Foreign Policy op-ed blames Jones Act among other things for Puerto Rico’s crisis, predicts a bad ending

by Michael Hansen, Hawaii Shippers Council, May 3, 2016

Foreign Policy Magazine published on April 29, 2016, opinion-editorial (op-ed), “The plot against Puerto Rico,” in which the author outlines the challenges facing the Commonwealth in respect of the financial crisis, cites the Jones Act as an example of bad federal policy, and predicts things will end badly largely because of a lack of interest in Washington, D.C.

Foreign Policy is a publication of the liberal-leaning Graham Holdings Company (formerly the Washington Post Company before sale of the newspaper to Jeff Bezos of Amazon.com).  The author is Michael Moran, Managing Director, Global Risk Analysis, Control Risks Group Holdings Ltd., a large London, UK-based consulting company.

The author describes the plot against Puerto Rico as perpetrated by the U.S. Congress and administration due to partisan differences and a great deal of indifference to a jurisdiction without much political clout due to its territorial status.

Key excerpts:

For the past 118 years, Puerto Rico has existed as an anomaly, geographically closer than Hawaii or Alaska to mainland United States, yet ruled like distant Guam or American Samoa. In keeping with America’s somewhat self-deceiving anti-colonialist ethos, the island was deemed a “possession” during World War I.

This is the context of Puerto Rico’s current fiscal crisis. Its $73 billion government debt is many times worse than any U.S. state’s burden in per capita terms, including the reigning champion of U.S. state-level fiscal dysfunction, Illinois. San Juan cannot raise enough tax money locally to pay — or even service — that debt and wields only partial control over the economy:

Many in Congress treat the island’s plight like a mere annoyance — or, at best, yet another way to highlight all that is wrong with the other party’s approach to government. Yet Congress has jealously, even imperiously, guarded its control of some of the basic realities of the island’s economic and political life, insisting that the United States can tap it for soldiers when needed, for instance, and refuse to extend the right to vote in U.S. elections or even congressional matters.

Even the island’s notoriously high prices for basic goods should be laid at the steps of the Capitol building: In 1920, as a sop to the U.S. maritime industry, Congress passed the Jones Act, which required shipping between U.S. states or possessions to be carried by U.S.-flagged ships manned by American crews. To say this is uncompetitive in the modern world is a vast understatement. A University of Puerto Rico study from 2012 found the practice costs the island’s economy about half a billion dollars annually. That windfall also adds U.S. shipping companies to those fighting debt relief for the beleaguered island.

Foreign Policy: The Plot Against Puerto Rico