Operation Bootstrap Case Study

T he Commonwealth of Puerto Rico is a political and economic anachronism.
Twenty-five years ago the establishment of the Commonwealth of Puerto Rico was the official U.S. response to the worldwide process of decolonization. It was the "showcase of democracy" for colonial peoples and underdeveloped countries, the U.S. model of how a country could pull itself out of poverty "by its own bootstraps" through an intimate political and economic relationship with the United States.
By 1977, the Commonwealth of Puerto Rico has become a source of embarrassment to the United States. Today Puerto Rico is one of the few colonies left in the world. It is an extreme example of social deterioration, with some of the world's highest indexes for drug addiction,
alcoholism, broken families, and criminality. The economy is admittedly decadent: real personal income has decreased since 1973, real unemployment rates fluctuate between 30 and 40 percent, while 71 percent of all households depend on the U.S. food-stamp program.1
The world has changed. The United States has changed. Puerto Rico has changed. But the legal and economic structures of Commonwealth status remain unaltered, a bar to economic, social and political development congruent with the new realities. Commonwealth is a brittle residue of the cold war, a pawn left over from a game of international politics long since concluded.
On December 31, 1976, President Gerald Ford declared that he would submit to Congress legislation for the admission of Puerto Rico to the Union as a state. President Ford's Tory farewell to the bicentennial year of the Declaration of Independence was a confession of the economic and political failure of Commonwealth, and underlines the need to think anew on Puerto Rico-United States relations. This rethinking, in my view, will demonstrate that the convolutions of Puerto Rican political history can only be understood as a prolonged and vain attempt to circumvent independence as the self-evident right of Puerto Rico.
II
On July 25, 1898, as a consequence of the Spanish-American War, U.S. troops invaded Puerto Rico. They confronted a homogeneous society four centuries old and at that time in the first stages of capitalist development. The still young native bourgeoisie was composed mainly of landowners of small and medium-sized holdings devoted to the cultivation and processing of coffee, tobacco and, to a lesser degree, sugar cane. It was a class of ample culture and growing political expertise.
The urban middle classes were integrated by connections between government employees and retail businessmen closely tied to Spanish political and commercial interests. A small number of craftsmen and industrial workers spread throughout the Island had not yet coalesced into an urban working class. But the vast majority of the population were the landless agricultural workers and subsistence farmers, mostly illiterate and traditionally alienated from the official political and cultural institutions of the Spanish colonial system.
Shortly before the invasion, the Autonomic Charter of 1897, accepted by Spain as a way of sidestepping independence, had established on the Island a limited elective government. This Charter, generous though it was, was the work of the Creole landowning class whose economic and social ideology closely matched the political program of fin-de-siècle Spanish liberalism. Autonomy meant the orderly administration of Puerto Rico by a privileged caste for its own benefit and for the economic and strategic benefit of a colonial power. This political system was unilaterally dismantled by U.S. military fiat and congressional action.
Progressive Puerto Ricans, however, had organized and developed an independence program based on the need to guarantee individual liberties as much as on national liberation. The abolition of slavery in 1873 is directly attributable to the leaders of the independence movement, who, in 1868, had planned and tried to execute an armed rebellion against Spain. Betrayed and quickly suppressed, the Grito de Lares, as this uprising came to be known, was the symbol of the Puerto Rican pro-independence struggle. But when the Spanish empire finally did crumble in Puerto Rico, it was only to make way for the imperial ambitions of the United States.
The first four decades of the U.S. occupation were years of outright exploitation. This is an undeniable historical fact. Contemporary writers nicknamed the Island the "poorhouse of the Caribbean" and many Puerto Ricans and North Americans courageously denounced the spoliation of our economy and our culture. U.S. military and civil governments alike took every step to force on the population a process of accelerated "Americanization." Teaching in public schools and at the University of Puerto Rico was in English; the civil system of laws turned overnight into a hodge-podge, as badly translated and implemented statutes and common law concepts were imposed on the mutilated remnants of Spanish law; Puerto Ricans were made U.S. citizens in 1917 notwithstanding the opposition of the House of Delegates, the only representative body in the Island; all important public posts were filled by North Americans, mostly directly appointed by the President of the United States.
The Foraker Act of 1900 and the Jones Act of 1917 provided the political framework for colonial exploitation. Puerto Rico was unilaterally included within the U.S. tariff system and the U.S. Constitution, and all federal laws applied to Puerto Rico except when declared by the United States to be locally inapplicable. This meant that the United States held power over all the basic determinants of Puerto Rican life, including currency, defense, citizenship, international commerce, and many others in the ever-expanding field of federal jurisdiction. Puerto Rico could elect a nonvoting resident commissioner to the United States and a legislature with jurisdiction over matters of a strictly local character.
Let us consider the main events of that period which are relevant to our analysis of present-day Puerto Rico.
1. The economy was converted from one characterized by small and medium-sized holdings, owned mostly by Puerto Ricans, to large-scale agriculture controlled by U.S. absentee landlords.
Puerto Rican landowners already in economic straits as a result of devastating hurricanes during the 1890s were forced to exchange their Spanish currency for U.S. dollars at devalued rates. This reduction in their capital resources was accentuated by the massive influx of U.S. capital into Puerto Rico. The smaller and middle-sized estates owned by Puerto Ricans became uneconomical as absentee corporate bodies accumulated vast latifundia centered on modern, well-capitalized sugar mills and tobacco manufacturing companies. Laws were enacted to forbid corporate bodies to hold lands over 500 acres but such laws were not enforced against the U.S. trusts and corporations. The Puerto Rican landowning classes were decimated, became permanently indebted to their corporate masters or led a life of idleness on the income derived from land leases. Thus, patterns of social, political and cultural leadership were disrupted in Puerto Rico long before the urban-industrial development of the 1940s and 1950s.
