Juan Negrón Ocasio

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Por Juan Negrón Ocasio
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Puerto Rican Pie: un resumen de la crisis in English

The Garita del Diablo is at El Morro in the Old San Juan. Anyone can see it from the aircraft before it lands on the LMM International Airport. The historic fortress, El Morro, was built in 1787 by the Spaniards to fight pirates trying to invade the island. Up to recently, Puerto Rico was considered the model colony of the world.  Some called it the Caribbean Showcase (La Vitrina del Caribe) due to the beautiful crystal clear beaches, country sights, the hospitality of its people, and most of all the welcoming to all people. Many left their homeland and fled to live in this beautiful island in the Caribbean Sea. Now people are fleeing and abandoning Puerto Rico and its beaches are for sell.

Over 500,000 foreigners saw a good opportunity to live there. The climate, financial stability, no sales tax, and cheap cost of living was irrefutable. But, soon many began calling PR the Welfare Island (La Isla del Mantengo). Over 60% of employment is mainly government jobs, and lot of people live based on Food Stamps, Welfare and USA Federal funds. Most of its fiscal budget depend on those funds. The agricultural production abandoned was transformed to an industrialized society. It took many years before the results of an unsupported economic situation showed its weakness and instability. No governor or lawmaker cared to create an economic system to launch financial resources. On the contrary, records show that back in 1984 then statehood Governor Carlos Romero Barceló left a deficit of $3,500 million. Additionally, there was no one monitoring the government expenditures and the loans taken on top off a continued deficit.       

Nevertheless, the causes of the economic crisis isn’t new. It has its roots when the US sized the island from Spain as a result of the Spanish-American War in 1898. The Puerto Rican companies were possessed by American investors. In 1900 the US government devalued the Puerto Rican peso equaling 60 cents of the American dollar, automatically loosing 40 cents from each transaction. In 1901 the US imposed the Hollander Bill a taxation to farmers. Farmers pawned their lands to US banks. No laws protected the farmers and high interest rates defaulted the loans and created foreclosures. The first governor of Puerto Rico Charles H. Allen, appointed by the US government, took advantage of this situation. Allen was the Vice President of Morton Trust Company in Wall Street, NY. He formed the American Sugar Refining Company (Domino Sugar) controlling the island’s economy through his governorship leverage.

In 1922, via the Balzac v. Porto Rico, 258 U.S. 298, (1922), the US declared Puerto Rico an unincorporated territory. That barred rights and wages for workers under US Laws. All industries, insular affairs, and legislature of Puerto Rico were controlled by American investors. The US government and PR lawmakers are liable for numerous fatal political decisions. The statehood governors Pedro Rosselló (1993-2000) and Carlos Romero Barceló were crucial eradicating Section 936 – US Internal Revenue Code which was an economic incentive that developed revenues and jobs in the island. It should not surprise anyone that upon the debt crisis of PR, billionaires such as John Paulson has been buying hotels, resorts, and office buildings, similarly to Charles H. Allen in 1907. Mr. Paulson has invested approximately $1.5 billion. Another modern investor, Michael Tennebaum, moved from California to the island. These investors are protected by the legislatures passed by statehood politicians known as Acts 20, 22, 273, 399 which makes investment gains tax free.

The detrimental financial situation may be a legal way of enriching some and a mechanism for insular politicians to grabbing a piece of the pie. As recently published by the NY Times regarding Puerto Rico’s X-Commissioner, through his wife’s job in Wall Street, they are both reaching out for a little bit of the whip. The fiscal crisis of Puerto Rico has left only beaches to be sold for dollars, hotels, homes, and land foreclosures free for all to grab. And, not only ‘til the political status of the island is changed, the economic mess won’t. Until then the US under the present Territorial Clause is now obligated to resolve this fiscal fiasco situation, and possibly others forthcoming, with the actual bankruptcy petition requested by the statehood governor.

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