Puerto Rico: Crisis Point

In a bid to sure up their island’s dire fiscal situation and address its $72 billion in outstanding public debt, Puerto Rican lawmakers narrowly passed a bill on Tuesday to significantly raise taxes on the territory’s inhabitants. The controversial legislation specifically increases Puerto Rico’s sales tax from 7 to 11.5 percent, the highest in the United States, and introduces a new 4 percent tax on professional services. If the bill is ultimately signed by Puerto Rico’s governor Alejandro Garcia Padilla, which seems likely given his avowed pro-austerity views, then the tax hikes will be implemented within the year.

Tuesday’s news comes after an announcement from San Juan that the government will be closing nearly 100 schools and 20 public agencies in the near future in order to save money.

Puerto Rico is in the midst of a crippling 8 year recession, characterized by devastating unemployment and poverty levels and unprecedented population flight. Critics of Tuesday’s bill decried the fact that the burden of the San Juan’s latest austerity scheme falls squarely on Puerto Rican consumers; they argue that the new taxes will seriously undermine already lagging economic demand on the island and ultimately deepen and prolong Puerto Rico’s longstanding recession, making it impossible for the territory to get out from under its smothering debt in the longterm.

Proponents of the legislation, on the other hand, say that such tax increases are desperately needed in order to stave off a government shutdown in the short-term. Foreign creditors, whose ongoing financing of the island’s government has become indispensable, with vested interests in Puerto Rico’s future solvency have long threatened to pull out of the U.S. territory in the absence of substantive austerity measures there. Policy makers in San Juan are hoping that the $1.2 billion in revenue that the new taxation is expected to yield will calm creditors abroad and attract new investors on the international bond market.

While credit rating agencies’ repeated downgrades of Puerto Rican treasury bonds have led many to reconsider their fledgling investments in the territory, one institution is actually seemingly eager to go all in on the struggling island.

You might be wondering who in their right mind could possibly want to purchase chunks of Puerto Rico’s behemoth and seemingly insurmountable debt. Why it’s our old friends over at Goldman Sachs; you know, the infamously predatory Wall Street banking conglomerate, and Federal Reserve junkie, that Matt Taibbi once hilariously, and poignantly, dubbed “a great vampire squid wrapped around the face of humanity, relentlessly jamming its blood funnel into anything that smells like money.” Well, according to recent article from Bloomberg Business, Goldman is currently gobbling up Puerto Rican bonds at breakneck speed, even as other investors flee for the hills. That a firm as historically and continually immoral and incompetent as Goldman Sachs is tripping over itself to buy up junkish Puerto Rican bonds should unnerve everyone. There’s a scam afoot here ladies and gentlemen, and you and I are the marks… again.

We’ve seen this movie before, and we know how it ends. If past is pretext, and -considering the U.S. government’s failure to break up Wall Street’s seemingly omnipotent “Too Big To Fail” banking cartels and fundamentally reform how it regulates and subsidizes such firms in the wake of the 2008 crash- it almost certainly is, then American taxpayers will get stuck bailing out Puerto Rico’s bondholders if and when the island eventually goes belly up fiscally. But by that point, the sharks at Goldman will have presumably already swam off into the Caribbean sunset, having sold off most of their toxic Puerto Rican assets to unwitting investors and simultaneously made lucratively risky and cynical bets against those same sales long before the island’s financial collapse. Wall Street will have transformed another crisis into a golden opportunity for itself, and the dismantling of Puerto Rican society will continue apace.

  

U.S.-Cuba: Where Things Stand

U.S.-Cuban negotiations aimed at restoring full diplomatic relations between the two formerly hostile countries have seemingly stalled once again. The latest round of high-level talks, held at the U.S. State Department in Washington D.C. over the course of several days last week, reportedly failed to produce significant progress, and formal mutual embassies in the American and Cuban capitals remain unopened.

Thanks to several recent breakthroughs in the diplomatic normalization process, including President Barack Obama’s decision last month to remove Cuba from the U.S. State Department’s infamous list of state sponsors of terrorism and the Cuban government’s resulting acquisition of much-needed banking services for its U.S. diplomatic mission with the Florida-based Stonegate Bank, the opening of embassies in Washington and Havana in the very near future seemed like a viable possibility ahead of last week’s talks. That said, American and Cuban negotiators in D.C. were unable to overcome critical disagreements over the degree of freedom that U.S. diplomats operating in Cuba should be afforded.

