Political Report # 1406 Puerto Rico: Increased Federal Control Is Not The Solution

By Yarimar Bonilla And José Caraballo Cueto The Hill

After 12 days of protests, the governor of Puerto Rico resigns. Some claim that the scandals related to the governor give credence to President Trump’s claims about Puerto Rican politicians being “inept” and “corrupt.” Others have suggested that the current political crisis calls for strengthening federal oversight and increasing the powers of the fiscal control board that is already charged with managing the island’s debt crisis. However, there is no evidence to suggest that increasing federal control would help tackle Puerto Rico’s problems of governance and such an outcome would run contrary to the goals of those marching in the streets. When Puerto Rico’s fiscal oversight board was first established, some residents held out hope that it would act precisely as a regulatory body that could bring an end to the kind of corruption that has been revealed by the recent FBI arrests. Yet, this has hardly been the case. In its nearly three years of existence the board has not filed a single corruption case or canceled any of the dubious contracts related to the FBI arrests.  Further, the board has been sued repeatedly for lack of transparency, a key element for good governance, and several politicians who lobbied for the board’s creation, including Puerto Rico’s former resident commissioner, are now working at firms that hold lucrative contracts with it. Moreover, some of the board members themselves have possible conflicts of interest due to their own involvement in the generation of the debt crisis they are now tasked with solving. These conflicts might have been elucidated through congressional nomination hearings. A first circuit court ruled that the board was unconstitutional precisely because of its failure to hold such hearings, a process that the U.S. government claimed was unnecessary in the case of “territorial officers.” Some claim that the Board is necessary to implement more structural reforms such as labor reforms. But the gains around such reforms are questionable. According to the former Secretary of Labor, the 2017 labor reform created a mere 200 jobs, which represents less than 1 percent of the workforce. With the reconstruction after Hurricane Maria government revenues are expected to increase and were already considered in the post-Maria fiscal plan. Now, the worst-case scenario is that the appropriated $42.3 billion reconstruction funds (not the $92 billion wrongly claimed by Trump) might never arrive, which means the board would have to increase austerity even further to meet the exaggerated debt payments, or engage in a second round of restructuring, thus prolonging the crisis. Unsurprisingly, the fiscal control board has steadily lost the trust and respect of local residents. At present a majority of Puerto Ricans are against it. The board has been sued by trade activists and bond holders alike, and has come under scrutiny for the elevated honoraria they pay to their consultants and lawyers, some of which simultaneously stand to profit from their holdings in Puerto Rico bonds - a conflict of interest banned by the chapter nine legislation but exempted for US territories. So it’s clear that the problems of corruption and good governance are not exclusive or endemic to Puerto Rican politicians. The fact is that within the 50 states the rates of convictions for political corruption are much higher than they are in the territories. And many of the corruption scandals of recent years involve non-Puerto Rican figures or entities, such as Whitefish.  One of the former officials indicted by the FBI in the prelude to the current crisis, former Education Secretary Julia Keleher, arrived in Puerto Rico from Philadelphia with the same kind of promises of cleaning up mismanagement as did the fiscal control board. Before her arrest, she often spoke against cronyism and insisted that she was a necessary “change agent” and “the only responsible adult in the room” when it came time to implement education reform. She now faces charges for illegally steering hundreds of thousands of dollars in federal contracts to close associates and politically connected contractors. The solution to Puerto Rico’s problems is this not to simply replace local politicians with U.S. envoys and supervisors, something which for many smacks of a retrenched colonialism, nor is the answer to strengthen the powers of a board that is rooted in legal exceptionalism. What Puerto Ricans need now is greater democratic tools, not increased control from the outside. This includes stronger independent prosecutorial entities, enforceable anti-corruption laws, and (most importantly) greater civic engagement in the political process, including in the designation of the next secretary of State, who would be the interim governor. It would be a tragedy if a popular movement that seeks democratic reform were to become a pretext for the hardening of anti-democratic forms of rule and the strengthening of a fiscal control board rooted in the legal exceptionalities of territorial governance. Instead of calling on the U.S. government to intervene further in local affairs, U.S. residents should perhaps take note and inspiration from Puerto Ricans’ efforts to clean up their government. They should also note that the calls coming from the vigils outside the governor’s mansion are not for greater federal intervention, but for the governor to leave and to take the fiscal board with him. Yarimar Bonilla is professor in the Department of Africana, Puerto Rican, and Latino Studies at Hunter College and the Doctoral Program in Anthropology at the City University of New York. She is co-editor of “Aftershocks of Disaster: Puerto Rico Before and after the Storm.” José Caraballo-Cueto is associate professor and researcher at the Institute for Interdisciplinary Research at the University of Puerto Rico at Cayey and former president of the Puerto Rico Economists Association. Original article can be found here. https://thehill.com/opinion/campaign/455018-puerto-rico-increased-federal-control-is-not-the-solution