Fighting Puerto Rico’s Federal Coup

How the Puerto Rican left is trying to build resistance to both colonialism and neoliberalism.

New York, NY. DUKEDLF / Flickr

On June 30, the US Congress passed the Puerto Rico Oversight, Management, and Economic Stability Act (PROMESA), using the island’s inability to pay its fiscal debt as an excuse to seize control of its government’s finances. Among other reforms, PROMESA established a seven-person fiscal control board to oversee Puerto Rico’s government and ensure that the colony makes good on its $70 billion debt obligation.

The neoliberal consensus has blinded the island’s mainstream political parties to the reality of Puerto Rico’s changing condition in the wake of PROMESA. But the Left shouldn’t hesitate to call the unelected fiscal control board what it is — a junta, a new colonial institution established by the same imperial power that has maintained Puerto Rico’s colonial status since 1898.

The current conjuncture presents serious challenges for the Puerto Rican left, which now must grapple with some difficult questions. First, what are the full effects of PROMESA? Are we seeing a major transformation in the political status of Puerto Rico — amounting even to the dissolution of the Commonwealth?

Second, how should the Left and social movements respond to PROMESA and the junta? As November’s election approaches, how can we build a durable anti-austerity movement capable of bringing forth a new wave of mass resistance to both colonialism and neoliberalism?

To answer these questions, we must closely examine the character of the crisis. Specifically, we should dispense with the simplistic notion that the “debt crisis” is the entire problem, and instead analyze the public debt in the wider context of the present state of colonial capitalism in Puerto Rico.

With PROMESA, circumstances have changed in Puerto Rico — the ground has shifted quite radically since we last had any straightforward answers to questions like the ones we now face.

The Zombie Commonwealth

The first question on everyone’s mind is if the Commonwealth of Puerto Rico — the “Estado Libre Asociado” (ELA) — is actually dead.

Mourning the ELA is asinine — an indulgence of the mainstream political parties. But it’s also a mistake to argue, as some on the Left have, that the junta is just an inconsequential transformation in the shape of the colonial apparatus. With the establishment of the junta, the government of Puerto Rico lost what little autonomy it had.

PROMESA didn’t do away with the previous institutional framework of the colony — it just rendered it irrelevant. The Commonwealth bureaucracy will still be around for a long time, but in an increasingly powerless form. Since the mid 1940s, Puerto Rico’s government had been based upon a simple formula — elected Puerto Rican officials administrate federally supplied funds alongside locally sourced revenue. But that’s it. This is all the ELA’s “autonomy” ever amounted to.

PROMESA eliminates even this limited autonomy by imposing an unelected body’s designs over the government’s fiscal decisions. Now, any law that appropriates funds is subject to the junta’s review — and possible veto. At the same time, the junta has the power to circumvent local environmental and labor regulations.

Too many in Puerto Rico are deluded as to what the junta will actually end up doing, thinking it will do things like punish corrupt politicians or end government borrowing. They are in for a rude awakening.

The junta exists to fiscally control Puerto Rico. Its role is to impose an austerity regime so as to guarantee two things — first, that Puerto Rico will pay its debts; and second, that Puerto Rico will be able to acquire more debt in the future.

In the US Congress, PROMESA was approved with bipartisan support, with Bernie Sanders and some state-based Puerto Rican legislators comprising the only vocal opposition. Both President Obama and Hillary Clinton were strong advocates for the establishment of the fiscal control board.

But since Puerto Ricans living in the territory have no representation in the US Congress, they were excluded from the decision-making process entirely. The true administrator of the colony is now an unelected body of technocrats, appointed without the consent of the Puerto Rican people or their representatives.

Neoliberalism in Panic

You don’t need a Marxist analysis to recognize that PROMESA imposed a form of colonial rule on Puerto Rico more extreme than any the island has experienced for more than seven decades.