The Cuban government argues that the journalism training courses and information technology that American personnel at the U.S. diplomatic mission in Havana regularly provide to Cuban dissidents is illegal, specifically violating a Vienna Conventions ban on diplomats meddling in the internal affairs of other countries. They demand an immediate end to the practice and also want to maintain existing restrictions on Cuban-based U.S. diplomats’ freedom to travel outside of Havana. Persistent discord between American and Cuban negotiators over these contentious issues effectively neutralized last week’s talks in Washington.

Speaking to the press in the wake of the most recent negotiations, Roberta Jacobson, the U.S. State Department’s top official for Latin America, stressed the need for Cuba to conform to her country’s standards of diplomatic procedure: “There are a range of ways in which our embassies operate around the world in different countries…We expect that in Cuba, our embassy will operate within that range. It won’t be unique. It won’t be anything that that doesn’t exist elsewhere in the world.”

The authoritarian Castro regime, which strictly prohibits most types of subversive media in Cuba, is justifiably fearful that certain American diplomatic, aid and intelligence staff operating in Cuba are bent on fomenting anti-government sentiment among the population of the Caribbean island. The U.S. has a well-documented history of relentlessly attempting to oust the Castro government since it took power in 1959, and provoking a regime change or, at the very least, reform in Havana remains an avowed central goal of White House’s current diplomatic normalization and democratization efforts in Cuba.

Though the most recent round of negotiations between the U.S. and Cuba appear to have been decidedly unimpactful, representatives of both governments were optimistic about the overall progress of U.S.-Cuban diplomatic normalization in their statements to the press following the meeting. Furthermore, they refused to write off the talks as a failure. Josefina Vidal, Cuba’s director of North American affairs, called the negotiations “respectful and professional,” while Jacobson described them as “highly productive.” Neither party was willing to go into detail about substance of the negotiations.

  

                             

        

“Free Trade” and the Consequences of Neoliberal Globalization.

Thanks to the office of Senator Elizabeth Warren for documenting some of the blatant failures of U.S. trade policy in recent decades. Forming an appreciation for the history of this issue is necessary when attempting to understand the present dismal state of U.S. trade with the rest of the world.

President Obama may tout the new Trans-Pacific Partnership (TPP) as a different kind of trade deal, but experts were quick to dub it “NAFTA on steroids.” The disturbing fact that the adminstration is fighting to negotiate the massive agreement in secret, using so-called “fast-track” authority, is indicative of a certain contempt for democracy among some American elites. If the TTP is as good a deal as Obama says, why not open it up to public scrutiny and debate?

It is absolutely vital that working class populations on the Asian and American sides of the Pacific unite against the radical expansion of corporate power that is the TPP. They must educate themselves and mobilize politically in order to compel their governments to reject the agreement. Only by fundamentally transforming our trade priorities -by eliminating transnational monopolies, protecting national and food sovereignty in developing countries and empowering local economies and labor rights internationally- can we create a sustainable and more just global economy.

View Warren’s report here: http://big.assets.huffingtonpost.com/WarrenReport.pdf

   

Tensions Flare in Puerto Rico’s Debt Battle

Disgruntled students from the University of Puerto Rico took to the streets of San Juan last Wednesday to protest a government plan to slash their school’s funding by some $166 million. The spending cuts formed part of a $1.5 billion austerity program that the island’s governor, Alejandro García Padilla, had hoped to implement in order to put a dent in the territory’s whooping $72 billion debt and calm nervous foreign investors with a stake in Puerto Rico’s financial solvency.

Heated confrontations between the demonstrators and police, as well as a bomb scare at the governor’s mansion, prompted García Padilla to abandon some of the controversial cuts by Thursday. He subsequently met with Puerto Rican legislators and drew up a revised, more revenue-centered, budgetary plan in an effort to salvage the larger austerity package. The new plan increases the island’s sales tax by 4.5 percent and introduces a new value added tax of 4 percent on goods and services that were previously exempted from such dues. Tax increases aside, the replacement proposal includes $500 million in painful public spending cuts as well. Whether the government will be able to implement the austerity measures in the face of almost certain public backlash remains to be seen.

Puerto Rico’s ongoing debt crisis has already led to 150 school closings in the past five years. According to the government’s own estimates, 600 schools may face closure in the next five years if the territory’s fiscal situation doesn’t improve.

