It was the wedding of one of her best friends, and Natalie Kao was going to be a bridesmaid in a fun, tropical setting on a small island just off the east coast of Puerto Rico. But the prevalence of the Zika virus across the U.S. territory gave her pause.
Kao, pregnant with twins, knew the mosquito-borne Zika virus has been linked to a rare birth defect in a tiny percentage of cases. But even a small risk was too great. "You don't know the impact, which is very scary," the San Francisco woman said.
She sent her regrets, as did several dozen other members of the wedding party.
Puerto Rico has been hit harder by Zika than any other part of the U.S., with more than 1,170 confirmed cases, one death and the first microcephaly case acquired on U.S. soil. Now, worries about the virus are starting to affect the tourism industry, which had been one of the few bright spots in an otherwise dismal economy.
The full number of people who have canceled plans to visit or chose another destination is unknowable. But people have cited Zika in the cancellation of at least 42,000 hotel room reservations through 2018, which translates to about $28 million in lost revenue for the lodging, restaurant and tour industry, said Ingrid Rivera, executive director of Puerto Rico's Tourism Company.
People who work in the industry say they have been seeing the financial effects of Zika for months, and it appears to be getting worse.
"Cancelations left and right and up and down," said Luis Alvarez Perez, owner of a luxury travel planning and relocation company in San Juan. "People just stopped coming."
Zika is named for a forest in Uganda where the virus was first discovered in 1947 and there have been many outbreaks over the years. Global health officials issued an alert after detecting it in Brazil in May 2015 and it has been spreading rapidly through the Western Hemisphere, carried by the common Aedes aegypti mosquito.
It had not been considered a particularly dangerous disease compared to dengue and chikungunya, which are carried by the same mosquito. Zika can cause headaches, fever, rash and reddened eyes. But it has now been linked to microcephaly, a rare defect in which babies are born with abnormally small heads and brain damage as well as to the unusual paralyzing condition known as Guillain-Barre syndrome.
But even rare complications can be scary. Kao said she was told that Zika caused a great deal of anxiety at the February wedding of a friend when some guests were inevitably bitten by mosquitoes.
"Some people cried," she said. "They were upset and went back to their room."
In the ensuing months, cancellations have started to mount. Major League Baseball scrapped a two-game Puerto Rico series between the Miami Marlins and the Pittsburgh Pirates scheduled for late May that will now be played in Miami. Tourism officials say that move cost the island $4.5 million in lost revenue. USA Swimming dropped plans to hold a training camp here in July. Other large groups also have canceled, including the California-based Internet Corporation for Assigned Names and Numbers. Dozens of people have withdrawn from an international boxing event scheduled for October.
"We're starting to see a larger impact with the groups," Rivera said. "Clearly it's a trend that we want to make sure that we stop."
Tourism represents only about 7 percent of Puerto Rico's economy, but money generated by visitors has been growing in recent years while other sectors have shrunk during a 10-year recession and the struggle of the territory's government to handle a spiraling public debt.
Some Puerto Rican officials have criticized the U.S. Centers for Disease Control and Prevention for what they consider overly alarming warnings. The CDC has projected that more than 20 percent of Puerto Rico's 3.5 million people could be infected with Zika in an outbreak expected to peak by this summer.
"They've exaggerated the numbers," Puerto Rico's Health Secretary Ana Rius told The Associated Press. "We're never going to reach those numbers."
The CDC told the AP that it recognizes Puerto Rico is in distress and said U.S. legislators are working to address the island's crisis. But it also said education is key to preventing the spread of Zika. "One of our responsibilities is to provide the best available science to people, and the more we learn about Zika, the more serious we think this virus is," the agency said in a statement.
Kao said she loves Puerto Rico and has visited the island multiple times, but noted that her pregnancy is her priority, like some of the other wedding guests who canceled.
"When the news kept getting worse ... we said: 'That's it. We're not going,'" she recalled. "None of us wanted to put ourselves at risk."
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Danica Coto on Twitter: www.twitter.com/danicacoto
Puerto Rico’s budget director says the U.S. territory cannot pay off its debt and provide essential services at the same time.
Luis Cruz Batista spoke Monday during a public hearing in which Puerto Rico legislators debated a proposed $9.1 billion budget.
He warned that nearly 3,500 public employees would have to be laid off in part if the island were required to meet all its debt obligations. Cruz said other scenarios include reducing the work week and making deeper cuts to the health, public security and education sectors.
The proposed budget sets aside only $209 million to help pay interest tied to a $2 billion debt payment due July 1.
Puerto Rico is mired in a 10-year economic slump and its government is grappling with $70 billion in public debt.
Copyright 2016 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.
Nelson Rosada has been a chef for 28 years. He takes pride in having crafted many extraordinary dishes. But, he claims, none have been as special as the food he now serves daily at the Caribe Hilton Hotel, on the north-east coast of Puerto Rico.
The reason, he says, is that for the first time the ingredients he uses are fresh, grown and harvested locally instead of arriving – many days old – on a boat from Florida.
This might appear a small victory for one sous chef catering mostly to tourists, but it is indicative of a revival in agriculture in the US territory that offers, some believe, one potential solution to the $73bn debt crisis currently gripping the island.
“We have a beautiful island and a perfect climate, we can produce whatever we want,” Rosado says of the boxes of lettuces, beans, peppers, herbs and other vegetables delivered daily by a farmer-run cooperative based close to San Juan, the capital city.
“Its taste, the smell, the freshness and the crunch, you can’t even believe we can produce this quality of food.
“But to see our island growing again in this way is cool, it’s nice, we have something going here. It keeps dollars in Puerto Rico. I’m very proud that we’re working and supporting Puerto Rico.”
