This is the first time in Puerto Rico’s history that a governor was forced to resign due to mass protests. What does Rosselló’s resignation mean for the future of Puerto Rico’s politics and its economy? José Caraballo-Cueto discusses the situation
Story Transcript
PUERTO RICAN GOVERNOR RICARDO ROSSELLO Despite having a mandate from the people who elected me democratically, today I feel that continuing in this position presents insurmountable difficulties. I announce to you today that I’ll be resigning as governor effective Friday, 2nd of August. [crowd cheers]
GREG WILPERT Welcome to The Real News Network. I’m Greg Wilpert in Baltimore.
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What you just saw was Puerto Rico’s Governor, Ricardo Rossello, announcing his resignation following almost two weeks of massive protests that mobilized hundreds of thousands of Puerto Ricans. Rossello had made the announcement shortly before midnight on Wednesday. The movement against him had gathered momentum after the Puerto Rican Center for Investigative Journalism published a series of text messages that Rossello exchanged with his inner circle in which they made disparaging, homophobic, and sexist comments against fellow Puerto Ricans. But those messages were only the latest scandal involving the governor. Corruption allegations and mismanagement had already been plaguing his tenure for weeks before that. Here’s what some of the protesters had to say after Rossello made his resignation announcement.
PUERTO RICAN PROTESTER 1 It’s a bit late, but he finally did it. We’re celebrating. We’re super happy. The people can do it when they unite.
PUERTO RICAN PROTESTER 2 After my son’s birth, this is the happiest moment of my life. This is incredible. I’ve been waiting for this moment since I [was] a little kid with my father.
PUERTO RICAN PROTESTER 3 This is a victory for the poor, for the Maria victims. This is a victory for everyone that has been let down by the government. Ricardo Rossello, goodbye.
PUERTO RICAN PROTESTER 4 We are a people of dignity and our government took it away from us, until tonight.
GREG WILPERT Joining me now to discuss the current situation in Puerto Rico is Jose Caraballo-Cueto. He is an Economist and Associate Professor of Statistics and Finance at the University of Puerto Rico in Cayey. Thanks, Jose, for joining us today.
JOSE CARABALLO-CUETO Thanks for the introduction.
GREG WILPERT So let’s start with your impressions of what the protesters had achieved— Rossello’s resignation. How significant is this, and what does it mean for Puerto Rico now?
JOSE CARABALLO-CUETO Well, I think it’s a landmark. For the first time in our history and perhaps for the first time in many parts of the world, especially in Latin America, a pacific protest removed an elected governor out of power. So I think that’s a great achievement. I think that’s a landmark actually in our history. And I think that it’s going to bring some stability because he was a distraction. He was bringing instability to our institutions, so we need secure institutions in order to perform the economic policies that we need. But I think that was a good achievement last night and I look forward to the next steps that we need in order to reach stability.
GREG WILPERT Now, Puerto Rico’s Secretary of Justice, Wanda Vazquez, is assumed to take over for Rossello once he’s gone on August 2nd. Now, will her taking over change anything? And will there be early elections for governor or will she remain for the rest of Rossello’s term, which actually doesn’t end until January 2021?
JOSE CARABALLO-CUETO Well, that’s the second step that we have to make sure we make it well. The Constitution of Puerto Rico says that the person that should take the power in case of a governor’s resignation is the Secretary of State, but he resigned two weeks ago. So the third person should be the Secretary of Justice, but just today we had another leak and another chat that involved the Secretary of Justice and I’m not sure that that person is going to bring the stability that we need. My suggestion is that all the parties involved especially all the sectors and all the political parties, look for a person of consensus that can actually get us to the next year and elections are going to be held next year. So I know there are many people that can do that transition, but we have to make sure that we look for them.
GREG WILPERT Now, one of the issues that Puerto Rico has been struggling with for a long time is its status as a US territory, which really should be called a colony since it’s part of the US, but has no power in the federal government. Now, do you think that this protest movement and the governor’s resignation will advance the cause for democracy in Puerto Rico? How do you see that development playing out now after his resignation?
JOSE CARABALLO-CUETO Well, there are two sides of the coin right now. There is on the one side, the people of Puerto Rico who are on the streets for the first time in a long time. They are demanding more democracy. The want to clean the house. They want zero corruption in the government. And they are demanding the board that was imposed by Congress three years ago to go as well with Rossello.
