Puerto Rico’s Unfinished Business After Hurricane María


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It has been a little over a year since Hurricane María fractured Puerto Rico’s infrastructure and its demographic and economic landscape. Currently, all the critical infrastructure—electricity, water, telecommunications, schools, and hospitals—is functional. The enormous effort and the amount of hard work put into removing millions of cubic yards of debris; patching up the electrical grid and the water treatment system; putting hospitals in working order; temporarily fixing damaged housing; among a host of other emergency response activities, sometimes under conditions dangerous to life and limb, should be acknowledged and recognized by one and all.

However, a year after the storm a kind of nervous normalcy prevails in the island and while the amount of work that has been done since last year should not be dismissed, it is important to understand the magnitude of the task at hand and the challenges that lie ahead. The island’s economic fundamentals remain fragile, the electrical system is unstable, the Puerto Rico Aqueduct and Sewer Authority still needs electrical generators to back-up critical water pumps, and despite an effort from all sectors to be vigilant and prepared for another natural disaster, there is significant uncertainty as to how well equipped the central government and its municipalities are to face another storm.

Furthermore, federal funds allocated thus far will not be sufficient to successfully rebuild Puerto Rico’s infrastructure. The Federal Emergency Management Agency (FEMA), using a model designed by the National Oceanic and Atmospheric Administration (NOAA), has acknowledged that total damages could add up to approximately $90 billion in Puerto Rico and the U.S. Virgin Islands. By the end of the 2018 federal fiscal year, estimates of funds appropriated for Puerto Rico disaster relief still range anywhere from $33 to $45 billion, or about half of what is anticipated to be necessary. And when compared to the total funds allocated to address the 2017 natural disasters, the amount obligated by FEMA’s individual assistance programs for Hurricane Maria’s disaster victims has been significantly lower than the portion obligated for victims of Hurricane Harvey or Hurricane Irma.

As noted throughout the report, Puerto Rico’s current situation is extremely complex, a fact that should be considered and addressed early in the recovery process, before making decisions that could have permanent and damaging social and economic implications. Fully understanding the current lay of the land is important because Puerto Rico is the only jurisdiction, to the best of our knowledge, tosimultaneously go through a bankruptcy procedure, a twelve-year economic recession, a fiscal and debt crisis managed under the purview of a congressionally-mandated oversight board, and a large-scale recovery process after a massive natural disaster.

In sum, the report seeks to frame Puerto Rico’s recovery process by providing a snapshot of where the island is today and how much federal money has been allocated, casting light on some of the reconstruction challenges, and igniting a discussion on the options available for a sustainable recovery. It is the first of a series that CNE intends to produce with the goal of educating policymakers about the nuances and complications they will face when designing long-term solutions for the island.

 

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Hace poco más de un año que el huracán María quebró la infraestructura de Puerto Rico y su panorama económico y demográfico. En estos momentos, toda la infraestructura crítica ‑—electricidad, agua, telecomunicaciones, escuelas y hospitales— funciona. Debemos todos reconocer el enorme esfuerzo y arduo trabajo realizado, en ocasiones arriesgando la vida y la integridad física, para recoger millones de yardas cúbicas de escombros; reparar la red de distribución eléctrica y el sistema de tratamiento del agua; poner a los hospitales a funcionar; y hacer reparaciones provisionales a las viviendas dañadas, entre un sinnúmero de otras actividades de respuesta ante la emergencia.

No obstante, a un año de la tormenta, en la Isla se respira una especie de normalidad ansiosa y, aunque no debemos minimizar el trabajo que se ha hecho desde el año pasado, es importante comprender la magnitud de las tareas y los retos que tenemos por delante. Las bases económicas de la Isla siguen frágiles, el sistema eléctrico sigue inestable, la AAA todavía necesita generadores eléctricos para operar las bombas de agua y, a pesar del esfuerzo de todos los sectores por estar alertas y preparados para otro desastre natural, existe mucha incertidumbre con respecto a cuán capacitados están el Gobierno central y los municipios para capear otra tormenta.