The headline figures of the century-long decline of Puerto Rican agriculture are depressing. In 1914, revenue from farming, food production and related activities accounted for 70% of the island’s gross domestic product. According to the most recent statistics from the US Census of Agriculture, it now accounts for less than 1%.
Furthermore, the loss to development of more than a million acres of prime farmland and the collapse of the sugar industry robbed Puerto Rico of vital income. Self-sufficiency declined to the point where the island imports up to 85% of the food it consumes – a “critical situation”, in the words of Dr Myrna Comas Pagán, secretary of the island’s department of agriculture.
However, thanks to a growth in demand for locally grown produce, financial incentives from the federal government and renewed focus on agriculture from local leaders, more families are returning to the land. According to the US Department of Agriculture (USDA), more than 1,700 new farms have begun operations. Farmers, food distributors, politicians and analysts increasingly believe that Puerto Rico can grow its way out of trouble.
‘We’re planting the seeds to bring foods for the future’
“It’s about recovering our lands and changing the culture of our people to make agriculture a way of life,” Dr Comas Pagán told the Guardian, pointing to a recent reclamation of 30,000 abandoned arable acres that lifted land available for growing to 637,000 acres, the first such increase in decades.
“Some of it will take time. For example, we’ve established 8,000 [new] acres for avocado and 8,000 acres for coffee that we can’t see for three years. But we’re planting the seeds to bring food for the future.
“We’re seeing new farmers, new technology, new farms. Already our agricultural income has increased since 2011 by 24% to more than $900m.”
On a hillside near Caguas, about 20 miles south of San Juan’s old town, brothers Pedro and Jorge Casas work in two giant greenhouses, tending crops of organic mint, chives, rosemary and basil. The farm was remodelled last year, in part through a $280,000 loan from the Farm Service Agency of USDA.
The physical footprint of the Agroponicos Cosecha farm is small, because no land or soil is required to grow. Instead, the tightly packed plants’ roots receive nutrition from a constant flow of water filtered in three large tanks full of tilapia fish. Since 2011 the brothers, who had no previous experience of farming, have harvested and sold increasingly large yields.
The entrepreneurs have also set up an expanding distribution network, to serve themselves and dozens of other farmers around the island and to help drive the food revolution.
“Everything is local,” said Jorge Casas, 31. “The point of everything is to grow the agriculture on the island and that’s the way we’re going to help the economy of the island.
“The farmers usually don’t like to go out and sell, so we’re creating this community of ‘You grow, I sell’. You grow what you’re expert in, we grow what we are expert in, and let’s join it all together and sell it.
“We’re working with more than 80 farms in food service, and hotels and restaurants are the main goal. Almost everything we have is sold with these clients, we’re not even in the supermarkets.”
The knock-on effect is more jobs, a welcome development on an island where according to the federal Bureau of Labor Statistics the unemployment rate is a highest-in-the-nation 11.7%, more than twice the US average of 5%.
With the farming boom come more farm labourers, drivers and retail workers, and urban produce markets are opening up across Puerto Rico. One such, O-Mrkt in the San Juan suburbs, opened in April with the Casas brothers as partners.
“We need to grow food,” said Pedro Casas, who was formerly a web graphics designer. “It doesn’t matter how but we need to grow it. If we don’t teach our kids these things you don’t turn that spark on. Education about agriculture was and still is very low on the island, we need to get into the schools.”
On a hillside near Caguas, about 20 miles south of San Juan’s old town, brothers Pedro and Jorge Casas work in two giant greenhouses, tending crops of organic mint, chives, rosemary and basil. The farm was remodelled last year, in part through a $280,000 loan from the Farm Service Agency of USDA.
The physical footprint of the Agroponicos Cosecha farm is small, because no land or soil is required to grow. Instead, the tightly packed plants’ roots receive nutrition from a constant flow of water filtered in three large tanks full of tilapia fish. Since 2011 the brothers, who had no previous experience of farming, have harvested and sold increasingly large yields.
The entrepreneurs have also set up an expanding distribution network, to serve themselves and dozens of other farmers around the island and to help drive the food revolution.
“Everything is local,” said Jorge Casas, 31. “The point of everything is to grow the agriculture on the island and that’s the way we’re going to help the economy of the island.
“The farmers usually don’t like to go out and sell, so we’re creating this community of ‘You grow, I sell’. You grow what you’re expert in, we grow what we are expert in, and let’s join it all together and sell it.
“We’re working with more than 80 farms in food service, and hotels and restaurants are the main goal. Almost everything we have is sold with these clients, we’re not even in the supermarkets.”
The knock-on effect is more jobs, a welcome development on an island where according to the federal Bureau of Labor Statistics the unemployment rate is a highest-in-the-nation 11.7%, more than twice the US average of 5%.
With the farming boom come more farm labourers, drivers and retail workers, and urban produce markets are opening up across Puerto Rico. One such, O-Mrkt in the San Juan suburbs, opened in April with the Casas brothers as partners.
“We need to grow food,” said Pedro Casas, who was formerly a web graphics designer. “It doesn’t matter how but we need to grow it. If we don’t teach our kids these things you don’t turn that spark on. Education about agriculture was and still is very low on the island, we need to get into the schools.”
Tara Rodríguez runs an organic cafe-restaurant and produce market in old San Juan. Photograph: Richard Luscombe for the Guardian Tara Rodríguez Besosa is another young entrepreneur who has recently moved her organic cafe-restaurant and produce market, El Departamento de la Comida (the Ministry of Food), out of a warehouse in old San Juan and to a larger site in Santa Teresita, a suburb in the east of the city. From small beginnings and a $10,000 loan from a friend, in 2010, she has built the business into a flourishing community hub, focused exclusively on locally grown produce and sustainable farming.