2. Organized labor sought at this time to establish its hold on the predominantly agricultural working classes of Puerto Rico. Its acknowledged founder and longtime leader was Santiago Iglesias Pantín, a Catalan anarcho-syndicalist who arrived in Puerto Rico from Cuba in December of 1895. From the start his work was an obvious threat to the Creole ruling elite. The patrician leaders of Puerto Rico's political structure resented and fought this unexpected attempt to reorganize politics on a class basis. But to many workers it made sense to do so: landlords, businessmen and bureaucrats were the concrete, the evident oppressors.
In 1899 Iglesias founded the Free Federation of Labor of Puerto Rico which became affiliated to the American Federation of Labor. The Socialist Party, founded in 1916, became the political arm of the Free Federation of Labor. Because the labor movement looked upon U.S. institutions as those which would provide for the improvement of working conditions and living standards, it adopted a pro-U.S. and pro-statehood position.
Thus a partisan disjunction between social justice and political liberation developed throughout the twentieth century. A double process of political confrontation resulted from the consequent erroneous perception of the relationship between social and political liberation: on the one hand, a class struggle with internationalist (i.e., pro-United States) overtones; on the other, a political conflict with independence, autonomy and assimilation as alternative goals.2
By 1932, confusion reached absurd heights when the Socialist Party joined in a winning coalition with the extreme right-wing and the pro-assimilation Republican Party of Puerto Rico as the only possible means of defeating the pro-independence Liberal Party.
3. Pro-independence sentiment and organizations also flourished during these decades. By 1932, the pro-independence Liberal Party, presided over by Antonio R. Barceló, was the strongest electoral organization in Puerto Rico. In 1932 it obtained 44 percent of the vote, and in 1936, 46 percent. The Liberal Party derived its strength from the traditional elements of Puerto Rican society - the professional and landowning bourgeoisie, and the agricultural workers and squatters from the central, mountain regions who still maintained personal relationships with the landowners. The Nationalist Party, headed by Pedro Albizu Campos, represented radical nationalism. It took its stand with a frontal fight against the interventionist power and served as a catalyst of pro-independence feeling during the 1920s and 1930s. The violent suppression of the Nationalist Party came to a climax with the first prison sentence against Albizu Campos in 1936 and the Ponce Massacre of 1937, when the police ambushed and killed many unarmed nationalists.
III
After the 1936 elections, Luis Muñoz Marín and a group of leaders comprising the most radical independence sector of the Liberal Party left the party and in 1940 founded the initially pro-independence Popular Democratic Party (PDP). After a prior statement that "independence is just around the corner," they then declared that political status would not be an issue in the 1940 elections.
Muñoz Marín tried to merge the independence ideology with the existing socialist movement under the slogan "Bread, land and liberty." His program carried the PDP to a slim electoral victory in 1940 with 37 percent of the vote. Four years later the party obtained a resounding triumph, and an overwhelming majority of the leaders elected on the PDP ticket petitioned the U.S. government for the independence of Puerto Rico. The PDP continued enjoying great electoral success until 1968.
Starting in 1941 and aided by President Roosevelt and Governor Rexford Guy Tugwell, the PDP initiated an economic and social reform program somewhat in the style of the New Deal, but still within the framework of the colonial relations which had existed since the turn of the century. The colonial legislature in these initial years of PDP government passed laws on minimum wages, labor relations, and agrarian and tax reforms. Internal government structures were improved by providing them with modern innovative instruments such as the Planning Board, the Budget Bureau, the Personnel Office, the Industrial Development Bank, the Industrial Development Company, and a number of commissions in charge of new programs.
The PDP and its leader, Luis Muñoz Marín, were very successful in consolidating their political power and providing the political stability which was indispensable to the government's particular postwar strategy for economic growth, based on the attraction of U.S. capital. To consolidate political power, Muñoz Marín had to face two important groups within his own party. One of the these groups consisted of pro-independence leaders; it included almost all of the top-echelon members of the Party. Muñoz Marín, who had been an advocate of independence up to 1940, moved swiftly and with great ability to "convince" them of the need to postpone or give up their plans for independence. This task culminated in the autocratic decree of February 10, 1945, which in effect forbade members of the PDP to join groups or organizations promoting independence. Most leaders stayed with Muñoz, but others left the PDP and in 1946 together with other independence leaders founded the Puerto Rican Independence Party. Political repression and a campaign equating economic growth with political dependency contributed to the decline of the Puerto Rican Independence Party from the mid-1950s until well into the 1960s.
Labor leaders constituted the second power group that had to be dealt with in order to ensure political stability. Muñoz Marín proclaimed himself the only leader of all workers in Puerto Rico and used every weapon at hand to keep labor unions small, divided and tame. Prominent labor leaders were kept within the PDP through appointment to executive office or election to safe seats in the legislature.
Gradually, in the early 1950s, the PDP drifted to the Right, losing in the process its populist "mystique." Step by step it evolved into a powerful political machine in the style of Tammany Hall, with abundant political plums and government jobs to lavish on its followers.
The first important reform in Puerto Rican political relations with the United States after 1917 came in 1947 as an amendment to the Jones Act giving Puerto Rico the right to elect its own Governor. And so, in 1948, Luis Muñoz Marín became the first Governor elected by the Puerto Rican people.
Two years later the U.S. Congress enacted Public Law 600, giving the Island the power to draft its own Organic Act which was to be called "the Constitution." All the provisions of the Jones Act, which governed the relationship between Puerto Rico and the United States, remained unaltered but were now to be known as the Federal Relations Act. Puerto Rico obtained absolutely no additional economic or political power, except the right to design the structure of its internal government, under the ever-watchful eye of the U.S. Congress. The U.S. Constitution and federal laws continue to apply on the Island, except in the case of a few provisions which Congress or the federal courts unilaterally decide do not. The Island was then rechristened in Spanish with the high-sounding name of Estado Libre Asociado de Puerto Rico which, in English, was ambiguously called "Commonwealth."
