(Published in Workers World newspaper May 11, 2006)
Tens of thousands protest as
Puerto Rico govt. lays off 100,000
By Tom Soto
San Juan, Puerto Rico
Social unrest is reaching a boiling point on the island of Puerto Rico due to a deepening financial crisis.
In September 2004, Moody’s Investor Services and Standard & Poor’s, which do the dirty work for Wall Street’s bond market investors, announced they were downgrading the credit-worthiness of Puerto Rico’s bonds.
Moody’s pointed to a PR government debt of $39 billion and a budget deficit in fiscal year 2004 of $1 billion. The budget deficit for the current fiscal year, which ends June 30, amounts to $750 million, at a time when the total public debt is already close to $45 billion. When calculated per capita ($9,958), the external debt of Puerto Rico is the largest in all of Latin America.
For the last year, Gov. Anibal Acevedo Vilá, of the Popular Democratic Party (PDP), and the PR Legislature, dominated by the pro-statehood New Progressive Party (NPP), have been imposing austerity measures as demanded by the Wall Street investors: cutting public services, forcing the early retirement of public employees, increasing the rates charged for electricity, water, highway tolls and public transportation, increasing tuition fees at the University of PR and more. (See Workers World Sept. 10 and Nov. 18, 2005, issues.)
Consumer sales tax and the external debt
The central theme being pursued by the Wall Street investors in their “restructuring plan” for the Puerto Rican economy is the imposition of a consumer sales tax. In 2004 the amount being floated was 9 percent. Interlocked within this web of massive external debt and a financial crisis is the fact that, since 1898, Puerto Rico has been a colony of the United States. Its economy is foreign-owned, primarily by U.S. corporations and investors.
For the last three months, the two rival bourgeois parties (the PDP and NPP) have been trying to persuade the public to view the current crisis narrowly, in terms of a mere budget deficit dispute. The pro-statehood NPP has proposed a 4 percent consumer sales tax, while the PDP proposes a 7 percent sales tax. Both ignore the broader issue of the strangling external debt, which requires a yearly (and unending) debt service of $3 billion.
In April, the governor announced that if the PR Legislature did not approve the 7 percent sales tax, providing new revenues, the government would not be able to get an emergency loan of $531 million to avoid shutting down as of May 1. Both bourgeois parties have been intransigent, holding the public and government employees hostage to the possibility of a partial government shutdown and imposing mass layoffs and further cutbacks, supposedly due to the lack of money.
At the end of the month, Gov. Acevedo Vilá announced that the government was out of money and would partially shut down 45 government departments and agencies, starting May 1. This includes the closing of schools, affecting 560,000 students, and laying off all the personnel in the Department of Education — more than 70,000 workers. The governor sent notices of the mass layoff plan to all government agencies and halted all money transfers to Puerto Rico’s 78 municipalities.
Moody’s ordered cuts in education
It is noteworthy that in the latest evaluation of Puerto Rico’s economy, carried out last month by Moody’s Investor Services, the Education Department of Puerto Rico is singled out as a target for cutbacks.
Among public employees and the working class generally, the announcement by the government created shock, uncertainty and anger. The unions who represent the 95,000 public employees to be dismissed began to mobilize forces. The entire union movement has denounced the imposition of a sales tax and the impending layoffs.
On April 28 the Association of Mayors, which is tied to the PDP, bused in several thousand municipal employees from cities throughout the island to pressure the Legislature to come to an agreement with the governor on the budget.
On the morning of April 29, a demonstration billed as “Puerto Rico Grita” (Puerto Rico Screams), initiated by radio show hosts Antonio Sánchez and Funky Joe, drew 40,000 marchers, who went to the Legislature demanding, again, that it and the governor come to an agreement.
That same afternoon Servidores Públicos (Public Servants), which represents office workers, held a demonstration in the banking and financial district of San Juan. The workers stopped in front of Banco Popular and sat down in the street, demanding that the crisis be averted by taxing the banks and corporations.
Some union leaders attempted to dramatize the moment by entering the bank to withdraw their deposits, but police moved in. Clashes with the police prevented the workers from entering.
Later that afternoon, some 5,000 members of the Federation of Teachers, the Puerto Rican Workers Union, the Association of Lunchroom Workers and others marched to the Legislature under the slogan, “Not 4 percent or 7 percent, make the rich pay.”
At the rally in front of the Legislature, Teachers Federation head Rafael Feliciano warned the government that if the schools closed on May 1, the federation and other unions representing the 70,000 Education Department employees would call for a general strike. He blamed the current crisis on “big business, which is holding the country hostage.”
From 1999 to 2005, the assets of the commercial banks operating in Puerto Rico increased from $44 billion to $83 billion. They include Banco Bilbao Vizcaya Argentaria, Banco Popular, Banco Santander, Bank & Trust of Puerto Rico, Citibank, Doral Bank, Eurobank, FirstBank, R-G Premier Bank, Scotiabank and Westernbank.
On May 1, the government went ahead with its plans and 95,000 public employees found themselves without jobs. The president of Puerto Rico’s Development Bank, Alfredo Salazar, who represents the island in negotiations with Moody’s Investor Services and Standard & Poor’s, explained to the press that the government shutdown would be viewed as a good thing by the credit rating houses and by bondholders on Wall Street because “they will see it as a demonstration that the financial problems are being confronted.”
May Day protest trashes banks
A May Day protest, organized by the Coordinadora Sindical (Union Coordination), drew 4,000 in the pouring rain. The demonstration gathered at the Labor Department and marched to the financial and banking district.
Marchers chanted in Spanish: “The government of Puerto Rico is an instrument of the rich,” “If 7 percent is so good, let the bankers pay it,” “Struggle yes—Surrender no,” “We say no to the layoffs,” and “Workers and students united and moving forward.”
As the demonstration passed the banks, militant, hooded young people sprayed the walls of the banks with the slogan in Spanish: “Not 4 percent or 7 percent—Let the rich pay.”
The police moved in to stop the youth. In the ensuing struggle, the demonstration’s security squad, made up of men and women unionists, held the police at bay. As crowds grew to protest the police intervention, more young people gathered and pelted the bank windows with rocks. Several large window structures at Scotiabank, McDonald’s and other businesses were damaged.
According to Puerto Rico’s Development Bank, last year the island’s gross domestic product was $79 billion; of that, $30 billion went straight into the pockets of U.S. investors. In that same year, per-capita income was reported at $12,947.
If one adds up the profits that Wall Street and other foreign investors have taken out of Puerto Rico in the 107 years of its domination by the U.S., it becomes clear that most of the wealth produced by the workers of Puerto Rico has been robbed.
The current struggle is a reflection of the fundamental contradiction of capitalism — that while the working class collectively produces all the wealth of society, this wealth is appropriated by a handful of private corporations and banks. In the case of a colony like Puerto Rico, it means that an even greater portion of what the workers produce is stolen.□
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