“I got to know all these amazing farmers, and wondered how people get to know about them and have access to these products if you’re not up at 8am on a Sunday for a farmer’s market,” said Rodríguez, 31.
“We’re creating demand. We have this pool of buyers, a pool of farmers and we’re bringing them together. Food is my bet on how to change this island, if not the world. Food has the power to change everything from economy to education to health to environment, you name it. I feel we’re on the verge of something with this island.”
‘Farmers have iPads, there are drones to monitor crops’
Many of Puerto Rico’s new generation of innovators and thinkers are gathering in San Juan this weekend for Agrohack, a specialist conference that will bring together for the first time the island’s food growers, sellers, chefs and consumers.
Much of the focus will be on “green” farming and new technology solutions that Carlos Cobián, the event’s founder, says will transform the island’s agricultural industry into an unrecognisable incarnation of its former self, with better energy and land efficiency and lower costs.
“You think of agriculture in Puerto Rico and the first image that comes to mind is an old jibarito in a straw hat walking the field slowly with his two bulls,” he said. “But the landscape is different now. Farmers have iPads, there are drones to monitor crops and spread seeds, they’re taking old warehouses and turning them into aquaponics and vertical farming.
“With the internet and education in agribusiness it’s not only about the farmer, it’s about people that export, it’s branding, marketing, gaining value from the product. We’re bringing together people with ideas, experience and innovation, the hackers, inventors, hustlers and business people who identify Puerto Rico’s problems and find the solutions.”
Despite the progress, and almost $60m from USDA to support agricultural programmes, the headwinds remain strong. The island’s vulnerability was exposed last summer when drought led to widespread crop failure and an emergency declaration in 10 counties.
Still, Dr Comas Pagán was upbeat.
“With the technology we have we can aim to produce 40% of our local consumption,” she said. “We’re in a crisis so we need to be efficient and contribute to our economic and labour development by creating agricultural jobs. People want to work.
“I’m excited because we’re looking at a revival of agriculture, young people considering it as a way of life.”
Jorge and Pedro Casas at one of their two greenhouses where they produce organic herbs. Photograph: Richard Luscombe for the Guardian
Puerto Rico's governor has lost a battle to increase a business-to-business tax and impose a transition to a value-added tax system amid an economic crisis.
Senators on Thursday gathered enough votes to approve a bill previously vetoed by Gov. Alejandro Garcia Padilla, who warned their actions would push the U.S. territory into deeper financial trouble. The bill prevents an increase of the business-to-business tax from 4 percent to 10.5 percent from going into effect next week.
Garcia said that legislators who overrode his veto acted irresponsibly and that they did not identify any new sources of badly needed revenue.
Puerto Rico is floundering amid 10 years of economic stagnation and faces a $70 billion public debt load that Garcia has said is unpayable and needs restructuring.
Republicans don’t want to block H.R. 5278 before the Nov. presidential election because the Puerto Rican vote matters in the key swing state of Fla., Guggenheim’s Jaret Seiberg says.
Opposition expressed by Bernie Sanders and some Senate Democrats may lead to votes on alternatives such as Fed emergency loans, but they will be defeated, Seiberg says
“It seems like it is this bill or it is chaos on the island. And we think enough key lawmakers on the Hill and Treasury realize this and want to ensure the bill gets enacted,” he says
NOTE: Puerto Rico-exposed bond insurers up YTD: MBI +14%, AMBC +17%, AGO +3%
Earlier: U.S. House Cmte Advances Puerto Rico Debt Crisis Measure
The last time Congress considered a debt-restructuring bill for Puerto Rico after lawmakers returned from a two-week recess, the measure died in committee.
Now, with a new bill to help the commonwealth avert a historic default facing a House vote next month after the Memorial Day break, House Speaker Paul Ryan and Minority Leader Nancy Pelosi want to make sure the legislation doesn’t stall again.
Ryan, who hammered out a deal with the White House on the legislation in an early test of his leadership, will have to rely on Pelosi’s Democrats to help pass it, lawmakers and staff on both sides of the aisle agree.
Though the bill cleared a big hurdle when it was approved Wednesday by the House Natural Resources Committee, fewer Republicans than expected voted in favor, raising pressure on Pelosi to limit defections from her own caucus, where some also remain wary of the measure.
Should the House approve the legislation, it will mark a rare show of bipartisan cooperation in Congress on an issue that has pitted Wall Street lobbyists against lawmakers and featured blistering ads in congressional districts over the Easter recess warning that the deal amounted to a “bailout.”
The Obama administration on Thursday continued to pitch the bill to House Democrats, with Treasury official Antonio Weiss, the point man on the Puerto Rican debt crisis, briefing the Congressional Hispanic Caucus.
“We’re not going to have unanimity in the Hispanic Caucus, but I think a majority will probably vote in favor of it,’’ said Caucus Chair Linda Sanchez (D-Calif.), who helps whip votes for Democrats. “And I think the Democratic side of the aisle will probably be the same.”
The legislation would help Puerto Rico restructure its $73 billion in debt and establish a federal oversight board to supervise the process. Pensions and social services would receive a measure of protection, while bondholders would probably be forced to accept less money than they’re owed. The bill would not spend any federal money on the debt.
Even though Pelosi and House Minority Whip Steny Hoyer (D-Md.) have voiced support for the bill, some lawmakers in the party remain uncomfortable, especially with the federally appointed oversight board, which some say will exert too much power over Puerto Rico.
