New York-based Latin organization in the trenches over Puerto Rico’s billion-dollar debt
As many took advantage of a hot summer Saturday on August 6 following a heat wave across the United States, a New York-based organization of about 30 members called a virtual meeting to discuss Puerto Rico’s $124 billion debt, the largest in US history.
PR no se vende (Puerto Rico is not for sale) is a grassroots organization part of a larger coalition that opposes federal austerity measures imposed on the island to resolve the island’s debt .
The topic of the meeting was how to file a complaint with the Securities and Exchange Commission (SEC), the federal agency responsible for monitoring market stability.
Gabriela Malespin, 27, is from Puerto Rico and one of the first members of the organization. She guided the call by filing a complaint herself and answering all questions along the way. On a call filled with mostly black tuned squares, she discussed the intricacies of the complaint process, hoping to make an otherwise complicated process easier for others.
For Malespin, the movement stems from the first-hand relationship between his upbringing and Puerto Rico’s dire economic conditions.
“You know, I slowly saw the turmoil that Puerto Rico went through throughout my childhood. I grew up during the recession and I saw a lot of my friends having to move (…) to Florida because ‘there was no job,’ recalls Malespin.
“I was in college when the debt crisis broke out (…) That’s where my family is. This is where my home is,” she added.
Her story echoes the Puerto Rican diaspora, a narrative that describes the uprooting of your life and starting over, not of your own volition because you see no way out.
A brief retrospective
Congress declared a crisis in 2016 when it deemed the island’s debt unsustainable, totaling hundreds of billions, an amount the local government said it could not pay, triggering a federal austerity response.
President Barack Obama installed the Federal Oversight and Management Council to control public spending and get debt back on track. The end goal was to design a payment plan without leaving the island financially insolvent.
PROMESA was Congress’ promise to bondholders, local government and retired employees to whom the debt is payable.
In 2019, Aurelius Capital Management, the major bondholders, took the case to the U.S. Supreme Court, which in a unanimous decision determined that the debt was constitutional by allowing the legitimacy of financial supervisors.
And because the court did not consider them “officers of the United States,” the president could appoint members without confirmation from the Senate. Puerto Rican citizens, the ultimate guarantee of the debt, had no say.
After years of harsh scrutiny that led to skyrocketing taxes and crippling wages, Puerto Rico is one step closer to its first payout after a federal bankruptcy court approved FOMB’s restructuring and payout plan in 2022.
The consequences of debt hit the bull’s eye
For people like Malespin, the effects of the debt are felt directly in her hometown of Bayamón, where schools like the one she attended for elementary school remain closed following the destruction of Hurricane María.
“I really can’t stand seeing all the reports about what’s going on in [Puerto Rico]. Reading about all the different ways vulture funds continue to prioritize their profits over Puerto Rican lives,” she said.
“I couldn’t keep reading about it without at least trying to do something about it. Without at least feeling like they could contribute in some way.
Through small actions like filing a complaint with the SEC, Malespin hopes to get enough traction on the website to trigger an investigation. While it’s unclear how many complaints are needed for the SEC to conduct a formal investigation, its ultimate goal is to mobilize the diaspora through several organizations in the country.
“One part is educating, and the next part is getting agitated and starting to take action,” she said.
A voice for the diaspora
“There is a very general knowledge that people have of Puerto Rico. They are aware of the debt crisis. These are just a few pieces of the puzzle. It has a lot to do with how people have appropriated the discourse on [Puerto Rico] (…) instead of questioning all the policies that got us to where we are,” said Malespin
Coverage of Puerto Rico’s crisis often makes national headlines, but there is little Congress can do about a constitutional debt, resulting in deteriorating economic conditions for the island’s citizens.
Puerto Rican lawmakers frequently express how any restructuring would end up leaving the island insolvent, or at the very least, unlivable, given the current dire conditions.
The law made the situation worse
As Capitol Hill members introduce recycled legislation, the nation’s wealthiest seek a tax haven on the island, where they can avoid the IRS after a few months of residency. Law 22, a legal measure passed by the Puerto Rican government, has attracted investors hoping to revive the economy.
According to economic studies, these investors would have risen to just over 2% since the adoption of the law.
These problems have compounded an inflation-stricken island with little to no economic growth or opportunity, forcing citizens off the island.
In the meantime, US lawmakers introduce statutes, which never worked, to resolve a political issue, leaving the economic outlook inconclusive.
Alongside surrounding coalitions, Malespin continues to raise awareness at the forefront of Puerto Rico’s debt battle.