A quotation from the Senate Report explaining and recommending the passage of the bill will suffice to prove that Puerto Rico obtained no additional powers with the enactment of Law 600: "It is important that the nature and general scope of S. 3336 be made absolutely clear. The bill under consideration would not change Puerto Rico's fundamental political, social and economic relationship to the United States"3 The same definite statements are to be found in the House Reports,4 and exactly the same viewpoint was expressed by Interior Secretary Oscar L. Chapman, when recommending the passage of the bill.5
The establishment of Commonwealth was used to create the myth - both for internal and external consumption - that Puerto Ricans exercised the right to self-determination because in 1952 they accepted Commonwealth in a yes-or-no referendum. Puerto Rico, according to the official version, freely self-determined against self-determination; we were asked to believe that a people can use one of the instruments of the republican form of government, i.e., the right to vote, to deny themselves the very essence of a republican form of government which is the full participation of the governed in creating the laws which are to govern them.6
IV
During the war years, the PDP, backed by Governor Rexford G. Tugwell, had experimented with economic and social reforms which extended to the development of government-owned and operated industries and utility companies. When the cold war set in, however, such experiments became suspect and the PDP turned to capitalism for inspiration in a new strategy of economic development - Operation Bootstrap.
Since 1900, the Foraker Act had included Puerto Rico within the U.S. tariff system and exempted the Island from the application of the federal internal-revenue laws. These long-standing trade and fiscal peculiarities, plus the extremely low wages then prevalent in Puerto Rico, allowed the PDP to obtain capital for industrial development by offering U.S. entrepreneurs tax holidays, subsidies and other incentives. The energetic promotion of Puerto Rico as an "investment paradise" was quite successful at a time when the booming U.S. economy faced practically no competition from other, war-ravaged industrial nations. U.S. investments in Puerto Rico resulted in tax-free earnings from the production of duty-free goods for the U.S. market under substandard, "foreign" labor conditions and wages.
An economic program for Puerto Rico almost exclusively financed by the import of U.S.
capital to promote industrial development and almost totally devoted to production for export to U.S. markets was obviously incompatible with independence. One immediate effect of the adoption of Operation Bootstrap as an economic development strategy, however, was the new position taken by the PDP on the status issue. Autonomy - political, social and cultural - was postulated as compatible with economic integration: Puerto Rico, we were told, could have the best of both worlds.
This, of course, did not prove the case. Operation Bootstrap, which relied on U.S. capital and technology for the development of an industrial private sector, had an unstated, inbuilt dependence on U.S. funds - federal and private - to finance the social and infrastructure costs of economic development with a consequent enlargement of federal and bondholders' power which could only erode autonomy.
But political accommodation and Operation Bootstrap resulted in dramatic changes for Puerto Rico from the late 1940s to the late 1960s. Income per capita rose from a little less than $200 in 1950, to almost $1,200 in 1967.7 The industrial sector became dominant, and the economy was transformed from an agricultural to a modern, industrial
economy.
This model became a "showcase" for the United States and some international agencies. Here you had a small country which was experiencing rapid rates of economic growth by following much of what is considered orthodox capitalist doctrine: (1) free trade; (2) no obstacles to foreign investment; (3) acting as a support agent for private enterprise; (4) the adoption of social, cultural and technological norms based on those of a highly industrialized nation (the United States); and (5) a party system with periodic elections. Puerto Rico became the proposed U.S. alternative to national liberation and socialist development for colonial peoples and underdeveloped countries, and it was aggressively promoted as such.
Such a political and economic program placed Muñoz Marín's portrait on the cover of Time magazine and had his "political philosophy" promoted in the editorial pages of The New York Times. Yet what exactly did this process entail?
Operation Bootstrap was implemented at great cost to Puerto Rico. The displacement of our population was the first sacrifice made to statistical economic growth. Between 1945 and 1964, close to 750,000 Puerto Ricans - more than one-third of the population - left the Island, lured by promises of a better life in the United States and forced to leave by an economic growth model which provided few jobs.
It has been the official government posture that it neither stimulated nor obstructed the migration process. However, it has become abundantly clear from documents which recently came to light that in fact the government had a very active migration policy. Thus, in a 1955 confidential report to the Governor, the Planning Board suggested that at least 60,000 Puerto Ricans should leave the Island annually in order to maintain unemployment at prevalent levels. In 1948, a Commission made up mostly of government officials had already noted that the migration of women was particularly important not only to alleviate unemployment but to reduce the birthrate. More recently, in 1974, the government again made clear its intention to encourage migration to the United States.8
But large-scale emigration failed to compensate for Operation Bootstrap's failure to generate enough jobs for the remaining population. The PDP then resorted to a pervasive welfare system as a prop to economic growth and to compensate for unemployment. Since, however, top priority had been assigned to the development of an economic infrastructure for tax-exempt industrial growth, funds were not available in Puerto Rico for social programs; thus, the Commonwealth became an eager participant in the expanded federal welfare programs of the 1960s. And as the amount of federal funds increased - from 10 percent of the total gross domestic product in 1959-60 to 30 percent in 1975, reaching in that year a total of $2 billion ($1.2 billion net) - so, too, did federal power. Our already limited capacity to direct our own process of development decreased. Autonomy under Commonwealth became almost exclusively identified with tax havens for U.S. capital.
Even massive federal transfers were not enough to assure the viability of Operation Bootstrap. The government perforce became the leading economic sector. Between 1969 and 1973, government employment increased from 105,000 to 155,000. The government's debt increased from $1.5 billion in 1969 to $6.6 billion in 1975. This increase in the public sector's debt, which is almost exclusively owed to U.S. creditors, was made necessary by the ever-increasing demands on government to generate jobs and from the needs of large new industries for infrastructure investments.