“There’s going to be a lot of members on the House floor, on the Democratic side, that are going to have to have a true gut check when it comes to this,” said Ruben Gallego (D-Ariz.). Gallego voted for the bill in committee after attaching amendments he drafted. He also received a call from Treasury Secretary Jack Lew asking him to support the legislation.
“It was very difficult for me to not vote for this bill in the end because I couldn’t let my personal political ideology stand in the way of relief for 3.5 million people,” Gallego said.
Many members of the Congressional Hispanic Caucus remained noncommittal even after Treasury’s Weiss briefed them, Luis Gutierrez (D-Ill.), an opponent of the bill, said.
Gutierrez and Sen. Bob Menendez (D-N.J.) held a news conference immediately after the meeting to blast the bill, calling it “neocolonial” because of the powers granted to the oversight board to overrule Puerto Rican elected officials on revenue, spending and budgetary matters.
“I’m going to actively work amongst my Democratic colleagues in the House to defeat” the bill, said Gutierrez.
Sources on both sides of the aisle have indicated that a bill introduced by Rep. Nydia Velazquez (D-N.Y.), an influential member among Democrats on Puerto Rico, will be considered the same week as the debt legislation as a way for Democrats to claim a minor victory. The bill ends an exemption in financial regulation that allows investment firms to both underwrite and sell municipal bonds on Puerto Rico. Critics of the exemption say it creates a conflict of interest.
“As there may yet be further changes, I will withhold judgment until the legislation is finalized and I can fully weigh the bill’s benefits against my remaining concerns,” Velazquez said in an email regarding the debt compromise. Among her concerns are whether the debt restructuring can work and that the oversight board will enjoy too much sway over Puerto Rico.
Allowing Velazquez’s bill to come to the floor signals the realization among Republican leaders that they may not get a majority of their members to vote for the Puerto Rico legislation before a $2 billion payment comes due for the commonwealth on July 1.
In a possible preview of a House floor vote, all 10 members voting against the bill in the Natural Resources Committee were Republican, a higher number than the panel had hoped. Two others, Reps. Alex Mooney (R-W.Va.) and Paul Cook (R-Calif.) did not vote.
TV, radio and social media ads, some directly targeting members in their districts, have now been joined by automated phone calls telling constituents to call their congressional office in opposition to the bill, a last-ditch effort to make the vote more painful for House conservatives.
Few Republicans outside of those on natural resources wanted to talk about Puerto Rico after the bill passed committee, saying they hadn’t had a chance to catch up on the current legislation, even though the panel's staff had briefed members again this week.
Formal vote-counting has yet to start but the Puerto Rico debt bill is expected to come to the House floor in the second week of June, when Congress returns from the break.
Republicans on the natural resources panel hesitated to project much more than cautious optimism.
“I think we’re going to be ok,” said Rep. Cynthia Lummis (R-Wyo.) said Thursday. Yet she added, "I think there will be some attempts at some floor amendments,” with Republicans who couldn’t change the bill in committee, most of whom were opposed to the underlying measure.
“It should pass with the majority on both sides,” said Rep. Rob Bishop (R-Utah), chair of the natural resources panel and one of its main salesmen within his caucus. “There’s no reason to vote against the bill.”
The Obama administration worked Thursday to solidify Democratic backing of the Puerto Rico debt bill, but met some resistance in the Congressional Hispanic Caucus.
Antonio Weiss, counselor the Treasury secretary, met with the caucus in its weekly closed-door session that, according to some, was at times contentious.
Rep. Luis Gutierrez, D-Ill., and Sen. Bob Menendez, D-N.J., are calling on fellow Democrats to use their leverage - Democrats' votes are needed to pass the bill in the House - to get some changes to the legislation. They were at the CHC meeting and peppered him with questions.
Although Puerto Rico faces a July deadline for a $2 billion debt payment, much of it to bondholders, Menendez and Gutierrez seemed willing to miss that deadline if necessary to get time to refashion the bill.
"I think it's important to meet your obligations but at the same time is that about somehow not funding essential services in Puerto Rico?" Menendez asked at a Capitol news conference.
Menedez added that while the deadline is important, if the Congress passes a bad bill that does more to harm than help Puerto Rico in the next year, "I don't view it as … July should be the end all and be all."
The House Natural Resources Committee approved the bill with Democratic votes and Democratic support also is being counted on to get the bill through the House. There are a number of Republicans who oppose the bill.
Congress left Thursday for its weeklong Memorial Day recess and the expectation is the bill until about mid-June but possibly in July.
Previous versions were pulled back into negotiations with the administration and support has come from many Democrats reluctantly.
Asked about lawmakers who are supporting the bill as the lesser of two evils - the other evil being continued fiscal chaos in Puerto Rico, Menendez said: "I have seen the lesser of two evils become a dragon at the end of the day and become very evil."
Looming over the entire process is the worsening state of Puerto Rico.
In an interview with CNN, Treasury Secretary Jack Lew painted a dire picture of the situation based on a visit there last week.
"What I saw was not acceptable in the United States of America. I was in a hospital, where the neonatal unit could not order the drugs they needed on an orderly basis to do dialysis to premature babies," Lew said. "They had to do cash on delivery daily to make sure they had what they need to keep these tiny babies alive."
As he departed the CHC meeting with Weiss, Ruben Gallego, D-Ariz, one of the Democrats on the House Natural Resources Committee who supported the bill, expressed concerns about who would be appointed to the powerful oversight board that the bill creates to get Puerto Rico's fiscal house back on track.
The seven-member Financial Control board will have four appointees named by Republicans, though all must be approved by the president.
"They appoint four Republicans. What if it is like the Freedom Caucus on steroids for Puerto Rico?" asked Gutierrez, referring to a caucus of House conservatives who were leaders in pushing out former House Speaker John Boehner. Gutiérrez's parents were born in Puerto Rico.