Por otro lado, los fondos federales asignados hasta ahora no serán suficientes para reconstruir cabalmente la infraestructura de Puerto Rico. La Agencia Federal para el Manejo de Emergencias (FEMA), empleando un modelo diseñado por la National Oceanic and Atmospheric Administration (NOAA), ha reconocido que los daños totales podrían alcanzar cerca de $90,000 millones en Puerto Rico y las Islas Vírgenes. A fines del año fiscal federal 2018, los estimados de fondos autorizados a Puerto Rico para ayuda para catástrofes todavía oscilan entre $33,000 y $45,000 millones, o alrededor de la mitad de lo que se calcula que será necesario. Y cuando se compara con el monto total de fondos asignados para afrontar los desastres naturales de 2017, la cantidad que los programas de asistencia individual de FEMA han obligado para las víctimas del huracán María ha sido significativamente más baja que la porción obligada para las víctimas del huracán Harvey o el huracán Irma.

Según se señala a lo largo del informe, la situación actual de Puerto Rico es extremadamente compleja, hecho que debe tomarse en consideración y con el que se debe lidiar en los inicios del proceso de recuperación, antes de tomar decisiones que podrían tener repercusiones sociales y económicas dañinas y permanentes. Comprender cabalmente la situación es importante porque, hasta donde sabemos, Puerto Rico es la única jurisdicción que ha experimentado, simultáneamente, un proceso de bancarrota supervisado por un tribunal, una recesión económica de doce años; una crisis fiscal y de deuda manejada bajo la incumbencia de una junta de supervisión impuesta por el Congreso, y un proceso de recuperación a gran escala después de un desastre natural inmenso.

En resumen, el informe busca situar el proceso de recuperación de Puerto Rico ofreciendo un panorama de dónde está la Isla hoy y cuánto dinero federal ha sido asignado, arrojando luz sobre algunos de los retos de la reconstrucción y provocando una discusión en torno a las opciones disponibles de recuperación sustentable. Es el primero de una serie que el CNE se propone producir con el propósito de concienciar a quienes toman las decisiones acerca de las sutilezas y complicaciones con las que tendrán que lidiar al diseñar las soluciones de largo plazo de la Isla.

 

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Puerto Rico como laboratorio socioeconómico

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A casi un año del paso del Huracán María, todavía no se avistan señales certeras de que se avecina la reconstrucción del país. A pesar de que recientemente se anunció la aprobación del Plan de Acción sometido al Departamento de Vivienda Federal (o HUD, en inglés) para poner en marcha programas y proyectos valorados en $1,500 millones, las autoridades federales todavía no han abierto la llave de paso y el torrente de los preciados fondos no se materializa. Más importante aún, todavía estamos pendientes de recibir decenas de miles de millones más que el Congreso de los Estados Unidos ya aprobó para financiar trabajos y servicios relacionados con la recuperación posdesastre.

Ciertamente, la repartición de estos fondos requiere que se sigan reglas y procedimientos particulares para asegurar que el dinero público se utiliza adecuadamente. Pero no es un secreto que al gobierno de Puerto Rico se le está exigiendo más de la cuenta. Además de los “controles internos” y documentos que normalmente exigen las autoridades federales, el Congreso le exigió a la isla someter un “Plan económico y de recuperación de desastres” que debe definir las prioridades, metas y resultados esperados de los esfuerzos de recuperación nacional, entre otras cosas. A primera vista, este requisito no parece descabellado. Como planificador, me parece justo y necesario que se arme un ejercicio coordinado e inclusivo para definir cómo se llevará a cabo la reconstrucción del país. Pero la intención del Congreso no está fundamentada en una afición por la planificación participativa; más bien, responde a una narrativa popular que nos describe como técnicamente incompetentes e incapaces de poder manejar una cascada de fondos provenientes del norte sin despilfarrarlos o que las grandes corporaciones desarrollistas nos tomen el pelo.

No podemos tapar el sol con la mano. La reputación de nuestras autoridades públicas está por el piso dada la pésima trayectoria fiscal de sucesivas administraciones. El peso de nuestra deuda pública tampoco nos ayuda mucho. Pero, más allá de nuestras evidentes fallas, queda claro que nuestras limitaciones también tienen mucho que ver con numerosas decisiones que se han llevado a cabo en el Congreso, especialmente los experimentos de gobernanza que han llevado a cabo en la isla.