Puerto Rico’s Education Secretary, Rafael Román, pointed to the mass exodus of tens of thousands of Puerto Ricans in recent years as a major factor in the government’s decision to move ahead with school closings. Puerto Rico’s 3.5 million population has shrunk by a staggering 7 percent over the last decade and is projected to contract by a further 0.6 percent this year alone. 

A significant portion of the people leaving Puerto Rico are doing so in reaction to the island’s deep and longstanding recession. They’re fleeing the Puerto Rico’s 44 percent poverty rate and its 14 percent unemployment rate (the latter figure, which is double the U.S. mainland’s rate, is likely vastly understated given its failure to account for those who’ve simply dropped out of the labor market). Given the territory’s dire fiscal situation, prospects for economic growth in the near future remain dim.

Many have pointed to the Puerto Rican government’s stubborn austerity fixation as the primary cause of its depopulation and enduring recession. In 2009, then-governor Luis Fortuño, a supply-side oriented member of the Puerto Rican Republican Party, laid off 17,000 public employees and effectively nullified collective bargaining rights as well as existing, and future, union contracts in an effort to please foreign creditors and avoid a government shutdown. His parallel corporate tax rate reductions, designed to attracted investment in Puerto Rico, utterly failed to offset the significant economic harm caused by these cuts. Although the territory’s current governor is from the comparatively less right-wing Popular Democratic Party, he has embraced similar austerity initiatives in addressing Puerto Rico’s debt obligations.  

         

Cuba Shares Lung Cancer Vaccine With the U.S.

Thanks to the ongoing warming of relations between Cuba and the U.S., Americans may soon have access to a groundbreaking vaccine against lung cancer called Cimavax. Though Cubans have had access to the drug since 2011, it has remained unavailable to most Americans thanks to the longstanding U.S. trade embargo on the Caribbean island. A new agreement between the U.S.-based Roswell Park Cancer Institute and Cuba’s Center for Molecular Immunology, which was finalized during New York Governor Andrew Cuomo’s diplomatic mission to Havana last month, promises to change that however.

As per the agreement, Cimavax will soon be made available to the U.S. Food and Drug Administration for evaluation. The Center for Molecular Immunology, the Cuban research agency which created the vaccine, is sharing information regarding the drug’s production process, toxicity levels and past clinical trials in an effort to speed up the FDA’s assessment process. Pending the drug’s eventual approval, Candace Johnson, CEO of Roswell Park, expects development of an American version of the vaccine to begin within the year.

Cimavax isn’t an outright lung cancer cure; it’s a preemptive treatment designed to manage the disease’s growth. By attacking a harmful protein produced by tumors, the vaccine can prolong a lung cancer patient’s life by four to six months -according to a 2008 study.

In Cuba, where lung cancer is the fourth-leading cause of death among a population attached to their internationally renowned cigars, Cimavax has been a godsend. The drug was developed by Cuban researchers over the course of 25 years as part of the Castro government’s Biological Front program -a longterm biotechnology and medical research initiative that has yielded numerous breakthroughs, including vaccines for meningitis B and hepatitis B. Like all healthcare services on the Caribbean nation, Cimavax is available to all Cubans free of charge and is produced by the Cuban government at an impressively low cost of $1 per shot.

Cuban medical research programs and healthcare policies have been widely lauded. “Cuba is the only country that has a healthcare system closely linked to research and development,” Margaret Chan, Director-General of the World Health Organization (WHO), explained during a trip to Havana last summer. She also particularly praised the Cuban government’s focus on securing cost effective preventative treatments for its population, stressing that Cuba’s healthcare system serves as a role model to other cash strapped developing nations. The Castro regime spends significantly less money than the U.S. government does on healthcare per individual and yet delivers comparable, and in many cases superior, outcomes, a reality which serves as an indictment of the U.S.’s dysfunctional private healthcare and health insurance industries as much as it is a vindication of Cuba’s socialized system. With a relatively high life expectancy of 78 years, Cubans continue to live longer on average than most other populations in the Americas.

Echoing Chan’s earlier praises, Johnson described the Cuban healthcare system: “They’ve had to do more with less… so they’ve had to be even more innovative with how they approach things. For over 40 years, they have had a preeminent immunology community.”

Significant obstacles to further collaboration between American and Cuban medical researchers remain due to the U.S. continuing trade embargo on the island nation.

   

No, France Will Not Be Paying Reparations To Haiti Anytime Soon.

French President François Hollande concluded his five-day tour of the Caribbean on Tuesday with a stop in Port-au-Prince, Haiti. The visit marked only the second time that a sitting French head-of-state has traveled to the struggling Caribbean nation -former President Nicolas Sarkozy went there in early 2010 after a devastating earthquake killed more than 300,000 Haitians and displaced countless more.

