Puerto Rican debt crisis

July 12th, 2017

Puerto Rico as the 51st state?

Is there room for another star on the United States flag? We’ll find out soon enough if Ricardo Rosselló, governor of Puerto Rico, gets his wish and statehood is granted to this longtime U.S. territory. In June of this year, 97 percent of voters in Puerto Rico agreed with Rosselló by voting for a nonbinding referendum to make Puerto Rico a state. The vote comes in the midst of an economic crisis in Puerto Rico. The territory filed for a form of bankruptcy in May.

Despite the overwhelming victory of this referendum, it’s still not clear if the majority of Puerto Ricans want to take the path of statehood. Only 23 percent of eligible citizens voted in this most recent election on an island that normally sees 80 percent voter participation. A similar referendum was approved in 2012 with much higher turnout, but political analysts have argued that the vote wasn’t necessarily a desire for statehood. Instead, they’ve viewed it as a way to voice the need for some sort of status change.

Informal polls of residents indicate that while some do want statehood, others want complete independence from the United States, and still others want to remain a territory. A recent New York Times article discussed how residents struggled with the vote and how the island’s economic problems have overshadowed other considerations such as the loss of culture or identity. Ana Velázquez, a hospital secretary, said, “I don’t want to lose my hymn, my coat of arms, my flag. . . . I don’t see myself ever singing the United States national anthem. I really don’t. But Puerto Rico is in really bad shape, and it needs help.” Velázquez’s struggle eventually led her to avoid voting at all.

Decades of inaction

The low voter turnout has also been blamed on the tactics of opposition parties who discouraged voting by saying the election was “rigged” by the poor wording of the referendum. This was the sixth time Puerto Ricans have taken a vote of this nature since the first vote in 1967. The 2012 vote was the first time statehood was approved. However, as a nonbinding referendum, no action was required and none was taken. While still nonbinding, the most recent election results have given Governor Rosselló hope to persuade Congress to approve statehood this time, saying voters were “claiming [their] equal rights as American citizens.”

According to the Constitution, Congress would need to pass a statute to admit Puerto Rico as a state. Conversations about statehood have been ongoing for decades. In 1977, President Gerald Ford called on Congress to make Puerto Rico a state. However, since he was at the end of his term, Congress never acted, nor did his successor Jimmy Carter.

It’s unlikely the current Congress will take any action, especially since federal funding would be needed to solve Puerto Rico’s economic woes. President Donald Trump recently said on Twitter that there should be no “bail out” for Puerto Rico.

Economic troubles 

For decades Puerto Rico’s economy has been sustained by federal laws that provided financial incentives to manufacturers who move production there instead of outside the United States. Congress began to phase out these incentives in 1996. When they were fully eliminated in 2006, Puerto Rico fell into a deep recession. Economic problems only worsened during the 2008 global financial crisis.

Puerto Rico is currently $74 billion in debt and has an additional $49 billion in pension obligations that it cannot pay. Hospitals have been shuttered, and 150 public schools have closed as a mass exodus of Puerto Ricans head for the mainland. Those who remain have to deal with huge cuts to public services. Statehood advocates argue that if Puerto Rico was a state, the income and corporate taxes it would receive would have prevented this financial situation. For example, if Puerto Rico had been a state in 2011, it would have received up to $3 billion in additional funding for Medicaid and Supplemental Security Income.

As the government continues to cut spending to make debt payments, more Puerto Ricans are leaving the island in search of jobs. This mass emigration of highly skilled workers is typically called a “brain drain” and has sent the island into what the governor calls an “economic death spiral.” The unemployment rate is near 14 percent, nearly half of the residents live in poverty and the per-capita income is half of America’s poorest state, Mississippi.

Puerto Rico’s near-term economic future is in the hands of Congress and the federal district judge who will decide which creditors will get paid and how much. As a territory, Puerto Rico cannot technically file for bankruptcy protection, but the island is undergoing a similar process to restructure its debt. This debt vastly outpaces the closest comparable situation, Detroit’s $18.5 billion bankruptcy filing in 2013. Still, some Puerto Ricans are quietly holding out hope that canceled debt will give the island a fresh economic start.

A long history of struggle

Puerto Rico was first discovered by Christopher Columbus in 1493. Fifteen years later, Juan Ponce de León claimed the island for Spain and brought hardship and slavery to the Taino, the natives of the land. As the natives died, more slaves were imported to meet the growing demand for sugar and coffee. Slavery was not abolished on the island until 1873.

The United States gained control of Puerto Rico in 1898 after winning the Spanish-American War. This transfer of power brought some stability to the island along with improved health care. In 1916, Puerto Rico was allowed to establish local leadership and remain part of the United States. Soon after, nationals were given U.S. citizenship.

In 1952, the United States granted Puerto Rico commonwealth status, which gave Puerto Ricans their own constitution, their own governor and participation in government programs like Social Security, Medicare and Medicaid. However, unlike states, Puerto Rico doesn’t pay federal income tax, has a delegate to Congress but no vote, and can vote in presidential primary elections but not in presidential elections.

A perspective on missionaries

Because of the United States’ complicated history with Puerto Rico, it’s understandable that Puerto Rico’s relationship with churches on the mainland is also complex. In a recent Christian Century article titled “The Colonial Gospel in Puerto Rico,” writer Jorge Juan Rodríguez V wrote about the influence of early American Protestant missionaries in Puerto Rico.

Rodríguez, whose parents left Puerto Rico for the mainland when he was young, laments the current humanitarian crisis there. He says that real effects can be witnessed in the “lo cotidiano: the everydayness of life.” Businesses are abandoned, teachers don’t have the resources they need and workers struggle on a $4.25 per hour minimum wage. Yet Rodríguez believes the current socioeconomic crisis is tied to the attitudes of early missionaries to the Puerto Rican people. He explains that in 1899, the nine major Protestant denominations divided Puerto Rico into “zones of influence.” For example, Methodists were to focus their evangelism efforts in the north central and southeast parts of the island. The collective mission of these churches was to “inaugurate a work that assures the Americanization of the island.”

Rodríguez argues that “spreading the gospel” was often just a cover for indoctrinating Puerto Ricans into capitalism, the English language and American culture. He writes, “Those connected to the Protestant tradition are implicated in this history because it was Protestant leaders and their particular missionary impulse that aided colonial objectives. This legacy demands that we educate ourselves on the past realities and present injustices in Puerto Rico.” This is a serious call for people of faith to consider the issues of sovereignty and economic crisis facing territories owned by the United States, and for churches to consider how we can aid those who are suffering in Puerto Rico.

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