Sunday, September 24, 2023

LATIN AMERICA | 18-08-2018 10:02

Rosselló: ‘Puerto Rico statehood is getting a second wind’

Ricardo Rosselló on Puerto Rico’s reconstruction, its economic future, the statehood movement and his relationship with President Donald Trump.

Governor of Puerto Rico Ricardo Rosselló has the challenging task of rebuilding his battered homeland following the devastating Hurricanes María and Irma in 2017. With much to say about the state of the island’s infrastructure and finances, as well as its complex relationship with mainland US authorities, he spoke to the Times during a brief visit to Buenos Aires where his wife Beatriz received a prize for her charity work with Unidos por Puerto Rico.

There were major discrepancies in death toll figures following María and Irma, with estimates ranging from 4,600 down to 64. The hurricanes also exposed infrastructure problems and an uneven response from US Federal Authorities compared to previous similar emergencies on the mainland. What can be done in the immediate and medium-term to alleviate the suffering of the people of Puerto Rico currently and ahead of more extreme weather?

Certainly, our public healthcare response after the hurricane was not adequate. It was hard to envision a category four hurricane, almost stationary, coming toward Puerto Rico. We lost essentially all communication, all roads, all electricity. We commissioned George Washington University to do a study. In between, many others have done studies. Some have shown wide ranges of excess death. Some more recently are anywhere between the 1,000 and 2,000-mark. While the number is important, I believe the most important thing is establishing how can we respond in the face of another hurricane and establish guiding protocols.

In the mid to short-term, there are a few things I can already see. We have a lot of people that are diabetics that have to do their renal studies and so forth. We need to have an open database to identify where these folks are, so in the face of an emergency we can target them and get to them quicker. Secondly, provide temporary assistance to all of them in the case of predictable events like a hurricane, so that they can get their services in time.

With regards to the federal response, there is no doubt that it was slow and weaker than in Texas and Florida. We have worked with HUD (United States Department of Housing and Urban Development) for what’s called the CBDG (Community Development Block Grant) funding, which is going to be readily accessible for rebuilding and kick-starting the economy, housing and infrastructure and so forth. But the process with FEMA (Federal Emergency Management Agency) has been riddled with bureaucracy, unnecessary bureaucracy in my view. To that end, we either need to fix it on the federal level; or, what I think is the underlying problem in Puerto Rico, is that we are US citizens but we are second-class citizens.

You’ve referred to Puerto as a “geopolitical blackhole” referring to your lack of political representation in Washington, your status as a colonialterritory, differential tax status, given the fact you don’t control your own currency, and the disadvantage you face vis-a-vis US states. In concrete terms, what can be done to push forth with statehood given the lack of political incentives for Washington?

I say that it’s a geopolitical black hole because like physical blackholes, physical reality seems to not play a role. In Puerto Rico’s case it’s the same, because we’re sort of foreign, we’re sort of domestic. We’re treated foreign for tax purposes; we’re treated domestic for inter-state commerce; we don’t have our own coin; we receive certain benefits from certain federal programmes but not all of the benefits, yet we are subject to all federal laws, which the US government pushes forward without us being able to participate. It is a challenging predicament. The only two solutions are either independence or statehood.

Generally, Republicans think Puerto Rico will be a Democrat state and historically there have been some Democrats that favour independence when you see the statehood movement gaining ground. My view is that it’s getting a second wind. The most glaring reason is that Congress doesn’t act unless there is a pressing need or emergency. Prior to Maria, we could go to the Senate and do the song and dance and they would say they couldn’t help us, the same with the House, but progress was very slow. In the onset of Maria, it sort of opened up a Pandora’s box of facts that people didn’t know. Most Americans didn’t know we were part of the US. Most didn’t know we were US citizens. Now people are starting to ask: Hey, are these US citizens treated differently because they’re Hispanic or they’re on a territory? On the other hand, we have 5.6 million Puerto Ricans that live in the United States. They all have voting power but they’ve never been organized. So one of the efforts we’re trying to do is getting the Puerto Rican diaspora to organise properly and to do what the Cuban diaspora does, for example.

You have expressed intentions to sue the Fiscal Oversight Board— which has the power to determine your budget—for overreaching its powers, given imposed austerity and deficit-reduction measures in the face of a debt load that climbs to US$70 billion, on top of the damage caused by the hurricanes. We face similar challenges with austerity and debt in Argentina, though for different reasons. How do you plan to generate economic growth in a context of austerity and a limited capacity to create savings?