Considering France and Haiti’s sordid history, the apparent reluctance of French leaders to visit the hard-pressed nation isn’t all that surprising. Prior to winning its independence from France on January 1, 1804 and becoming the world’s first black republic, Haiti was France’s most prosperous, and slave-ridden, overseas colony.

In 1825, the French government demanded, in exchange for its formal recognition of Haiti’s independence, that the former colony compensate the French plantation owners that had lost property and slaves during Haiti’s 1791-1804 revolution twenty years before. Significantly, slavery had already been outlawed in France for years by that time, calling into question the legality of Paris’s reparation proposal from the outset. Even so, the Haitian government was eager to acquire diplomatic legitimacy and agreed to cover the debt.

The so-called “independence debt” that France extracted from Haiti amounted to around 90 million gold francs ($18.9 billion), which was ten times the young country’s annual public revenue in 1825. It crippled Haiti’s economic growth for well over a century and, in a trend eerily similar to certain contemporary cases, enriched the French banks that helped finance Haiti’s regular debt payments to France. Though the burdensome debt was, and still is, widely regarded as morally and legally illegitimate, Haiti paid off the full sum, along with the substantial accumulated interest it owed to French lenders, by 1947.

There have been repeated calls by many, including Haiti’s ousted former President Jean-Bertrand Aristide, for France to begin paying billions in reparations to its former colony in order to atone for the unjust “independence debt” and aid the now poverty-stricken nation.

A joint 2013 statement from Office of International Lawyers and the Institute for Justice and Democracy in Haiti was supportive of financial reparations: “If the international community really wants to help Haiti, repayment of the independence debt will be at the top of the agenda, not off the table. A just repayment of the independence debt, by contrast, would allow Haiti to develop the way today’s wealthy countries did — based on national priorities set inside the country. It would also right a historical wrong, and set a strong example of a powerful country respecting the rule law with respect to a less powerful country.”

In 2001, a law was passed in France that formally characterized slavery and the sale of humans as crimes against humanity, acknowledging France’s own historic involvement in the atrocious slave trade in the process. Though the French government cancelled Haiti’s outstanding debt to France after the horrendous 2010 earthquake, which then stood at $81.2 million, it has steadfastly resisted proposals for reparations to Haiti for years.

A speech by President Hollande at the inauguration of a slavery memorial in Guadeloupe on Sunday did address the contentious question of France’s debt to Haiti and reignite the hopes of many who are calling for a reevaluation of French policy on the issue of Haitian reparations.

“When I go to Haiti, I will, for my part, handle the debt that we have,” the French leader proclaimed to thunderous applause. Some interpreted Hollande’s statements as an indirect endorsement of concrete financial reparations, but the president’s staff subsequently clarified that his words referred strictly to France’s more abstract moral debt to Haiti. For the time being at least, reparations do not appear to be on the horizon for Haiti.

This article was updated by the editorial staff of Antillean Media Group before its publication on Thursday May 14, 2015. The final version of the post can be viewed here: http://www.antillean.org/haiti-hollande-independence-debt-222/ 

  

New Cuban Travel Opportunities on the Horizon 

In the latest development in the long process of diplomatic and commercial normalization between the United States and Cuba, the Obama administration is lifting a five decade ban on ferry services from Florida to Havana. By fall of this year, American tourists should be able to shuttle across the 225-mile shipping route separating southern Florida from the Cuban capital with any of four U.S. Treasury Department-approved commercial ferry services -including Havana Ferry Partners in Fort Lauderdale, Baja Ferries in Miami, United Caribbean Lines Florida in Greater Orlando and Airline Brokers Co. in Miami and Fort Lauderdale.

Robert Muse, a lawyer for Baja Ferries, told the Associated Press that the White House’s move, which was made public on Tuesday, was “a further indication of the seriousness of the Obama administration in normalizing relations with Cuba, we’re now going from the theoretical to the very specific.” Muse said that the new ferry services will provide American vacationers to Cuba with an affordable alternative to air travel.

Obama’s decision to reauthorize commercial ferry services to Cuba comes less than a month after the U.S. State Department removed Cuba from its list of state sponsors of terrorism. Many in the U.S. and Cuba are hopeful that Tuesday’s news will portend the full legalization of American tourism to Cuba, which -despite some recent and significant regulatory changes- remains at least formally prohibited.

