Juan Pablo Bohoslavsky and several more independent experts from the United Nations requested an invitation from the United States last fall to visit Puerto Rico on a fact-finding trip. Their concerns have now been made public in a statement on the UN Human Rights website.
Bohoslavsky declared that the poor of Puerto Rico can’t be ignored. “The population in Puerto Rico cannot be held hostage to past irresponsible borrowing and lending,” he wrote. “Losses need to be fairly distributed. This means that bond holders, including hedge fund investors, also need to take their fair share. Hedge fund investors – which hold a significant part of the territory’s municipal debt – are also bound by the principles of good faith, debt sustainability, co-responsibility and human rights.”
In discussions of Puerto Rico’s debt, there have often been claims that “they have to live with the consequences of their actions” or “they can’t expect a bailout when they were irresponsible.” Who exactly is “they” in these cases? Nearly 60% of the children in Puerto Rico now live in poverty. It cannot reasonably be suggested that these children were irresponsible with the finances of the territory and now must live with their actions.
Creditors may take the position that they want to be repaid in full. In many cases, these creditors bought the chancy investments at a fraction of their potential value, specifically in order to make a large profit when Puerto Rico is once again in a position to pay the debt. Bohoslavsky takes the position that these creditors should put human rights ahead of their profits, but this is not their job. It may be the place of the fiscal oversight board to insist on a fair distribution of losses. Bohoslavsky recommends this.
“I am particular alarmed about the deterioration of the public health care system in Puerto Rico,” says Bohoslavsky, “which is not only struggling to absorb spending cuts, but also has to cope with an unprecedented emigration of medical doctors. In addition, Puerto Rico has faced a Zika virus outbreak that has endangered up to one fifth of the island’s population, and financial constraints have complicated the timely and comprehensive response to prevent the outbreak.”
Health care has been a concern in Puerto Rico for some time, and now, according to the U.N. statement, food and shelter are becoming an urgent issue.
Bohoslavsky is focusing on human rights, but he points out that continued austerity measures also won’t help to improve the economy of Puerto Rico. People leave every day from Puerto Rico to go and live in one of the 50 states. The loss of people with the resources to move to the U.S. mainland and find jobs is leaving Puerto Rico with a weaker workforce and continued stringency simply makes Puerto Rico less appealing to businesses. A business considering establishing a factory or office in a new location always looks for a place that will not only provide a strong local workforce, but which will also be an appealing place for workers and management to live. The U.S. cannot allow Puerto Rico to become a place where food, shelter, healthcare, and education are uncertain — and expect new businesses to spring up there.
“The ability of health and education systems to off-set spending cuts through efficiency gains is limited,” Bohoslavsky says. “Any reforms should be made carefully, have a realistic time span, and prevent that accessibility, affordability and quality of public services are further undermined.”
Bohoslavsky commended the Task Force created under PROMESA for their support for tax changes for the people of Puerto Rico and for fairness under Medicaid and Medicare. He also spoke in favor of the Department of Treasury’s position that Puerto Rico must have some debt relief. But he continues to wait for a response allowing a U.N. fact-finding visit to Puerto Rico.