A view of the Puerto Rican Capitol building. Photo/AP Images

Opinion: The U.S. has to deal with Puerto Rico’s “colonial” economic woes

It took me three days to absorb the rather sobering and depressing story in Sunday’s Washington Post about the ongoing economic crisis in Puerto Rico. The article basically summed up what I have always known from family, friends and conversations with island experts and politicians: Puerto Rico is bleeding.

Consider some of the more stark statistics from the article:

  • The loss of 54,000 residents from 2010 to 2012, a 1.5 percent drop in population.
  • A drop in population of 138,000 residents since 2006, bringing the island’s current population to 3.7 million.
  • A $70 billion debt that is raising comparisons to Detroit.
  • $37 billion in pension obligations that are not funded.

The story paints a picture of a sinking island, one with no way out. But lost in all the numbers and tales of woe, is a very perceptive analysis by Pedro Pierluisi, Puerto Rico’s Resident Commissioner and a non-voting member of Congress. When asked to share his thoughts, Pierluisi said the following:

Some people might say, ‘This is their problem.’ But Puerto Rico is part of the United States, you own this problem. It is not like you can ignore it.

But in essence that is exactly what the United States is doing. Sure, the White House recently announced a new “team of experts” to help Puerto Rico “marshal existing federal resources” as well as help the island “build its capacity to address economic issues.”

Nonetheless, it is just a band-aid approach when the solution requires reconstructive surgery. The federal dependency model touted by the U.S. for decades has failed.

Pierluisi, a statehood proponent, once again said that Puerto Rico’s economic problems are directly tied to its commonwealth status – which I consider a ‘colonial’ status. Yet almost every Puerto Rican I know, including those who keep pushing for the status quo commonwealth system, is declaring that a radical change must occur for the island to make a comeback.  Yet the relationship between Puerto Rico and the U.S. is very uneven – dare I say colonial?

That tone of the Washington Post article emphasized this. For example, it talked about Puerto Rico’s debt and worsening economy. Yet when it discussed the negative impact of the phasing out of manufacturing tax credits, it did not emphasize the role of Congress in making a fundamental decision to phase these out. As a recent analysis states:

The Commonwealth is powerless to the whims of US commercial and economic policy. For years, it benefited handsomely from Section 936 of US tax law, which waived taxes on income for manufacturing firms operating in the Commonwealth. Pharmaceutical companies, especially, took advantage of the favorable tax treatment under 936, also enjoying the highly skilled, lower cost, and bilingual workforce, as well as strict US surveillance for safety and quality control. But this law was phased out in 2006. Unfortunately, all that lingers from Section 936 is the adverse side effect of the Dutch disease it created. Since the law’s repeal in 2006, Puerto Rico has registered virtually consistent negative GNP growth and a cumulative GNP contraction of 15% over the period, according to official statistics.

Puerto Rico’s biggest hope lies in its bilingual population, but that “brain drain” has already shifted from the island to the mainland. Add to the fact that there has always been a tension between those who have left the island and those who still remain, and you have a mess. Real progress will happen when ALL Puerto Ricans begin to bring their issues together front in center, both on a national and global scale. Are we ready to take this on, putting asides decades of political disagreement and sniping? If so, Puerto Rico will rise again. If not, people will keep moving to Orlando and going to Disney World.

Puerto Rico is at at major crossroads. It lacks economic control of its destiny, and that is because it literally is dependent on the U.S.

Yet, the island has the potential to become the true bridge between a growing Latin American market and the U.S. Yet it seems that the U.S. doesn’t see that potential, nor does it allow the island to take a chance on that gamble.  As The Economist points out, will the U.S. Congress grant Puerto Rico statehood if the island so chooses?  They think it won’t.

That is the real tragedy here. The last colony is powerless right now. And the clock is ticking.

Opinion: The U.S. has to deal with Puerto Ricos colonial economic woes   julio nbc final 1 news NBC Latino News

Julio Ricardo Varela (@julito77 ) founded LatinoRebels.com in May, 2011 and proceeded to open it up to about 20 like-minded Rebeldes. His personal blog, juliorvarela.com, has been active since 2008 and is widely read in Puerto Rico and beyond. In the past 12 months, Julito represented the Rebeldes on Face the NationNPRUnivisionForbes, and The New York Times.


  1. Reblogged this on Franky Benítez and commented:

    My latest for NBC Latino.

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