“We are approaching the project not just as a ferry operation but as a new, important economic driver for both countries, and development of a ferry system for the Caribbean,” Bruce Nierenberg, president of United Caribbean Lines, explained to Newsweek. Nierenberg was optimistic that, with the U.S. government’s blessing, his company would soon be operating ferry services to Cuba out of Miami, Tampa, Port Everglades and Key West.

Also this week, JetBlue announced that it would soon begin offering weekly round-trip flights to Cuba out of the John F. Kennedy International Airport in New York. Outside of Florida, the New York metropolitan area maintains the highest concentration of Cuban Americans in the U.S.; JetBlue’s upcoming service was likely developed with this population in mind. The new nonstop flights, which will commence on July 3, should last about three and a half hours.

The company’s announcement capped off a recent two-day trip to Cuba by New York Governor Andrew Cuomo designed to promote closer trade and travel ties between his state and the Caribbean island. “By leading one of the first state trade missions to Cuba as the United States reestablishes diplomatic relations, we placed New York State businesses at the front of the line for new prospects in Cuba, that will in turn support jobs and economic activity here at home,” the governor told the press on Tuesday.

JetBlue is the first commercial airline to seize on the opportunity presented by President Obama’s initial easing of Cuban travel restrictions earlier this year. Currently, about 600,000 Americans make their way to Cuba every year -often chartering private flights to do so. Some fly to Cuba through third-party countries like Canada. New direct and over-the-table flight’s, of the type JetBlue is planning to offer, promise to normalize and grow this irregular market, encouraging greater U.S.-Cuban tourism in the process.

  

New Report Tracks Political Repression in Cuba 

There were at least 338 political arrests in Cuba this April according to a report released on Monday by the Cuban Commission for Human Rights and National Reconciliation (CCDHRN). The figure represents a significant reduction from the 610 Cuban politically motivated arrests that the Commission counted in March. Even so, the CCDHRN, which is the only organization in Cuba tracking such arrests, argues that April saw an intensification of other forms of political repression in Cuba.

The monthly “Acts of Political Repression” report cited increased instances of Cuban law enforcement employing physical aggression, verbal intimidation, vandalism and so-called “shows of rejection” -when police and state security forces pose as regular citizens in plain cloths and stage counter-protests in opposition to anti-government demonstrations- against dissidents last month as evidence of a government crackdown on political opposition.

Throughout April, one dissident organization in particular, the Ladies in White, were the victims of chronic police harassment during their weekly rallies. The Ladies in White gathered every Sunday last month and held public protest “masses,” where the group distributed images of political prisoners to onlookers and decried the Castro regime’s human rights violations. Large assemblies of this kind are strictly prohibited under Cuban law and are regularly broken up by the government.

During the most recent of these “masses,” in Havana on May 3, 51 Ladies in White and 38 other activists were detained by the authorities for six hours. The director of the Ladies in White, Berta Soler, reported that activists were denied food and water during their detainment on Sunday and that many were “brutally beaten.”

“It’s further proof of the Cuban government’s intolerance towards people who think differently,” Soler told the press.

The CCDHRN is also calling for an investigation into the recent killing of Yunieski Martinez in the Matanzas province of Cuba. The Commission alleges that the unarmed 30 year-old, who was shot in the back, may have been murdered by a state security official affiliated with the Interior Ministry.

April’s CCDHRN report went on to criticize the Cuban government’s tone at the recent Summit of the Americas meeting in Panama, arguing that President Raul Castro’s rhetoric during his remarks at the conference, which included a defiant denunciation of the United State’s hemispheric influence, represented a refusal to “accept international standards on issues of civil, political, and labor rights, as well as other fundamental rights.”

Although the Cuban government regularly participates in several regional summits, this year marked the first time that Cuba was invited to the Summit of the Americas -a conference historically dominated by the U.S. Cuba’s groundbreaking inclusion at the multilateral meeting last month is likely a result of the diplomatic normalization efforts publicly initiated by Havana and Washington last December.

Soler remains skeptical that the Castro regime’s current rapprochement with the American government will substantively improve the human rights situation in Cuba. She claims that President Castro’s new policy with respect to the U.S. -far from reflecting a genuine intent to implement political reforms in Cuba- is solely motivated by the need to access “credit with powerful countries to keep himself in power, due to the fact that Nicolás Maduro, president of Venezuela, can no longer comply with the support that former president Hugo Chávez offered Cuba.”