Puerto Rico: Governed to Death

Several people have asked what the hell is happening in Puerto Rico and with good reason. When you’re labeled the Greece of the Caribbean, that tends to raise flags and bring some questions. The answer is as complicated as it is unfortunate. By the way, this post is a matter of opinion although since I’m not fond of any political party, it should be a little less biased than what most news outlets report or so I hope. Also, I’m writing this in English because the people who have asked me aren’t from Puerto Rico and seeing the “brilliant” reporting being done on both sides of the pond, I’d rather offer a Puerto Rican’s perspective of what’s going on in the Island… a Puerto Rican that left the Island in search of opportunity and a better life, mind you.

Before anything else, the situation in Puerto Rico has various sides to it. This should be obvious but needs to be stated to not see it as ONE situation but SEVERAL.

Firstly, what is the Fiscal Board, why was it implemented, and what does that mean for Puerto Rico?

The fiscal board is an oversight committee assigned to the Commonwealth of Puerto Rico. If you’re not familiar with the term Commonwealth, not to worry, you are not alone, and that’s because it is a gray area in terms of territory terminology. In essence, PR is a US territory governed by both US federal laws and local regulations and statutes. In layman’s terms it should be more than a colony and less than a state in terms of rights and responsibilities. The Fiscal Board was implemented because for several years Puerto Rico has been writing checks it cannot cash and has a huge problem of Fraud, Waste, and Abuse across all government agencies from the looks of it in addition to several other problems. Among those other problems are vulture funds that are benefitting from loopholes, tax cuts, and other bureaucratic resources to make money off of Puerto Rico while shafting local investors and gutting the local economy. One example would be of companies making a killing would be Wal-Mart. They make a lot of money in Puerto Rico. When you have low cost everything on an Island that has a high poverty rate, that means sales. But it also means that all that money does NOT stay in Puerto Rico. The only money that stays in the Puerto Rican economy are the meager salaries workers earn from a company notorious for short changing its personnel. As for examples of fraud, development contracts, and advisor roles are the norm.

What other problems does the local economy have? Well local investors and people with Puerto Rican bonds are not the priority of people who will be paid in this debt and will more than likely not see their earnings or their money. That honor goes to foreign investors, mainly from the US but from several other places in the world. The board is supposed to ensure that everyone gets paid and that funds aren’t squandered or misused but unfortunately, it’s very possible that the board could do little to remedy this. Moreover, a lot of people speculate that the people assigned are part of those who are benefitting from the Island being gutted financially.

I’ve been asked whether I think the fiscal board is a good idea and that’s quite the loaded question. This is because the term “good idea” doesn’t apply. In theory, a fiscal board should help the situation in Puerto Rico, but the way it’s being implemented will not benefit the country and only benefit people in power. Some members of the board are questionable and there do appear to be several conflicts of interest. The fact of the matter remains; everyone wants a slice of the pie no matter how many people get affected.

So in summary, a lot of people think that the Fiscal Board is bad but they fail to admit that part of the problem are the political parties in charge, which are directly responsible for the exodus of the middle class, because we continue to shoulder the tax burden while rich people keep getting breaks. Also, there seems a desire to deny any accountability for the Fiscal Board being implemented. Simply put, bad decision after bad decision and corrupt administration after corrupt administration opened the door to this Fiscal Board. In short, what is happening in Puerto Rico is what the top 2% would want to happen in all the US but have a bit more loopholes to jump through stateside. Meanwhile in Puerto Rico, it’s basically a free for all.

Ok, so what instances of waste occur? From lavish offices, to tax funded trips, to about 8-12 consultants/advisors per politician is a start. I’m not talking about qualified people, I’m talking about sub-par record producers (Glen Monroig) and sub-par socialites (Andrea De Castro Font, daughter of a convicted corrupt politician). Add to this that there are 78 municipalities on the Island and each with its own budget and you see that this might or might not contribute to the problem. Personally, I think consolidating municipalities might help, but I’ve heard from numerous people that have told me that it wouldn’t fix much if anything at all.

Other instances of waste are in the assignment of lush salaries to people who haven’t done much. Lisa Donahue is the person with the highest profile that has benefitted from a juicy salary that has not yielded many if any results. In regards to this, a lot of people have said that the matter is more complicated than that and that the multimillion dollar salary was used to pay for a group of people. I still fail to see the sense in the assignment of so much money, especially since the results of “studies” and “evaluations” have not geared Puerto Rico to resolve its oil dependency or a fractured infrastructure. Last year there was a major outage on the Island and for several days, there was no power. When I lived in PR, the power would go out at least 3 times a week and that’s on a GOOD week. Since I left the power outages have become more common and there is also speculation that these power outages are a cheap way to save money by the Electric Energy Authority (AEE). Is there evidence of this? No. But a lot of things seem rather convenient. What this means is that Puerto Rico is almost 100% dependent on foreign oil. Oil that is sold at a mark-up, which is the case with everything on the Island. With an 11% tax, you’d think that’s pretty bad, but you’re forgetting that there’s also an import tariff placed on all imports, which account for 95% of what the Island consumes. So it’s not 11% it’s way higher. Oh and did I mention that the Water Company is run by the government and also shows signs of corruption, shady operations (filtering waste to supply “potable” water to certain communities), and a fractured infrastructure. Two years ago there was a massive drought and water rationing occurred. This means you had water one day and no water three days. Reservoirs are not being maintained and sedimentation levels hover between 30-40% and in some instances over 60%. This means that reservoirs are FAR From operating at maximum capacity.

