Puerto Rico Senator José Nadal Power (“Commonwealth” party) is advocating changes in federal law to re-purpose the U.S. Overseas Private Investment Corporation (OPIC) to help Puerto Rico out of its current debt crisis and related economic woes.
OPIC is a federal government agency that promotes U.S. private investment to create jobs domestically and assist economic development in over 100 foreign countries. Nadal Power’s proposal to redefine the agency’s mission to include “public and private projects” in “Puerto Rico and other U.S. territories” comes at a pivotal moment.
Last month President Trump officially proposed that OPIC’s budget should be zeroed-out and the agency eliminated. Congress will now decide whether or not to terminate OPIC in the FY 2018 budget process.
OPIC was created to help U.S. large and small businesses manage political risk associated with direct investment outside U.S. borders. It augments but does not substitute for private insurance industry risk management tools available to U.S. investors with assets located in foreign jurisdictions. Its activities must satisfy strict U.S. policy criteria under State Department oversight, including a requirement that increased jobs in project locations do not result in reduction of U.S. employment.
Domestic applications of OPIC have been proposed for cities and rural areas facing economic adversity, including Detroit, federal tribal reservations governed under Indian treaty law, as well as Puerto Rico and other U.S. territories subject to the power of Congress over territories. In all cases, after careful consideration, the President and Congress have rejected domestication of OPIC’s mission.
During the first Bush administration in 1989, senior Puerto Rico officials, including Tito Colorado, “commonwealth” party appointee as local territorial Secretary of State, made representations about the island territory’s political status that convinced OPIC to give preliminary consideration to extension of OPIC programs in Puerto Rico. Like a similar understanding reached between a “commonwealth” party administration in Puerto Rico and the government of Japan, the OPIC proposal asserted incorrectly that Puerto Rico had sufficient sovereign powers to enter binding international agreements its own name and right.
Consequently, the proposal to extend OPIC to Puerto Rico met the same fate as the Japan “tax treaty.” Once its implications were fully understood it was rejected by the U.S. State Department and White House.
For U.S. investors statehood is the gold standard of risk management, it is OPIC on steroids, amplified a thousand times, mitigating political risks on a national basis without non-uniform and less than equal treatment Puerto Rico receives as a territory. That is why all 32 territories that became states have experienced rapid increased growth and been sustained at each new plateau of development until the next highest level is achieved, resulting in convergence with the national economy.
If Puerto Rico wants OPIC to promote U.S. investment from the 50 states (assuming the agency survives the new threat to have its funding zeroed out), it needs to become a sovereign nation. If it wants to be on equal footing with the 50 states with uniform legal remedies in the U.S. investment markets and economy, it needs to become a state.
