As Wall Street Vultures Circle, Demands for Immediate Puerto Rico Debt Relief
Friday, September 29, 2017
"Washington must abandon its austerity agenda and support the removal of all manmade obstacles to Puerto Rico's recovery and reconstruction."
While Wall Street vultures circle amid an ongoing humanitarian crisis and try to entice Puerto Rico with "relief" offers in the form of more debt, advocates for economic justice are demanding immediate debt relief and federal stimulus spending to rebuild the island's devastated infrastructure.
"Puerto Rico needs immediate humanitarian assistance before many more lives are lost thanks to America's latest climate catastrophe, and reconstruction aid to help them rebuild their infrastructure," Wenonah Hauter, executive director of Food & Water Watch, wrote for Common Dreams on Friday. She continued:
The hurricane only made a bad situation much, much worse: Puerto Rico has been reeling from austerity measures for years that were put in place by Wall Street, which has been calling to recoup the debt. One of Donald Trump's first responses to the mounting humanitarian crisis was to remind people of the "billions of dollars" the territory owes to the bank, "which must be dealt with"—signaling what the priorities will be.
"Instead, we should consider forgiving Puerto Rico's debt and federally fund its reconstruction," Hauter added. "It's important to demand federal funding for our precious water infrastructure before disasters happen as well; indeed, this funding was cut off to Puerto Rico because of its debt, making a bad situation much worse when the hurricane hit."
Since Hurricane Maria struck the island last week, nearly half of the commonwealth's 3.4 million residents remain without access to potable water and 97 percent remain without electricity—which its governer has warned may not be fully restored for up to six months.
Meanwhile, President Donald Trump, as Common Dreams reported Tuesday, has continuously offered assurance that the recovery efforts are "doing well" while also suggesting the government can offer only limited assistance because of Puerto Rico's debts.
"For the president to bring up Puerto Rico's economic crisis and its debt to corporate America during a time of tremendous suffering is shocking, even for Trump."
—Sonali Kolhatkar, Truthdig
—Sonali Kolhatkar, Truthdig
"For the president to bring up Puerto Rico's economic crisis and its debt to corporate America during a time of tremendous suffering is shocking, even for Trump," Sonali Kolhatkar wrote for Truthdig on Thursday. "The fact that he accompanied this statement with very little action to actually help Puerto Ricans intensified the cruelty of his words."
Trump has faced intense criticism for his response to the disaster, and though on Thursday he finally caved to mounting pressure and temporarily suspended the Jones Act—a shipping restriction that prevents countries from docking at island ports to directly deliver aid—many are already drawing comparisons to how former President George W. Bush poorly handled Hurricane Katrina.
Though Kolhatkar notes how the government's "botched response to hurricane damage in New Orleans caused devastation that the city never fully recovered from," she warns that Puerto Rico now "faces a proportionately larger dilemma."
Unlike New Orleans—Louisiana's coastal city that was destroyed by Katrina in 2005—Puerto Rico, is a U.S. commonwealth with a complex colonial history, which has not only complicated disaster relief efforts but also helped create the economic crisis that hobbled the island even before the hurricane hit.
"Just as it is impossible to separate Puerto Rico's economic crisis from its status as a U.S. territory," Kolhatkar notes, "it is impossible to disentangle the devastation of the hurricane from the man-made disaster stemming from the island's subservient relationship with the U.S."
"Puerto Rico's vulnerability to such a disaster is the result of putting bondholder interests over those of Puerto Ricans—now, urgent debt relief is necessary."
—Mark Weisbrot, Center for Economic and Policy Research
And while the federal government, under Trump, refuses to commit federal funds to rebuild Puerto Rico's decimated infrastructure, some profit-motivated creditors are trying to benefit from the bankrupt island's dire situation, as David Dayen reported for The Intercept this week.
"A group of bondholders, who own a portion of Puerto Rico's massive $72 billion debt, has proposed what they are calling relief—but in the form of a loan," Dayen reported. On Wednesday, the PREPA (Puerto Rico Electric Power Authority) Bondholder Group offered the island $1 billion in new loans and to replace $1 billion in existing bonds with a new $850 million bond.
The bonds would have had top priority for repayment, "and between that increased value and interest payments after the first two years, the bondholders would have likely come out ahead on the deal, despite a nominal $150 million in debt relief," Dayen explained.
Officials with Puerto Rico's Fiscal Agency and Financial Advisory Authority said as much when they determined that the offer was "not viable" and would harm recovery efforts. In addition to rejecting the offer, Dayen reported, officials "suggested that profit motive rather than altruism was the bondholder group's real goal."
"Puerto Rico's vulnerability to such a disaster is the result of putting bondholder interests over those of Puerto Ricans," said Mark Weisbrot, co-director of the Center for Economic and Policy Research (CEPR). "Now, urgent debt relief is necessary to allow for the rebuilding of the island's infrastructure and to stimulate growth."
On Friday Weisbrot demanded not only debt relief for the commonwealth but also "a significant fiscal stimulus package to fund the recovery efforts and jump-start the austerity-ravaged economy; allowing Puerto Rico the same Medicaid funding as U.S. states, and the permanent abolition of the Jones Act."
As Jake Johnston, CEPR research associate, concluded: "Washington must abandon its austerity agenda and support the removal of all manmade obstacles to Puerto Rico's recovery and reconstruction."
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