But a Marxist analysis does help us understand what this transformation represents — the utter failure of neoliberalism as a development project. In Puerto Rico’s colonial-capitalist context, neoliberalism proved itself incapable of creating an economy that could satisfy peoples’ needs while successfully reproducing itself.

Neoliberalism came to Puerto Rico in two distinct phases.

Beginning in the mid-to-late 1980s, the Puerto Rican government embarked on a thorough transformation of the economy along neoliberal lines. Services previously supplied by the state were supplanted by companies operating on “free-market” terms — most importantly, this involved the privatization of the public health system and the Puerto Rican Telephone Company. At the same time, labor regulations were rewritten to make the labor market more flexible for employers.

The reorganization of the Puerto Rican economy along neoliberal lines was marked by a steady decline in the viability of previous developmental projects — such as state support for capital-intensive industries through federal tax breaks like Section 936, which offered significant benefits to US companies operating in Puerto Rico.

During this time — in Puerto Rico and all over the world — the goal was to become more competitive by adapting to the “new economy” of globalization. After 2006, however, the implementation of this project was supplanted by the need to manage the accelerating local economic crisis, which was manifesting itself as a fiscal crisis of the state — a situation soon to be compounded by the emerging global economic crisis.

The character of neoliberalism in Puerto Rico changed — solving the fiscal crisis took priority over implementing a coherent neoliberal program. Whereas before the state had been proactive — using neoliberal reforms to systematically dispossess workers and establish a more business-friendly economy — after 2006 the state became reactive, using neoliberal reforms to mount an aggressive response to the fiscal crisis.

Thus, there are important differences between the 1998 privatization of the telephone company and the 2012 privatizations of transportation authority properties like the Luis Muñoz Marín International Airport.

Whereas the Telephone Company was a profitable state enterprise privatized as part of a planned neoliberal transition, the privatization of the LMM airport was a hasty and desperate measure, meant to ensure the transportation authority’s continued existence and, most importantly, its ability to repay its bondholders.

Both periods catered to the same ideological tenets and class interests. But during the first period, neoliberalization was a coherent (though fatally flawed) project, while during the second it became a scattered one, responding unevenly to the exigencies of fiscal crisis.

A Homegrown Crisis

Clearly, Puerto Rico’s economic woes are more than just a local effect of worldwide trends and US political influence. In many respects, the crisis is also “homegrown,” although nothing that happens in Puerto Rico can be separated from its colonial relation to the United States. The island’s economy isn’t just experiencing the long-term effects of the 2008 global recession — it’s also experiencing the explosion of its own economic contradictions.

Nowadays, almost everyone recognizes the Commonwealth’s inability to pay its debts, including mainstream politicians like the governor. But how did the government get into this position? The answer lies in Puerto Rico’s economic structure, not in an intrinsic fiscal problem within the state.

Certainly, there are some problems particular to the government itself — such as its deficient tax collection infrastructure, the inefficient management of public companies, and rampant corruption. But the fiscal crisis of the colonial state is not the same thing as the crisis of the Puerto Rican economy.

The Commonwealth simply can’t collect taxes from an economy that’s not productive enough to generate revenue. And it’s not for lack of trying — in recent years, attempts at increasing tax collection have become absurdly extreme, even from a capitalist perspective (take, for example, the 11.5 percent sales tax).

Some of the roots of this problem can be traced back to the development scheme initiated in the early 1970s, which was premised on granting large tax exemptions to US companies operating on the island. From the beginning, Puerto Rico’s industrial taxes were designed to favor private producers over the state. And even after federal tax exemptions began to expire in 1996, they were often just replaced by even more generous local ones.

Still, as worldwide neoliberal reforms made capital increasingly mobile, Puerto Rico was stripped of much its manufacturing industry, and what little industry could be enticed to stay demanded unsustainable tax breaks, starving the state of much-needed funds.

The crisis isn’t the product of the public debt. On the contrary, the rising debt is a result of Puerto Rico’s crisis of production.

All of this might seem like arguing nuance, but in fact it’s a very important debate. Without a detailed understanding of the situation at hand in Puerto Rico, the Left is limited to platitudes — we can hardly offer a real strategy for resistance.

