Trump Sees Devastated Puerto Rico as Captive Market
Refusing to waive shipping restrictions and stressing Wall Street debt obligations, President Trump continues a colonial legacy that hampers Puerto Rico’s recovery, says scholar Marisol LeBron
Aaron Maté: It’s The Real News, I’m Aaron Maté. Puerto Rico desperately needs aid as it grapples with the aftermath of Hurricane Maria, but President Trump is stonewalling and one of the first things he can do to help. The Jones Act bars cheaper, foreign flag ships from bringing in supplies from US Ports. It’s been waived after previous disasters like Hurricane Katrina and Superstorm Sandy but today President Trump explained why he’s still only considering a waiver for Puerto Rico.
Reporter: Why not lift the Jones Act like you did in Texas and Florida?
President Trump: We’re thinking about that, but we have a lot of shippers and a lot of people and a lot of people to work in the shipping industry that don’t want the Jones Act lifted. We have a lot of ships out there right now. I will tell you, the governor was very generous yesterday with some statements and so was the mayor of San Juan, very, very generous in what they’re saying.
Reporter: He’s begging for help.
President Trump: We have a lot of people and I’m going there on Tuesday as you probably have heard.
Aaron Maté: Even if Trump does end up waiving the Jones Act, he’s already given strong signals of his overall approach to Puerto Rico. In his first comment since Maria hit, Trump said on Twitter that Puerto Rico will have to deal with its billions of dollars in debt to Wall Street. It’s that debt that has helped cripple Puerto Rico’s economy and infrastructure and also threatens Puerto Rico’s ability to recover. Marisol LeBrón is an assistant professor of American studies at Dickinson College. She is one of the co-founders of the Puerto Rico Syllabus, a digital project about the Puerto Rican debt crisis. Professor LeBrón, welcome.
Marisol LeBrón: Thanks for having me.
Aaron Maté: Let’s start with President Trump’s comments today despite pleas from residents, pleas from lawmakers to make this small gesture of waiving the Jones Act. He’s saying he’s only considering it and he’s citing the fact that people in the shipping industry oppose it.
Marisol LeBrón: Right. I think it really encapsulates what has been the dominant approach of the US to Puerto Rico, which is to treat Puerto Rico as a captive market for US industries. It’s telling that in a moment of intense devastation and crisis, he’s prioritizing the needs of the shipping industries and their desire to only use US bill and ships that are carrying US flags to bring aid to Puerto Rico in this moment.
Aaron Maté: Let’s fit that into a wider history because even before this storm hit, the US has been subordinating Puerto Rico’s needs and it’s economy to the needs of people far outside of shores, investors, corporations. How has Puerto Rico come to be in the situation that it is right now in terms of a crippled economy that is seriously hampered in how it can recover from this crisis?
Marisol LeBrón: I think that the US has really prioritized foreign investors and particularly US investors in their desire for what they want Puerto Rico to look like and how they want Puerto Rico to function for them in terms of maximizing profit. Much of what we see happening in Puerto Rico is as a result of these disastrous US policies and really the failure to, after the collapse of what was known as Operation Boot Strap, which was really this industrialization process for the island in the mid-20th century. We don’t see the US really working with the Puerto Rican government in order to build, create sustainable, local economies. We see really an emphasis on the tourism sector. We see during the 1970s an emphasis on petrol chemicals. In the 1990s on light manufacturing but we don’t really see the US trying to work with the Puerto Rican government on how to facilitate its own trade, which goes back to the Jones Act, but then also how to build a sustainable economy for all Puerto Ricans.
We see with each subsequent economic collapse, fewer and fewer Puerto Ricans having access to the formal economy and being pushed out. In that way, migration to the US and American citizenship for Puerto Rico has function to alleviate what would have been a much deeper crisis in Puerto Rico because they’re able to, in a sense, get rid of what they would consider surplus populations, the unemployed, the very poor, the elderly. They’re able to have these populations be in the US, not be a burden on the local Puerto Rican economy and this inflates what looks like a success story in Latin America and the Caribbean in terms of how US capitalism and the benefits if US citizenship have worked for Puerto Ricans.
Aaron Maté: Let’s talk about PROMESA, this fiscal control board that was appointed by Congress to oversee Puerto Rico’s affairs to deal with its seven billion dollar debt crisis. So far, this board or the Junta as they’re known as, has approved just one billion dollars for the island’s recovery?