By 1967, it had already become evident that the process of industrialization, with emphasis on light industry, inadequate though it was, had reached its limit. This was caused by a number of factors. Puerto Rico was confronted with competition from a number of countries in Europe, Japan and from low-salary countries (e.g., Taiwan, South Korea, the Dominican Republic, Haiti, etc.), particularly in those industries which had been the core of its development: textiles, women's clothing, shoes and other light industry. Forced to buy U.S.-imported goods at New York prices, labor demanded higher wages. This reduced Puerto Rico's absolute advantage in relation to the rest of the world as well as to the states of the Union, particularly those of the South. As a result, the government looked to capital-intensive, highly polluting petrochemical industries as a means of continuing the industrialization process. This gambit failed. Although investment in the industry has reached $1.5 billion since 1965, the total number of jobs generated was a mere 6,000, not the 35,000 which had been anticipated.
By the early 1970s Puerto Rico's economy was characterized by stagnant manufacturing and agricultural sectors and, consequently, by a large and continuously increasing public debt, a great dependence on U.S. transfer payments and a bloated public sector. The increased cost of petroleum further burdened the already stagnant oil-energy based economy.
Puerto Rico needed ever-growing infusions of government funds to prop up an economy which could not develop sufficient impetus on its own. Yet the Commonwealth found itself without the means to finance such government expenditures since the industrial sector is to a large extent exempt from payment of taxes; and with the stagnation of the economy, personal incomes had also decreased and tax payments had not increased proportional to government expenditures. The only means available were further increases in the public debt and more aid from the United States.
The crisis of the world capitalist economy in 1974 and its impact on the U.S. money markets meant that even the alternative of increasing the debt was not as available as before in order to sustain economic growth. Not only was money scarce, but the U.S. lending syndicates became concerned about the solvency of the Commonwealth. The government of Puerto Rico was applying Keynesian economic theory designed to deal with short-run cyclical downswings to cope with structural economic stagnation. And the situation was made worse because such spending was financed by increases in the externally held debt. Puerto Rico's colonial status precludes the control of monetary supply as a means of dealing with the public debt.
The concern of the mainland and of the financial syndicates led to the creation of a committee, made up exclusively of U.S. economists and financiers and chaired by Yale economist, James Tobin, to study Puerto Rico's finances. The Tobin Committee concluded that the Island's present economic situation was not the result of external economic conditions, but grew from the systemic factors we have discussed above. Furthermore, the Report suggested quite strongly that there was little hope for an economic revival of the Commonwealth.
The recommendations made by the Committee, however, prescribed economic orthodoxy to the letter: decrease government spending, freeze wages, increase taxes (but not on tax-exempt industries). These and other measures recommended by the Committee were aimed at protecting the investments of the U.S. financial sector rather than at modifying the causal conditions underlying the crisis. But, in any case, the Tobin Committee report was the death certificate for Operation Bootstrap.
Fiscal year 1974-75, the last for which complete official statistics are available, saw the Gross National Product fall by 2.4 percent; investment in plant and equipment decreased by 10.5 percent; exports by 12.9 percent; and employment fell from 775,000 to 738,000, of which 10,000 jobs were lost in the manufacturing sector. The official unemployment rate was 20 percent in 1976, even though Puerto Rico had a labor force participation rate of only 41 percent, one of the lowest in the world, thus making the real unemployment rate between 30 and 40 percent (as compared with an official unemployment rate of 12 percent in 1960).
What is in store for Puerto Rico under Commonwealth status is an economy based on a small industrial sector with few jobs, a large service sector (particularly in the public sphere), and the migration (or subsistence on federal transfer payments) of an increasingly large proportion of the population which is marginal to the process of production. Already, about a third of all families are completely alienated from the production process. Not only will this require an even greater dependence on the federal government, the social cost of this type of development is immense. Puerto Rico is on the way to becoming a stagnant, totally dependent, mortgaged society, subsisting on the dole.
V
The growing social and economic decomposition, a new mass of young voters born after 1940 (who, unlike their parents, have no loyalty to the PDP), the gradual but clear identification of that party with powerful economic interests - a natural outgrowth of its development theory - governmental corruption and the rusting of its political machinery, resulted in a loss of political strength for the PDP during the 1960s. This, in turn, paved the way for the victory of the New Progressive Party in 1968, when it obtained 43.6 percent of the vote.
The NPP was founded by a group of leaders, headed by industrialist Luis A. Ferré, who left the old Republican (pro-Statehood) Party when that political organization refused to participate in the 1967 plebiscite.9 Mr. Ferré ably adopted a populist program more left of center than the PDP's. He also used Muñoz Marín's old strategy of declaring that political status (in this case, Statehood) was not an issue in general elections.
Early in his tenure Mr. Ferré abandoned his campaign commitment of not pushing for statehood. He repeatedly asked for support for statehood among his friends and colleagues in the U.S. Republican Party. He was severely criticized in Puerto Rico for such activities and gradually lost the support of the many thousands who had voted for him only because of his economic and administrative program and his personal appeal. Rampant corruption and inefficiency in his administration, repeatedly denounced by the Comptroller of Puerto Rico, also contributed heavily to the NPP's defeat in the 1972 elections. Thus the PDP, led by Rafael Hernández Colón, regained power promising an honest and efficient administration. He obtained 50.7 percent of the vote. But in 1976 the NPP, headed now by Carlos Romero Barceló, came back into power by attacking the PDP's administrative corruption and presenting once more a populist program.
Pointing to the 1976 elections it has been argued that there is majority support for statehood in Puerto Rico. That is simply not the case. First, the NPP's official 1976 program clearly asserts that "statehood would be achieved only after obtaining majority support in a plebiscite." Second, Mr. Romero Barceló and all leaders of the NPP continuously stressed during the electoral campaign, by all the means at their disposal (as they did in the 1968 and 1972 elections), that a vote for the NPP could not be considered a vote for statehood, and that Puerto Rico's political status was not a campaign issue but should be placed before the voters in a plebiscite. Third, even if we consider electoral results as plebiscitary, we must underline that in the 1976 elections the pro-statehood party obtained only 48 percent of the vote, while the parties openly opposing statehood obtained 52 percent. Perhaps the most important factor that has influenced the political process since 1968 has been the growing dissatisfaction of the people with the conditions produced by the increasingly ineffective "economic scheme" of the PDP and the subsequent political instability caused by this dissatisfaction.
