Crisis must spur new deal for Puerto Rico with US

“Are we in Haiti?”

“There are no trees, we need to seed again!”

“Did we remove the heart of Te Fiti (Mother Nature in the movie “Moana”) that she sent us this terrible hurricane?”

“When are we going to have a normal life?”

{mosads}These were my children’s questions after seeing the war-zone-like conditions in our home island of Puerto Rico, which was devastated by the strongest hurricane on record in its history. As of now, if you want a loaf of bread or a liter of gas, you need to have cash in your pocket and stand in line for two hours or more. 

Under this crippling scenario, I tried to encourage some optimism in my kids. However, my replies to them should have been:

“Remember what I told you how natural disasters can remind us about the conditions other people live in throughout the world? Well, this is one of those situations. Due to natural disasters like hurricanes, we now hold similarities with Haiti: a deforested territory; scarcity of food; a collapsed economy and infrastructure that will cause many people to go months — or years — without electricity, clean water, internet and other basic needs.”

So, yes, we need to seed and reconstruct the island again. Many communities have gotten together to clean up the streets and help each other in reconstructing some houses. But it should be noted that Puerto Rico didn’t hurt the environment alone.  

We are just disproportionately paying the consequences of global environmental problems that have caused us to suffer two strong hurricanes in a row — in just two weeks!  

We are not going to have a “normal” life until we get rid of the cabotage laws: Most of our imports come from the U.S., but there are too few (and too expensive) ships to bring the much needed key items, such as batteries and food.

For all the people who want to help Puerto Rico, do one thing right away: Call your respective member of Congress and implore him or her to support Sen. John McCain’s (R-Ariz.) project to permanently end these cabotage laws, which are outdated regulations that harm consumers and businesses, except for the few carriers that integrated this merchant marine oligopoly.  

In addition, if we do not find an exception to the ERISA act (as Hawaii did), it would be very difficult for the Puerto Rican government to avoid a health funding cliff next year, where hundreds of thousands of poor people will not have access to health care, and many more physicians will migrate as a result.

That exception will allow Puerto Rico to develop its own health system, as we had before the 1990s, without wasting millions of dollars on insurance companies. The current system, which prioritizes the intermediary role of insurance companies, is not good for patients, physicians or taxpayers. 

To return to normalcy, we need even more help than that which was extended to Florida after hurricane Irma, where thousands of electrical workers from other states got there to help rebuild the state’s infrastructure.  

Our electrical infrastructure is so weak that when Hurricane Irma barely hit the island, many people were still without electricity before the destruction caused by Hurricane Maria even occurred. In fact, even before the hurricanes, Puerto Rico suffered a huge blackout a couple months back.

Most accommodated families in Puerto Rico now have an electrical generator, and poor families are going back to using candles (resulting in some accidental house fires). Past experiences with privatization of other natural monopolies, such as the Puerto Rico Aqueduct and Sewer Authority (PRASA), did not improve the service or the price.  

Perhaps a permanent solution to the unfolding Puerto Rican humanitarian crisis could include a type of “Marshall Plan” that allows the island to rebuild its infrastructure and make it stronger, making the island competitive while increasing its ability to pay debt obligations in the process.

This does not necessarily imply that the U.S. government would have to pay something. Unfamiliar people will not know that the U.S. has helped many foreign countries when they have faced a similar debt crisis by endorsing new, competitive debt to pay off old, unsustainable debt.

This would be a better solution to the U.S. bondholders, too. They are currently wasting millions of dollars on lawyers, attempting to squeeze every drop of milk out of a thin cow — the Puerto Rican government. New financing can include a portion for rebuilding infrastructure.

Strengthening a fiscal control board to squeeze a broke government from a battered country is not optimal and will just exacerbate the current economic depression, with more defaults in mortgages and lower consumption levels.  

If the U.S. did this with foreign countries, they can do it with their own colony that is living through a catastrophe. After all, the infrastructure of Puerto Rico was made in coordination with its industrialization. When the federal government caused a fast deindustrialization, the local revenues declined and were not sufficient enough to maintain this infrastructure.

When Congress adopts the right policies for Puerto Rico, we can be confident that a new wave of refugees — all of whom are U.S. citizens — will not pour into the U.S. mainland. Right now, it is hard to tell my children that a normal life will be possible on this island.   

José G. Caraballo, Ph.D., is a professor in the Department of Business Administration at the University of Puerto Rico at Cayey. He is also the director of the Census Information Center at UPR.