Según nos explica el Juez Juan Torruellas en un ensayo publicado en el Harvard Law Review Forum, el gobierno de los Estados Unidos ha llevado a cabo cuatro grandes experimentos de gobernanza en la isla mediante diversos mecanismos legales: la Ley Foraker a principios del siglo XX, luego la Ley Jones en el 1917, la creación del Estado Libre Asociado en el 1952 y la adopción de la ley PROMESA en el 2016. Torruellas plantea que estas movidas han servido para perpetuar una relación colonial asimétrica que viola los derechos humanos de los residentes de la isla y está detrás de nuestro deterioro económico. Así las cosas, el más reciente experimento que se gesta con PROMESA se fundamenta en una lógica similar a la que se le aplicó a Washington DC durante su crisis fiscal: los puertorriqueños no pueden gobernarse a sí mismos, por lo que el gobierno federal debe imponerse y nombrar un pequeño grupo de tecnócratas que pongan la casa en orden.

Como bien sabemos los planificadores, las gestiones y argumentos técnicos a menudo sirven para enmascarar posiciones ideológicas y deseos de experimentación. Muy similar a la trayectoria que siguió Rexford G. Tugwell, quien fungió como gobernador en la década de 1940 e intentó establecer un “laboratorio social” en Puerto Rico mediante la aplicación de las herramientas técnicas de la planificación económica y la administración pública racional, algunos miembros de la Junta de Control Fiscal intentan probar si las medidas de austeridad bajo dictaduras temporeras sirven para revertir los designios de las jurisdicciones en aprietos financieros. En algunos de sus escritos, David Skeel, miembro de la Junta y profesor de derecho en la Universidad de Pensilvania, ha apoyado la idea de que localidades en quiebra, como Puerto Rico, deberían tener que someterse a regímenes antidemocráticos que impongan las reformas necesarias para convertirlos en lugares más responsables —e irónicamente— democráticos.

Pero, aparte del interés de probar la eficacia de las “dictaduras para la democracia”, la Junta y el Congreso han elucubrado otro gran experimento en Puerto Rico: la puesta en marcha de un régimen severo de austeridad neoliberal que corre a la par con un esfuerzo masivo de reconstrucción nacional. Hasta donde sé, esto no se ha intentado antes. Y es una coyuntura que presenta numerosos retos para los planificadores y oficiales públicos, quienes tendrán que diseñar e implementar procesos y proyectos de reconstrucción con rapidez y precisión mientras que simultáneamente se desarma y reconfigura el andamiaje institucional gubernamental. Como han argumentado numerosos expertos, los esfuerzos de reconstrucción requieren de datos detallados, coordinación a varios niveles, la movilización de comunidades y organizaciones de base, y ejercicios de planificación intensivos en diversas escalas. Resulta altamente improbable que las políticas para poner en cintura y achicar el gobierno que avanza la Junta, que incluyen recortes drásticos para la Universidad de Puerto Rico, le permitirán al gobierno liderar competentemente los esfuerzos de recuperación.

Según este cuadro, es sumamente probable que nuestra reconstrucción seguirá un enfoque de mercado, en el que se le ofrecerá toda clase de oportunidades, incentivos y contratos a grandes empresas foráneas que se dedican a perseguir desastres, y que comúnmente proveen soluciones enlatadas que aplican indiscriminadamente en cualquier lugar. Ante el desmantelamiento progresivo del gobierno, estas compañías seguramente serán llamadas a llenar las lagunas de capacidad y peritaje que generan las políticas de austeridad en el sector público. La experiencia de Nueva Orleans luego del Huracán Katrina nos sirve para entender que transferirles responsabilidades clave a actores del sector privado no es una buena idea porque limita la rendición de cuentas y la supervisión publica de la toma de decisiones e implementación. Igualmente, estaríamos privatizando importantes lecciones que nos podrían servir para mejorar la capacidad gubernamental, tomar mejores decisiones y generar mejores bienes públicos en el futuro.  

Los procesos de reconstrucción toman tiempo y son sumamente complejos, no importa dónde se lleven a cabo. Acá, en nuestras costas, tendremos que lidiar con retos adicionales asociados con una década y pico de decadencia económica y la carga de una deuda pública impagable. Pero, más difícil aún, tendremos que transformar al país mientras combatimos los experimentos del Congreso y la Junta, que crean las condiciones ideales para que resbalemos en el camino y terminemos cediendo nuevamente el control de nuestros designios.