On the other side, there is the federal government and they’re watching everything that is happening in Puerto Rico, the federal government of the US. And they are somehow—Actually some newspapers such as The New York Times and The Washington Post are also demanding to give more power to this fiscal control board so that they make sure that they take the control of everything in Puerto Rico, especially all the political institutions, to make sure that the policies that they want to execute can take place. But I think those two sides of the coin are going to be struggling in the next week. And I hope that this side of the coin— that is, the people of Puerto Rico— and their demands are the ones that are finally accomplished.
GREG WILPERT Now, related of course to the political situation, and you already touched on it, and it’s perhaps even more complicated, is the issue of Puerto Rico’s economy. Now, how do you see Puerto Rico’s economic future following the PROMESA Act of 2016 and a near default on its debt? It now has this financial oversight management board that you mentioned, which is not controlled really by Puerto Ricans, but by the US government. What does this mean for Puerto Rico and is there any chance that people will now after this victory of forcing the governor’s resignation, that they will mobilize against this state of affairs now that they’ve achieved this resignation?
JOSE CARABALLO-CUETO Yes. I think these protests are going to affect the plan of adjustment that the board was planning to present to the court in these days. The plan of adjustment of the central government, it has the agreement of all the debts that the central government had. And both Rossello and the fiscal control board had certain agreements on how to present that plan of adjustment to the judge, so right now those plans will have to wait a little longer until this new government is in office and we have to see what is their orientation. So I hope that at the end, the people of Puerto Rico win with this and we can look for better debt agreements than the one that the previous government reached with the creditors, especially with bondholders.
GREG WILPERT Tell us a little bit more about the adjustment plan that you mentioned. I mean, what would it mean if it were implemented? And you know, this is something we’ve covered before with Mark Weisbrot, for example, of the Center for Economic and Policy Research, but I just want to get your take on what this adjustment plan would mean if it were to be implemented for Puerto Rico.
JOSE CARABALLO-CUETO Well, the one that the board was thinking to implement— along with the Rossello administration— includes pension cuts, it includes I think a too generous agreement with bondholders, and they don’t actually want to look at the debt that was illegal, vis-a-vis the illegal part of the debt. They of course made some statements in the press that there are some debts that are going to be illegal, but at the same time they are negotiating with those bondholders. But I think we have to make sure that we don’t negotiate any illegal debt. And the second thing that we need to make sure is that we find sustainable payments so that in three or four years, we are not in another round of restructuring. And I’m not sure that giving a generous agreement with bondholders is going to prevent that.
GREG WILPERT And what about the possibility of a debt forgiveness? I mean, that has been mentioned by some people, but obviously the federal government is not willing to support that. But don’t you think that that might be a route that the movement that has, so to speak, developed now could be pushing for?
JOSE CARABALLO-CUETO We have to see how that movement develops. I have seen, you know, in countries such as Haiti after the earthquake, a large part of the debt was forgiven. But in the case of Puerto Rico, after Hurricane Maria, what the board did was to double the payments in the fiscal plan’s debt payments. So if we compare as I did the fiscal plan before Maria with the fiscal plan after Maria, what the board did was to double the payments because they’re saying, well the government of Puerto Rico is going to have more money now. We’re going to observe a relatively large reconstruction and that is going to increase government revenues, so let’s use those new government revenues to pay more debt. And for me, that’s ridiculous because after a disaster, you cannot pay more debt than the one that you planned before the disaster. So I hope that the new governor that is going to be in power in the next month, makes a new fiscal plan and negotiates new terms with the board, and they actually stick to the debt payments that they say were sustainable before Maria. If not, they’re going to use Hurricane Maria as an excuse to bail out bondholders.
GREG WILPERT Okay. Well, we’re going to leave it there for now. But of course we’re going to continue to follow the situation in Puerto Rico. I was speaking to Jose Caraballo-Cueto, Economist and Associate Professor at the University of Puerto Rico. Thanks again, Jose, for having joined us today.
JOSE CARABALLO-CUETO Thank you.
GREG WILPERT And thank you for joining The Real News Network.