The Freedom Caucus includes Rep. Raul Labrador, R-Idaho, who was born in Puerto Rico. He has backed the bill and has been trying to bring along other conservatives to do so as well.
Rep. Loretta Sanchez, who attended the caucus meeting, said after that some language in the bill is vague or not well defined and leaves room for policies that could hurt the Puerto Rican people.
"There's not a lot of love for that bill," said Sanchez, D-Calif., but she also said not everyone who attended the caucus meeting was skeptical.
"We are united in that the Puerto Rican people have suffered and are suffering and we need to get this turned around," she said, "and very disgusted in that we have been clamoring to get something done and that finally, Speaker Ryan turned to it … but it's been a long time coming."
Sen. Bob Menendez, D-N.J., left, accompanied by Rep. Luis Gutierrez, D-Ill., speaks during a news conference on Capitol Hill in Washington, Thursday, May 26, 2016, on the Puerto Rico Oversight, Management, and Economic Stability Act, which passed the House Committee on Natural Resources on Wednesday, May 25, 2016, and is designed to address its critical debt crisis. (AP Photo/J. Scott Applewhite) J. Scott Applewhite / AP
Puerto Rico is in an economic crisis, with the government already having defaulted on some of its $70 billion in debt (or $200,000 for each of its 3.5 million residents).
Congress is presently debating a bipartisan rescue bill. Banks are closing, businesses are flailing and Gov. Alejandro Garcia Padilla is warning that the territory will be short on an $800 million bond payment due in July. That’s after already missing most of its $422 million payment earlier in this month.
Add to that a 45 percent poverty rate, a population prone to emigration and fears about the Zika virus, and the situation is anything but bright and sunny for the U.S. island that many are calling America’s Greece.
Colonial history is still alive and well in San Juan. Photo from the Puerto Rico Tourism Co.
And, while it is not an example of Nero playing while Rome collapses, a recent visit doesn’t seem to show the government’s dire straits hitting the locals all that hard. Tourism initiatives are likewise plowing ahead despite the island’s dour mood and dismal financial reputation.
Citizens may not be exactly “Livin’ la Vida Loca,” but there are signs of commercial activity throughout San Juan. Construction cranes are noticeable, and sold signs frequent the windows in Old San Juan, the historic quarter of the capital city.
“There is a saying here that goes, ‘The government, the banks and these big companies are bankrupt, not the people,’” said Luis D. Muñiz-Martinez, deputy executive director for Puerto Rico Tourism Co. “There definitely are challenges, but go outside and you’ll see people in restaurants — local people, not tourists. You’ll see locals buying ice cream cones. You don’t buy ice cream if you aren’t doing well.”
Some with experience there say that while international competitiveness has been hindered, it’s not as if everything has ground to a halt.
“The government is suffering the pains of the crisis but the economy is still moving in the private sector,” said Sandro Murtas, an Atlanta-based global trade specialist for Synovus Bank, who spent 13 years as director of the International Trade Center at the Puerto Rico Small Business and Technology Development Center. Still, he said, if austerity is imposed, government pain will trickle down to the local economy.
Currently, though, Mr. Muñiz-Martinez said tourism and agriculture are still strong. More than 1.5 million cruise passengers on 500 ships from 18 different lines pass through the San Juan Cruise Port, a stable number compared to previous years.
Delta Air Lines, which says Puerto Rico is vital to its Caribbean strategy, has three to six nonstop flights from San Juan to Atlanta daily depending on the season; four to five nonstop daily from JFK in New York and seasonal once a week flights from Detroit and Minneapolis. These flights fill 1,600 round trip seats per day, 10 percent of which are first class. Most, if not all flights, are at capacity. Traffic is helped by the fact that Puerto Rico is the starting point for many cruises. The strong diaspora in places like New York is also important.
While the community isn’t as strong in Atlanta, Delta’s connectivity to the broader U.S. and international markets is one of its main selling points.
“Demand for the Atlanta flight is bolstered by our industry-leading global network. In addition to local customers, more than 200 destinations with more than 1,000 peak-day departures have direct flights to Atlanta, which allows great connectivity for our four daily Atlanta flights to San Juan,” said Noah Downer, a regional sales manager for the Caribbean at Delta.
Saborea 2016 showcased Puerto Rico’s Caribbean culinary culture. Photo by Mary Welch.
Overall, American customers also like that they don’t need a passport to travel to Puerto Rico, as well as the fact that the airport check-in experience mirrors what they’re used to, given that it’s governed by the Transportation Security Administration, Mr. Downer said during a Delta-led media trip to Saborea 2016, an island food festival.
In addition to beautiful beaches, bioluminescent bays, its colonial history and El Yunque, a tropical rainforest national park, San Juan also boasts the largest and most technologically advanced convention center in the Caribbean. Conferences continue to flock to the island, Mr. Muñiz-Martinez said.
“The last years we’ve pretty much beaten every record and we’re at 80 percent capacity across the island,” he said.
In the past three years more than 1,200 new hotel rooms have come on board, including a recently opened Hyatt House and Hyatt Place near the convention center. Also planned is a nearby entertainment center that will feature restaurants, movies and other attractions.
Mr. Muñiz-Martinez said individuals have learned to accommodate the economic realities.
“I had a friend who flew executives around the island in a helicopter. When that business dried up, he flies tourists around San Juan. You’ll see farmers opening food stands and selling their produce. There’s a lot of real estate in San Juan that went into foreclosure. People are buying them at very good prices and turning them into small hotels or condos,” he said. “Instead of looking at this as a crisis, people are looking at this situation as opportunity.”