Por: Deepak Lamba-Nieves, Director de Investigación, Centro para una Nueva Economía

 

Almost a year after Hurricane Maria, there are still no clear signs that the island’s reconstruction will be completed any time soon. Despite the recent announcement of the approval of the Plan of Action submitted to the Department of Housing and Urban Development that would set in motion programs and projects valued at $1.5 billion, federal authorities have still not turned on the faucet, and the torrent of much-needed funds has not materialized. Even more importantly, we are still awaiting tens of billions of dollars more that the U.S. Congress has already approved for financing work and services related to the post-disaster recovery.

Naturally, disbursement of these funds requires that painstaking rules and procedures be followed in order to ensure that the public money is used appropriately. But it’s no secret that more is being demanded of the government of Puerto Rico than is strictly warranted. In addition to the “internal controls” and documents normally required by the federal government, Congress has required that the island submit an “Economic and Disaster Recovery Plan” that would, among other things, define the priorities, goals, and results expected from the recovery efforts. At first glance, this requirement does not seem unreasonable. As a planner, I think it’s only fair, and in fact necessary, that a coordinated and inclusive exercise be undertaken to define how the island’s reconstruction will be carried out. But Congress’s intention is not based on a penchant for participatory planning; rather, it responds to a popular narrative that paints Puerto Ricans as technically incompetent and incapable of managing a cascade of funds pouring down from the north without wasting them or allowing the big development companies to have their way with us.

Of course we mustn’t delude ourselves. The reputation of our public authorities couldn’t be lower, due to the terrible financial history written by successive administrations. The burden of our public debt doesn’t help much, either. But beyond our obvious failings, it’s clear that our limitations also have a great deal to do with a number of decisions made in Congress, especially the governance experiments it has inflicted on the island.

As Judge Juan Torruellas explains in his essay in the Harvard Law Review Forum, the United States government has carried out four grand governance experiments on the island, using a number of legal mechanisms: the Foraker Act in the early twentieth century; the Jones Act in 1917; the creation of the Commonwealth of Puerto Rico (the Estado Libre Asociado, for its Spanish translation) in 1952; and the adoption of the law known as PROMESA in 2016. Torruellas argues that these actions have served to perpetuate an asymmetrical colonial relationship that violates the human rights of the island’s residents and is at least partly the cause our economic deterioration. That said, the most recent experiment, which is being carried out through PROMESA, is founded on a logic similar to that applied to Washington, D.C., during its financial crisis: Puerto Ricans cannot govern themselves, so the federal government has to come in and take over and appoint a small group of technocrats to put the house in order.

As we planners know, technical arguments and actions often serve to mask ideological positions and experimental desires. In a way very similar to the actions taken by Rexford G. Tugwell, who served as governor in the 1940s and tried to establish a “social laboratory” in Puerto Rico by applying the technical tools of economic planning and rational public administration, some members of the Financial Oversight and Management Board (FOMB) are trying to test whether austerity measures under temporary dictatorships can undo the misfortunes of jurisdictions in financial straits. In some of his writings, David Skeel, a member of the Board and law professor at the University of Pennsylvania, has supported the idea that governments in bankruptcy, such as Puerto Rico’s, should have to submit to anti-democratic regimes that impose the reforms needed to make those governments more responsible and—ironically—more democratic.

But aside from their interest in testing the efficacy of “dictatorships for democracy,” the Board and Congress have devised another grand experiment in Puerto Rico: the implementation of a regime of severe neoliberal austerity in parallel with a massive islandwide reconstruction effort. So far as I know, this has never before been attempted. And it is a combination that presents a number of challenges for planners and public officials, who will have to design and implement reconstruction projects and processes quickly and accurately while, simultaneously, the institutional governmental scaffolding is being taken apart and reconfigured. As many experts have argued, reconstruction efforts require detailed data, coordination at many levels, the mobilization of communities and grassroots organizations, and intensive planning exercises on a number of scales. It is highly improbable that the Board’s policies to downsize the government and tighten its purse strings—including drastic cutbacks to the budget of the University of Puerto Rico—will allow the government to deal competently with the recovery efforts.

