A legislative proposal pending before Congress would give Puerto Rico voters a choice among constitutionally viable non-territory status options – statehood or nationhood. Jordan Ferris of Pasquines wrote an essay on the economic consequences of the bill.
“If Puerto Ricans were to choose independence, then the territory would have complete economic autonomy for the first time since the islands were ruled by the Taíno,” Ferris points out.
Although an independent country would also be able to control its own economy, the Pasquines analysis points out that limits on a sovereign nation in free association with the U.S. would face constraints on its national security powers, which could, in turn, have economic implications.
Economic effects of free association
“[T]he US government has the power to dismiss any action taken by the freely associated state government if it believes that it disrupts the military protection of the FAS,” Ferris writes. “This is an integral point to keep in mind when thinking about Puerto Rico’s economic sovereignty because if [Puerto Rico] were to choose FAS status they would still potentially be at the will of the US military and any economic action that could be taken to improve Puerto Rico would ultimately be up to the US for the final decision.”
Ferris is referring to the U.S. “defense veto” that exists in the U.S.-affiliated freely associated states that provide the United States with decision-making power over the nations’ national security and defense policy.
We saw in the committee markup on The Puerto Rico Status Act that several members of Congress wanted to include limitations on a new nation of Puerto Rico’s relationship with China. In fact, As China establishes increasingly deep roots in the Caribbean, the United States would feel intense pressure to make national security decisions for an Associated Republic of Puerto Rico. These decisions could impact Puerto Rico’s economy as well.
A hotel or a base?
The example of Vieques gives us some hint of how a military presence can affect the economy. The U.S. Navy used Vieques for bombing practice for 60 years. “Ironically,” says the Vieques tourism website, “the Navy presence kept the island like the Caribbean of the past, un-crowded, lush and serene with miles of beaches free of development.”
Vieques is encouraging tourism. The use of toxic chemicals on the islands, along with unexploded ordnance that is scheduled to be cleaned up with a time frame of decades, however, hinders the tourist industry. The Marshall Islands, a sovereign nation in free association with the United States, faces similar problems. The days of nuclear testing are past, but the lack of control over national security decisions made by the U.S. military would be a feature of any Compact of Free Association.
Imagine a situation in which a community planned a hotel development. Just as the Navy presence kept development from taking place on Vieques, U.S. defense veto power could prevent development in an Associated Republic of Puerto Rico. A new lush resort may never get off the ground if such plans conflict with Washington’s national security priorities.
Beyond the veto
The Puerto Rico Status Act envisions a lot of financial support from the United States. Since Congress would regularly vote on funding for an Associated Republic of Puerto Rico — and such a republic would have no representation in Congress — we can imagine that actually obtaining this funding could be an annual battle and one that Puerto Rico would not be well-armed to fight.
Because it is impossible to know what the terms of a Compact of Free Association between the United States and Puerto Rico would include before Puerto Rico voters would have to decide on a status option on the referendum called for in The Puerto Rico Status Act, any claims about the economic effect of free association must be speculation. We can confidently say that there would be economic changes for Puerto Rico, though.