While new entrepreneurs may be sprouting as a result of the dire economic conditions, Mr. Murtas warned that the government must also focus on growth. With the expiration of tax incentives that brought pharmaceutical companies and other factories to the island, plus high energy costs, it’s now struggling to compete in the sectors that helped it boom during the good times.
“What it will take to bring the economy back is to bring efficiencies in services to private industry,” he said.
Foreclosures have led to bargain prices on some properties in downtown San Juan. Photo by Trevor Williams.
So this happened: From May 6th to May 9th, the Economist and You-Gov conducted a survey of U.S. citizens 18 and older, asking them several questions about the Puerto Rican financial crisis which has been in the news.
One of the questions was about the citizenship of Puerto Ricans, and the results are a bit embarrassing: Only 43 percent of those surveyed knew Puertorriqueños are U.S. citizens from birth. Another 41 percent thought “Puerto Rican” was its own citizenship, and another 15 percent weren’t sure.
The numbers are higher than I expected, but I can’t say I’m surprised. I’ve heard stories from Boricua friends about Department of Motor Vehicle employees refusing to renew driver’s licenses because they believe Puerto Ricans are “foreigners;” and I’ve seen far too many articles (and even respected research efforts) that classify Puerto Ricans as “immigrants” when they move stateside — as they’ve been doing since beginning of the 20th century.
Now, if you think this popular misconception resides only in Red States without substantial Puerto Rican populations, think again. It’s alive and well in Pennsylvania too, and we have cities that rank No. 2, No. 10 and No. 12 (Philadelphia, Allentown and Reading, respectively, according to the 2010 census) in terms of the highest Puerto Rican populations stateside.
“In daily life, in the social fabric of U.S. society, and even in city, state and federal agencies, white or African Americans many times don’t know that (we are citizens),” said cultural anthropologist Dr. Sandra Andino. “They tend to see us as foreign immigrants.”
That misconception prompts the microaggressions that many Boricuas experience time and again.
“My son and I were waiting in line on Free Comic Book Day and this gentleman in the line kept pushing me. I asked, very politely, to please stop pushing. His response was, ‘this is America, deal with it.’ He pushed me again and this time I pushed back and told him to stop. … His response was, ‘You need to get on a boat back to your country,’” recountedGilberto Gonzalez, senior designer at Community College of Philadelphia.
“The point being, everyone assumes that because you look Latino you’re an immigrant,” Gonzalez said. “Why should I have to explain to anyone that I am Puerto Rican and that I was born in Philadelphia and that I am a U.S. citizen? I have always been told, by Blacks and Whites, ‘to get back on my banana boat and get out of Philadelphia.’ At the age of 51 I am still dealing with that ignorance.”
Marangeli Mejia Rabell, the co-founder of Philly’s AfroTaino Productions, said it’s not uncommon for people to ask her about Puerto Rico’s currency, or how long it took her to become a citizen. But the clearest manifestation of people’s lack of understanding about Puerto Rican citizenship happened to her in 1991, with Operation Desert Storm.
“I was at work when the announcement was made that we were at war,” Mejia said. “I began crying and a coworker told me he didn’t understand why I was crying since I wasn’t a citizen and Puerto Ricans didn’t go to war.”
“(It) speaks to the lack of knowledge Americans have about Puerto Rican history and its Ccommonwealth status,” said Isamac Torres-Figueroa, the vice-chair of the Pennsylvania Democratic Latino Caucus. “The Jones-Shafroth Act of 1917, a federal bill passed by the U.S. Congress, granted Puerto Ricans U.S. citizenship. This action came with a hefty price tag, a significant sacrifice, in that by making Puerto Ricans U.S. citizens the men would be eligible to be drafted into the army. A successful strategy on the part of U.S. government officials pending the onset of World War I.” Since then, more than 200,000 U.S. citizens from Puerto Rico have served in the Armed Forces, in every major U.S. conflict.
“Many Americans do not know the history of how and why Puerto Rico became a U.S. territory because it is not a part of American history that is taught,” Torres-Figueroa added.
Israel Colón, an independent consultant for the government and non-profit sectors and an elder statesman of Philly’s Latino community, agrees that lack of education about U.S. and Puerto Rican history underpins the survey’s findings.
“The historical relationship between the U.S. and Puerto Rico is a convoluted one. Because of Puerto Rico’s ‘unincorporated’ territorial status, Puerto Rican citizenship (on the island) is not afforded the full protection of the U.S. Constitution,” Colón said. “Congress has full plenary powers over what was often considered by former justices of the Supreme Court as a ‘foreign’ territory. The sense that they are ‘foreign,’ is infused in the public mindset.”
“Remember, despite its colonial status, Puerto Rico has its own language, culture and history,” Colón added. “And, they are people of color, which makes integration into American society just as difficult as it is for other immigrant groups and racial/cultural minorities. So it doesn’t surprise me that many Americans know little of Puerto Rico’s relationship to the U.S. In fact, I’ve often found myself explaining to my ‘gringo’ friends (Black and White) the history of Puerto Rico, their ‘rights’ under the statutes of the U.S. Congress vs. those of the diaspora, etc.”
Differences in constitutional rights for Boricuas living on the mainland and those living on the island — including that islanders cannot vote in presidential elections and have no real representation in Congress, do not have access to the healthcare other citizens are entitled to, and the fact that the commonwealth is precluded from declaring bankruptcy as other U.S. municipalities can — have contributed to the grave financial crisis Puerto Rico has been going through.
And that situation is what Carmen Febo San Miguel, the executive director of Taller Puertorriqueño, is really concerned with changing.