Meanwhile the Puerto Rican Independence Party (PIP), which had experienced sustained electoral losses during the late 1950s and early 1960s, gradually started to increase its electoral strength. In 1968, the PIP obtained 25,000 votes, 52,000 in 1972, and 73,000 in 1976 when its candidate for Governor obtained 83,000 votes. Since 1972 the PIP has gone before the electorate with a program of independence and democratic socialism for Puerto Rico.
A smaller group of independence advocates, the Puerto Rican Socialist Party,10 which professes a Marxist-Leninist philosophy, took part in the 1976 general elections and obtained nearly 11,000 votes. Therefore, the total pro-independence vote in 1976 was around 94,000 votes, almost four times as many as in 1968. The percentage totals increased from 3.5 percent in 1968 to 6.5 percent in 1976.
Fundamental to the PIP's steady growth in votes since 1968 is the fact that, for the first time in Puerto Rican history, the struggle for democratic socialism is merged with the quest for independence.
VI
The unresolved problems of Puerto Rico require that we examine the different alternatives with both U.S. and Puerto Rican interests in mind. The United States has important interests in Puerto Rico. Corporate and financial investment in the Island is close to the $14 billion mark. Sales of American products amounted to $3.38 billion in 1976. And the Puerto Rican economy in 1976 produced $1.61 billion ($7.5 billion from 1970 to 1976) in profits, dividends, and interest payments to U.S. corporations and individuals. From a military and strategic point of view, the United States has one important naval and air base at Roosevelt Roads and a number of minor installations. Puerto Rico is still considered by some to be of strategic importance to the United States, and many consider Puerto Rico to be the physical and psychological presence of the United States in the Caribbean and Latin America. Moreover, recently discovered copper and nickel deposits as well as the petroleum deposits which it is suspected lie offshore represent very real assets which the United States would clearly like to control.
But Puerto Rico is daily becoming a more onerous burden for the American taxpayer. Gross federal disbursements amounted to $2.74 billion (net $1.98 billion) in 1976, and will continue to mount as the Puerto Rican economy deteriorates and the population increases. American taxpayers are therefore required to contribute exorbitant amounts to finance an economic system which in 1976 produced for U.S. corporations and individuals more than $1.5 billion dollars, a substantial part of which is totally tax-exempt. American cities will hardly be able to absorb Puerto Ricans by the hundreds of thousands. The strategic importance of the Island has decreased considerably as a result of advances in aeronautics and in satellite-relayed communications.
U.S. foreign policy, moreover, is no longer served by the Commonwealth formula, bereft as it is of propaganda value in a world weary of colonial subterfuges. U.S. control over Puerto Rico is understood by many to be the big stick wielded to further U.S. foreign policy aims in the Western Hemisphere and particularly in the Caribbean. Thus, Puerto Rico becomes the touchstone on which the sincerity of U.S. foreign policy in Latin America must be tested. Sooner or later the United Nations will confirm world opinion by declaring Puerto Rico a colony.
As a nation, Puerto Rico has the inalienable right to its sovereignty and to develop and defend an economic system which will be adequate to its needs and its resources. It must have a truly democratic system of government so that its citizens can freely elect and control all their public officials.
We yearn to live decently from the products of our work, and we have the moral responsibility for putting an end to the degrading situation of being forced to live indefinitely as welfare recipients11 in an artificial economic structure designed for the benefit of U.S. corporations and their local intermediaries.
We claim the inalienable right to defend, protect and develop our natural resources, our nationality, our culture and our language.
We are a nation, not a military or a strategic base. And, as Latin Americans, we refuse to be used as a beachhead for the penetration and control of the Americas.
Let us examine the choices which are offered as solutions to these conflicting interests.
Commonwealth. The proposals presented by the supporters of the present Commonwealth status to acquire more power for the Puerto Rican government have been rejected by Congress time and again, but in any case all these proposals have maintained the basic economic and political structures which, as we have observed, have led us to our present condition.12
Congress has rejected all these proposals, in the first place because some of them present enormous constitutional problems and, in the second place, because these measures would give Puerto Rico preferential treatment over the states of the Union that the states are not ready to concede.
Furthermore, Commonwealth, under any guise, fails to comply with present requirements of international law and the expectations of the world community as defined particularly by Resolution 1514 (XV) of the U.N. General Assembly. The United States has been forced to risk its prestige and to resort to heavy-handed persuasion only to postpone a vote by the U.N. Committee on Decolonization regarding the status of Puerto Rico. If the United States were to persevere in flouting international law and opinion so as to maintain by subterfuge its colonial position in Puerto Rico, its prestige could only suffer. No nation can hope to remain as virtually the sole colonial power in the world and assert a claim to moral leadership in a world where over 75 new nations, all of which understand what colonialism is about, have gained their independence since the Second World War.
Twenty-five years are more than enough to demonstrate that Commonwealth status not only will not improve with time, but will undoubtedly get worse in economic, political and social terms, and that day by day it will decreasingly serve the interests of both the United States and Puerto Rico.
Statehood. Statehood is not a real alternative for the United States or for Puerto Rico.
From an economic point of view statehood would unquestionably worsen Puerto Rico's economic problems. With the full application of federal taxes, Puerto Rico would lose most of the attraction for American and foreign investors upon which the already decadent economic structure is based. Economic stagnation, greater than that existing now, would occur.
As a result, Puerto Rico would be a beggar state, destined to subsist only through massive transfer payments from the federal government. Evidently Puerto Rico would, as a state, have the right to the largest proportional share of federal welfare funds, and contribute the least to the federal treasury.