So let’s summarize, corrupt government, oversight board implemented that may favor foreign investors versus local investors, lavish salaries given to foreign functionaries that don’t seem to be yielding results, a compromised infrastructure, and almost complete dependency on imports. And unfortunately there is still more.

Going back to imports and exports, please note that Puerto Rico is forced to import US products or US approved products because of a trade agreement (please understand imposed trade agreement). The same goes for exportation, which limits the Island in its ability to evolve business opportunities. Seeing all of this, obviously Puerto Rico should pay less Social Security and Medicare taxes, right? Wrong. Puerto Rico pays the same taxes as stateside and receives less than half the benefits and is subject to harsher cutting of budgets for Medicare and Medicaid plans. By the way, the same happens stateside, Louisiana and Mississippi are two examples of states that get less benefits and endure harsher cuts than other states and I’m sure there’s some perfectly long and complex way of justifying something that feels wrong. I’m not saying it is wrong for one simple reason, I want to be spared the long explanation that justifies a system that is designed to shaft economies and populations in need.

Add to this that due to the bi-partisan nature of the Puerto Rican government, there are a lot of stalemates and a lot of things don’t get done but still cost tax payers millions of dollars. (Sound familiar yet?)

Ok, so why did people call for a National Strike on Monday May 1^st? Again, several answers. Firstly, one of the proposed budget cuts focuses on the University of Puerto Rico, a public education system. They say the program needs to take several cuts and a lot of people are opposed to it. Tuition is affordable and it represents one of the longest standing institutions on the Island. Does this mean it’s perfect? Not at all. There’s a huge problem with assignment of funds and the overall administration of the entire system. I don’t know the details but I do know it’s been a topic that’s been a thorn in the side of countless governors and university administrations. Due to all the protests and problems the UPR has had, it has lost its accreditation and Pell Grants will be cut most likely in their entirety. In general, the Department of Education has been riddled with scandals, fraud, and corruption to the point where it’s a miracle it’s still standing.

Add to this that the Government Development Bank of Puerto Rico (Banco Gubernamental de Fomento, BGF) is bankrupt and you see how much the problem extends. Oh, might I add that the BGF, the AEE, and pretty much all major agencies have offered bonuses to functionaries that they have fired and you see that the shade spreads far and wide. Oh and this Monday the PROMESA act and several things proposed within this act expired, so naturally the government of Puerto Rico got sued.

So in short, the Island country of Puerto Rico is in debt for several billion dollars and people seem to want to audit the debt to see how much is really owed, to whom it is owed, and why it is owed. That’s the general feeling of why people want the audit with the hope that a lot of rats will be cast out in the open… but still the debt remains. Meanwhile, foreign investors, vulture funds, and government personnel are trying to see what is left of the pie to split amongst themselves, even at this point. Think of it as a huge fire sale.

What other problems are there? Well since Puerto Rico is a Commonwealth and not a state, we don’t have the luxury of getting the break say Detroit got to file for bankruptcy and restructure its debt. Stateside, several people have said that Puerto Rico shouldn’t be bailed out because it’s the Island’s problems and that it’s not the US’s responsibility. To put it short, that’s a very oversimplified response to a very complicated situation that has come about precisely due to laws, regulations, loopholes, and shady negotiations on both sides of the pond. What it means yet again is that another US territory only seems to be good to provide music, sports stars, and cannon fodder for the armed forces. If that seems like a harsh assessment, by all means check out the history of the 65^th infantry for just one example. People stateside don’t like to hear it, but the fact remains, Puerto Rico has been taken advantage of in more ways than anyone wants to admit, which is the same as American Samoa, Guam, and other territories. We are seen and often treated as property and a means to save businesses (somehow we’re #1 or near the top spot in sales for Krispy Kreme, Macy’, JC Penney’s, Maggy Moo’s, Burger King, Costco, and beyond). A new Labor Reform was passed without flinching which would cut people’s vacation/sick days and probably salaries. Yet we keep hearing a lot of people say “not my problem”, including a lot of people that are going to the bank to deposit the cash they’ve gotten from deals in PR.

I am by no means an expert of any of these topics and I’m reacting based on what I see on the news and my perception. Both major parties on the Island have also played huge roles in the disaster we see nowadays. But a lot of this was due to oversight in the sense of omission or a blunder. Now a Fiscal Board has been implemented and the results will speak for themselves.

Last year, I decided to leave the Island in search for more opportunities as an author, in search for a better quality of life, and because I saw a glimpse of having my hours cut. For the most part I don’t vote for major parties in local elections because I’ve seen how inefficient they are and this applies to both major parties. Red is not better than blue and blue is not better than red (sound familiar yet?).

Yesterday there was a national strike, it was mostly peaceful. But there were outbreaks of violence and destruction. Who was responsible is up for debate but a lot of things smell fishy in the situation and that’s all I’ll say about that because we don’t know for sure. But what still seems to be the case is that the local government would rather carry out a referendum that will not solve anything rather than accept an audit to this debt. There is a lot of pushback in regards to doing the audit and my only question is: why?

For my part, I don’t know. All I know is that Puerto Rico needs help and that people in power are only focused on helping themselves and having seconds.

I write this as a Puerto Rican trying to shed light on the current situation. I have no interests with either party and I may in fact be completely wrong about a couple of things. But I’m not writing this to win any argument or be right. I’m writing this in the interest of impartial information from an individual that loves his country but questions the methods and intentions of people that would rather make a profit and keep a country down than allow an amazing Island to show that though we may be small in size, we are big in heart, and just need the means to develop the amazing potential of a paradise with worldwide potential.