“What is frustrating about the lack of knowledge regarding Puerto Rico is more than just the fact that they are not aware of our citizenship status,” Febo said. “It is even more frustrating that that citizenship status is fraught with inequities … that keep Puerto Ricans on the island in a constant state of economic inability and standstill. I would encourage people to find out more so they are more informed. Maybe that way, Congress can be persuaded to change laws that are antiquated, unfair and beneath the standards of U.S. democratic values.”
For Torres-Figueroa, the island’s financial crisis reinforces the need for Puerto Rico’s history “to be taught across the United States.”
Gonzalez, meantime, is hard at work producing his second film about the oldest Latino gang in Philadelphia, which he describes as covering “police abuse, drugs, deindustrialization and the forced and sometimes-violent gentrification of the Spring Garden Community” in Philadelphia.
For him, the education that needs to take place begins here.
“I hope that my films will educate everyone in this city about the Puerto Rican experience,” he said. “I think it is time for Philadelphia to embrace the Puerto Rican community.”
“The Puerto Rican Tree,” as residents and Parks & Rec workers refer to it, in Norris Square Park. Photo | David Cruz via Instagram.
And members of Philly’s large Puerto Rican community don’t find that surprising at all. How the misconception fuels microaggressions that many Boricuas experience daily.
" Puerto Rico's governor says pharmaceutical supplier Sartorius is investing $50 million to expand its plant in the U.S. territory and convert it to its main logistical hub for the Americas.
Gov. Alejandro Garcia Padilla said Tuesday that the Germany-based company expects to create 350 new jobs in the next five years and step up production of membranes for lab tests and manufacturing of aseptic storage bags. The plant in the southwest town of Yauco now has 420 workers.
Garcia said the expansion was made possible with $5.4 million in government incentives.
It is the second expansion announced this month related to the island's manufacturing sector, which has declined amid a 10-year economic slump. Bristol-Myers Squibb Co. is investing nearly $80 million to expand its plant in Puerto Rico.
Legislation allowing Puerto Rico to restructure more than $70 billion in bondholder debt was approved by the House Natural Resources Committee on Wednesday by a 29-10 vote.
The Puerto Rico Oversight, Management, and Economic Stability Act would create a fiscal oversight board with exclusive authority to enact and enforce fiscal plans and reforms, with the overall goal of improving access to capital markets. That board would promote voluntary restructuring agreements with bondholders, with additional authority to adjust debts “in the best interests of creditors.”
The legislation would halt any litigation over debts, and create a firewall between constitutionally protected creditors and the $2 billion Puerto Rico Employees Retirement System, Hato Rey.
The bill also calls on the new board to conduct an independent analysis of the pension system to help evaluate “the fiscal and economic impact of the pension cash flows.”
The committee rejected an amendment that would have prevented Puerto Rico from taking any action to address the underfunded pension system until 120 days after that analysis, but Chairman Rob Bishop, R-Utah, said during committee debate on the bill that there might be additional changes before the bill is presented to the full House.
Mr. Bishop, whose committee has jurisdiction over U.S. territories, said the bill will ensure compliance with fiscal plans and fair treatment of investors. “This bill is Puerto Rico’s last and best chance to get on sound financial footing and put its economy on the path to recovery and prosperity,” Mr. Bishop said at the beginning of the session.
Proposed legislation to address Puerto Rico’s $70 billion debt is vital to restoring fiscal stability on the island, a House committee chairman said Tuesday, warning that the crisis will get much worse if Congress doesn’t act.
“If we do not pass this bill, Congress will be faced with the prospect of a bailout later -- a real taxpayer bailout,” House Natural Resources Chairman Rob Bishop said as his panel began considering the measure. “The failure to pass this bill will ensure that Congress becomes the financial backstop for Puerto Rico’s spending, but without the oversight that this bill institutes.”
Earlier in the day, Bishop said he expects lawmakers to pass the legislation with "good majorities from both parties," though it may not come until after the island’s July 1 deadline for a $2 billion payment to investors.
“This bill needs to come as quickly as possible to solve the problem,” Bishop of Utah said on Bloomberg Television. Asked whether July 1 was a hard deadline to pass the measure, he said, "No, not necessarily. We have to be further along in the bill, almost to passage by then,” to provide financial markets with the security of knowing it will pass, he said.
His committee is scheduled to continue its hearing on the revised plan Wednesday. It’s unclear whether it has enough support to clear the panel. The full House probably won’t vote on the bill until early June and it still has to be passed by the Senate.
Gutierrez’s Opposition
One House Democrat, Luis Gutierrez of Illinois, who is of Puerto Rican descent, announced his opposition to the measure Tuesday in a letter to members of Bishop’s committee that said the control board is "still too powerful" and that there is "no logical reason to leave pension funds unprotected."
Lawmakers in both political parties are under pressure to vote against the measure. Republican-leaning groups like Heritage Action have said it doesn’t do enough to overhaul Puerto Rico’s economy. Labor unions are opposing it, arguing it doesn’t do enough to protect government workers’ pensions and that it allows cuts to the island’s minimum wage. Democratic presidential contender Bernie Sanders said last week he opposes the plan.
Still, the top Democrat on Bishop’s panel, Raul Grijalva of Arizona, plans to support it.
"He understands that there are Democratic concerns with the bill, but he’s been very involved with the negotiations over these past few months and understands that this bill is a compromise," said Grijalva’s spokeswoman, Diane Padilla. "It’s not the bill he would write, but Treasury has reassured him that it’ll help get the people of Puerto Rico back on their feet, which is what he ultimately wants."
Republicans Skeptical
Some Republicans on the panel say they still haven’t decided how they’ll vote and are skeptical about it.
“The heart of the problem is the massive amount of spending and the incredibly large number of government employees,” said Representative Louie Gohmert, a Texas Republican. “It doesn’t appear that this bill addresses that.”
