Highlights of the Economic Crisis of Puerto Rico
The following is a translation of a report given by Ricardo Santos Ramos, former head of UTIER (Union de Trabajadores de la Industria Eléctria y Riego, or Electrical Industry and Irrigation Workers Union) in Puerto Rico, to a special meeting of the Moratorium NOW! Coalition in Detroit, MI. This report, given on 8/6/18, was translated by Ricardo’s partner Charo. This meeting was convened to follow up on the National Conference to Defeat Austerity in March of 2018. Here is the text of the translation:
Good evening comrades
Last March, we shared with you some aspects of the crisis in our country, Puerto Rico. Political, economic and social crisis dramatized by the recognition of the United States government on the colonial character of the political relationship between Puerto Rico and the United States known as Commonwealth. The exhaustion of the economic model has plunged us into an economic depression of more than a decade, the breakdown of the government that accumulates a debt of 73 billion dollars.
In response to the bankruptcy, the Congress of the United States imposes the PROMESA law, which, through the so-called Fiscal Oversight Board, proposes to pay the public debt and rehabilitate the country’s credit so that it continues to borrow.
Rehabilitate the credit by paying the creditors of Vulture Funds at the expense of multiple adjustment measures that are undoubtedly leading the Puerto Rican working class to misery.
More than 6% of the young working population has been forced to emigrate from the country in search of a job. It seems that in a deliberate way it is promoted that every day there are more people who decide to move out of the country. While the conditions are created for the rich and entrepreneurs to acquire land and move their residences to the island in exchange for large tax benefits.
I would like to briefly update you on the following topics:
Electric energy
Public education
Housing
Workers movement
ELECTRIC POWER
Part of the plan of the Fiscal Control Board and the Government of Puerto Rico is the privatization of the production of electric power and give away the administration of the transmission, distribution and commercial operations of the Electric Power Authority main public corporation of Puerto Rico to private companies.
The PR POWER AUTHORITY known as PREPA is only replenished from the damage caused by Hurricane Maria. It is going through an administrative crisis, product of the struggle of powers between sectors of the United States Congress; Republicans and Democrats, members of the Fiscal Control Board and the government of Puerto Rico. In the past 18 months they have appointed 5 executive directors, two of them foreigners and practically two government boards.
The Fiscal Control Board has just announced an agreement with a group of bondholders, the vultures, with the intention of withdrawing PREPA from Title III of PROMESA, to facilitate the privatization process.
The agreement reached establishes the payment of the bonds to 74₡ of US dollars, guaranteed directly with the payment of the adjusted bills, with an increase of 4.7₡ KW per hour which would take the KW per hour to 30₡ completed the process of privatization, leaving in the open the big lie of the government, who claimed that the cost of energy would not increase with privatization. The agreement establishes that, when improving the economic situation of the company, it would be paid an additional 10%, limiting the original reduction to 16%. We must point out that this agreement was reached with the vulture bondholders, who bought the bonds between 40 and 60₡ for each dollar, which represents a substantial gain for them.
In addition to this abuse, the Fiscal Control Board indicated that the workers would receive a degradation in the payment of the medical plan, reduction in the payments for overtime worked, elimination of the payment of the Christmas Bonus, substantial changes in the Retirement System of employees and a 10% reduction in pensions for retirees.
This agreement with the bondholders has been described by the Institute of Energy Economics and Financial Analysis, a financial group based in Cleveland Ohio, as one that is based “on fiscal trickery, legal dishonesty and lack of political scruples.” In other words, in a leonine agreement where only the bondholders benefit in prejudice of the people and the workers.
We reiterate that the debt must be audited and substantially reduced so that it has the possibility of some payment without condemning the people of Puerto Rico to misery.
EDUCATION
The situation of public education every day is worse. The Department of Education, whose budget is of $ 2,500 million, the largest in the government of Puerto Rico, has an enrollment of 376,000 students and 33,400 teachers faces the greatest attack on adjustment measures.
