Puerto Rico: Dance Under the Storm (Part III: The Gimmick)


USS Iowa (BB-61) fires a full broadside of her nine 16″/50 and six 5″/38 guns during a target exercise near Vieques Island, Puerto Rico. (Credit: U.S. Dept. of Defense)

The “gimmick,” Juan Manuel García Passalacqua (aide to two Puerto Rican governors during the 1960s) wrote in a newspaper column over a decade ago, was as follows:

To produce jobs here so that our population could be kept domesticated to prevent social disorder to protect law and order in the archipelago that was essentially and only a very important naval and military base for the United States. We all ended that in Vieques.[i]

Passalacqua was warning of economic disaster given the impending end of Section 936 of the Internal Revenue Code, which gave “mainland United States companies an exemption from Federal taxes on income earned in Puerto Rico, whether it comes from operations or interest on local bank deposits.” In the aftermath of the closing of the naval artillery range in the small contiguous island of Vieques, and of the closing of the impressive Roosevelt Roads naval base, Passalacqua relayed the conclusion of several economic reports from the US mainland: “Tax exemptions to multinational corporations are not needed anymore” (The San Juan Star, July 9, 2006).


The first free election for governor of the US territory of Puerto Rico was honored with a 3-cent stamp on April 27, 1949, at San Juan, Puerto Rico. (Credit: National Postal Museum)

In 1949, the first local election for governor of Puerto Rico was held (before then, all governors were appointed by the US government). The first elected Puerto Rican governor, Luis Munoz Marín, initiated a program of economic development (Operation Bootstrap) that combined federal tax exemptions with local tax exemptions and incentives to boost the island’s economy. During the 1950s and 60s, Puerto Rico became an exemplar of economic success and a showcase for the US system—especially when compared to Cuba, where the economy was ailing under communism and the US embargo. In 1980, in the midst of the final phase of the Cold War, Ronald Reagan declared: “To show the world that the American idea can work in Puerto Rico is to show that our idea can work everywhere.”[ii]


A U.S. Navy Lockheed DP-2E Neptune (BuNo 128401) from composite squadron VC-8 Redtails carries two BQM-34 Firebee drones toward the launching point at the Atlantic Fleet Weapons Range off Puerto Rico, in the 1960s. (Credit: U.S. Navy)

By then the storm was brewing, bringing with it the dread associated with Caribbean hurricanes. My father-in-law—an agricultural genetics engineer at the University of Puerto Rico—never ceased to lament that Puerto Rico’s growing industrialization was killing the agrarian economy. So it did: “Our present industry structure is poorly aligned with the sort of job opportunities needed by Puerto Rico’s population, the G[overnment] A[ccountability] O[ffice] now tells us. Why now, never before?”[iii]

The high wages of Puerto Rican workers drove multinational corporations away, in search of cheaper labor pools elsewhere in the Third World. A vast number of Puerto Rican professionals moved to the mainland, decimating the tax base. Tax free deposits in Puerto Rican banks ($100 billion by 2006) were never invested in the Puerto Rican economy; they were, however, used to finance politicians that would secure added benefits for the 936 corporations. Succeeding Puerto Rican governors and legislators acted like Nero fiddling while Rome was burning. Pro-statehood politicians propagated the fantasy that the United States would grant statehood to a Spanish-speaking nation, which would cause five states to lose representation in Congress:

Were Puerto Rico to become the 51st state of the U.S., it would receive an additional four seats beyond its automatic first seat, for a total of five. Specifically, after receiving the automatic first seat, it would then receive the 128th seat, the 209th seat, the 294th seat, and the 378th seat. And according to our application of the Equal Proportions apportionment method to the 2010 population data from the Census Bureau, the five states that would lose representatives if Puerto Rico became the 51st state are Florida, Washington, Texas, California, and Minnesota.

Pro-commonwealth politicians lived under the illusion that Puerto Rico is not an Indian reservation; and pro-independence politicians insisted that Puerto Rico is too much of a nation to be a colony (which is true), but lived in denial of the heart-rending notion that the island is too small to become economically viable as a modern democracy (which is a geographical fact).


An example of the voting ballot for the 2004 elections of the governor of Puerto Rico. (Credit: Wikimedia Commons)

With the end of the Cold War, the US did not see the need for an extensive military presence in the island. And through it all, according to Passalacqua, “Americans have no idea that they owe us retribution for more than a century of colonialism.”

A rascal like Donald Trump, who never served in the US armed forces, can declare bankruptcy several times. I can declare bankruptcy by the simple expedient of living in Arizona; and yet Congress is reluctant to grant the Puerto Rican nation, which has served honorably in every US war, and which has been battered by the winds of history, surcease from its financial troubles. Will we now declare, following Reagan’s words, that the US economic system is an abject failure?

JTFEX 01-02

U.S. Marines from Task Force Sledge Hammer train on the island of Vieques, Puerto Rico, 6 August 2001. (Credit: U.S. Navy)

Chafing under the US holier-than-thou attitude that encouraged Germany to help Greece during its recent financial troubles, German finance minister Wolfgang Schaeuble offered the US this deal: “We could take Puerto Rico into the euro zone if the U.S. were willing to take Greece into the dollar union.” (Puerto Rico’s debt is estimated at $72 billion; Greece’s debt was estimated then at $335 billion). No one rushed to take up Schaeuble on his offer.

What now for Puerto Rico? I do not despair. I know the Puerto Rican people (I am married to one, and my oldest daughter was born in Puerto Rico), and I think of myself as Puerto Rican. A nation that survived the Spanish colony, pirate attacks by Sir Francis Drake and Danish Captain Balduino Enrico, the US invasion, the Great Depressions and thousands of Caribbean hurricanes, will not easily wince under the present crisis.

I know the magic of the island, and the strength of its people. And with a reference to that, we will finish this serial tribute to Puerto Rico in our next post.


Puerto Rico

Aerial view of naval Station Roosevelt Roads, Puerto Rico, 19 May 1997. (Credit: U.S. Navy)

[i] Juan Manuel García Passalacqua, ¨Permanent government issues 22 warnings,” San Juan Star, July 9, 2006.

[ii] Quoted by Larry Craig, “Practicing What We Preach,” San Juan Star, July 8, 2006.

[iii] Passalacqua, San Juan Star, July 9, 2006.

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