"If we do not help to provide some structure, provide some oversight -- this is not a bailout -- but if we don’t step in and do those types of things, in the end, we will have to bail them out," said Representative Glenn Thompson of Pennsylvania.
Still, Representative Raul Labrador of Idaho, a committee member and co-founder of the conservative Freedom Caucus, said it “appears to be a good bill” although it could benefit from some changes in committee debate.
The bipartisan deal to tackle Puerto Rico’s debt crisis represents Paul Ryan first big victory as Speaker.
While the Wisconsin Republican has notched other wins on highway, education and government funding during his short, nearly seven-month tenure, former Speaker John BoehnerJohn (R-Ohio) had a hand in all of those negotiations.
The Puerto Rico pact, coming in the middle of a contentious presidential election year, is Ryan’s, and Ryan’s alone.
The agreement to restructure the island’s $70 billion in debt fulfills a promise the Speaker made to Minority Leader Nancy Pelosi (D-Calif.) and Democrats during spending talks last December. And it shows that Ryan’s approach to the leadership job — empowering committee chairmen — can work, to a certain extent.
For months, Ryan deferred questions about Puerto Rico to Natural Resources Committee ChairmanRob Bishop, letting the Utah Republican spearhead talks with both Democrats and Republicans on his panel. But when negotiations got bogged down by a few sticking points, including the creation of an independent fiscal control board, Ryan stepped in to close the deal.
Ryan spoke with White House chief of staffDenis McDonoughlast week as the accord neared the finish line. One recent weekend, Ryan spoke by phone with Treasury SecretaryJack Lewwhile mowing his lawn at his home in Janesville, Wis., according to sources familiar with the discussions. Ryan and Lew, two policy wonks, had crossed paths in 2011, when Ryan was the chairman of the Budget Committee and Lew the White House’s top budget official.
Democrats, however, portray the Speaker as much more involved in the day-to-day negotiations than he lets on. Pelosi and Ryan were in frequent contact throughout the entire process, holding many phone calls and instructing their staffs to meet regularly to discuss specific provisions, such as the control board.
“A lot of things needed to be worked out at the leadership level,” a Democratic aide said. GOP aides characterized those conversations as status updates, though they acknowledged that Bishop kept Ryan in the loop.
Lawmakers on both sides of the aisle have appreciated Ryan’s communication, which members have said is a significant improvement fromBoehner’s reign.
The Puerto Rico legislation still hasn’t been scheduled on the House floor. Bishop will mark up the bill in his committee on Wednesday, leaving the full chamber just one day to take it up before lawmakers leave town Thursday for the Memorial Day recess.
Some lawmakers want a quick vote on Puerto Rico this week. The longer it hangs out there, the thinking goes, the more time political foes will have to try to stir up opposition. On the left, Sen.Bernie Sanders(I-Vt.), a Democratic presidential candidate, urged his Senate colleagues Monday to oppose the legislation, ripping the oversight board as “undemocratic” because it’s comprised of “unelected” appointees.
One option would be passing the House bill on suspension, which requires a two-thirds majority. It wouldn’t be impossible given Ryan’s prediction that a majority of House Republicans will support the legislation; most Democrats have signaled they’re on board as well. Language affecting Puerto Rico’s minimum wage and keeping a wildlife reserve in federal hands helped cement Democratic support.
But GOP leadership sources said a floor vote isn’t expected until after the weeklong break. Lawmakers want to act before July 1, when the cash-strapped territory is at risk of defaulting on another $2 billion in payments.
Ryan made a handful of strategic moves to ensure some conservatives wouldn’t derail the legislation. In news conferences and statements, the Speaker used his bully pulpit to aggressively refute TV ads from an outside group that blasted the package as a taxpayer “bailout.”
And Ryan invited influential members of the far-right Freedom Caucus to the negotiating table. Rep. Raúl Labrador (R-Idaho), a Puerto Rico native who serves on the Natural Resources panel, successfully inserted a firewall between payments to bondholders and pensioners. Payments to bondholders are guaranteed by the Puerto Rican Constitution, and the new language ensures pension payments cannot be prioritized.
Ryan and his leadership team “have been working closely with me. They’ve done a great job of making sure that all the concerns that I had about the bill have been addressed,” Labrador said.
Another Freedom Caucus leader, Rep. Mick Mulvaney (R-S.C.), a member of Ryan’s informal group of advisers, helped Labrador with research, speaking to experts on the effects of restructuring the bond markets.
Bond markets, Mulvaney found, worried that protecting pensions over secured debt could start a dangerous pattern for cash-strapped cities and states. Though Detroit’s prioritization of debt payments was seen as an anomaly, traders feared that doing the same in Puerto Rico would set a precedent for future cases.
The Freedom Caucus, a collection of nearly 40 ultraconservative lawmakers, has thwarted Ryan on getting a budget done this year, but it’s staying neutral on the Puerto Rico bill — in part because some of its leaders took part in negotiations.
Rep. Mark Meadows (R-N.C.), a member of the group, said he’s leaning yes. “I am favorably disposed to it,” Meadows said, “because Raúl Labrador has said that he’s optimistic about the bill.”
Texas Rep.Bill Flores, chairman of the 170-member Republican Study Committee and a member of Ryan’s group of advisers, said the legislation still has some “soft spots that we’re concerned about.”
But he added that lawmakers should act quickly to solve the debt crisis and then move on to more critical issues.
“In terms of the issues that the U.S. House of Representatives needs to be worrying about right now, Puerto Rico is not highest on the list,” Flores said in an interview Monday. “I don’t think it’s anything where we need to have a giant food fight.”
