincorporated territory, belonging to but not a part of the United States.” In the early 1950s, the US promoted a cosmetic change in the government of Puerto Rico and defined it as a “commonwealth” or “associated free state.” We say that we’re not associated, not free and not a state. This was meant to get Puerto Rico taken off the United Nations’ list of non-self-governing territories because if you’re on that list, the colonizer needs to report every year. For the past 33 years, Puerto Rico has come before the committee on decolonization in the UN; they have voted every year to bring it before the General Assembly, and the United States has vetoed it every year.

We have two houses, we have a governor, and we vote every four years. We also have a non-voting resident commissioner who sits in committees in the House of Representatives in Washington but does not have a vote. He does vote on committees and can speak, but he cannot vote on the floor. So that is our representation, which is less than what we had under Spain. We cannot make our own economic treaties; if there’s ever any issue, the US can step in and veto it. We have the US federal court, which is only in English. The judges are all Puerto Rican, but you have to do everything in English. You go in there and they’re all speaking in English, even though most Puerto Ricans do not speak English. They call it “el difícil,” the difficult one, because people don’t want to speak it. In the federal court proceedings, people will not speak Spanish, so you have to have a translator, and many times the translator knows less English than the people in the audience. So this is a real carnival.

At the same time, the Puerto Rican courts are based on Roman law, just like all of the Latin American and the Mediterranean countries, whereas the federal court is based on Anglo-Saxon law, and one will supersede the other.

To give an example, Puerto Rico does not have the right to declare bankruptcy, Chapter 9, as do the states. So in order to try to deal with this debt crisis, the Puerto Rican government actually passed a law, our local Chapter 9, and the creditors sued in federal court and won. So we can’t do that either.

An issue that is a political hot potato in Puerto Rico is that of independence, similarly to how “Grexit” is a hot potato in Greece. How is the issue of independence viewed in Puerto Rico?

The issue of independence has been criminalized in Puerto Rico. There has been tremendous repression. We have had many political prisoners, including one at the moment named Oscar López Rivera, who has been in prison for 34 years of a 75-year sentence for “seditious conspiracy to overthrow the government of the United States in Puerto Rico.” He has not been accused of or convicted of any violent crime, and there is currently an international campaign to pressure President Obama to free him.

There have been many violent deaths, many forced exiles, a tremendous amount of fear and repression, and we’ve been taught that Puerto Rico does not have either the human capacity or the natural resources to be independent, and most people believe this. [In schools] in Puerto Rico, there used to be a geography book, by a North American named Mueller, which said that “Puerto Rico is a small island without natural resources and it’s overpopulated, and so it cannot be independent and it needs to rely on the United States.” That was the first thing you learned.

One of the things I have had to do is to decolonize myself. This has been one of my inspirations for going off to school and becoming a professor. It was the whole idea of “why am I told that I’m less than everyone else? Why am I told that I have to depend on someone else?”

Currently, the people who openly support independence – and there’s open and also hidden support for independence – is small. We do have an Independence Party that gets maybe 4-5 percent of the vote. Most pro-independence supporters don’t actually support the party because there’s a tremendous amount of division among the Puerto Rican independence supporters. When we unify, we can achieve some wonderful things, but we are incredibly divided for many reasons. Other people will vote for one of the majority parties for some strategic reason, to keep the other one out. Some people will actually vote for the statehood party because they think that if Puerto Rico asks for statehood Congress will say no, while others will vote for the colonialist party, saying we can’t vote for statehood under any circumstances, that maybe we can get some autonomy. And there are many people who refuse to vote because it is a colonial process.

I believe that we really have no way out unless we can take some responsibility and have some power to decide our own future. Independence does not guarantee it by itself, but there is no way that you have the possibility of having enough sovereignty to make your own decisions without independence. We could join with the wonderful unifying collaborations that are happening in Latin America right now. We are a Latin American country. There is a saying in Latin America that the independence of Latin America is not complete without Puerto Rico. I believe that. I’ve spent a fair amount of time in Latin America, and the thing that’s always impressed me is that we have been so isolated, so part of a “iron curtain” of colonialism, so affected by an embargo at least as strong as that of Cuba and less known, that we don’t even know that we’re not isolated, don’t even know that we have a “patria grande,” a greater country, and that’s Latin America. I believe it’s our destiny; I believe we won’t survive unless we do it.

Based on your own experience from Puerto Rico, and having visited Greece and having followed the developments there, would you characterize Greece as a sovereign country or one that resembles a colony?

Speaking as an outsider, Greece of course officially has all the trappings of a sovereign country. It reminds me of Latin America before the last 20 to 30 years, where you have those trappings of sovereignty, but in terms of real governance [it was] very colonial, with an oligarchy that benefitted from this and was only too happy to serve the interests of the outside powers.

It seems to me that the membership in an unequal union, such as the EU and especially the eurozone, has taken away much of Greece’s sovereign ability to make its own decisions. If you want to do things with your economy, say devalue the currency, control what comes in and what goes out, it’s impossible to do in the eurozone. [In Greece], I found it very interesting to see the EU flag next to the Greek flag almost everywhere. All I could think of is Puerto Rico, where we are often forced to have the United States flag next to the Puerto Rican flag. We call the US flag “la pecosa,” which means “the freckly one,” and I was looking at the EU flag and I was saying, “That’s another pecosa.”

“Where would we be without her?” That’s a saying in Puerto Rico for the people who are pro-statehood. I find that so similar to the things that I’ve heard from Greeks in discussing their fears about going back to the “bad” days of the drachma. There’s a part of me that says, “What are you afraid of?” You at least have the trappings of sovereignty. We have much further to go than you do. And I’m saying, as a Puerto Rican, do it and give us hope that we can do it too.