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Walden Publishing Ltd.

Puerto Rico: Profile, Review

September 11, 2001
Copyright © 2001 Walden Publishing Ltd.. All Rights Reserved.

Puerto Rico: Profile

Americas Review World of Information Copyright: Walden Publishing Ltd. All rights reserved. Walden Publishing Ltd and Quest Information Ltd assume no liability for the consequence of reliance upon any opinion or statement. Copyright (c) 2001 Quest Economics: Janet Matthews Information Services

Historical profile

1493 The island was inhabited by some 100,000 Taino Indians (an Arawak culture that also occupied most of Hispaniola and part of Cuba) at the time of the first European sighting by Columbus. A member of the expedition, Juan Ponce de Leon, was given permission to settle the island, which he named San Juan.

1898 The island was ceded to the US by Spain at the end of the Spanish- American war. The US ruled it as an unincorporated territory.

1917 The inhabitants became citizens of the US.

1948 Puerto Rico elected its first governor.

1952 A new constitution designated Puerto Rico a self-governing commonwealth within the US.

1967 A plebiscite rejected the option of becoming a state of the US.

1993 The statehood option was rejected for a second time in a national referendum.

1998 In December, Puerto Ricans again narrowly rejected the option of statehood in favour of maintaining the constitutional status quo.

2000 Sila Maria Calderon Serra became the first female governor in November.

2001 In January, Mrs Calderon announced the creation of the Blue Riband Commission to review all large transactions made by the previous (Rossello) administration.

Political structure

The island is a self-governing commonwealth within the US constitutional system.

The local government consists of executive, legislative and judicial branches. Puerto Rico has 78 municipal governments.

Detailed laws governing the status and relationship of the Commonwealth of Puerto Rico with the United States cover, among other aspects: military conscription, tax and trade, social security, citizenship, constitutional changes, internal autonomy.

The governor of Puerto Rico is elected by popular vote in November every four years, along with Puerto Rico 's Resident Commissioner to the US Congress, as well as all legislative and municipal officials throughout the island.

Form of state

Both the Constitution of Puerto Rico and the US Constitution are applicable - Puerto Rico is an overseas Commonwealth Territory and freely associated state of the US. Puerto Ricans have US citizenship with local self-government but not full political rights as US citizens.

The executive

The governor heads the executive branch, and is the head of state and chief commander of the state militia.

Cabinet members, consisting of department secretaries and other agency heads are appointed by the governor with the advice and consent of the Senate.

National legislature

The legislature is the bicameral Legislative Assembly: the Senate (27 members - 16 from the eight districts, 11 on a wider franchise) and the House of Representatives (51 members - 40 from constituencies, 11 on a wider franchise). The term for both Houses is four years and representation of minority parties is constitutionally guaranteed - from a quarter to one-third of seats in each chamber.

The legislature convenes each year from January through April, but the sessions usually extend into May or June to complete pending legislation.

Last elections

November 2000 (national elections)

Next elections

By November 2004 (national elections)

Political parties

Ruling party Partido Popular Democratico (PPD) (Popular Democratic Party).

Main opposition party Partido Nuevo Progresista (PNP) (New Progressive Party); Partido Independentista Puertorriqueno (PIP) ( Puerto Rican Independence Party)


The 2000 census established the population as 3.8 million.

Another approximately three million live in the US. The annual population growth rate was 1 per cent between 1990-99, and is expected to be 0.7 per cent between 1999-2015. Life expectancy is 76 years. The infant mortality rate is 10 deaths per 1,000 live births. Population density is 435 inhabitants per square km.

Ethnic make-up

Fusion of three main cultures: native Indian, European and African.

The Spanish conquistadores initially came to the New World without wives or family, and married into the native population, producing themestizo (Spanish and Taio) and the mulatto (Spanish and African) groups.

The Spanish settlers brought in African slaves to work in the sugar- cane fields and plantations, and when migration restrictions were relaxed, more Spanish came, together with a large contingent of Corsicans and a small number of Irish.

