Puerto Rico will compete in the 2012 Summer Olympics independently of the United States, as it has since 1948. The National Olympic Committee for Puerto Rico was recognized in 1948 by the International Olympic Committee.
How can Puerto Rico, a territory of the United States, have its own Olympic team? As it happens, the Olympics include quite a few entities that are not sovereign nations. For example, the International Olympic Committee recognized the U.S. Virgin Islands in 1967, Guam in 1986, and American Samoa in 1987. The U.S. Olympic team does not object to the inclusion of Puerto Rico or these other U.S. territories as being included among “nations” competing in the the Olympic games.
The International Olympic Committee doesn’t shy away from controversial decisions where there may be political ramifications. China has separate teams for the People’s Republic of China, Taiwan, and Hong Kong. Israel and Palestine field separate teams.
The U.S. government has objected in the past when Puerto Rico has attempted to behave like a sovereign nation outside of the realm of sports. In 2003, for example, the PDP-led Puerto Rican government attempted to sign cooperation agreements with independent Caribbean nations. Secretary of State Colin Powell interceded, however, instructing these foreign governments that Puerto Rico lacked the authority to conduct its own international affairs and inviting the PDP government to further discuss this issue with his office directly (the memo). The PDP never accepted the Secretary’s invitation.