According to this scenario, it is quite likely that our reconstruction will take a market-focused path, in which all sorts of opportunities, incentives, and contracts will be offered to off-island companies who chase ambulances, figuratively—disasters, literally—for a living and who generally provide one-size-fits-all solutions that they apply indiscriminately anywhere they go. Given the progressive dismantling of the government, these companies will undoubtedly be called upon to fill the expertise and ability gaps created by the austerity policies in the public sector. The experience of New Orleans after Hurricane Katrina shows us that transferring key responsibilities to actors in the private sector is not a good idea, because it limits accountability and public supervision from the decision-making and implementation processes. Furthermore, we would be privatizing important lessons that could help us improve state capacity, make better decisions, and create better public assets in the future.

Reconstructions take time, and the processes involved are extremely complex, no matter where they take place. Here, on the island, we will have to deal with all the additional challenges associated with a decade and more of economic deterioration and the burden of an unpayable public debt. But even more difficult, we will have to transform the island while combatting the experiments conducted on us by Congress and the FOMB—experiments that promise to create the ideal conditions for a pratfall by us on the path forward and a consequent turnover, again, of the control of our own destiny.

By: Deepak Lamba-Nieves, Research Director, Center for a New Economy

Expediting the Recovery Process: A Proposal to Create a Puerto Rico Development Authority

Introduction

Puerto Rico is at a critical junction in the disaster recovery process after Hurricane María. Relief efforts, while still ongoing in certain parts of the island, are slowly winding down and soon will give way to recovery activities and the rebuilding of the island. It is, therefore, “a time of desperate loss, yet also a time of distinct possibility.”1

The commencement of the recovery process is crucial to making the most of that “time of distinct possibility”, as research carried out after similar disasters has found that the time between the beginning of the relief efforts and the beginning of the recovery process is highly correlated with the length of the recovery, as well as with the severity and duration of public health and economic impacts of the disaster on the population as a whole.2 So, it is in the best interest of all stakeholders to move the recovery efforts forward as soon as possible.

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Proposals for Disaster Recovery and Rebuilding Puerto Rico

 

  • TREAT PUERTO RICO FAIRLY – Puerto Ricans are US citizens by birth. Therefore, Congress should treat Puerto Rico as a state for purposes of allocating disaster recovery and rebuilding funds. Funding provided through FEMA and the Community Development Block Grant-Disaster Recovery program should be allocated to Puerto Rico on terms and conditions no less advantageous than those applicable to the fifty states, including funding for hazard mitigation to ensure we minimize harm from similar events in the future.

  • LEVERAGE PRIVATE SECTOR FUNDS – In addition to providing Puerto Rico with its fair share of disaster recovery funding, Congress should legislate to encourage the private sector to actively participate in the creation of the new Puerto Rico. This could be accomplished by enacting a special private activity disaster recovery bonds program, similar to the Liberty Bonds program enacted after 9/11 and after Hurricane Katrina. These bonds would be exempt from federal taxes on interest, including the Alternative Minimum Tax, which allows issuers to offer the bonds at lower interest rates. Proceeds from these bond offerings have been used in the past to finance broad reconstruction activities, including the rebuilding of utilities, hospitals, hotels, residential housing, and commercial real estate, among other uses. The private entity issuing the bonds is entirely responsible for their repayment.
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The Case for Comprehensive Disaster Relief

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Erika P. Rodriguez for The New York Times

By: Sergio M. Marxuach
Public Policy Director

This hurricane season has been particularly bad with major storms hitting Florida, Texas, Puerto Rico, the United States Virgin Islands, and several Gulf states. Total damages are estimated to exceed $200 billion. The Federal Emergency Management Agency (“FEMA”) is doing the best job it can with the resources it has at its disposal, but it is clearly reaching the limits of its capabilities. Under the American constitutional system, only Congress has the authority to enact a comprehensive relief and reconstruction package to address this situation.

The devastation in Texas, Florida, the United States Virgin Islands, and Puerto Rico has been well documented. The destruction of public infrastructure and the loss of private property affect millions of US citizens. A well-financed, broad-based recovery and reconstruction program would provide a much-needed boost to economic activity in these heavily damaged areas and help many hard-working families get back on their feet. READ MORE

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