Thousands of mainland Americans have established themselves in Puerto Rico , and migrants have also come from the Dominican Republic, Canada, Europe, Asia, Cuba and South and Central America.


About 85 per cent of the population is Roman Catholic. Protestant denominations are also represented.

Religion has traditionally played an important role in the island's history. The religious groups have been instrumental in fostering community co-operation and providing health and educational services.

Main cities

San Juan, capital (population estimated at 1.4 million), Bayamon (232,000), Ponce (190,000), Carolina (189,000), Aguadilla, Arecibo, Caguas, Mayaguez and Guaynabo.

Languages spoken

Although English and Spanish are official languages, Spanish is the primary language of the vast majority of Puerto Ricans .

English is an important second language. It is taught in public and private schools from first grade through high school and also in college.

Government affairs are conducted in Spanish.



Dailies: The three main dailies widely circulated include El Vocero de Puerto Rico , Nuevo Dia Interactivo and San Juan Star (English). Other regional dailies and those published from San Juan are Apuntenlo, El Cronista, La Esquina, La Estrella de Puerto Rico , El Expresso, El Impacto, Impresiones, El Periodico, Primera Hora, Puerto Rico Herald and Vieques Times.

Weeklies: The Caribbean Business is a weekly publication.

Periodicals: Que Pasa is an Official Visitor's Guide published bi- monthly in Puerto Rico .


Around 115 national commercial radio stations and nine television stations broadcast.


Although closely linked to the US economy, Puerto Rico showed signs of resisting the economic slowdown which gradually became a reality in the US in late 2000. Although growth was slow, and there were notable deteriorations in hotel occupancy rates and in some manufacturing figures, the trend was not recessionary and there were enough sectors performing well in the Puerto Rican economy to keep growth figures positive. As with many Caribbean countries, Puerto Rico 's construction sector slowed significantly in 2000. This is partially due to the completion of projects which were undertaken following destructive storms in previous years, and probably due to decreased private construction caused by uncertainty about the health of the global economy. Spurred by the cost of fuel, inflation increased by 8.7 per cent year-on-year in fourth quarter 2000.

The weakness in Puerto Rico 's manufacturing sector will need to be addressed urgently if exports are to remain steady and economic growth sustained. At the same time, other regional agreements such as the North American Free Trade Agreement (NAFTA) has made countries such as Mexico attractive low wage, tariff free alternatives to Puerto Rico . Many investors are adopting a 'wait and see' attitude to Puerto Rico .

External trade

There has been a regular trade surplus since 1985 due to increased exports of manufactured goods. The balance of payments is, however, still reliant on US federal aid flows.

Puerto Rico ranks among the 10 largest world customers for mainland US products. The US accounts for over 75 per cent of the island's imports and exports, much of which are intra-company shipments of parts from US companies and exports of finished goods in return. This flow of materials and products creates profits for private companies and jobs for workers in Puerto Rico and the US.

Other major trading partners include Japan, Dominican Republic, UK, Venezuela and a number of neighbouring Caribbean countries.

The Free Trade Area of the Americas is to be created in 2005. With this in view, Puerto Rico is hoping to transform itself into a 'trade bridge' between North and South America, and between the Americas and Europe.


Principal exports are medical drugs, office, computing and accounting machines, beverages, surgical medical and dental instruments and supplies, industrial organic chemicals, communication equipment, soap, detergent and cleaning preparations, perfumes, cosmetics and other toilet preparations, agricultural chemicals, miscellaneous food preparation and kindred products, electric transmission and distribution equipment.

Main destinations: US (typically 89 per cent of total), Dominican Republic (3 per cent), Japan (1 per cent)


Principal imports: medical drugs, motor vehicles and equipment, industrial organic chemicals, petroleum refining, electronic components and accessories, surgical, medical and dental instruments and supplies, miscellaneous food preparation and kindred products, office, computing and accounting machines, crude petroleum and natural gas, miscellaneous manufacturing equipment.