Marisol LeBrón: That’s correct. One billion dollars I think is the amount estimated to barely get the electrical grid back up, not to make the necessary repairs to the infrastructure, which has been damaged now for quite some years. We’re really seeing a vast inequality in terms of how Puerto Rico’s being treated in comparison to her, for instance Texas and Hurricane Harvey. After Hurricane Harvey, Congress quickly authorized 15 billion dollars to aid in assistance there. We’re seeing that because of the debt crisis, really Puerto Rico is hampered in terms of how it can approach the recovery efforts that are necessary, the devastation is expected to exceed the cost of Hurricane Harvey in Texas and Irma in Florida. It’s going to take much more than 15 billion dollars to make the necessary repairs to get people’s lives back to some semblance of normality after this devastating natural disaster.
We see that the Trump administration said it’s going to wait until the first or second week of October despite the fact that he’s supposedly going next week to Puerto Rico to ask for a formal request for Congress to put together an aid packet. There’s also concerns that the aid packet is not going to be as substantial as it was for Texas precisely because Puerto Rico exists in this liminal state than this relationship with the US where there has been very vocal opposition among the public, but also from this administration about anything appearing as a bailout for Puerto Rico and especially in the context of the debt crisis. There’s concern that Puerto Rico will not receive even when it does receive federal aid, receive the aid that it really needs in order to make the necessary infrastructural repairs that it needs to make in order to take care of its population and in order to really just rebuild people’s lives in futures.
Aaron Maté: I want to ask you more about the debt crisis. Billions of dollars of Puerto Rico’s debts are tied up in obligations to bondholders and firms that bought up it’s debts in the hopes of trying to make a profit off of recovering them. Just today, a group of investment funds that includes OppenheimerFunds, a major firm, offered a deal that Puerto Rico previously rejected, which was: In exchange for a loan of one billion dollars, we’ll give you a 15% hair cut on a portion of our three billion dollars in bonds. You have to just pay us back 85 cents on the dollar of a portion of this three billion dollars in bonds. Essentially, trying to leverage Puerto Rico’s needs right now with getting Puerto Rico to accept this plan that they previously rejected for paying back these bonds that are held outside of it.
Marisol LeBrón: Right. I think this is one of the things we have to be really careful and really vigilant about as recovery efforts are underway is how Wall Street is planning to one, get its money back, which is in and of itself a questionable concept since most people believe that the debt was generated illegally in terms of usurious loans and debt obligations that need to be audited. Even before the hurricane, prominent demand among Puerto Rican civil society was for the debt to be audited before we agreed to start servicing a 72 billion dollar debt that we don’t really know anything about what’s encapsulated in that debt. I think that what we’re seeing is that Wall Street’s response is to try and recoup some if its money and it’s going to do that by offering, ironically in the middle of a debt crisis, Puerto Rico more debt in order to try and do these very shady deals, and these swaps to try and just recoup some money because I think they are concerned about the growing calls for a moratorium to be placed on the debt particularly after the devastation from these two hurricanes.
People are really making demands that not only the debt payments be suspended, we see that there have been requests under the title three processes occurring, which is the bankruptcy of life process that Puerto Rico’s undergoing now, there have been requests for the payments to stop, for a new schedule to be evaluated for what the terms of repayment would be for Puerto Rico’s debt. We also see that folks are really asking for a partial or complete abolition of the debt in the context of what it would really take for Puerto Rico to get back in its feet and to be in a better position than it was before these hurricanes.
I think people are trying to think about what it would mean for Puerto Rico in the future to really be able to avoid the catastrophic devastation to infrastructure and people’s lives that we’re seeing now, which really is in a scale that is, I think to many, unimaginable. I think it’s really hard for a lot of folks in the mainland continental US to imagine what it would mean to live for four to six months without electricity, without adequate medical care, with raw sewage in the streets and in people’s homes, without adequate drinking water. These are all things that are planned, especially with the response of the current administration, to go on into the next six months into the near future. I think people need to be thinking about what would it take to avoid this kind of devastation, and for Puerto Ricans who have been already organizing against La Junta and organizing against these really unfair debt repayment expectations. This is something that’s emerging as a central demand.
Aaron Maté: We’ll leave it there. Marisol LeBrón, assistant professor of American studies at Dickinson College. She is one of the co-founders for the Puerto Rico Syllabus, a digital project about the Puerto Rican debt crisis. Professor LeBron, thank you.
Marisol LeBrón: Thank you for having me.
Aaron Maté: Thank you for joining us on The Real News.