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The Colonialism Business In Puerto Rico

By Arturo J. Guzmán

January 28, 2002
Copyright © 2002 SAN JUAN STAR. All Rights Reserved.

The catastrophic failure of oil giant Enron and most recently news that K-Mart, America’s third largest retailer, had filed for protection under Chapter 11 of the Federal Bankruptcy Law, are not a direct result of the state of our national economy. These are failures that have been evidently caused by internal corporate policies and practices.

The stockholders, board members or employees of these giant enterprises can’t blame Pedro Rosselló or Carlos Romero Barceló for being instrumental in eliminating the type of corporate welfare that would have kept them doing "business as usual" for there was never any. Neither can they run to Uncle Sam and petition for federal incentives that would keep them artificially alive at the expense of other American taxpayers.

Although it appears certain that Enron can’t be resurrected, K-Mart’s top management has already announced that they are already implementing a plan that will hopefully return the company to profitability by next year. Like any private sector enterprise, K-Mart’s executives will analyze each and every aspect of their operation, including closing non-profitable outlets, discarding slow product lines, reducing inventories, employee efficiency, new markets, etc. Federal bailouts are not an option!

National economic policies, under both Democrats and Republicans, have been consistent in their determination that private sector enterprises must succeed or fail on their own. Federal intervention of any type, including loan guarantees or incentives, are only a last resort and applicable only to those industries that are certified vital to the national interest and particularly to the national defense.

Under these parameters, even on those scarce cases where federal assistance has been requested and evaluated, their corporate management has been required to prove beyond doubt to the Congress and to the administration of tenure that they have taken all possible internal remedies and that federal assistance will be temporary in nature and not become a permanent subsidy or drain to the national economy.

Likewise, foreign countries when seeking international financial assistance are made to comply with a number of remedial requirements even before they qualify. These often encompass radical changes in their internal governmental and economic structures, such as currency devaluation, massive privatization of state owned enterprises, streamlining of government employment etc.

These lessons from corporate America and from the international community should not be lost on Puerto Rico when dealing with its own internal economic situation. Puerto Rico, like any other colonial relationship has been a business venture that has provided at times considerable profits for certain sectors in the national economy and the local oligarchy even while attained at the expense of the equality of Puerto Ricans, and the pockets of the average American taxpayer.

The colonial business of Puerto Rico during the last century had as an inextricable element the characteristic of being considered vital to the national interest and defense. For reasons that have been recently repeated "ad-nauseum" by some sectors in Washington and San Juan, and which I consider flawed for other considerations I can’t publicly share at this time, it appears to be the case that the United States will no longer retain Puerto Rico as an indispensable strategic, tactic, political or military element in drafting its defense plans for the new millennium.

Already there are persistent reports that the Army’s Southern Command will relocate to the mainland, and with the loss of Vieques as a practice range the Navy will find little justification or economic viability to retain its base in Roosevelt Roads, particularly when a new round of base closings is scheduled by a Congress where not only we don’t have voting or political representation but where each individual member will fight "tooth and nail" to prevent military base closings in the districts from which they were elected.

These actions will leave Puerto Rico’s government to compete for any type of federal incentive or assistance in its "bare bones" and thus equally compelled to prove beyond doubt that it has taken and implemented all necessary internal political and economic measures and reforms prior to being given any consideration.

Governor Rossello’s failure to obtain congressional approval for the benefits of Section 30A of the Internal Revenue Code, and thus far the similar failure of Calderon to obtain benefits under Section 856, underscore a growing sense in the Congress that Puerto Rico has cried "wolf" much too often without giving one ounce of proof that it is willing and able to make reciprocal sacrifices than those it demands of the American taxpayer.

In a climate where a Republican president is already hounded by mere perceptions of engaging in favoring big business, it remains to be seen what the Congress will demand prior to considering Calderon’s requirements. What changes the government of Puerto Rico should anticipate, and the obstacles that will remain in order to attain them will be the subjects of my next column. Meanwhile, stay tuned and continue enjoying the plethora of good news!

Arturo J. Guzman can be contacted at:

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