The closure of 305 schools, mostly at the elementary level, was ordered in isolated communities. Almost 2,635 teachers were declared surplus.
The schools that were closed have been offered to private entities so for the establishment of charter schools. The displaced teachers are invited to become part of said schools, losing their positions in the public service.
In the other hand, the University of Puerto Rico, fundamental as a center for the development of the knowledge, is without a strategic direction, isolated from all the processes that afflict the country, with fewer resources and the announcement of increases in enrollment and the closings of student housing, with the purpose of privatizing it.
While the government sustains an alleged struggle with the members of the Fiscal Control Board for these to promote a reduction in 10% of the pensions of government retirees, the truth is that it was announced that the central government, public corporations and municipalities are not making their contributions to the fund established by law for the payment of pensions once the retirement systems of public employees were eliminated. In the case of teachers and police officers, the situation is very serious because they do not contribute to Federal Social Security, depending exclusively on the Government’s Retirement System.
HOUSING
As we all know, the right to decent housing is internationally recognized as fundamental for human development. Tragically this is one of the components of the society most affected by the double crisis that Puerto Rico is experiencing. Hurricane Maria destroyed 70,000 homes and over 200,000 were partially affected. The US Department of Housing and Urban Development (HUD) granted $1.5 billion in funds to subsidize the recovery of homes and businesses. The government of Puerto Rico created the plan “Tu Hogar Renace” (“Your Home is Reborn”) for minor repairs of the houses and at this moment everything indicates that corruption and incomplete work are the order of the day. In addition, companies located in the US obtain 90% of the funds allocated by the Federal Government, limiting the fact that these funds enter the local economy.
The housing situation caused by the economic crisis is even worse. Every day, 9 families lose their homes due to foreclosures. From 2008 to the present 25,361 mortgages have been executed, 18,950 are in the process of being executed, while 7,195 are in arrears of more than 90 days for a total of 51,506 foreclosed homes or imminent danger of foreclosure, according to the Mortgage Bankers Association of Puerto Rico. The business of home sales is at its worst, around 40,000 units are for sale, while in the housing rental sector the situation is the same. In the last 3 months, 2,580 cases of owners of rental housing seeking eviction from tenants were presented in court.
The government amended the law that rules the evictions to expedite the same, practically in 30 days the tenant is out the rented house. According to a study conducted by Professor Luis Torres Asencio of the Faculty of Law of the Interamerican University of PR, in 90% of the cases filed in the courts, the defendant is a woman, head of the family and they go to the litigation without lawyers. In two weeks the hearing is celebrated and the sentence is pronounced. This inequality is dramatized by the fact that most cases are presented by the government in public housing and those affected live under poverty levels. Not only do we face the evils that Hurricane Maria left us, but the result of a system that favors the real estate market and does not respond to the needs of the people with equity and justice.
WORKERS’ MOVEMENT
On the other hand, the workers’ movement of Puerto Rico, after receiving for the past five years the attack of the government in relation to the degradation of collective bargaining, now faces a new challenge: the affiliation and mandatory payment of membership fees as a result of the decision issued by the Supreme Court of the United States in the case of Mark Janus vs. AFSCME. Although this case refers to the payment of fees for service to employees who do not belong to the union, the government of Puerto Rico has given it a more restrictive interpretation that has the effect of eliminating unionized workshops where the worker is forced to join the union and pay the established fees. Undoubtedly, this action by the government constitutes an attack on the organized working class to affect its instrument of struggle. Workers have the obligation to transform our unions into instruments of struggle that are not subject to an employer, agency or business in such a way that we have enough independence in the actions in order to vindicate our class struggles. Even though the challenge is strong and may represent the disappearance of some unions accustomed to the convenience of the bureaucratic negotiation process, we must turn this attack into an opportunity to transform our unions into more effective and dynamic instruments of struggle, independent of governmental control.
