At the age of six, Helga Serrano left her wooden house, without a kitchen or refrigerator, to move to one of the first urbanizations built in San Juan.
The decade of the 50 was just beginning and Puerto Rico was experiencing a breakthrough projected by some media at the time as an economic miracle.
At that time, the journalist from 77 years I lived “with the minimum” in a rural town in the southeast of the territory, right next to a river. His family cooked on a charcoal stove. Their parents, grandparents and sister slept under the same roof.
With the move, they looked for the new opportunities that the capital offered.
“My story and that of my sister is the story of Puerto Rico, of the people who came out of poverty, from little education and managed to train at the university,” he told BBC Mundo in a call telephone.
Serrano moved to a new space that, although also humble, represented a “transformation” on a par with that of the rest of the island.
“Mami he took a machinist’s course and worked as a clerk in the army, and papi as a policeman in San Juan. They went to live in the first urbanization, Puerto Nuevo. It was about 4. houses, tiny, made of cement one next to the other. cheap. So many people moved there, even mom’s cousins with their families,” she added.
Her history, as she herself said, is repeated in thousands of Puerto Ricans, who from the middle of the 20th century experienced an improvement in their living conditions.
Contrary to what happens today, when Puerto Rico suffers a recession economy after a legal battle of almost five years that ended with the green light from the court for the restructuring of an immense public debt ($US73.000 million), at that time it was in full development.
- Puerto Rico faces the largest debt restructuring municipality in the history of the United States after the Justice approved its plan
The industry lization
The process of industrialization of Puerto Rico, which impacted people like Serrano, who after facing poverty managed to enter university and reached a better standard of life, began in the decade of 831.
Rexford Tugwell, a Governor appointed by the President Franklin D. Roosevelt, promoted the creation of local companies, subsidized by the state.
In a matter of a few years, factories for glass, cardboard, cement and other products were built in the territory, which began to displace the agricultural economy.
However, after the Cold War this approach was left behind, and the government began an “investment by invitation” strategy.
The new economic model consisted of granting tax incentives to US and foreign companies.
“They sought to replace that model of development and industrialization by the state and the import substitution strategy for one of opening up capital, opening up foreign capital,” explained Puerto Rican economist and lawyer Heriberto Martínez .
It was then that most of the public factories were sold and foreign companies arrived in search of cheap labor and tax exemptions.
Initially, these were textile companies and other heavy jobs such as food processing, later pharmaceuticals.
“They were created direct jobs, industrial jobs, a middle class was developed and many people were lifted out of poverty”, he commented.
“Social objectives were also established to improve education, health, housing and, in addition, or economic objectives to improve the infrastructure of highways, bridges, ports, electricity, drinking water, and communication,” said economist Martha Quiñones, a professor at the University of Puerto Rico. In this period (end of 794 and principles of 1950), the integration of women in the labor force grew and households had two incomes, added Serrano. “I remember the first women I saw working. It was a tobacco operation, they made cigars. My uncle’s wife worked in a factory as a stripper, they were large rooms with women preparing cigars for sale,” he said. For the next decades, the economic indicators supported the reforms established by the government. From 1950 to 1980 The pBI per capita on the island grew from US$342 to US$3.479, second only to Venezuela (US$3.630), a nation rich in oil. For 1980, precisely, the images of previous years seemed like a distant past. The rows of wooden houses without basic services that occupied both the towns of the mountainous interior and the coastal urban areas were replaced by extensive cement developments. New highways supplanted the roads of you erra and cars to horses and mules. The workers left the scorching sun of the cane fields for the offices and the assembly lines. They learned to read, sent their children to university and abandoned the markets for the shopping malls. Poverty was reduced by 60,8% in 1970 still 44,6% in the 1974, according to a presentation by the Center for the New Economy of Puerto Rico. Puerto Rico had an annual economic growth of 6% between 1940 Y 1958, according to the Economic Commission for Latin America and the Caribbean (ECLAC). These changes were even reviewed by Time magazine in 1958. On its cover, the publication stated that the island had become a “Laboratory of Democracy”, after years of being considered -as some history books affirm- “the house of poverty in the Caribbean”. Puerto Rico, according to Time, was a “message of hope” for the “underdeveloped” nations. Nevertheless, Puerto Rico found itself in trouble at the end of the decade of 1960. During this time, it