Puerto Rico’s Status and the Debt

Antonio Weiss, Counselor to the Secretary of the U.S. Treasury, was the only witness at yesterday’s House Natural Resources Committee hearing on “The U.S. Department of the Treasury’s Analysis of the Situation in Puerto Rico.” He made a statement and then answered questions from members of Congress.

Weiss made it clear throughout the hearing that the Treasury wants two things:

  • debt restructuring (bankruptcy protection or something like it)
  • oversight (a board to help with financial management)

He assured members of Congress that both those things are necessary, and that there can be no further delay. Congress has the power to provide these tools for Puerto Rico, and Weiss recommended that there be an act under the Territorial Clause to get it done.

Pedro Pierluisi, Resident Commissioner for Puerto Rico in the U.S. Congress, emphasized that it is not just the government of Puerto Rico that will be affected by Congress’s decision. He recalled that the governor of Puerto Rico had compared Puerto Rico to a ship sending out a distress call. He said the passengers of that metaphorical ship included the people of Puerto Rico and the investors in the bonds that have created much of the debt. “Puerto Rico and its creditors are on the same ship. We are going to sail safely to shore together or we’re going to sink together. Our common fate depends on whether leaders in Washington and San Juan rise to the occasion.”

Pierluisi pointed out that Puerto Rico’s problems are the result of the territory’s unequal position, caused by its status as an unincorporated territory.

Rep. Jose Serrano brought the question of status up again later in the hearing. “Status is the problem,” he said, and insisted that Congress has responsibility for Puerto Rico’s status. “At minimum, the U.S. Congress has to tell Puerto Rico what’s available,” he said, referring to the referendum which has already been budgeted for by the federal government. Previous plebiscites have sometimes resulted in the choice of “enhanced commonwealth” options which Congress has rejected. The Natural Resources committee has in fact told Puerto Rico before that statehood and independence are the only “viable” options.

Weiss agreed that “The ‘commonwealth’ status has not afforded equitable treatment.” Serrano proposed that the act which Congress is committed to create before March 31 should also include a demand to resolve the status of Puerto Rico.

Otherwise, he said, the committee would be back again looking at the same problems in the near future.

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