To end I want to thank your solidarity response to our invitation to join us in a forum organized with the UTIER to share your experiences lived the case of the bankruptcy of Detroit. Soon we will communicate all the details of your visit.
The struggle continues, a different Puerto Rico is possible, nothing and no one will destroy us. Long live the working class.
Good evening comrades
Last March, we shared with you some aspects of the crisis in our country, Puerto Rico. Political, economic and social crisis dramatized by the recognition of the United States government on the colonial character of the political relationship between Puerto Rico and the United States known as Commonwealth. The exhaustion of the economic model has plunged us into an economic depression of more than a decade, the breakdown of the government that accumulates a debt of 73 billion dollars.
In response to the bankruptcy, the Congress of the United States imposes the PROMESA law, which, through the so-called Fiscal Oversight Board, proposes to pay the public debt and rehabilitate the country’s credit so that it continues to borrow.
Rehabilitate the credit by paying the creditors of Vulture Funds at the expense of multiple adjustment measures that are undoubtedly leading the Puerto Rican working class to misery.
More than 6% of the young working population has been forced to emigrate from the country in search of a job. It seems that in a deliberate way it is promoted that every day there are more people who decide to move out of the country. While the conditions are created for the rich and entrepreneurs to acquire land and move their residences to the island in exchange for large tax benefits.
I would like to briefly update you on the following topics:
Electric energy
Public education
Housing
Workers movement
ELECTRIC POWER
Part of the plan of the Fiscal Control Board and the Government of Puerto Rico is the privatization of the production of electric power and give away the administration of the transmission, distribution and commercial operations of the Electric Power Authority main public corporation of Puerto Rico to private companies.
The PR POWER AUTHORITY known as PREPA is only replenished from the damage caused by Hurricane Maria. It is going through an administrative crisis, product of the struggle of powers between sectors of the United States Congress; Republicans and Democrats, members of the Fiscal Control Board and the government of Puerto Rico. In the past 18 months they have appointed 5 executive directors, two of them foreigners and practically two government boards.
The Fiscal Control Board has just announced an agreement with a group of bondholders, the vultures, with the intention of withdrawing PREPA from Title III of PROMESA, to facilitate the privatization process.
The agreement reached establishes the payment of the bonds to 74₡ of US dollars, guaranteed directly with the payment of the adjusted bills, with an increase of 4.7₡ KW per hour which would take the KW per hour to 30₡ completed the process of privatization, leaving in the open the big lie of the government, who claimed that the cost of energy would not increase with privatization. The agreement establishes that, when improving the economic situation of the company, it would be paid an additional 10%, limiting the original reduction to 16%. We must point out that this agreement was reached with the vulture bondholders, who bought the bonds between 40 and 60₡ for each dollar, which represents a substantial gain for them.
In addition to this abuse, the Fiscal Control Board indicated that the workers would receive a degradation in the payment of the medical plan, reduction in the payments for overtime worked, elimination of the payment of the Christmas Bonus, substantial changes in the Retirement System of employees and a 10% reduction in pensions for retirees.
This agreement with the bondholders has been described by the Institute of Energy Economics and Financial Analysis, a financial group based in Cleveland Ohio, as one that is based “on fiscal trickery, legal dishonesty and lack of political scruples.” In other words, in a leonine agreement where only the bondholders benefit in prejudice of the people and the workers.
We reiterate that the debt must be audited and substantially reduced so that it has the possibility of some payment without condemning the people of Puerto Rico to misery.
EDUCATION
The situation of public education every day is worse. The Department of Education, whose budget is of $ 2,500 million, the largest in the government of Puerto Rico, has an enrollment of 376,000 students and 33,400 teachers faces the greatest attack on adjustment measures.
The closure of 305 schools, mostly at the elementary level, was ordered in isolated communities. Almost 2,635 teachers were declared surplus.
The schools that were closed have been offered to private entities so for the establishment of charter schools. The displaced teachers are invited to become part of said schools, losing their positions in the public service.
