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He had long warned of the risks associated with Puerto Rico’s overwhelming dependence on imported fossil fuels and centralized power generation: One big storm, he had cautioned, could knock out the whole grid—especially after decades of laying off skilled electrical workers and letting maintenance lapse.
The island gets an astonishing 98 percent of its electricity from fossil fuels. But since it has no domestic supply of oil, gas, or coal, all of these fuels are imported by ship. They are then transported to a handful of hulking power plants by truck and pipeline. Next, the electricity those plants generate is transmitted across huge distances through above-ground wires and an underwater cable that connects the island of Vieques to the main island. The whole behemoth is monstrously expensive, resulting in electricity prices that are nearly twice the U.S. average.
There is also another, very different version of how Puerto Rico should be radically remade after the storm, and it is being aggressively advanced by Gov. Ricardo Rosselló in meetings with bankers, real estate developers, cryptocurrency traders, and, of course, the Financial Oversight and Management Board, an unelected seven-member body that exerts ultimate control over Puerto Rico’s economy.
The real problem, they argue, was the public ownership of Puerto Rico’s infrastructure, which lacked the proper free-market incentives. Rather than transforming that infrastructure so that it truly serves the public interest, they argue for selling it off at fire-sale prices to private players.
At the core of this battle is a very simple question: Who is Puerto Rico for? Is it for Puerto Ricans, or is it for outsiders? And after a collective trauma like Hurricane Maria, who has a right to decide?
You don’t have to relinquish your U.S. citizenship or even technically leave the United States to escape its tax laws, regulations, or the cold Wall Street winters. You just have to move your company’s address to Puerto Rico and enjoy a stunningly low 4 percent corporate tax rate—a fraction of what corporations pay even after Donald Trump’s recent tax cut. Any dividends paid by a Puerto Rico–based company to Puerto Rican residents are also tax-free, thanks to a law passed in 2012 called Act 20.
Thanks to a clause in the federal tax code, U.S. citizens who move to Puerto Rico can avoid paying federal income tax on any income earned in Puerto Rico. And thanks to another local law, Act 22, they can also cash in on a slew of tax breaks and total tax waivers that includes paying zero capital gains tax and zero tax on interest and dividends sourced to Puerto Rico. And much more—all part of a desperate bid to attract capital to an island that is functionally bankrupt.
all it takes to get in on this scheme is agreeing to spend 183 days of the year in Puerto Rico—in
Puerto Rican residents, it’s worth noting, are not only excluded from these programs, but they also pay very high local taxes.
Mining cryptocurrencies is one of the fastest growing sources of greenhouse gas emissions on the planet, with the industry’s energy consumption rising by the week. Bitcoin alone currently consumes roughly the same amount of energy per year as Israel, according to the Bitcoin Energy Consumption Index. The
Still, the idea of turning an island that cannot keep the lights on for its own people into “the epicenter of this multitrillion-dollar market” rooted in the most wasteful possible use of energy is a bizarre one and is raising mounting concerns of “crypto-colonialism.”
Now rather than simply shopping for mansions in resort communities, the Puertopians are looking to buy a piece of land large enough to start their very own city—complete with airport, yacht port, and passports, all run on virtual currencies.
The Puerto Rican governor’s office predicts that over the next five years, the island’s population will experience a “cumulative decline” of nearly 20 percent.
Gov. Rosselló himself seems to agree. In February 2018, he told a business audience in New York that Maria had created a “blank canvas” on which investors could paint their very own dream world.
Vieques—more than two-thirds of which used to be a U.S. Navy facility where Marines practiced ground warfare and completed their gun training—was a testing ground for everything from Agent Orange to depleted uranium to napalm. To this day, agribusiness giants like Monsanto and Syngenta use the southern coast of Puerto Rico as a sprawling testing ground for thousands of trials of genetically modified seeds, mostly corn and soy.
Time after humiliating time, Puerto Ricans have been sent that familiar message about their relative worth and ultimate disposability. And
As of this writing, the official count of how many people died as a result of Hurricane Maria remains at 64, though a thorough investigation by Puerto Rico’s Center for Investigative Journalism and the New York Times put the real number at well over 1,000.
they also learn the practical skills of “agro-ecology,” a term referring to a combination of traditional farming methods that promotes resilience and protects biodiversity, a rejection of pesticides and other toxins, and a commitment to rebuilding social relationships between farmers and local communities.
Roughly 85 percent of the food Puerto Ricans actually eat is imported.
According to Puerto Rico’s Department of Agriculture, more than 80 percent of the island’s crops were completely wiped out in the storm, a $2 billion blow to the economy.
