ourEconomy: Opinion

Puerto Rico’s teachers’ strikes mark the latest fight against austerity

Even with the recent debt restructure plan, the island still faces a future of privatisation and default

Ed Morales
1 March 2022, 2.47pm
School teachers demanding higher wages and better working conditions in San Juan, Puerto Rico
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Ricardo Arduengo / Reuters / Alamy Stock Photo. All rights reserved

Faced with austerity, privatisation, and the further erosion of democratic rights, Puerto Rico is entering a crucial stage of political upheaval.

Last month, a coalition of workers, students and activists – led by primary school teachers – staged a series of demonstrations demanding higher wages. Galvanised by slogans such as ‘El pueblo antes de la deuda’ (The people before the debt), this impressive worker-student coalition is rekindling the movement that ousted Puerto Rico governor Ricardo Rosselló in 2019.

The recent protests come on the heels of the January approval of a debt adjustment plan by Laura Taylor Swain – a US federal district court judge overviewing the island’s debt as mandated by the PROMESA (the Puerto Rico Oversight, Management, and Economic Stability Act). Passed by the US Congress in 2016, this law – which allowed the island to file for bankruptcy – established the unelected Fiscal Oversight and Management Board (FOMB, also referred to in Puerto Rico as ‘la junta’) to restructure the island’s debt and finances.

Puerto Rico is a territory of the US but does not have real representation in Congress. The island sends one representative to Congress, called a resident commissioner, who may introduce legislation in the House of Representatives and serve on committees, in which they can vote, but cannot vote on the final passing of bills. The island’s residents do not have the right to vote for the US president.

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The new debt adjustment plan, which was hailed by Puerto Rico’s governor Pedro Pierluisi as “a new chapter in Puerto Rican history”, reduces a $33bn portion of the $73bn debt to just $7bn. The settlement also includes an immediate cash payout of $7bn.

Economists such as José Caraballo-Cueto argue the agreement will only lead to a future default. And critics highlight the fact that the plan was implemented without the forensic debt audit demanded by local advocacy groups.

Public austerity, private gains

The stringent austerity imposed by the FOMB has kept primary school teachers’ basic salary at $1,750 per month – which are considered poverty wages for a three-person household in the US. A recent report by the Center for Popular Democracy says that FOMB policies have resulted in 250 school closures.

Several weeks ago, however, Pierluisi announced a “permanent” wage increase for teachers to $2,700 a month, although there are doubts that the government can sustain the increase given the difficulty of defending the additional $180m annual expenditure against the cost-cutting agenda pushed by the FOMB.

In addition, Pierluisi questioned the low basic wage for firefighters, telling a press conference, “No one is obliged to be a policeman or firefighter,” implying that these workers should look for other jobs.

The Puerto Rican government actively promoted a ‘race to the bottom’ by offering huge tax breaks to millionaires and billionaires

This all comes as companies – many based outside Puerto Rico – are seeking to privatise central elements of the island’s economy. Last year, it was announced that a US- and Canada-based consortium called LUMA would ​​take over the operation of the Puerto Rican Electrical Authority’s transmission and distribution systems.

The privatisation – granted without significant public input – has inflated prices and diminished service. LUMA’s CEO has also been accused of paying the consortium’s executives high salaries at the expense of hiring more experienced workers.

The Puerto Rican government, under the previous Rosselló administration, actively promoted a ‘race to the bottom’ by offering huge tax breaks to millionaires and billionaires to set up residency on the island. This attracted settlers like YouTuber Logan Paul and cryptocurrency mogul Brock Pierce.

Posters calling Paul and Pierce “colonisers” have surfaced across the island. Many residents assert that the settlers’ presence is fuelling real estate speculation and pricing out the local community.

Last year the cost of living in Puerto Rico increased by 7%, while house prices rose by over 18%.

Anti-gentrification actions like these are spreading across the island. In Ocean Park Beach and Dorado Beach, activists are asserting their right to public beaches as outside investors – mainly from the US – claim them as private property. Last month, protestors occupied a stretch of beach, and named it ‘Ghetto Beach’ – playing off recent comments from a government official who claimed that without the laws passed to attract rich investors, Puerto Rico would become a ghetto.

In other locations, like Rincón and Luquillo, protests have erupted over plans for hotel developments that threaten the local ecosystem.

More failed federal policy

The Biden administration has made some good strides towards helping the island’s economy – such as the plan to modernise Puerto Rico’s energy grid to meet its goal of 100% renewable energy by 2035. But overall, the administration has failed to take strong steps to address Puerto Rico’s problems. By not critiquing or strongly recommending that Congress re-evaluate PROMESA and the FOMB, the administration is binding Puerto Rico to a future of even more austerity and potential default on its debts. (A 2019 study by economists Martin Guzman and Pablo Gluzzman recommended that the portion of the debt covered by the recently approved adjustment plan be reduced by 85% in order to avoid future default.)

The problems also extend to Congress. In 2020, House Natural Resource Committee chair Raúl Grijalva introduced a bill called the Amendments to PROMESA Act, which would prevent conflicts of interest among board members, create federal funding for the board (Puerto Ricans currently foot the bill), and provide a debt audit. However the bill hasn’t been advanced.

Representative Nydia Velásquez has recently gone on the record criticising the presence of crypto speculators on the island, but knowledge of this activity has been publicised in mainstream outlets like the New York Times since at least 2018.

And there still has not been serious advancement of status change – giving Puerto Rico statehood or independence – introduced with great fanfare at the beginning of Biden’s term.

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Puerto Ricans have much to gain and much to lose on 3 November.

The bills that have been introduced have significant flaws. One, introduced by Florida Representative Darren Soto and proposing statehood be granted by Congress, is based on the results of faulty plebiscites undertaken by Puerto Rico’s pro-statehood party (the New Progressive Party) that were largely boycotted by members of the pro-status quo party (the Popular Democratic Party). The other bill, introduced by Representatives Nydia Velásquez and Alexandria Ocasio-Cortez, calls for a status convention to bring different proposals to a discussion and vote. However the bill includes a US-based advisory board.

Puerto Rico faces an uncertain future – with its economic development far from guaranteed. But its people are aware of the challenges and pushing for a better future. An impressive “intersectional” nationalism led by young people is connecting issues such as increased violence against women and LGBTIQ people to austerity. Even pop culture figures like Ricky Martin and Bad Bunny have been advocates of the teachers’ strike, as they were supporters of the protests leading to the ousting of Rosselló.

This vibrant and burgeoning movement might just lead to a similar fate for governor Pierluisi, who – aside from occasional attempts to protect pensions – seems to have no strategy other than embracing austerity and accepting the inadequate debt adjustment agreement.

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