Puerto Rico, an American colony in the Caribbean that was once perceived as “The Shining Star of the Caribbean,” is on the verge of collapse due to colossal financial crises. Puerto Rico’s economy grew significantly after abandoning its sugar-based economy and adopted industry-based economy in the second half of the twentieth century. The American government offered the nation immense support that fast-tracked the growth. During the Cold War, Puerto Rico was blossoming as the U.S. set naval base in the country due to its strategic position as an alternative to Communist Cuba. The thriving economy earned Puerto Rico the status of a model country to be emulated by both developing and developed nations (Bannan, 2015). Puerto Rican economic challenges emanate from numerous issues from the corrupt government, colonialism, natural disasters, and austerity measures that have recently triggered protests.
Admittedly, colonialism and government corruption can vividly explain Puerto Rican financial challenges. The colony rose to prominence due to its diplomatic ties with America and equally fall due to the same links. Once America cut the support it used to offer Puerto Rico, especially with its naval base on the territory, the island experienced substantial financial problems. The colony was left at the mercy of reprobate government officials that aided dirty businesses. For instance, most debates arise from the legitimacy of the hedge funds where unscrupulous businesses buy municipal bonds at low prices but, in turn, charge extravagantly high interest rates (Bannan, 2015). Corruption wasted a significant amount of government funds leading to more debts and increased taxation, which hurts the taxpayers. The huge debt has devastating impacts on the citizens who are compelled to pay for it in the form of reduced public services, high unemployment rates, and decreased benefits (Bannan, 2015). At the same time, the graft in the government contributes to the embezzlement of public funds, especially infrastructure money.
Other than the despicable corruption in the Puerto Rican government, colonialism also plays a significant role in escalating the crisis. Due to its status as a territorial possession of the U.SPuerto Rico has little power to represents people’s grievances (Bannan, 2015). The colony depends almost entirely upon the legislation enacted by the American Congress. Thus, the government is unable to respond effectively to people’s interests by making laws that apply to its population. Additionally, the country is barred from declaring bankruptcy or restructuring debts as it is not a sovereign nation. Hence, it is compelled to struggle with paying debts even when the debts are high than the colony’s gross domestic product. Moreover, the Puerto Ricans have no authority to elect representatives or senators to represent them in the nation’s capital. Thus, the only way the citizens can air their grievances to the government is by protesting, which usually does not bear favorable outcomes. Protests tend to paralyze the city as everything within the capital stops. The ties with America also encourage emigration. Scores of citizens tend to move to the U. S. searching for opportunities, education, and escape the economic crises at home (Bannan, 2015). As a result, the colony suffers a significant brain drain that paralyzes some crucial income generation sectors.
Due to the unmanageable debts, Puerto Rico has resorted to austerity measures that, instead of rescuing the colony, dims its future. The government has no option but to source funds from its poverty-stricken citizens, struggling small businesses, and a significant cut in government services and jobs. A considerable number of people working for the government are laid off as there are not enough funds to support recurrent expenditure. The economic crisis status in Puerto Rico is now a form of human rights violation since the colony spends more on debts than security, education, and health. Furthermore, Puerto Rico has closed more than one hundred and fifty schools, proposed reducing the minimum wage, significantly cut the university budget, increased taxes, and is facing a shortage of medical providers due to emigration (Bannan, 2015). As it stands, Puerto Rico has no viable strategy for renegotiating the debt, which cast doubts on the colony’s economic future. With the resultant food insecurity, unemployment, and separation of families, Puerto Ricans have no option other than to protest. The island has been experiencing regular protests for the last five years demanding change in government.
Puerto Rico’s future is at a stake if the ongoing economic crisis does not get long-lasting solutions. The country is not in a position to reclaim its lost glory unless the international community intervenes. Still, America as the territorial owner can offer aid to promote economic growth in the devastated colony. However, it might take a while before Puerto Rico finds a solution that addresses the leading causes of the crisis. Resolving the root cause, which is corruption and austerity measures, is the only way the colony can resurrect its economy to the previous status. As for now, the country will continue experiencing regular protests and massive emigration of its population.
Reference
Bannan, N. L. O. (2015). Puerto Rico’s odious debt: The economic crisis of colonialism. CUNY L. Rev., 19, 287.