There also exist insurmountable political obstacles to statehood. As we have indicated, after 79 years of American occupation, there is no majority support for statehood in Puerto Rico. It is illusory to think that statehood will ever attain in Puerto Rico the overwhelming support that is required for admission of a state to the federal Union, support which must come close to unanimity in a Latin American country where, in contrast to Hawaii and Alaska, independence has been a constant of political life.
Among those opposing statehood, there are thousands of Puerto Ricans determined to impede assimilation by any and all means. A great number of these are to be found among the two million Puerto Ricans now living in the United States. Any serious attempt at incorporating Puerto Rico as a state would unquestionably precipitate a wave of violence, not only in Puerto Rico but also in the United States. We all know that in the past, and without the threat of impending statehood, grave acts of violence have taken place. Violence will undoubtedly breed repression and might involve minorities within the United States in a destructive conflict to assert by force the right to self-preservation, equality and dignity.
But what would the admission of Puerto Rico as a state mean to the United States? Puerto Rico would be a densely populated, Latin American, overwhelmingly Catholic, Spanish-speaking and, by American perceptions, racially mixed state entitled to two Senators and seven Congressmen and able to cast nine votes in the Electoral College, surpassed in electoral strength only by less than half of the states.
The language barrier alone should be enough to end speculation on the admissibility of Puerto Rico to the Union. After 79 years of U.S. occupation, the immense majority of Puerto Ricans feel no great need to speak English in their private and public life. Even supporters of statehood are very much aware of the insurmountable cultural and linguistic obstacles which statehood for Puerto Rico entails. The New Progressive Party in its 1976 program declared that "the enabling act must assure our people its maximum economic and social development, the conservation and enrichment of our culture and our Spanish language, which are not negotiable." And very recently Governor Romero Barceló reaffirmed that the Puerto Rican culture and language are not negotiable and that, if Congress is not willing to grant statehood under those conditions, he would then opt for independence.
Puerto Rico is not a case, as President Carter seems to believe (as demonstrated in his recent message to the Governor of Puerto Rico), of tolerating bilingualism in a minority. We are a majority, an overwhelming majority in our nation. Of the four daily newspaper published in Puerto Rico with a total circulation of approximately 415,000, only one with a circulation of about 40,000 is written in English. Only as a rare exception is an English language program televised by one of the five operating TV channels. And the numerous programs imported from the United States have to be dubbed in Spanish. Only one out of 84 radio stations has English language programming. Even sporting events like the World Series and boxing matches have to be transmitted in Spanish. Spanish is used in schools, universities, churches and courts of law with the few exceptions which serve exiguous minorities. Politically, this would mean that candidates to national office would not be able to communicate directly with the 1.8 million registered voters in Puerto Rico who could very well decide a close U.S. presidential election.
Northern Ireland, Scotland, Wales and Québec, although not in the same historical and political circumstances as Puerto Rico, underline the impossibility of repressing a nationality. The question is not if or when the theoretical State of Puerto Rico would be placed on such a roster. The question is only how destructive the fight to restore us to freedom would be.
Moreover, granting statehood to Puerto Rico will have to be implemented over widespread international opposition. Caribbean and Latin American nations can hardly be expected to applaud and forget when one of their own is swallowed by the "colossus of the North." No one can foretell what exactly they would do when faced with such action. At the very least, it would certainly poison U.S.-Latin American relations for many decades. The Conference of Heads of State of Nonaligned Nations has repeatedly and unanimously affirmed the right of Puerto Rico to independence. Even President Ford's lame-duck gesture provoked an immediate and negative response from points as geographically and ideologically distant as Mexico, Cuba, Venezuela, Spain, France and the Union of Soviet Socialist Republics.
Independence. To us independence is synonymous with the development of a democracy, the full protection of civil and political rights, and a decent way of life based on a work ethic. Independence will not bring about the millennium. But independence will provide the means and conditions to develop a more permanent, more just and more self-reliant economic growth.
Difficulties will confront us. Independence will require profound changes in our work and consumption habits and attitudes so that consumption conforms to our production capability. Despite per capita incomes which are a third of what they are in the United States, our consumption habits are the same: one car for every three Puerto Ricans; television sets for 93 percent of the families. A society which receives $600 million in food stamps a year and whose government admits that 60 percent of all families are medically indigent spends $1 billion in gambling in that same year. Conspicuous consumption is financed through an enormous private and public debt ($5.3 billion and $6.6 billion respectively by 1975) which will have to be paid sooner or later, and under Commonwealth status through massive federal expenditure.
The generation of investment funds in the early years is another problem which must be faced by the Republic. Independence would vary the conditions under which Puerto Rico would have access to U.S. money markets.13 But alternative sources of capital would be available through participation in international organizations which are at present active in promoting and financing development in Third World countries. Ample possibilities exist for bilateral arrangements, particularly with the major petroleum exporting countries. Venezuela, for example, has been favorably inclined to precisely such arrangements with Latin American countries.
The regulation of our financial sector and of consumption through the use of the appropriate fiscal and monetary powers of the Republic will allow us to generate savings and allocate them efficiently. Although aggregate consumption in Puerto Rico has exceeded income in recent years, savings have been generated. But accumulated capital has been exported or has been used to finance extravagant consumption. Puerto Rican banks regularly invest hundreds of millions outside Puerto Rico, and companies established here exported $1.6 billion in 1976. A large part of this wealth can be diverted to productive use in Puerto Rico where local banks have made less than 12 percent of their loans (totaling $3.9 billion in 1975) to manufacturing and agriculture. The Republic could match, at a minimum, the investment coefficient of 24 percent, which is the figure for Latin America as a whole, or even reach the investment coefficient of a small country such as Iceland (34 percent).
