Trump Is Launching a Hostile Takeover of Puerto Rico
Donald Trump dismissed five of the seven members of Puerto Rico’s Financial Oversight and Management Board last week. The move is part of a hostile takeover of the territory made possible by its corrupt neoliberal elite.
The dismissal of five members of the Puerto Rico Financial Oversight and Management Board by the Trump administration will intensify austerity, poverty, and the multifaceted crises afflicting the island. (Jeenah Moon / Bloomberg via Getty Images)
On Monday, August 4, President Donald Trump dismissed five of the seven members of the Puerto Rico Financial Oversight and Management Board (FOMB), the entity that, for all intents and purposes, governs Puerto Rico. The move likely signals the start of a Trumpian takeover of the island that will only intensify austerity, poverty, and the multifaceted crises afflicting the oldest colony in the world.
No one should shed a tear for members of the board — or La Junta, as Puerto Ricans not-so-lovingly call it. The FOMB was created by federal law (PROMESA, signed by President Barack Obama in 2016) to address Puerto Rico’s financial crisis and oversee its debt restructuring process. It was given near-unlimited power by Congress to set Puerto Rico’s budget, veto local laws, and overrule the elected governor.
For the past decade, the board has used that authority to implement a draconian austerity regime in Puerto Rico. It has slashed pensions, cut funding for public education, and pushed for privatization of the island’s electrical grid to companies that charge Puerto Ricans more money for a poorer service.
While Puerto Ricans feel the pain, bondholders swim in profits. The board’s members, and its army of lawyers and consultants, are handsomely paid as well. Executive director Robert Mujica Jr, who was Andrew Cuomo’s former budget chief in New York, makes $625,000 a year — more than the president of the United States. As of 2022, McKinsey had raked in $120 million for consulting on the island’s debt restructuring. By now, that figure is surely higher.
The Trump administration has cited the board’s profligacy and excess as cause for the five members’ dismissal, but that’s a cheap misdirection. First, because while the FOMB was created by Congress and its members are appointed by the president, all salaries and fees are paid for by Puerto Rico’s government. Few reasonable people will believe that the Trump administration is particularly concerned about the well-being of Puerto Ricans. Second, because the five members of the board dismissed by Trump were all appointed by Democrats. The two remaining members of the FOMB, John Nixon and Andrew Biggs, are Republicans.
A Trumpian Takeover
By all accounts, what’s really going on here is a partisan purge of the board that will surely result in the appointment of new right-wing overlords to rule Puerto Rico. Trump’s firings come on the heels of a pressure campaign from far-right figures like Laura Loomer, who has been loudly denouncing the FOMB on social media. Loomer had already gotten other key figures in the Trump administration fired; it appears that the Puerto Rico board members are her latest victims.
Why would an ultraconservative influencer suddenly become interested in the inner workings of Puerto Rico’s debt restructuring? Because as much as they’ve already profited, the vulture funds that own Puerto Rico’s remaining debt want more. They have spent the past decade fighting Puerto Rico and the FOMB in court to try to squeeze every red cent out of an island that can barely keep the lights on. Their latest legal challenge was rejected in July; a month later, they also lost an appeal to hold the federal government responsible for their losses. Mere days after that decision, Trump took an ax to the board.
Already the firings have thrown a wrench in legal proceedings on the island’s debt. On August 11, Bloomberg reported that the federal judge overseeing Puerto Rico’s power utility bankruptcy pushed back a filing deadline and asked for a report “concerning the status of its membership and what effect, if any, the recent events will have on its participation in matters pending before the court.”
We do not yet know who will replace the five dismissed members of the FOMB, but Trump and the Republican Party will get to handpick the new appointees. They will almost certainly be even friendlier to the hedge funds that have already crippled Puerto Rico’s finances and social fabric since the debt restructuring began. We can now expect more austerity and vulnerability in a place that, by the FOMB’s own admission, is experiencing a demographic death spiral due to low birth rates and outmigration.
But a board full of Trump acolytes may do far worse than give bondholders a nice payday: the power of the purse will allow them to reshape Puerto Rican society. The FOMB might decide that the University of Puerto Rico is a den of diversity, equity, and inclusion (DEI) wokeness and demand curricular changes before approving its budget. It can choose to deny funding to Puerto Rican agencies and programs that do not comply with Trump’s English-only policy.
In short: Puerto Rico could become an ideological playground for the Trump administration — and its three million colonial subjects will be powerless to stop it.
Decolonializing Puerto Rico
That colonial condition lies at the heart of Puerto Rico’s precarity now, why the island has an oversight board at all, and why it fell into a debt crisis in the first place. In the best of times, the so-called Commonwealth status has failed to produce prosperity in Puerto Rico, where 60 percent of children live under the poverty line. In the worst of times, which may be yet to come, it leaves Puerto Rico at the mercy of hateful US leaders who daily prove their disdain for Latinos in general and Puerto Ricans in particular.
The only moral and meaningful solution to this undemocratic fiasco is to end Puerto Rico’s colonial status. And there is only one way it could feasibly end: with sovereignty. Republicans soundly reject statehood, which they are convinced would result in more Democratic members of Congress. Democrats, for their part, are both too divided on statehood and too disinterested in expending the massive political capital it would take to overcome Republican opposition. As with statehood for Washington, DC, the notion that Puerto Rican statehood could get sixty votes in the Senate is a complete fantasy.
But many American policymakers and citizens alike continue to indulge that fantasy and operate under the delusion that statehood is a realistic outcome. In doing so, they merely perpetuate Puerto Rico’s colonial status — and are not-too-indirectly responsible for whatever their president, whom Puerto Ricans cannot even vote for, is about to unleash on the island.
Thankfully, the movement for Puerto Rican sovereignty is growing. In the 2024 election, more than 40 percent of voters on the island backed either full independence or sovereignty in free association with the United States, a form of independence in which Puerto Rico and the United States would maintain bilateral relations through a negotiated compact. Puerto Rican megastar Bad Bunny, who called for a free Puerto Rico on NPR’s Tiny Desk program, is currently crooning his anti-statehood anthem “Lo que le pasó a Hawaii” (What Happened to Hawaii) to sold-out crowds during his historic residency in Puerto Rico.
What will happen to Puerto Rico as President Trump digs his claws deeper into the island colony? Surely nothing good, and his administration and appointees will bear most of the blame. But the shame should be felt by all who, through silence, neutrality, or complicity, continue to abet the United States’ colonial regime in Puerto Rico.
Only independence will save Puerto Rico from Trumpism and from colonialism. It is not too late for people everywhere who believe in justice and in democracy to support it. But the hour is growing later all the time.