Puerto Rican bankruptcy: A prelude to savage austerity and pension cuts
Puerto Rico formally declared bankruptcy on May 3 before a special tribunal created last year. The island, a US territory, had budgeted $800 million for the next five years’ debt payments, far short of the $3.5 billion creditors are demanding. As expected, the creditors, which include large Wall Street hedge funds, rejected the offer.
With this declaration, Puerto Rico became the first US territory or state to place itself into a process like the municipal bankruptcies, which have become increasingly common in the United States. Officially Puerto Rico owes some $72 billion to various vulture funds and another $50 billion for so-called unfunded pension liabilities to public employees.
Since January 2, when newly elected governor Ricardo Rosselló declared the island in a financial emergency it has been an open secret that the MIT-educated leader of the New Progressive Party (Partido Nuevo Progresista-PNP) and former Hillary Clinton delegate at the Democratic National Convention would throw the island into bankruptcy.
While Puerto Rico was historically barred from declaring bankruptcy, Congress enacted a law last year allowing bankruptcy-like proceedings. According to the PROMISE Act legislation passed last year in Congress and signed by the Obama administration, a US Supreme Court justice will now appoint a tribunal to oversee the bankruptcy process. While this includes forcing creditors to accept a reduction in the principal and accumulated interest, it is certain that the interests of Wall Street will take precedence over those of working-class Puerto Ricans, just as it did in Detroit in 2013-14.
Read more: https://www.wsws.org/en/articles/2017/05/05/puer-m05.html
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