And those rare estates that still used traditional methods—including planting a diversity of crops and using trees and grasses with long roots to prevent landslides and erosion—had some of the only fresh food on the island.
Yucca, taro, sweet potato, yam, and several other root vegetables are nutrient-rich staples of the Puerto Rican diet, and because they grow underground, where the high winds couldn’t touch them, most were almost entirely protected from storm damage. “Some farmers were harvesting food a day after the hurricane,” Vázquez recalled. Within a few weeks, they had hundreds of pounds of food to sell or distribute in their communities.
The group has also been warning about the dangers of chokepoints in Puerto Rico’s highly centralized system, with almost all of its food imports shipping out of a single port in Jacksonville, Florida (which itself was slammed by Hurricane Irma last September), and roughly 90 percent of the food arriving at one entry point: the Port of San Juan.
This deliberate exploitation of states of emergency to push through a radical pro-corporate agenda is a phenomenon I have called the “shock doctrine.” And it is playing out in Puerto Rico in the most naked form seen since New Orleans’s public school system and much of its low-income housing were dismantled in the immediate aftermath of Hurricane Katrina, while the city was still largely empty of its residents.
Central to a shock doctrine strategy is speed—pushing a flurry of radical changes through so quickly it’s virtually impossible to keep up.
Many Puerto Ricans told me that the latest chapter in this story really begins in 2006, when the tax breaks that had been used to attract U.S. manufacturers to the island were allowed to expire, prompting a devastating wave of capital flight
This was such a deep shock to the island’s economy that in May 2006, much of the government, including all the public schools, was temporarily shut down. That was the first punch. The second came when the global financial system melted down less than two years later, dramatically deepening a crisis already well underway. Broke and desperate, the Puerto Rican government turned to borrowing, in part by using its special tax status to issue municipal bonds that were exempt from city, state, and federal taxes.
According to data compiled by lawyer Armando Pintado, debt-service payments, including interest and other profits paid to the banking industry, increased fivefold between 2001 and 2014, with a particularly marked spike in 2008. Yet another shock to the island’s economy.
In 2009, Puerto Rico’s governor passed a law declaring an economic “state of emergency” and used it to lay off more than 17,000 public sector workers and strip negotiated benefits and raises from many more—this at a time when unemployment was already 15 percent.
It was in this context that in 2016, Congress took the drastic measure of passing the PROMESA law that put Puerto Rico’s finances under the control of a newly created Financial Oversight and Management Board, a seven-person body appointed by the U.S. president, six of whom appear not to live on the island. The board, which is essentially charged with overseeing the liquidation of Puerto Rico’s assets to maximize debt repayments and approving all major economic decisions, is known in Puerto Rico as “La Junta.”
Puerto Ricans—unable to vote for president or Congress but forced to live under U.S. laws—already lacked basic democratic rights. By giving the fiscal board the power to reject decisions made by Puerto Rico’s elected territorial representatives, they were now losing the weak rights they had won, marking a return to unmasked colonial rule.
by 2017, Puerto Ricans were resisting this shock doctrine strategy with organization and militancy.
A popular movement calling for an independent audit of the debt was quickly gaining ground, spurred by the conviction that if its causes were closely examined, as much as 60 percent of the more than $70 billion Puerto Rico supposedly owes would be found to have been accumulated in violation of the island’s constitution and is therefore illegal. And if a large part of the debt is illegal, not only would it need to be erased, the fiscal control board would need to be dismantled, and debt could no longer be used as a cudgel with which to impose austerity and further weaken democracy. According to
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Then, on May 1, 2017, many of Puerto Rico’s labor and social movements converged into one angry cry, when roughly 100,000 people took to the streets to demand an end to austerity and an audit of the debt—by some estimates, the second-largest protest in Puerto Rico’s history.
Desperation because the relief and reconstruction efforts have been so sluggish, so inept, and so apparently corrupt that they have understandably instilled a sense in many that nothing could be worse than the status quo. This is particularly true for electricity.
Related to this is distraction: Daily life in Puerto Rico remains an immense struggle. There are repairs to be done to damaged homes, and byzantine, time-devouring bureaucracies to navigate to help pay for them. For those who still don’t have electricity or water, there are the interminable lineups required to receive aid.
the mechanics of survival can take up every waking hour—a state of distraction not very conducive to political engagement.
“Puerto Ricans had already undergone a huge amount of trauma due to the colonial relationship to the United States,” most recently during the debt crisis. Then came the storm, which literally ripped the lid off the agony that so many households had been quietly enduring. With cameras poking into homes that had their roofs torn apart, Puerto Ricans found themselves looking into one another’s lives, and they saw not just storm damage, but also punishing poverty, untreated illness, and social isolation. As
