United States grinding down its Puerto Rico colony

March 1, 2018
A man stands amid what was once his home after Hurricane Maria devastated Puerto Rico last year.

Five months after Hurricane Maria devastated the Caribbean island of Puerto Rico, 25% of the US colony’s people are still without electricity. No state in the US has ever experienced such a long blackout.

Even areas with power are plagued with intermittent blackouts. Wide swathes of the island were recently plunged back into darkness after an explosion and fire at an electrical station, a result of the rickety nature of the whole electrical system.

Puerto Rican Governor Ricardo Rossello asked Congress and the Donald Trump administration for US$94 billion to rebuild. He received a pledge of $16 billion, which may or may not arrive.

The US-appointed board that controls the colony’s finances, together with the compliant government of Puerto Rico, is on a drive to privatise the island’s public electrical company and educational system.

History of exploitation

Puerto Rico was in dire straits before the hurricane. Its situation is the result of more than a century of US imperialist exploitation, after the US wrested the colony from Spain in the 1898 war.

In relation to the colony’s formal status, the US Supreme Court has ruled that Puerto Rico “belongs to, but is not part of” the US. Any law or decision made by the island’s authorities can be nullified by the US Congress or courts, which can also impose decisions on it.

For the first 50 years, US companies exploited Puerto Rico mainly through vast sugar plantations. After World War II, US businesses were set up to take advantage of cheap labour. Washington encouraged this by making the colony a tax haven for US companies.

In 1996, Congress began to gradually do away with these tax giveaways, which were eliminated by 2005. This led to a big exodus of US capital, creating a depression that still continues.

In response, the pro-imperialist Puerto Rican government turned to borrowing from Wall Street. To pay off loans, more cutbacks to social services were made. A vicious circle set in, with more borrowing and austerity policies implemented to meet existing loan payments. In 2014, the colony’s government finally declared it could not pay any more on its $75 billion debt.

In response, the then-Barack Obama administration established the fiscal control board to dictate Puerto Rico’s finances in 2016.

By then, the Puerto Rico Electric Power Authority (PREPA) was insolvent. As a result of using its revenue to repay loans to the Wall Street sharks, the system fell into disrepair. It was so rickety that it completely collapsed when a hurricane hit in September, throwing the entire island into a blackout.

Rip-off contracts

The nature of PREPA’s management was evident when it immediately hired a two-person business called Whitefish in a rural Montana town to rebuild the system. This business then contracted work out to actual (if small) electrical companies. They did very little, sending only 300 workers who were not properly trained.

PREPA tried to hide the terms of its contract with Whitefish, which included a clause stating: “In no event shall PREPA, the Commonwealth of Puerto Rico, FEMA [Federal Emergency Management Agency] administrator or any other authorised representatives have the right to audit or review the cost and profit elements of the labour rates specified herein.”

But in October, the contract was exposed as a complete rip-off, with PREPA paying exorbitant amounts for shoddy work. In the resulting scandal, PREPA’s head resigned.

The US Army Corp of Engineers then hired more reputable electrical companies to rebuild. But even where power has been restored, the system remains subject to breakdowns. Now these companies are being withdrawn with the work unfinished. One thousand workers left in the two weeks after February 13, and the rest are set to leave by April 7.

The Corp first said electricity would be largely restored to the whole island by December. That goal was then moved to February, then March, April and now May.

Most of those without any power are in rural areas. The New York Times reported on February 26: “The decision to scale back was met with ‘indignation’ across the island.”

The scandal with Whitefish is not atypical. FEMA approved a $156 million contract with a one-person US company to deliver 30 million meal packages in the aftermath of the hurricane. FEMA cancelled the contract after just 50,000 packages were actually delivered.

This came after FEMA gave more than $30 million in contracts to a newly-created Florida company for tarpaulins to help protect the homeless and people in damaged homes. The company failed to deliver a single tarp.

In a February 19 Democracy Now! interview, San Juan Mayor Carmen Yulin Cruz said: “I would like nothing more than to say ‘Thank God, things are looking up.’ But yesterday the secretary of the Department of Labor of the Puerto Rican government said, ‘No, we haven’t been able to pay [workers], because we haven’t gotten the money from FEMA.’

“Most of the American people probably think that out of the $4.9 billion that was approved for November and December, that we have gotten some of that money. We’ve gotten zero.”

Death toll

There is also a great discrepancy over the number of deaths caused by Maria. The island’s governor says 64 people died, but this counts only those known to have been killed immediately by the storm.

That figure is unreliably low, given that the power blackout across the island made reporting hard, if not impossible. Yulin Cruz pointed out the central government has noted a jump in cremations by 500 in September over the same period a year before.

She told Democracy Now!: “It is more than a thousand people that have died, because you have to count … the people that have died because they didn’t have oxygen tanks [for certain illnesses] in their homes or because there were no oxygen tanks at the hospitals [due to the lack of electricity], and the people who have died because of the botched rebuilding effort. Others didn’t have their diabetic medication.”

Concerning the US fiscal oversight board, Democracy Now! noted that the board’s website said it had told the governor that his “plan for the water authority was not sufficient, that they wanted a 17% cut in costs, because the water authority is projecting a 17% loss in water revenues as a result of the storm. They also told the government that its overall financial plan was not sufficient in terms of cuts.

“Amazingly, they wanted the government to create a budget reserve to help pay back the debt while cutting services.”

Yulin Cruz added that the governor’s new financial plan “is an austerity plan. But the board rejected it, saying, ‘No, we want more … We want more privatisation’.”

She said the board was pushing a $500 million funding cut for the University of Puerto Rico as well as funding cuts for municipalities, noting: “So, the fiscal control board is here for one thing, to insure that bondholders get every single penny they can.”

Two targets up for privatisation are PREMA and education from kindergarten through to high school. Asked who would want to buy PREMA given its decrepit state, the governor replied that the new owners could be assured of high profits as they would be in a position to charge electricity users anything they want.

The proposal is to turn schools into for-profit charter schools. This was done in New Orleans in the wake of 2005 Hurricane Katrina. The Trump administration is pressing to do the same throughout the US, with Puerto Rico the first in its sights as its colony status allows Washington to impose the measure by Washington by fiat.

Deliberate destruction

What the PREMA and FEMA scandals revealed are not the results of incompetency, but of a conscious policy to crush Puerto Rico. The fiscal control board is also using the island’s $75 billion debt to squeeze its people as much as much as possible. The wrecking of PREMA and the cuts to education also aim to make privatisation seem a better alternative.

Canadian journalist and activist Naomi Klein demonstrated in her 2007 book The Shock Doctrine: The Rise of Disaster Capitalism how the US government uses catastrophes to further the interests of the mega-rich.

One objective of the US ruling class and the pro-imperialist Puerto Rican capitalists in imposing such cruel policies is to remove the poorest of the island’s population.

This follows on from what occurred in New Orleans in the aftermath of Hurricane Katrina in 2005. The disaster was used by the authorities to drive out the poorest Blacks and gentrify the city.

In Puerto Rico, the aim is to drive as many poor Puerto Ricans to migrate to the US — which is made easier by Puerto Ricans officially holding US citizenship.

Already, as a result of the conditions on the island created by imperialist exploitation, about 5 million Puerto Ricans live in the US. Only 3 million still live in Puerto Rico. In the past five months, about 200,000 to 300,000 more have left for the US.

The likely result will be the gentrification of the colony for the benefit of the wealthy. The island has a tropical climate, beautiful beaches and other amenities. The rich, middle class and better paid workers — those from the island as well as the mainland — may find it a good place to live or vacation in.

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