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Estudios Técnicos points out that losses of at least $1 billion more can also be expected in forgone revenues due to the diversity of sectors of the economy that have halted their operations due to major infrastructure failures, particularly in electricit
Estudios Técnicos points out that losses of at least $1 billion more can also be expected in forgone revenues due to the diversity of sectors of the economy that have halted their operations due to major infrastructure failures, particularly in electricit (Andre Kang)

The passage of hurricane Maria over the island caused losses of nearly $ 20 billion in infrastructure and lost revenue, according to a preliminary report prepared by the firm Estudios Técnicos (Technical Studies) for the Puerto Rico Manufacturers Association. Although preliminary, the study constitutes the first scientific analysis released about the devastation caused by the powerful cyclone throughout the island.

The study only counts losses and destruction and not the possible cost to repair or rebuild what was lost. If the cost for reconstruction of the damage in electrical, water,  roads and communications infrastructure as well as houses were to be added,  then the preliminary estimate would be between $ 50 and $ 90 billion a figure suggested, among others, by governor Ricardo Rosselló, explained the CEO of Technical Studies, economist and planner José Joaquín Villamil.

However, this means monumental figures that represent a devastating blow to an economy that has already been in recession for the past 10 years. The study also confirms that the reconstruction of Puerto Rico will cost a phenomenal amount of money that the Puerto Rican government, which this year was protected under Title III of bankruptcy under the PROMESA law, does not even remotely have.

"It is going to take Puerto Rico a long time to recover from this," Villamil said.

Estudios Técnicos made its estimate based on an International Monetary Fund (IMF) model that measures hurricane damage with an equation between wind speed and gross domestic product (GDP), an extrapolation of the damage caused here by hurricane Georges in 1998 and literature reviewed on damage caused by natural phenomena.

Estudios Técnicos estimates the damage in infrastructure in $ 18,58 billion, divided in $ 16,59 billion in houses; $ 1.6 billion in electrical infrastructure; $ 200 million in telecommunications infrastructure; $ 120 million in transportation infrastructure and $ 75 million in water infrastructure.

Economic damage was estimated at $ 1,31 billion, divided into $ 1,16 billion lost by the government and $ 145 million, in agriculture. There was no estimate on damage in tourism, one of the main sectors in economy here, but it is already known that, at least, three large hotels  will not be operating during the next months: the Conquistador Hotel in Fajardo, the Meliá Hotel in Rio Grande and the W Hotel in Vieques.

"This preliminary report provides an initial assessment of the damage. There is much more work being done and damage estimates will be adjusted as more information becomes available, "the document says.


Estudios Técnicos points out that losses of at least $ 1 billion more can also be expected in forgone revenues due to the diversity of sectors of the economy that have halted their operations due to major infrastructure failures, particularly in electricity and communications.

In addition, it indicates that due to lack of information, other important costs such as loss of production and other capital costs were not estimated.

Preliminary estimated losses are approximately five times greater than those caused by Georges, that in 1998 hit most of Puerto Rico causing losses for $ 3,97 billion. The US government, through the Federal Emergency Management Agency (FEMA), covered about $ 3 billion of the losses on that occasion. Puerto Rico covered the rest.

Villamil believes that it will take Puerto Rico between 12 and 13 years to recover the  Gross National Product (GNP) of 2006, when the current recession began.

Following the bankruptcy this year and the austerity plan imposed by the Oversight Board, it was estimated that Puerto Rico had eight to ten more years of economic contraction.

Villamil thinks that María has delayed the recovery between five to six years.

At the end of all this long and tortuous process, and if predictions that Puerto Rico will not experience again economic growth until at least 2030 become true, the island will have spent about 24 years of deep economic hardship.

"We will be what we have always been, a poor island, but we will have to recognize that we are a poor island, which is something we have not recognized," said Villamil, who believes that in the next ten years the population of Puerto Rico will decline to less than three million for the first time since the 1970s.

According to the last census, there are 3,411,000 inhabitants in Puerto Rico.


Many people believe that Puerto Rico will not be able to rise again unless it is with special assistance from the United States that goes beyond the routine support that FEMA provides to areas that have suffered natural disasters.

Villamil does not think that will happen. "The federal government does not want to set a precedent. There are other states that have gone through these situations and have debt problems. The government is being cautious and does not want to set a precedent, "he said.

Meanwhile, economist Antonio Fernós Sagebién said that the disaster in Puerto Rico product of Maria is of such magnitude that there is no doubt that the United States will establish a new version of the Puerto Rico Reconstruction Administration (PRRA), created in 1935 by US President Franklin Delano Roosevelt to promote economic development and stability on the island after the Great Depression.

Fernos Sagebién said that Maria took Puerto Rico "to the foundations of civilization," with thousands having a hard time to meet their most basic needs, such as housing, food and water, as well as the devastation it caused in the electrical and  communications infrastructure. For Fernos Sagebién, Puerto Rico will only be able to overcome this with "appropriately channeled federal aid, the private sector, -because the government is broken- and the informal sector and the underground economy."


All the experts interviewed regarding the steps that Puerto Rico has to take to overcome the catastrophe of Maria come, with different variants, to the same point: the priority must be to recover the electrical system, which is key to reactivate communications and that will require special assistance from the United States, that has Puerto Rico as territory subject to the plenary powers of Congress since 1898.

"Puerto Rico was hardly collecting $ 8 billion a year. Now it will be less due to all the businesses that will have to close, because you can not have a business without electricity, "said Miguel Soto Class, president of the Center for a New Economy (CNE).

"This is a time when people are going to have to dig deep. Those who don´t like the United States will have to put up with it for now, because I do not see how we can rebuild Puerto Rico without their help, "Soto added.

So far, despite Governor Rosselló´s claims there is no formal proposal in the United States for any special assistance for Puerto Rico beyond the routine assistance of FEMA.

On the island there are also personnel from the Pentagon, the US Army Corps of Engineers and several states.

But they are all focused on emergency care, and no one has considered, at least publicly, to collaborate with the cost of reconstruction once the emergency has passed.

Governor Rosselló received the authorization of the Board to use $ 1 billion of the government coffers for recovery work and members of the entity have also been in Washington exploring possibilities for greater federal assistance. But so far they have not been successful.


Ignacio Álvarez, president and chief executive officer of Banco Popular, said that in Puerto Rico and the United States it must be understood that there is a pre-Maria world and a post-Maria world and everything has to be evaluated in the light of this new and harsh reality .

 "The fiscal plan is going to have to be reviewed and we will need support from the federal government to lift the infrastructure," said Álvarez, who added that the lack of electricity causes serious economic damage because businesses can not operate without power.

"Generators are not designed to work for months," the executive said.

Almost three weeks after the passage of Maria, barely 10% of the users have power. The Puerto Rico Electric Power Authority (PREPA) has estimated that the recovery of the entire system will take, at least, six months, and a few days ago,  the Electrical Industry and Irrigation Workers Union (UTIER) informed that they no longer have materials to continue the work to reconnect the system.

"They (US government officials, including President Donald Trump and Vice President Mike Pence) have been here and have seen the destruction of the electrical system. They will not allow this to continue. We will have to look for an innovative way to rebuild our electrical infrastructure,"Álvarez concluded.

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