By Beatrice E. Rangel
The deadly fingerprints of Irma and Maria will mark the Caribbean for decades to come.
Cities and villages completely wiped away. Distraught human beings parading through the debris like zombies. Darkness and dryness all over. Unfolding famine that threatens to erase all traces of civilization as looting and killing become tools for survival.
And these events are unfolding under the limelight of the world TV networks in a US territory!!
Yes, to our chagrin Puerto Rico is the global showcase for the U.S. failure to properly manage one of its territories nourishing malformations that have crippled the island and that spring from lack of definition.
While Texas and Florida are already on their ways to recovery a month and three weeks after the visits of Harvey and Irma. A week after confronting Maria, Puerto Rico is in a state of spiraling deterioration that could soon erupt into bloodshed.
To be sure, the island territory was the worst prepared to face a natural calamity.
Its state-owned power utility has been experiencing sustained decay for at least two decades. As its management became politicized and its labor benefits good in relative terms, the company became prey of political patronage and union peddling.
Inefficiency and tolerated illegal stealing of electricity took a toll on its profits. As profits shrank equipment renewal was postponed. Today the company largely operates with transmission equipment from the 1980s. And it lacks an appropriate maintenance budget. Worse, the utility is debt ridden to the tune of US$20 billion.
From the institutional viewpoint Puerto Rico is better defined by what it is not instead of what it is.
It is not a state. It is not a country. It is a U.S. territory that lacks a firm institutional network, as its institutions are a patchwork made of what was left by the Spaniards and what is allowed by the Americans.
As a result, Puerto Rico lacks the institutional resources to file for bankruptcy, structure its debt or even develop a maritime hub to house growing transpacific trade coming to the Americas.
Indeed, Puerto Rico must punish its population an overprice of 30% for all its imports on account of the Jones Act which bans any foreign vessel from entering a second U.S. port. Given that Baltimore, New York, Boston, Atlanta, and Miami usually are the port of entry, Puerto Rico gets its trade after it is transshipped to a U.S. vessel run by a U.S. crew.
From the economic view point, the maze of public policies enacted in Puerto Rico have the dubious record of competing with the Dominican Republic in fostering corruption. This is the net result from the intervention of layers of institutions which include the U.S. Congress, an Oversight Board (whose members evidently spend their lives tanning at the beaches), and the U.S. Supreme Court.
Accordingly, a simple financial exercise such as preparing a budget turns into a jamboree where diverse agents perform diverse tasks without a common script. In the process, accountability is lost in space thereby promoting impunity and lack of reality.
Worse, convoluted public policies have created a perfect environment for vulture funds. These own the lion's share of the debt. The vulture funds appear to be using front groups to influence congressional debate on measures that could relieve Puerto Rican debt at the creditors' expense.
60 Plus, a conservative seniors' group that is funded by a few wealthy anonymous donors and played a lead role in opposing the Affordable Care Act, set up a group called "Main Street Bondholders" to fight efforts in Congress to provide Puerto Rico with even the most modest bankruptcy powers.
Finally, there is education. As the crisis deepens, more schools are closed forcing desperate low-income parents to register their children in overcrowded schools where ill-trained and worse compensated teachers try to teach a program that would demand a Harvard PHD to be suitably executed. Schools are thus turning into massive workshops of ill-educated generations that are deprived from reaching enriching and stimulating jobs.
And this tragedy arises from a history where neither the Puerto Rican leaders nor the Americans have had the courage to choose a path to development that resembles that of the U.S. because such a decision is fraught with conflict big and small. Dodging conflict for centuries has produced a crippled Quasimodo in the Caribbean where "all hope is lost" as Dante Alighieri would put it.Beatrice Rangel is President & CEO of the AMLA Consulting Group, which provides growth and partnership opportunities in US and Hispanic markets. AMLA identifies the best potential partner for businesses which are eager to exploit the growing buying power of the US Hispanic market and for US Corporations seeking to find investment partners in Latin America. Previously, she was Chief of Staff for Venezuela President Carlos Andres Perez as well as Chief Strategist for the Cisneros Group of Companies.
For her work throughout Latin America, Rangel has been honored with the Order of Merit of May from Argentina, the Condor of the Andes Order from Bolivia, the Bernardo O'Higgins Order by Chile, the Order of Boyaca from Colombia, and the National Order of Jose Matías Delgado from El Salvador.
You can follow her on twitter @BEPA2009 or contact her directly at BRangel@amlaconsulting.com.
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