Main sources: US (typically 62 per cent of total), Dominican Republic (6 per cent), Japan (4 per cent)


The agricultural sector is small-scale, contributes around 1 per cent to GDP and employs 3 per cent of the workforce.

Only 10 per cent of land is suitable for agriculture. An additional 25 per cent of the island is composed of uplands, partially suited for certain agricultural purposes.

Dairy and livestock farming is of increasing importance.

Farming on the island has changed considerably since the 1940s and 1950s, when traditional small farming methods prevailed, and sugar- cane, coffee and tobacco were the dominant crops. Of these, only coffee has survived, but it lags behind milk and poultry production. Milk production accounts for 34 per cent of total gross farm income.

Around 50 per cent of food requirements are met by imports.

Almost all of Puerto Rico 's farm output is consumed locally, although small quantities of coffee are exported to Europe and Japan, and some fruit and vegetables, mangoes, tomatoes and onions, also go to Europe.

In its effort to encourage farmers to diversify and invest in modern, efficient commercial farming projects, the government offers generous incentives, including a 50 per cent tax incentive credit (Law 225).

Industry and manufacturing

The industrial sector forms the mainstay of the economy, contributing approximately 41 per cent to GDP, and employing 24 per cent of the workforce. The sector accounts for 98 per cent of exports.

Manufacturing predominates, contributing some 40 per cent to GDP. Most of the island's manufacturing output is shipped to mainland US.

Industrialisation has been the focus of government economic policy since the late 1940s when a programme known as Operation Bootstrap was launched. In 1950 there were 82 industrial plants in Puerto Rico , but by 1965 there were around 1,000. Since then industrial development has tended to be more capital intensive and dependent upon highly skilled labour.

Production is centred on food processing, textiles, petrochemicals, rum distilling, pharmaceuticals, metal fabrication and assembly of electrical/electronic components. The capacity of Puerto Rico 's oil refinery stood at 49,000 barrels per day (bpd) in January 2000.

Section 936 of the American tax code which made profits earned on the island tax-free for American multinationals was revoked in 1996.

Most of the assembly industries are US-owned and are heavily dependent on the US market.

The US Commerce Department's Foreign Trade Zones Board has approved the conversion of all the island's industrial parks into free trade zones (FTZs). This, together with Puerto Rico 's generous incentives package and skilled workforce has in the past made the island a prime destination for a company looking to expand or relocate. However, competition from Mexico in particular has had an adverse effect. The period for approving applications for FTZ operations has been cut from 18 months to 90 days, reducing the cost of applications from US$150,000 to US$5,000.

The island's agricultural industry makes an important contribution to the economy through the food industry services of prepared food and retail sales.

Isolated positive developments in the sector involved military and other US government clothing contracts. DJ Manufacturing opened a US$1 million plant in early 2000 after obtaining a five-year, US$75 million contract from the US Department of Defense. JG Industries, another clothing manufacturer, began production on the island in January 2000 and plans to create 500 jobs over the next three years.

The investment incentives provided by the Commonwealth since the 1950s have led to the presence in Puerto Rico of around 150 Fortune 500 companies. In the pharmaceutical sector all the leading US manufacturers are represented - some with major investments.

There is also heavy investment by computer and electronics companies, footwear and rubber goods manufacturers. The K-Mart Corporation, the US retailing group, is well represented in Puerto Rico .


Tourism is traditionally a key source of income for the island, with over three million tourists annually. About 70 per cent of visitors come from the US.

At least US$25 million a year has been spent on the promotion of Puerto Rico as a mix of Caribbean and Latin America, but with an American business culture.

The number of hotel rooms has increased by over 50 per cent to more than 12,000 and the number of jobs in the sector has soared to 15,000, an over 50 per cent increase from 1992.

There were approximately 3.5 million tourists in 1999.


Activity in this area is extremely small - production is centred on non- metals such as stone, sand, salt and clay.

There are small unquantified reserves of copper, nickel, cobalt, iron, chromium, lead, gold and silver.


Puerto Rico depends on imported energy fuels, mainly from Venezuela and the Netherlands Antilles.