In Puerto Rico, we’ve identified those austerity measures, which are largely part of the huge size of government. To give you some context, Puerto Rico has 138 agencies, which is way too many. One of our objectives is to reduce government to a more manageable size with 30 or 35 agencies. We want to save US$ 1.5 billion in expenditure. The second part of it is that Puerto Rico has some very unique incentives for economic growth, we’ve just never had the opportunity to leverage them. We have Laws 20 and 22, which make Puerto Rico the most competitive place in the Western Hemisphere to either invest as a wealthy individual or to export your services as a company.

Unlike Argentina, inflation is not a consideration, control of monetary policy is not a consideration. Puerto Rico really has four major ways to bringing capital to the Island and bringing value. One is credit --- we don’t have access to that now because of the debt burden. Second, is transfers -- in your case it would be the International Monetary Fund, for instance, in our case it would be the federal programmes we receive. We have steady state federal programmes which come to Puerto Rico, but now with the devastation we’re expecting anywhere from US$ 70 to 100 billion. The last two ways we can get money to Puerto Rico are either exporting or direct investment.

What we’re trying to see is what have been chronic problems in Puerto Rico, and see how we can help with this investment to solve it. Chronic problem number one is our energy grid. It’s very expensive, unreliable and bad for the environment. The same with the labour participation rate, which has been one of the worst in the world, always in the bottom five. With the influx of capital, we can start capacity building for folks, starting with the reconstruction but then expanding into other areas. Education has also been a critical and chronic problem. We have a reform pathway and social equality as one of the critical guidelines for us to stick to in the future.

Puerto Rico has received big promises to solve its economic problems, first from big hedge funds seeking to relocate to take advantage of tax incentives, and more recently from cryptocurrency millionaires promising to invest. We are speaking of investment, something President Macri has promised as a solution to Argentina’s fiscal deficit, which never materialised here and instead attracted fast-money which ended up exacerbating currency volatility. Is there any truth to these big money solutions that could help Puerto Rico in a concrete way?

Puerto Rico has always been a good place to invest but there have been severe obstacles. Of course, scale matters and the scale of Puerto Rico to Argentina is much smaller, so we think it will have an impact. The other thing that is different between the two countries is that I think that there is concern that it would take just an election to flip Macri’s pro-business policies. At least my senses are that investors have been somewhat weary because while they believe in the current policies they don’t know if they’ll withstand in the future.

What can you tell Latin America about President Donald Trump? I ask in the provocative context of Trump having minimised the impact of the hurricanes suggesting they were less deadly than Katrina—which they were not in terms of death toll—and him joking that you used them as an excuse for the island’s decrepit energy system, when you were asking him a very serious question about statehood and trying to resolve this double-tiered system?

I know there is a certain perspective of the president and he uses that to his advantage or disadvantage, using social media, his very strong expressions and maybe unorthodox style. But as a governor, and a governor who’s a Democratic, from the opposing party, I have to say that when I’ve asked him for something he has delivered. It’s not to say that the rest of the federal government has done the same. I’ve had a terrible experience with the corps of engineers restoring the energy grid. I’ve had challenging experiences with FEMA. Good experiences with others like HUD but the reality is that from our standpoint he has delivered. Is his style unorthodox? Yes. Does he know that he will be criticised for everything, one way or the other, or how he says it? Very likely. But my concern right now as Governor of Puerto Rico is not to tinker with that rather to ensure he is helping Puerto Rico and I will continue that route. The moment he doesn’t, I’ll be the first person to call him in out on it.

Corruption is one of Latin America’s defining obstacles toward development. Here in Argentina there has been a scandal involving notebooks exposing public-private corruption. What is your vision on Latin American corruption and what could be done to eradicate it?

Corruption is a worldwide ill. My goal has always been to see how we can eradicate it. There are a lot of things you can do post-event but really there’s no substitute for prevention or education. I think those are the two components. There needs to be a hard stick. If you’re given an opportunity and you act in a corrupt manner, you should pay the maximum price. In Puerto Rico, what have we done recently, we’ve created a corruption code so everything is coded in terms of white-collar corruption. I think that infrastructure in general is one of the places you find the most corruption. In Puerto Rico we have a gold standard framework for public-private partnerships. It’s been successful in roads, airports and novel infrastructure. The beauty of it is that it’s completely transparent. It is a big concern of mine because right now we’re going to get US$70 to 100 billion and a lot of it is going to go to infrastructure. We’re going to create a new office and one of the key components is going to be a transparency portal which will state where the money is, who’s bidding for it, what project they have, what stage is the project at, and what’s the benefit for Puerto Rico. Not only for us to see, but for the world to see, that it’s a transparent process. If someone if fanegaling with people’s money, then let them pay the highest price.

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Agustino Fontevecchia

Agustino Fontevecchia


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