The lack of free access to U.S. markets will require readjustments in some export areas. But the lack of such free access (which will affect a decreasing number of products due to recent U.S. tariff trends) will be more than compensated for by our capacity to protect the local market to assure rational import substitution and internal growth, and by access to cheaper sources of supply and transportation costs. In 1975 Puerto Rico's balance-of-trade deficit with the United States was $1,397 million - excluding crude petroleum, imported mostly from Venezuela, and petroleum products, exported mostly to the United States. The savings to the Puerto Rican economy if it had access to world market supplies would be significant. We must remember that Puerto Rico is a captive market (the fifth largest in the world for U.S. exports) through what is called in classic colonial economic theory, an assimilated tariff policy; the application of both U.S. tariffs and the Offshore Shipping Laws now lock us into an expensive market with high maritime transportation costs.
In order to generate more permanent, more just and more self-reliant economic growth, we propose a new model for economic growth and social development for the Republic - one radically different from the present colonial model and capable of solving the problems it has engendered and cannot solve.
The model will have three basic objectives: (1) an increase in production and employment; (2) a better distribution of wealth; (3) more self-reliant economic growth.
Our production and employment policy will be based on rational import substitution. In several studies the Puerto Rico Planning Board has stated that import substitution is feasible and desirable and that the only restraints are political (i.e., lack of protection for local production) and not economic. Puerto Rico is endowed with the economic infrastructure and with the human and technical resources necessary for such production.
Import substitution is not synonymous with autarkic development. Our industrial structure will still have an important component geared for export, but, with independence, Puerto Rico will be able to substantially increase production for internal consumption and thus generate employment. In 1975 we imported $5,055 million. There is ample scope for import substitution in durable and nondurable goods which account for close to $2,000 million of imports.
In agriculture, our goal would be to guarantee as far as possible self-sufficiency in foodstuffs. In 1975 imports of foodstuffs amounted to $787 million. More than 60 percent of our arable land lies fallow. At present, this objective cannot be achieved because we cannot protect our agriculture from the dumping of U.S. produce; because of massive propaganda by U.S. producers which cannot be matched by local producers; and because of the utilization of agricultural land for sprawling, unplanned, highly speculative residential expansion, made possible in large degree by highly concentrated land ownership patterns. In the last 20 years, the amount of land under cultivation has decreased from 600,000 to 300,000 acres.
The existence of extensive nickel and copper deposits in Puerto Rico, calculated at a value of at least $10 billion, opens up an additional avenue of production and self-reliant growth. Recent petroleum explorations demonstrate the very high possibility (according to the exploring company, 85 percent) of the existence of petroleum off the northern shore of the Island. Only under independence could Puerto Rico be assured control over this resource, since, according to federal law, states have sovereignty only to a three-mile limit, and by special concession to a ten-mile zone. The exact nature of the Commonwealth's control is yet to be determined by the U.S. federal agencies or courts.
A better distribution of income and wealth - currently the upper 10 percent of families receive 35.82 percent of income while the lower 40 percent receive 8.9 percent - will require direct public intervention into those specific conditions and institutions which contribute to the generation of such maldistribution. These include the present abusive tax structure; the absence of a wage, income and price policy aimed at reducing inequality; and the lack of guaranteed and equal access to health, education, legal and other services.
Our third major objective is to have control over our economic growth process. Any small country in today's world faces great difficulties in trying to achieve self-reliant growth; but independence will provide the means whereby we can extend considerably the range of decisions over which we are sovereign, decisions which are now made by the United States - foreign trade and monetary policies are obvious examples. But to fully achieve this objective the government of an independent Puerto Rico will have to control its basic economic and financial sectors, intervene more directly in the distribution of consumer and investment goods, assume responsibility for the import sector, and engage in a process of social and cultural decolonization.
Our objectives will not be reached overnight. We anticipate a transition or phasing-out period of a number of years within which some of the present economic structures will coexist with those which will characterize the Republic.
New arrangements and agreements regarding the basic financial and industrial sectors now totally controlled by U.S. capital, and whose control by Puerto Rico is central to our objectives, should be reached after careful negotiation which would include provisions for gradual and just compensation. This process must not be considered as abrupt, but as part of the development of a Republic, which, like all other sovereign nations during the last half of the twentieth century, aspires to political independence and economic interdependence with other nations.
Private and public debt would be paid through long-term refinancing agreements, and arrangements should be reached to deal with the phasing out of federal transfer payments and the transfer to Puerto Rico of various programs, such as Social Security and federal pensions, which are presently administered by the United States.
Obviously U.S. corporations would lose their privileges and monopolistic hold on Puerto Rico. The military and strategic interests of the United States would have to conform to the Republic's sovereignty over its national territory.
A number of nations in Africa, Asia and the Caribbean demonstrate the possibility of achieving independence peacefully, even in coordination with the colonial power. Such a rational process is still available to the United States in solving the Puerto Rican question.
The Republic of Puerto Rico, conceived in liberty and founded on rational and equitable economic principles, would protect the interests and rights of the people of Puerto Rico; free the American taxpayer of the increased cost of maintaining an unworkable economic system; and would make U.S. policies conform to the principles of liberty on which the Union was founded as well as the principles of contemporary international law.
VII
Over the last 79 years - that is, since the U.S. invasion - the Puerto Rican nationality, an integral part of the continental Latin American nationality, has shown a vigorous capacity for resistance against overwhelming odds and constant attempts at assimilation. To argue that a well-defined, homogeneous nationality like that of Puerto Rico can be assimilated, or that nationalism and the urge for freedom are not felt by the immense majority of Puerto Ricans, by pointing to the result of one or another colonial election, would be as futile as confusing the size of an iceberg with that of its visible tip.