The Puerto Rico Electric Power Authority (Prepa), with assets of US$2.5 billion, is the second-largest municipally-owned US utility.

Demand for power is growing at 3.5 per cent a year. Several plants are under construction and will be commissioned by 2002, and additional capacity is also being provided through the refurbishing of some Prepa power stations. In 1999, Prepa had 1.3 million clients, generating capacity of 4,400MW and faced peak demand of 3,057MW.

Prepa is spending US$1.9 billion during the period 1999-2003 to improve generating, transmission and distribution infrastructure.

Many companies still maintain their own generators as essential back- up.


The Puerto Rican commercial banking system comprises about 17 banks with around 300 branches. Financial deregulation and consolidation in the industry have improved operating conditions. Major US banks include Citibank, Chase Manhattan and First National Bank of Boston. Foreign banks include Royal Bank of Canada, Bank of Nova Scotia, Banco Central de Madrid, Banco Bilbao Vizcaya and Banco de Santander.

Banco Popular de Puerto Rico, Puerto Rico 's largest bank, continues to expand into US Hispanic markets.

Central bank

There is no central bank.

Such functions as fiscal agent for the Commonwealth of Puerto Rico and its public entities, and the provision of development loans to the public as well as the private sector, are undertaken by the Government Development Bank for Puerto Rico (GDB).


GMT minus four hours.


Puerto Rico comprises the main island of Puerto Rico , together with the small offshore islands of Vieques and Culebra and many other smaller islets, lying about 80km (50 miles) east of Hispaniola (Haiti and the Dominican Republic) in the Caribbean Sea. Roughly 160km long by 48km wide, Puerto Rico is the smallest and most westerly of the Greater Antilles. The centre of the island is composed of dead volcanoes, the highest of which, the Cordillera Central, has an elevation of 1,325 metres. To the north of the mountains lies a belt of broken limestone country, and then a fertile coastal plain. The whole island is well supplied with rivers. Only about 1 per cent of the country remains forested, and is largely reserved.


Tropical with extremes of heat tempered by constant sea winds. There are occasional hurricanes.Temperatures are 28-30 degrees Celsius (C) in summer, and 21-26 degrees C in winter. Rainfall is heaviest in the second half of the year, especially June-October. Puerto Rico lies in the 'hurricane belt', but the strike by Hurricane Hugo in September 1989 was the first serious one since 1956. Hurricane Georges hit the island in October 1998.

Dress codes

Suits and ties are customary for businessmen since almost all offices are air conditioned; a jacket and tie may be required in first class restaurants. The Hispanic Caribbean guayabera, a long decorated shirt, is worn increasingly commonly.

Entry requirements

Passports Required by all except nationals of US and Canada.

Visa Required by all except nationals of US and Canada.

Currency advice/regulations

No restrictions on import/export of any currency to the value of US$10,000. Higher amounts must be declared.

Health (for visitors)

The standard of health care in both government and private hospitals is high, but expensive.

Dengue fever, transmitted by mosquitoes, is endemic in rural areas. Its initial symptoms may be similar to influenza. Bilharzia parasites may be present in rivers.

No special precautions are necessary for food and drink.

Mandatory precautions



There are several efficient business hotels, mainly in San Juan. Early reservations are recommended as hotels tend to be fully booked on US holiday weekends.

Fifteen per cent tip usual.

Public holidays

Fixed dates

1 Jan (New Year's Day), 11 Jan (De Hostos' Birthday), 15 Jan (Martin Luther King Day), 22 Mar (Emancipation Day), 16 Apr (De Diego's Birthday), 4 Jul (US Independence Day), 17 Jul (Munoz Rivera's Birthday), 25 Jul (Constitution Day), 19 Nov (Discovery Day), 25 Dec (Christmas).

Variable dates

Epiphany (Jan), Washington-Lincoln Day (Feb), Good Friday, Memorial Day (May), Barbosa's Birthday (Jul), Labour Day (Sep), Columbus Day (Oct), Veterans' Day (Nov), Thanksgiving (Nov).

