Cancel the debt now!
To expect Puerto Rico to rebuild from this unnatural disaster while at the same time bailing out Wall Street financiers is to condemn its residents to a permanent state of crushing hardship and impoverishment.
by Stan Cox and Paul Cox
Donald Trump has now followed up his recent sadistic attacks on the people of Puerto Rico with a comment out of the blue regarding the territory’s $73 billion debt: “… we’re going to have to wipe that out.” Whether or not Trump can be taken any more seriously on that than he can on any other issue, Hurricane Maria did reveal in the starkest possible way that forgiveness of Puerto Rico’s debt is a moral necessity.
The economic vulnerability that set the island up for an unnatural disaster unprecedented in U.S. history was a hybrid between mainland hedge-fund managers’ greed and the island colony’s political powerlessness. Writing more than a year before Maria, legal scholar Natasha Lycia Ora Bannan argued,
“The colonial status of Puerto Rico both contributes directly to the economic crisis as well as inhibits comprehensive solutions that would address short-term concerns and long-term economic policy changes. The United Nations Special Committee on decolonization issued its annual resolution on the colonial status of Puerto Rico in early 2015, noting that the island needs to be able to make decisions in a sovereign manner to address its urgent economic and social needs, including its twelve percent unemployment rate, marginalization, and the widespread poverty of its residents. The Committee recognized that the economic vulnerability of Puerto Rico is a direct consequence of its colonial status and that Puerto Rico’s lack of political power to affect decision-making in the United States is reflected in the policies and politics that shape and ultimately cripple the island’s economy.”
Ora Bannan and other legal experts have maintained, based on the doctrine of “odious debt,” that continuing to compel the people of Puerto Rico to repay bondholders is legally and morally indefensible, because national governments “have an obligation towards their citizens to provide their basic needs for clean water, health and education and at least not to frustrate their citizens’ attempts to meet their needs for food, clothing and shelter. The freedom of the population to pursue the meeting of these needs is a fundamental human right.”
In Puerto Rico over the past decade, the struggle to make debt payments, along with the economic decline related to that struggle, had already led to increasing poverty, a home-foreclosure epidemic, involuntary migration, and relentless contraction of public services, all well before the storm hit. According to Ora Bannan, pre-Maria Puerto Rico was spending more on debt service than on education, health, or security. Results included the shuttering of 150 schools, the gutting of health care, increased taxes, splitting of families between the island and the mainland, and increased food insecurity.
Therefore, by the time Maria came hurtling across the Atlantic, Puerto Rico stood out as a textbook illustration of disaster vulnerability. Debt service was already strangling the island. Now, if our nation has any shred of humanity left, we must relieve the storm’s victims of their debt burden. To expect Puerto Rico to rebuild from this unnatural disaster while at the same time bailing out Wall Street financiers is to condemn its residents to a permanent state of crushing hardship and impoverishment.
Ironically, it is our own country that introduced the concept of odious debt, at the very inception of our history as a colonial power. Ora Bannan notes that odious debt,
“first appeared in practice when the United States refused to assume the debts acquired by Spain when it was ceded sovereignty over Cuba, Puerto Rico, the Philippines, and other territories in the late nineteenth century after the Spanish-American War. The United States claimed that the debt Spain was attempting to pass on after trading colonial rule was not contracted for the benefit of the Cuban people, and in fact was hostile to their interests.”
Washington promptly went on, perversely, to pursue financial policies that were detrimental to the Puerto Rican people and hostile to their interests. The territory’s constitution mandated that debts must be serviced first, before any money was spent on keeping society functional. The Jones Act (the innocuously named law of which almost all of us on the mainland were totally ignorant until last month) helped raise prices of everyday goods to unaffordable levels. Corporations operating on the island got tasty tax breaks while organized labor was ground down under the invisible heel of the market.
By the 2000s, bonds being issued by a desperate Puerto Rican government were so high-risk that hedge-fund vampires could bleed extortionate returns from them. As the national and world economies sank after 2007, Puerto Rico had nowhere to turn for debt relief, because it was not a nation but a colony. Small, strapped nation-states around the world had standing to work with international agencies to fend off the roving packs of wild investors, but Puerto Rico was American soil and had to depend on succor from an investor-friendly Washington.
Puerto Rico’s median income is less than one-third that of our country as a whole, and its per capita carbon emissions are less than half the U.S. average. Discussions of climate justice tend to revolve around the stark disparities in climate vulnerability and greenhouse emissions between rich and poor nations, but on the ground, the issue is not so clear-cut. Hurricanes Harvey and Irma, like Katrina and others before, should have jolted America’s population and power centers into awareness that, climatewise, global North and South exist side by side right here in our own country. And while Harvey and Irma were red flags on that point, Maria is a flashing red-and-yellow LED billboard.
But don’t expect much. The very first comments on the Maria catastrophe that emanated from that racist Twitter account known as @realdonaldtrump focused more on Puerto Rico’s debt than on the people who live there and implied that whatever recovery help does come will be more punitive than restorative. The Congress surely will follow along at its own leisurely pace.
In a characteristically dense couplet, @realdonaldtrump declared, “Much of the Island was destroyed, with billions of dollars / Owed to Wall Street and the banks which, sadly, must be dealt with.”
This reads like too many thoughts in one sentence; it was probably not meant as a statement about causation. However, taken out of all context, it’s a true statement that was already true before Maria took form in the Atlantic. Debt was already destroying Puerto Rico. What was legally and morally odious before the storm is pure cruelty now. Joining the people of Puerto Rico in demanding the debt’s cancellation is a matter of human rights.
Stan Cox (@CoxStan) and Paul Cox (@Paul_Cox) are authors of How the World Breaks: Life in Catastrophe’s Path, From the Caribbean to Siberia. This article was originally published by Green Social Thought.