In the other hand, the University of Puerto Rico, fundamental as a center for the development of the knowledge, is without a strategic direction, isolated from all the processes that afflict the country, with fewer resources and the announcement of increases in enrollment and the closings of student housing, with the purpose of privatizing it.
While the government sustains an alleged struggle with the members of the Fiscal Control Board for these to promote a reduction in 10% of the pensions of government retirees, the truth is that it was announced that the central government, public corporations and municipalities are not making their contributions to the fund established by law for the payment of pensions once the retirement systems of public employees were eliminated. In the case of teachers and police officers, the situation is very serious because they do not contribute to Federal Social Security, depending exclusively on the Government’s Retirement System.
HOUSING
As we all know, the right to decent housing is internationally recognized as fundamental for human development. Tragically this is one of the components of the society most affected by the double crisis that Puerto Rico is experiencing. Hurricane Maria destroyed 70,000 homes and over 200,000 were partially affected. The US Department of Housing and Urban Development (HUD) granted $1.5 billion in funds to subsidize the recovery of homes and businesses. The government of Puerto Rico created the plan “Tu Hogar Renace” (“Your Home is Reborn”) for minor repairs of the houses and at this moment everything indicates that corruption and incomplete work are the order of the day. In addition, companies located in the US obtain 90% of the funds allocated by the Federal Government, limiting the fact that these funds enter the local economy.
The housing situation caused by the economic crisis is even worse. Every day, 9 families lose their homes due to foreclosures. From 2008 to the present 25,361 mortgages have been executed, 18,950 are in the process of being executed, while 7,195 are in arrears of more than 90 days for a total of 51,506 foreclosed homes or imminent danger of foreclosure, according to the Mortgage Bankers Association of Puerto Rico. The business of home sales is at its worst, around 40,000 units are for sale, while in the housing rental sector the situation is the same. In the last 3 months, 2,580 cases of owners of rental housing seeking eviction from tenants were presented in court.
The government amended the law that rules the evictions to expedite the same, practically in 30 days the tenant is out the rented house. According to a study conducted by Professor Luis Torres Asencio of the Faculty of Law of the Interamerican University of PR, in 90% of the cases filed in the courts, the defendant is a woman, head of the family and they go to the litigation without lawyers. In two weeks the hearing is celebrated and the sentence is pronounced. This inequality is dramatized by the fact that most cases are presented by the government in public housing and those affected live under poverty levels. Not only do we face the evils that Hurricane Maria left us, but the result of a system that favors the real estate market and does not respond to the needs of the people with equity and justice.
WORKERS’ MOVEMENT
On the other hand, the workers’ movement of Puerto Rico, after receiving for the past five years the attack of the government in relation to the degradation of collective bargaining, now faces a new challenge: the affiliation and mandatory payment of membership fees as a result of the decision issued by the Supreme Court of the United States in the case of Mark Janus vs. AFSCME. Although this case refers to the payment of fees for service to employees who do not belong to the union, the government of Puerto Rico has given it a more restrictive interpretation that has the effect of eliminating unionized workshops where the worker is forced to join the union and pay the established fees. Undoubtedly, this action by the government constitutes an attack on the organized working class to affect its instrument of struggle. Workers have the obligation to transform our unions into instruments of struggle that are not subject to an employer, agency or business in such a way that we have enough independence in the actions in order to vindicate our class struggles. Even though the challenge is strong and may represent the disappearance of some unions accustomed to the convenience of the bureaucratic negotiation process, we must turn this attack into an opportunity to transform our unions into more effective and dynamic instruments of struggle, independent of governmental control.
To end I want to thank your solidarity response to our invitation to join us in a forum organized with the UTIER to share your experiences lived the case of the bankruptcy of Detroit. Soon we will communicate all the details of your visit.
The struggle continues, a different Puerto Rico is possible, nothing and no one will destroy us. Long live the working class.
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