Working hours

Banking Mon-Fri: 0830-1430. (Some banks 0830-1700; some banks open Sat.)

Business Mon-Fri: 0800-1700.

Government Mon-Fri: 0800-1630.


Puerto Rico 's telecommunications system is fully integrated with that of the US. The telephone system is digital with more than 900,000 lines. A high capacity undersea cable is available for instant data processing, and there are earth stations capable of dealing with high- speed computerised data of up to 1.5 megabits per second. A cellular radio service began operation in 1986.


In February 1999, the US Federal Communications Commission approved the privatisation of the government-owned Puerto Rico Telephone Co (PRTC), to a consortium led by GTE of the US for just over US$2 billion.

The proceeds of the sale are being used to finance infrastructural improvements in Puerto Rico .

The telecommunications infrastructure base will have to be continuously upgraded in order to accommodate the increasing demand.

Mobile phones

Cellular One, the island's second-largest wireless service provider, with around 330,000 customers, was sold in 1999 for US$814 million to a joint venture comprising SBC Communications (US) and Telefonos de Mexico (Telmex).

Electricity supply

120V AC

Social customs/useful tips

Despite links with the US and the almost universal ability in the business community to understand English, the use of Spanish by the visitor is appreciated.

Hotel and restaurant staff, and taxi drivers, may expect tips of 15 to 20 per cent. Service charges are rarely included in restaurant bills.

Puerto Rico combines the lifestyle and social customs of the modern US and the traditional Spanish-speaking Caribbean.


Poverty and unemployment have helped to contribute to a growing crime rate, particularly in San Juan. As in all cities, it is unwise to leave articles unattended in parked cars or hotel rooms.

Getting there


There are direct flights from Europe; Latin American countries are connected via Miami. There are also numerous other connections via New York. Other US cities are also well connected to Puerto Rico .

Main airport: Luis Munoz Marin (SJU), 14.5km east of San Juan; duty- free shop, bar, restaurant, bank, post office, shops, hotel reservations, car hire.

Airport tax: Luis Munoz Marin International airport levies a passenger facility charge of US$3.


Main ports: Ponce, Mayaguez and San Juan (major Caribbean hub for maritime shipping).

Getting about

National transport

Air: American Eagle links San Juan, Ponce and Mayaguez.

Road: Modern highways link all main centres. The island's roads are being extended.

Buses: Regular bus (guagua) service operates in San Juan from central terminal at Plaza Colon.

Buses are scarce after 2100.

City transport

Taxis: Within San Juan: metered - small charge for taxis ordered by telephone. Also shared taxis (publicos) which have yellow number plates and run to all parts of the island. Fifteen per cent tip usual.

Car hire

It is advisable to book through the airline well in advance. Foreign licences are acceptable.

Puerto Rico : Review


Americas Review World of Information

Copyright: Walden Publishing Ltd. All rights reserved. Walden Publishing Ltd and Quest Information Ltd assume no liability for the consequence of reliance upon any opinion or statement. Copyright (c) 2001 Quest Economics: Janet Matthews Information Services

Puerto Rico 's 'Commonwealth' status is, for many Puerto Ricans , the worst of all worlds. They can fight and die for the US - as many have - but have no real say in the decision making process.

Neither independent nor integrated, Spanish speaking Puerto Rico is seen by many to be more of a glorified colony than a true commonwealth. Over three million Puerto Ricans live in the USA - almost as many as on the island itself. The largest concentrations of Puerto Ricans are found in New York, New Jersey, Connecticut, Illinois and Florida.

Calderon sweeps in

In the November 2000 elections, Sila Maria Calderon of the Popular Democratic Party (PPD) scored a massive victory over former Governor Pedro Rossello's New Progressive Party (PNP), gaining control of Puerto Rico 's Senate and Congress, ending eight years of dominance by the PNP and its pro-statehood agenda. Mrs Calderon is the first woman to be Governor of Puerto Rico .

