By Chris Fry
A 12-day long uprising by the people of Puerto Rico, culminated on July 22 in a massive general strike and demonstrations so huge that they shut down the entire island. Just before midnight on July 24 Puerto Rican Governor Ricardo A. Rosselló was forced to resign rather than face certain impeachment. The Puerto Rican legislature had already voted that they would open impeachment proceedings unless he resigned. As news of his ouster spread, celebrations erupted throughout the island.
What sparked these huge protests? “All this started on July 13 as an 889-page document, released by the non-profit journalism group Center for Investigative Journalism revealed that the official has led a racist, misogynist smear “chat” campaign against his competitors and journalists. Rosselló also faced allegations of corruption and mishandling of public funds in his administration. Even the victims of the terrible 2017 Hurricane Maria were maligned in the governor’s texts.
Just days before the release of these texts a pair of high officials were arrested on corruption charges.
Seized from Spain in 1898, Puerto Rico has been a U.S. imperialist colony since that time. It is home to some three million people. Given citizenship so that their young people could be pulled into World War I and all the U.S. wars since then, such as Korea, Vietnam and Iraq, the Puerto Rican people are denied any representation in Congress. The U.S. also mandated that Puerto Rico must start selling bonds that the island could never tax, enriching U.S. corporations while impoverishing the people. Instead, Wall Street has burdened the Puerto Rican people with billions in debt.
A report by the Refund America Project describes the predatory loans by the Wells Fargo Bank toward Puerto Rico this way:
Wells Fargo and Wachovia were one of the underwriters on seven different issuances of capital appreciation bonds to Puerto Rico. A capital appreciation bond (CAB) is a long-term bond with compounding interest on which the borrower does not make any principal or interest payments for the first several years, and, in some cases, until the final maturity of the bond. As a result, the outstanding principal actually grows over time because the unpaid interest gets tacked on to the amount owed, and then the borrower has to pay interest on the interest. Because of this structure, borrowers often end up paying extraordinarily high interest rates over the life of the bonds. In this way, a CAB is like the municipal version of a payday loan.
Wells Fargo and Wachovia helped underwrite seven issuances of these payday loans to Puerto Rico, which have an outstanding balance of $21.5 billion. However the underlying principal on these bonds is just $2.6 billion. The remaining $18.9 billion is interest—an effective interest rate of 734%!
Wells Fargo is just one of several Wall Street “vulture capitalists,” who have indebted the people of Puerto Rico to the vast sum of $121 billion.
In 2017 Hurricane Maria devastated the island, killing thousands and causing at least $130 billion in damages. There is no way that this devastation can possible be repaired if Puerto Rico is forced to back these “vulture capitalists”. Boss Trump travelled to the island just to show his contempt for the people by tossing paper towel rolls to the crowd, to those suffering for the lack of food, water and electricity.
As U.S. banks and corporations deepened the island financial crisis particularly during and after the Great Recession, the U.S. Congress in 2016 passed the Puerto Rico Oversight, Management, and Economic Stability Act (PROMESA). PROMESA established an Oversight Board, which functions similarly to the infamous Emergency Managers in Detroit and Flint. This board does not answer to any local island officials. Although it is supposed to protect the welfare of Puerto Rican residents, in fact it has in every way acted to ensure that every sort of austerity measure is used – cutbacks in pensions, social services, school closings – to pay off these predatory loans.
A July 24 Bloomberg report indicates that the PROMESA oversight board will use the governor’s ouster to remove their last obstacle in federal court to take total control of Puerto Rico’s finances and implement their harsh austerity measures. But it remains to be seen whether these corporate parasites themselves will spark the same strength and resolve to fight back by the Puerto Rican people that we have just witnessed. In fact, it was reported that many of the demonstrators in the recent actions were chanting, “Down with Rosselló, down with the Junta,” referring to the Federal PROMESA Oversight Board.
The people of Puerto Rico have created a tremendous example of struggle for our whole working class on the mainland as we confront our same arch-racist and class enemy Donald Trump and the Wall Street vultures at his back.