Current issues
Everyone will agree that Puerto Rico is a territory with an ambiguous status. It is unusual for a country to have its own team in the Olympic Games and, at the same time, to take on the nationality of "another country". The definition given by the Supreme Court of the United States is confusing: "Puerto Rico is a territory, a free and associated state of the United States (...). It is a territory attached to and belonging to the United States, but not a part of the United States. In other words, the archipelago applies the U.S. Constitution, but has its own government and local legislature. Puerto Ricans are U.S. citizens, but they do not have the right to vote to elect the president who sits in the White House.
Future 51st American state?
As a Commonwealth of the United States, Puerto Rico enjoys certain freedoms. San Juan has control over its internal affairs. But Washington still controls the constitutionality of laws, a possible declaration of war, foreign relations, customs administration, air, military, immigration, treaties, radio and television, roads, post office... In fact, wherever U.S. law is absent, Puerto Rico can intervene freely. The country is not represented in the U.S. Senate, and is represented only in the House of Representatives, by a person with no legislative vote.Puerto Ricans are not subject to federal taxes, but to local taxes passed by the Puerto Rican Congress. This status also does not allow the Caribbean archipelago to establish trade relations with countries other than the United States.
For decades, the island's administrative status has been at the heart of political debate. Six referendums have already been held on this subject. In 2017, 97 per cent of the votes were cast in favour of a federal state, but the turnout was very low (23 per cent). The last referendum, held in 2020, won an absolute majority of votes (52%) in favour of statehood, with a turnout of 54%. However, these referendums remain purely advisory, with only the U.S. Congress holding the power to make the territory a full state.
Pedro Pierluisi, a member of the New Progressive Party (NPP) and governor of Puerto Rico since January 2, 2021, is pushing for full integration, and for the archipelago to become the 51st of the United States. With this statehood, Puerto Ricans would have access to all the rights enjoyed by U.S. citizens, while preserving, according to him, their culture, their language, their way of life. They would be able to vote in presidential elections and finally have representation in Congress (2 senators and 4 representatives), to defend the interests of Puerto Rico. The United States would then be able to fund federal infrastructure and programs in the areas of health, education and security.
The arrival of Joe Biden in the White House in 2021 has been seen as a hope by those who want this rapprochement. A congressional delegation has been appointed to bring the debate on the island's territorial status to Washington. But Puerto Rico's poor economic health is holding up the process. And while, like Alaska or Hawaii, Pedro Pierluisi remains convinced of the value of annexation, some continue to fight for more autonomy. The total disregard of Donald Trump, during his visit in 2017, after the passage of Maria, has only exacerbated the tensions and the desire for independence. So the debate remains open and the question for Puerto Rico to become the 51st U.S. state still ambivalent and highly contested. But also always topical.
Develop the agricultural sector
Apart from its picturesque beaches and tropical climate, Puerto Rico has few exploitable natural resources, although arable land is its main natural resource, representing only 6% of the island's surface area. Puerto Rican agriculture produces coffee, sugar cane, pineapples, plantains, animal products (poultry in particular). But its potential remains under-exploited, mainly because of the insufficient number of workers in a sector that is still not very attractive. As a result, even though most of its land is fertile, the island imports about 85% of its food needs. Agriculture employs only 1% of the active population and represents only 0.6% of GDP. Puerto Rico's rich and fertile soil could produce far more than it does. The COVID-19 pandemic has helped encourage thinking about reducing this over-reliance on imports. In order to develop local production, the government has taken matters into its own hands and planned an expansion of the agricultural sector for the coming years.
Sugar cane production dominated the Puerto Rican economy for a long time, until the end of the 1940s, before the United States decided to develop the industrial sector. Between 1942 and 1977, 42 production plants closed their doors. The others closed down in the following years. Today, the sugar industry represents an insignificant part of the Puerto Rican economy. On the other hand, since sugar cane is also used for rum production, there has been a renewed interest in plantations by local producers, who have started distilling agricultural rum (San Juan Artisan Distillers, for example), and are standing out from the rum giants that have been in operation for decades (Bacardi, Don Q, Ron del Barrilito,...). Puerto Rico's rum industry generates more than $300 million annually, creates more than 700 direct jobs and 4,500 indirect jobs, according to the Department of Economic Development and Trade.
The case of the pharmaceutical industry
Puerto Rico's economy is based primarily on the pharmaceutical, chemical, textile, petrochemical, and electronics industries. This sector remains stable, despite a reduction in demand in 2020 and 2021. It accounts for 51.1% of GDP and employs 15.2% of the workforce. The territory is home to 12 of the 20 most profitable pharmaceutical companies in the world and 13 of the world's best-selling drugs are produced in Puerto Rico. The crisis of the 2000s caused a collapse in activity. But the pharmaceutical industry still accounts for 2% of the gross domestic product today. In fact, almost 20% of the pharmaceutical production in the United States is made in Puerto Rico. While Hurricane Maria weakened the sector (it took almost a year to restore electricity and running water), the pandemic has brought a significant boost to big pharma. Puerto Rico is banking on further rapid growth in this sector in the coming years, positioning itself as a viable alternative to Asia for drug manufacturers serving the Americas.
"Live Borricua": boosting the tourism sector
As for the service industry (tourism, finance, insurance, trade, real estate, transportation), the sector comes in second place, with 48.8% of GDP and 83.7% of the working population. Although affected by the passage of Hurricane Maria in 2017, the tourism industry recovered very quickly with 1.9 million cruise passengers for the 2018/2019 season, a record for the port of San Juan. But the Covid-19 pandemic reshuffled the cards, with this one having three times more impact on tourism than Maria. Not to mention the 6.4 magnitude earthquake that hit Puerto Rico in January 2020. Nevertheless, the sector has managed to adapt and recover again in 2021, in an exemplary fashion. In support of this recovery, the government is continuing its efforts and is once again banking on international tourism, hoping to attract European visitors in particular. An agreement has been reached in this sense with the airline Iberia, which since April 2022, operates five direct weekly flights between Madrid and San Juan. The Puerto Rico Tourism Board(www.discoverpuertorico.com) is also doing a stronger communication job, with a new 2022 campaign called "Live Boricua" that emphasizes Puerto Rican experiences and culture. In fact, travelers are invited to share their own experiences with the hashtag #LiveBoricua.
Finally getting out of the state of bankruptcy?
This is the nerve of the war. Getting out of bankruptcy. Since the end of the 2000s, the Puerto Rican government has built up a colossal public debt of 73 billion dollars, the equivalent of 90% of its GDP for 3.5 million inhabitants. In 2006, the end of tax privileges caused a massive flight of investors, the island sank into crisis and declared its bankruptcy in May 2016. Drastic austerity measures followed, with the population paying the consequences through a series of cuts to public services, increases in various taxes, reductions in pensions, minimum wage and retirement. Education was affected by the closure of 180 schools and a reduction in the budget. 42% of the population lives below the poverty line. The pandemic has only worsened the economic and social crisis of the country, which was already weakened by the passage of Hurricane Maria in 2017, and whose damage is estimated at 90 billion USD.
Despite this gloomy picture, with negative growth expected for 2022 and 2023, the economy should nevertheless continue its gradual recovery. The good news came on January 18, 2022, when a federal judge approved a plan to restructure Puerto Rico's public debt. This decision should allow the island to finally emerge from bankruptcy. The forgotten treasury of the United States could then benefit from a new breath.