For the most part political parties in Puerto Rico define themselves not in terms of ideology or policies, but on the sole issue of the island's relationship with the US. The newly elected PPD favours continuing, but enhancing, the island's commonwealth status. The opposition PNP is for statehood and full integration with the US. A third party, the Puerto Rican Independence Party (PIP) seeks full autonomy.

The race for the governorship was close: Mrs Calderon won 48.5 per cent of the vote, against 46.1 per cent of the votes cast for the PNP's Carlos Pesquera. 4.9 per cent of votes were cast for the PIP's Ruben Barrios. The PPD ended up with 27 senators, 51 representatives, 78 mayors and 1,170 National Assembly members, losing only the capital San Juan to the PNP's Jorge Santini. Following their election defeat the PNP elected Leonides Diaz Urbina as its president. Diaz was the only candidate for the position.

The reported bad blood between Governor Calderon and her predecessor, the outgoing Governor Pedro Rossello, showed itself at the inauguration ceremony. Mrs Calderon failed to greet Rossello, who in turn left for the airport as soon as Mrs Calderon had taken the oath, thereby missing her inauguration speech.

The economy - tax credits

Puerto Rico , despite the aid and subsidised investment it has received over the years, is poor. Annual per capita income, at around US$10,000 is half that of the US's poorest state - Mississipi. Sixty per cent of its inhabitants live under the federal poverty line. By US standards the island's economy is statist and centralised. As most businessmen will agree, the island's bureaucracy has more in common with its Latin neighbours to the south than with their Anglo Saxon counterparts to the north.

The direction of the economic policy adopted by Mrs Calderon will ultimately depend on whether she succeeds in persuading the US Congress to restore the federal tax incentives originally designed and implemented to attract investment to the island. Federal tax incentives were originally introduced in the 1940s as a catalyst to the island's development efforts. And they worked: large investment flows were generated - notably from the large pharmaceutical companies, which in the year 2000 accounted for 42 per cent of the island's manufacturing capacity.

The tax incentives were repealed in 1996, causing many businesses to reconsider their investment plans for Puerto Rico or even to contemplate re-location to more attractive economic locations. Mrs Calderon's concern to reinstate the tax incentives should be seen against the backdrop of an economy that is - at least by Puerto Rican standards - performing quite well. Although the island's unemployment rate of 11 per cent (October 2000) was high by mainland standards (3.9 per cent) it had dropped from 16.5 per cent in 1992 and from a high of 22 per cent in the 1980s. Tax receipts have doubled since 1992, to reach US$6.8 billion in 2000, as the evasion rate appeared to drop as more and more Puerto Ricans left the black economy. The proportion of those in government employment has dropped from 24 per cent to 18 per cent and the year 2000 saw, for the first time, private investment exceed that of the public sector.

The tax credits had started to be dismantled by Congress in 1993, when a bill restricted them to a credit based solely on actual spending in the island. In 1996 the credits were repealed completely with a 10-year phase-out provision. Despite high-level lobbying, the chances of the Bush administration reinstating the credits are remote. With Puerto Rico 's economy growing at over 2 per cent annually for the past four years, the prevailing view in Washington is that Puerto Rico is doing fine without tax exemptions.

Among Puerto Rico 's business community there is a feeling that Mrs Calderon's perceived anti-US stance over the Vieques naval base (see below) has done little to encourage Washington to look favourably on the reinstatement of the tax incentives. The incoming government's preoccupation with the Vieques matter was also thought by some to be distracting it from more pressing economic matters.

Budget and job creation

These fears turned out to be unjustified as, in March 2001, Governor Calderon submitted her first consolidated budget of US$20.1 billion. This amount will be spent on education and culture, (20 per cent), social welfare (15 per cent), economic development (20 per cent) health (14 per cent), public safety (7 per cent) and administration (5 per cent).

In June 2001 Mrs Calderon announced an ambitious plan to create some 100,000 new jobs, thereby raising the workforce to 1.25 million. The job creation plan involved government investment of US$379 million. This expenditure will be focused on agricultural initiatives, job training programmes, subsidies for job creation and a streamlining of the bureaucracy. More than half the government's investment will come from federal funds.