From the imposition of American citizenship on Puerto Ricans against the expressed will of the Puerto Rican House of Delegates to last year's refusal by the President of the United States to recommend the granting of minor reforms solicited by the majority PDP through a status commission, time and again the U.S. government has acted contrary to the will of even those officially representing the colonial government and timidly requesting some autonomous powers. Independence advocates have been frequently persecuted, and in the post-Chile and post-Watergate era no one can doubt the sinister indirect and direct methods that have been constantly used by the U.S. intelligence agencies against the Puerto Rican independence movement.14
Within this historical context, faced with an overpowering U.S. presence and immersed in continuous anti-independence propaganda, it is not surprising that many Puerto Ricans, out of frustration and a sense of impotence, have been left with no alternative but to view the political process in exclusive relation to their most immediate and pressing needs.
By now it should be clear to the U.S. government that nationalist processes rarely follow a linear development. Elements which are present but not apparent, or seemingly disparate, will crystallize and fuse overnight. Québec, where after two centuries of political and economic integration, pro-independence forces with 8.8 percent of the popular vote a few short years ago became the governing party in 1976, is only the most recent example of such nonlinear development.
The dynamics of the Puerto Rican reality - economic disruption, social decay, the political disrepute of Commonwealth status, the impossibility of statehood as an alternative, the enormous cost of Commonwealth to the American taxpayer as a subsidy to a few corporations, the unacceptability of colonialism in the world community and the merging of the independence ideal with the doctrine of democratic socialism - make of independence not only the inalienable right of the people of Puerto Rico, but also the only rational solution to the status problem of Puerto Rico.
In Puerto Rico an accelerated process is going on which can lead either to a sudden explosion or to an orderly channeling of nationalism. I personally should like to believe that through mutual understanding reason will validate our right to freedom and dignity. Our people cannot live without freedom and dignity. Independence is the only solution.
Footnotes
1 All economic data in this article have been taken from the official reports of the Puerto Rico Planning Board.
2 The ideological rationalization for coupling the vindication of social rights to an assimilationist stand was spelled out by Iglesias in 1907 in an article entitled, "Self-government for Whom?" His thesis was that the Puerto Rican bourgeoisie would establish a republic that would benefit only themselves. Workers, on the contrary, should incorporate themselves into the U.S. labor movement which then included progressive, even socialist, elements. The work of men like Eugene Debs made Iglesias fail to realize that trade-unionism, not socialism, was the dominant ideology of U.S. labor organizations.
3 United States Congressional and Administrative Service 1950, Vol. 2, Page 2682. A partial list of the powers held by the U.S. government demonstrate the extent of U.S. control to which Puerto Rico is subjected: eminent domain; defense and military service; tariffs; foreign commerce; foreign relations; currency; shipping; internal and external navigation; internal and external communications; citizenship and nationality; immigration and emigration; bankruptcy; air space; maritime limits and coast guard; treaties; patents. Other areas where there is theoretical concurrent jurisdiction are to all intents and purposes under U.S. jurisdiction - forests, monopolies, ports and airports, minerals, internal commerce, quarantine laws, minimum wages and labor laws and procedures.
4 Ibid., p. 1894.
5 Ibid., p. 2685.
6 The Puerto Rican advocates of the present Commonwealth status have within the last few years developed the curious rhetorical trick of adding the adjective "common" when mentioning the powers held by the federal government, thus trying to create the false impression that Puerto Rico shares these powers with the federal government. The dollar is therefore called "common currency"; American citizenship goes by the name of "common citizenship"; the military power of the United States and its power to establish bases on Puerto Rican soil and to draft young Puerto Ricans into the United States Armed Forces, is known as "common defense"; and federal powers over commerce and tariffs are blithely transformed into a "common market."
7 Per capita indexes have continued to climb: by 1976 per capita income was around $2,000. The reality of statistical growth must, however, be measured against debt, inflation, unemployment, etc. which have grown disproportionally since 1967. Obviously, increases in per capita income after 1967 do not reflect real economic growth even in the very limited sense that such a term can be applied to any phase of Operation Bootstrap; much less do they reflect an improvement in the pattern of the distribution of wealth, which is as lopsided as in 1940, if not more so.
8 Oficina del Gobernador, Taller de Empleo, Adiestramiento y Educación, Documento de Integración y Síntesis, San Juan: 1974.
9 In 1967 a plebiscite was held in Puerto Rico to consult the electorate on status preferences. Three choices were placed on the ballot: Independence, Statehood and the "culmination" of the Commonwealth. Since the results of the plebiscite were by definition not binding on the government of the United States, the Puerto Rican Independence Party, then the only pro-independence party in Puerto Rico, refused to participate, and campaigned for electoral abstention. Of those voting 60.41 percent voted for Commonwealth, 38.98 voted for Statehood, 0.6 percent despite the boycott sponsored by the PIP voted for Independence; 34.1 percent of registered voters did not participate.
10 Not to be confused with the Socialist Party founded by Santiago Iglesias.
11 According to Commonwealth of Puerto Rico statistics, in a population of 2.9 million there are 60,000 drug addicts; 100,000 alcoholics; 60,000 families living in extreme poverty; $1 billion spent on legal and illegal gambling; one out of every five children is born out of wedlock; and a serious crime is committed every six minutes.
12 These proposals have at times been quite broad, including, for example, the power to determine which federal laws would apply to the island, and the power to make commercial treaties and to establish certain tariff mechanisms but only under specified conditions. At other times they have been very limited, comprising such matters as exemption from federal minimum wage and labor relations laws, and from environmental regulations, or simply, having the authorization to conduct in Spanish the proceedings of the federal court in Puerto Rico.
13 Income derived from Government of Puerto Rico bonds is at present exempted by federal law from federal and state taxes.
14 Some glaring examples out of a long list of recent repressive measures can be mentioned. Former U.S. Attorney General Levi openly acknowledged that the FBI had improperly interfered on many occasions with independence groups in Puerto Rico. The Puerto Rico Civil Rights Commission reached the same conclusion regarding the insular police force. In the last few years the political offices of independence parties and groups have been subjected to more than a hundred attacks with guns and bombs, and no one has been brought to trial because of such acts.