After five years of haggling, debate, and protests, Chief Judge Laura Taylor Swain of the U.S. District Court for the Southern District of New York finally approved a debt restructuring agreement for Puerto Rico in January.

 

The Fiscal, Oversight and Management Board for Puerto Rico (FOMB) was able to reduce the government of Puerto Rico’s total debt obligations from $33 billion to $7.4 billion, according to recent reporting by The New York Times.

 

FOMB was created under the Puerto Rico Oversight, Management and Economic Stability Act of 2016. It consists of seven members appointed by the President of the United States and one ex officio member designated by the Governor of Puerto Rico. The Board is tasked with working with the people and Government of Puerto Rico to create the necessary foundation for economic growth and to restore opportunity to the people of Puerto Rico.

 

The latest FOMB plan also saves the island more than $50 billion in debt service payments, the Board said in a written statement. But this still leaves the root cause of many of the island’s fiscal and disaster recovery issues unresolved. As an unincorporated territory, Puerto Rico’s 3.2 million American citizens are subject to the plenary powers of Congress. Yet, they are unable to vote for the U.S. president, and are unrepresented in the U.S. House and Senate.

 

“It is obvious that Puerto Rico’s subordinate, some would say colonial, political status has been an obstacle to the recovery process,” said Sergio Marxuach of the nonpartisan Center for a New Economy, based in San Juan.

 

This disenfranchised status allowed Congress to pass legislation  allowing fiscal control and oversight by Congress of Puerto Rico’s finances. It also permits the U.S. federal government to discriminate against Puerto Rico when it allocates taxpayer funds for Medicare, Medicaid and nutrition assistance.

 

Natalie Jaresko, executive director of FOMB, said Puerto Ricans are justified in feeling resentful over the imposition of a financial control board. “Congress could not have imposed an oversight board on a [U.S.] state,” Jaresko wrote in The Wall Street Journal.

 

There is disagreement over what the permanent status of the island’s relationship should be, but island residents have expressed some preferences during locally-sponsored status consultations in 2012, 2017 and 2020.

 

In 2012, when asked if they wished to continue living under the present form of territorial status, 54% said no.  In 2020, 53% of Island residents chose the statehood option confirming similar votes in 2012 and 2017.

 

“Congress is unlikely to step in to make a determination on status until PR gets its financial house back in order,” said Jaresko. “And the debt load was one of the biggest such obstacles; that obstacle has now been removed.”

 

In recent years, some members of Congress have resisted resolving Puerto Rico’s status until the debt questioned is settled. Now that Judge Swain has approved the restructuring agreement, this last obstacle to permanently resolving the status question has been removed.

 

Gene Roman is a freelance reporter based in The Bronx.