Flawed Oversight Board Formed to Address Puerto Rico's Debt Crisis Defended as Only Alternative

Posted July 6, 2016

MP3 Interview with Andrew Hanauer, campaigns director for Jubilee USA Network, conducted by Scott Harris

puertorico

After months of Congressional inaction on Puerto Rico’s looming debt crisis, President Barack Obama signed into law the Puerto Rico Oversight, Management and Economic Stability Act, known by its acronym, PROMESA, or “Promise” in Spanish. The new oversight board was authorized on June 30th, just before a July 1st deadline for the island’s government to make a $2 billion payment to creditors that Puerto Rico’s Governor Alejandro Garcia Padilla say they cannot pay. The island defaulted on an earlier payment in May. Although Puerto Rico is a U.S. territory, because it is not a state, the island is not allowed to restructure its daunting $72 billion debt under Chapter 9 the way bankrupt cities like Detroit have done.

President Obama and supporters of PROMESA maintain that the measure will provide "more stability, better services and greater prosperity over the long term for the people of Puerto Rico." But many opponents of the PROMESA bill say that Puerto Rico shouldn’t pay its debts to enrich Wall Street profiteers. They point to the fact that $33.5 billion of the $72 billion in debt is actually interest on capital appreciation bonds, representing 785 percent interest on an earlier $4.3 billion loan. Critics also oppose the structure of the oversight board which would not be accountable to the island government and requires that only one of its seven members resides or has a business in Puerto Rico. The board will have control over Puerto Rico's future budget, laws, financial plans, and regulations.

Between The Lines’ Scott Harris spoke with Andrew Hanauer, Jubilee USA Network's campaigns director, who examines the strengths and weaknesses of the PROMESA legislation, and the long term economic challenges facing the people of Puerto Rico

For more information, visit Jubilee USA at jubileeusa.org.

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