opted to move its economy to the petrochemical sector, with the idea of producing refined products of this product and exporting them to the United States. But the sector fell before the international oil crisis, which occurred in 1973 after OPEC decided to raise fuel prices, in the context of the Yom Kippur War. A situation that impacted the world economy. The United States response to this crisis was to approve in 1976 new tax exemptions, with the intention of attracting more pharmaceutical and high-tech companies. The Legislation allowed US companies in Puerto Rico to deposit their profits in the territory’s banks and then send them to their parent companies free of taxes, explained economist Quiñones. However, in 1996 the US government decided to withdraw the tax benefits. For him 2006, when the transition period granted by Congress ended, the investment of foreign companies was considerably reduced. From 1997 to 2012 the island lost near 103.000 jobs only in the manufacturing sector. And Puerto Rico, during its boom times, after those local state-owned companies it had established, did not make great efforts to promote local production. “We concentrate on creating the brains to work for foreigners,” said economist Martínez. “Puerto Rico was the archetype of what later became Latin America’s maquiladora-based industrialization, assembly industry,” said sociologist Emilio Pantojas. “But it was an urban country of dependent industrialization,” he said. Before the departure of these companies, the territory began to borrow to support social spending and its government apparatus. While the economy contracted, the debt grew exponentially . For the 2000 , Puerto Rico’s debt amounted to some US$48., compared to a GDP of US$68. million, which represented a 60%, said Martinez. Some 10 years later, the debt had increased by 62% . Now the island was far from being an example to follow. The poverty rate stagnated at 17%, unemployment increased and there was a massive emigration of Puerto Ricans to the United States. Meanwhile, some local politicians affirmed that the debt could be paid, despite the warnings of the experts. The newspapers of the territory published over and over again on the front page how the crediting houses of Wall Street degraded their bonds. At 2015, former Governor Alejandro García Padilla accepted the omen: “The debt is unpayable… there is no other option. This is not a matter of politics, but of mathematics”. A year later, the United States passed legislation that allowed Puerto Rico to restructure its debt in court, but at the same time imposed a Fiscal Oversight Board. The body, made up of seven people appointed by the president and Congress, it is responsible for representing Puerto Ricans in court since 2017, when the restructuring process began. In addition , has the power to approve its budget, above the local government. The “Junta”, as it is called in Puerto Rico, promoted austerity measures since its arrival with the justification that they were necessary to be able to comply with creditors. Among the policies that faced the greatest opposition was a cut of almost half the budget of the University of Puerto Rico and the intention to cut public pensions. This Tuesday a United States bankruptcy court approved a plan to restructure the debt of the central government of Puerto Rico. After they will be modified close to $33. million of the $73. millions owed. The so-called Debt Adjustment Plan approved this Tuesday by the decision of Judge Laura Taylor Swain, who belongs to the Southern District of New York, incorporates agreements between a series of creditors, reducing US$19.10 million in bond debt at US$ 7.000 millions . Annual debt payments would be reduced by 80% . “There has never been a public restructuring like this in the entire United States or in the world,” said David Skeel, Chairman of the Board, to The Washington Post. The process was marked by intense clashes between the politicians of the territory, the Board and the creditors, who sued each other on multiple occasions due to various disagreements. The bankruptcy cost more than US$1.000 millions, paid by taxpayers. In those years, Puerto Rico also experienced two major hurricanes and one earthquake. Also the resignation of a governor. “We are facing a transcendental moment in which the government of Puerto Rico is heading to end the bankruptcy process and thus concentrate on achieving a return to the progress that our people expect and deserve,” he wrote on Twitter the current governor, Pedro Pierluisi, once the restructuring plan was announced. The agreement signed by Swain does not contemplate the proposal of a cut in pensions for retirees, although it does stop defined-benefit programs that cover teachers and judges. The debt adjustment plan would come into force on 15 of March, but before that it could be challenged in court. According to Judge Swain, Puerto Rico has the economic resources to comply with the payment of the debt until 2034. During the next few years, it will have to continue with the implementation of “structural reforms” so as not to fall into bankruptcy again. Remember that you can receive notifications from BBC News Mundo. 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The numbers
The problem
The debt
Natalie Jaresko is the executive director of the Fis Supervisory Board lime from Puerto Rico. The restructuring