Blue Riband Commission

The PPD victory was hailed by many of its supporters as indicating that Puerto Ricans had had enough of the corruption scandals that had surrounded the PNP leadership during its eight-year rule. A number of PNP politicians had been jailed on corruption charges.

Two months after her election, in January 2001, Mrs Calderon announced the creation of a government commission (the Blue Riband Commission) to review all large transactions made by the Rossello administration. Somewhat dramatically, the new governor declared that she believed the island's fiscal position to be critical, largely as a result of the former administration's dealings. Predictably, the Blue Riband initiative was seen by the opposition as designed to prejudice in the public mind many of the privatisation initiatives taken during the Rossello years.

The controversial sale of 51 per cent of the Puerto Rico Telephone Company (PRTC) to the Texas based GTE corporation in 1999 looked likely to be the new Commission's first target. The Puerto Rico government had purchased PRTC from the former owners, ITT, in 1974 for US$165 million in response to the company's alleged failure to respond to the growth in demand for services. Under government ownership, PRTC increased market penetration from 25 per cent in 1974 to 74 per cent in 1996, becoming a profitable government owned corporation in the process.

For 'corporation' read 'monopoly', for PRTC's profitability was based on its monopoly position, which ended when the US Congress approved the Telecommunications Act (which also applied to Puerto Rico ), opening up the telecommunications industry to competition. As its market share began to fall, it became clear that PRTC was unable to compete as a public corporation. Even the trade unions, which had fought passionately against privatisation in 1977 and 1999 had conceded that a privatised PRTC was more likely to perform profitably in a competitive market.


Vieques is an offshore island, some 52 square miles in size, with some 9,000 inhabitants. It is also the largest area in the Western hemisphere for US military exercises with live ammunition and the only place in the world where live bombing occurs close to a substantial civilian population. In April 1999 a Puerto Rican civilian security guard was killed and four others wounded when a marine F/A-18 dropped two 500 pound bombs near their ground post. The Vieques issue had played a major role in the elections.

In late 1999, the Clinton administration had offered to stop live ammunition exercises on Vieques and close the firing range within five years, along with a US$40 million economic development package. The then Puerto Rican government had demanded the immediate cessation of all exercises. Cynical observers wondered whether the Clinton initiative might have anything to do with Mrs Clinton's electoral campaign in New York, with its large Puerto Rican population. The reality is that in the Vieques negotiations with Washington, all the Puerto Rican side could do was to huff and puff, but little more. Puerto Ricans know that however many referendums are called, they will have no real say in the matter. Decisions over the future of Vieques are simply beyond their political reach.

It was with some relief, therefore, that in June 2001 Governor Calderon greeted President Bush's re-affirmation of the Clinton proposals. President Bush stated that 'these are our friends and neighbours and they don't want us there'. He neglected to add that 200,000 Puerto Ricans have served in the US forces since 1917, that 2,000 have died in action and four have been awarded the congressional medal of honour. A referendum on the island's future was due to be held in November 2001, although the Puerto Rican side wanted it earlier.

Opinion polls suggest that 53 per cent of Puerto Ricans would vote in favour of the US Navy leaving Vieques in 2003. Those that hold reservations do so because such a departure would inevitably be economically expensive for Puerto Rico . In a nutshell, jobs would be lost. Pro-Navy protesters have even been to Washington to present petitions seeking Vieques ' secession from Puerto Rico and adoption as a separate US territory.


Governor Calderon and her PPD government have wasted little time in making a mark on Puerto Rican politics. Whether Mrs Calderon's oppositon to the privatisation initiatives of her predecessor will translate itself into action remains to be see. By Caribbean standards Puerto Rico is successful - with a stable, growing economy. But the high poverty levels do little to create social stability, and in relation to the aid the island has received from the US over the years, it should be doing a lot better.

Risk assessment

Economic: Satisfactory

Political: Satisfactory

Regional stability: Good


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