This analysis allows us to see that the underlying problems in Puerto Rico aren’t just a result of the colonial relationship — rather, they’re rooted in that relationship’s capitalist character, and, moreover, in the neoliberal mode it acquired over the past three decades.

How to Fight the Junta

The actual questions underpinning any debate on the Puerto Rican left are simple — what conditions are we fighting in, and what are we fighting against? Knee-jerk reactions — like the call for a boycott of November’s elections — show precisely what not to do in the current situation. But what should we do instead?

First, it’s imperative to recognize that the Left in Puerto Rico has been in its own (mostly self-inflicted) crisis for over two decades. Only recently have we taken the first steps toward resolving this crisis, and even then only tentatively. But at the same time, circumstances demand an immediate response. The most urgent question at hand is how to fight the junta.

Two positions are worth considering: a worker-oriented left-populist electoral strategy, and a socialist extra-parliamentary direct struggle strategy. Of course, these two strategies are not mutually exclusive, but they do represent two divergent outlooks regarding the struggle against austerity in Puerto Rico.

Left-populism in Puerto Rico is represented by the Working Peoples’ Party (PPT). The PPT began as an effort of socialists and other activists to break the considerable insularity of the Left and construct a mass movement against neoliberalism. In November, it will participate in its second election, having garnered eighteen thousand votes in the last gubernatorial race.

Despite the fact that it is clearly committed to workers’ struggles, the PPT has certain self-imposed limitations. Discursively, it operates by appealing to the center, which leads to ambivalence on important issues. For example the PPT has voiced its support for self-determination in ambiguous terms, refusing to take a hard line against colonialism.

More recently, the PPT came under fire for suggesting that it would be open to collaborating with the junta — a political misstep that occurred precisely because of the party’s effort to articulate their politics from a centrist position. But even though the PPT is a contradictory force, its efforts to “open a path” (“abre paso”) in Puerto Rican politics are an essential first step towards constructing an actual alternative to capitalism and colonialism.

The Workers’ Socialist Movement (MST) has adopted a more radical and uncompromising strategy. Previously, the MST has advocated a strictly anti-electoral stance. In practice, MST has eschewed all mainstream politics and instead concentrated in grassroots-level work — participating in community struggles, student movements, and unions. Within these spaces, the organization has attempted to foster a radical base upon which to build a new cadre-based party.

However, MST policies have often confined the organization to the limits of the small and sectarian left. In other words, compared to the PPT, the MST has veered too much in the opposite direction.

Other forces on the Left, such as the Puerto Rican Independence Party (PIP) and the Hostosian National Independence Movement (MINH) have also presented positive developments. Despite the party’s limitations, the PIP has positioned itself as an ally of workers’ struggles and marginalized groups, especially the LGBT community. For its part, MINH has broken with its decade-old policy of supporting the ruling Popular Democratic Party (PPD) with nothing to show for it.

In light of PPD moving further and further to the right on social issues — and coming closer to advocating statehood — MINH’s radical youth wing has been able to reposition MINH as an organization advocating active struggle over passive support for mainstream politicians.

But most importantly, there is a milieu of activists and organizers in Puerto Rico whose work goes beyond just proselytizing for their organizations. In places like the university system and in community struggles around ecological and other issues, a new generation of committed fighters is emerging.

The Left must articulate a strategic plan that opens up avenues for mass participation without compromising our principles. One step towards this goal has been MST’s proposal of a Minimum Common Program of the Left — a set of common positions that can be collectively undersigned by all organizations which are currently active in Puerto Rico’s social struggles.

Recent events like the encampment in front of the federal courthouse in San Juan and the successful disruption of the first PROMESA conference point towards the reactivation of militant social forces in Puerto Rico. And they remind us of a crucial lesson — as we work to build a fighting movement against PROMESA’s colonial austerity, it will be there in the streets that resistance truly shows its face.