After seven weeks of two category five hurricanes that changed Puerto Rico, bad governance began to reappear, which led to Puerto Rico’s previous economic crisis. The controversy surrounding PREPA’s millionaire contract with the company Whitefish Energy Holdings are proof of lack of transparency and poor administrative decisions.
More than a month after the passage of “María” the 3.4 million U.S. citizens are still in a precarious period while the government shows signs of exhaustion and inability to manage the recovery process of the Island.
The crisis seems to transcend the capacity of this or any civil government in bankruptcy which does not have the expertise to return us to normal after the hurricane devastation.
The recovery complicates itself as partisan politics begin to emerge within the recovery process, as if we no longer had enough problems. That said, before the government’s capacity collapses and the islands economic crisis continue to down spiral, Congress needs to implement a real solution to the Puerto Rican humanitarian crisis.
The fiscal, social, and economic costs for both local and federal government will be high, if the problem is left without a realistic and effective solution.
Just when Congress and the Federal Government decide how to enable programs to help the recovery of the Island, this controversy of the islands partisan politics will have terrible consequences and divert attention from Congress.
The situation is more painful even when viewed from the perspective that PREPA has long been the main enemy of consumers and the economy, charging excessive fees because of bad management in the public monopoly.
Today, if Puerto Rico continues to be shut down more than a month after the passage of “María” it is because we had an electrical system, fragile and obsolete, lacking in maintenance and PREPA insolvency, in the process of bankruptcy.
The failure of the state energy monopoly, which was the spearhead of our industrial takeoff in the middle of the previous century, is today our best example of failure as a society.
Faced with the clear incapacity of the government and the potential systemic risks for the economy and the stability of the territory, Congress must legislate and create an administrative entity that takes the reins of the territory in a state of emergency. The federal entity must be integrated by the Federal Emergency Management Agency (FEMA), the Department of Defense, and the Fiscal Oversight Board (FOB).
Through federal legislation, Congress must create an “Emergency Manager” of with special powers to manage the physical recovery of the Island, and ensure the stabilization of physical infrastructure and economic recovery.
Possibly never any state or territory in the United States, has faced simultaneously, a catastrophe of this dimension while in a bankruptcy process, without fiscal resources, and without access to the capital markets.
To aggravate the outlook, there is a serious problem of legitimacy of local institutions before their citizens, which impedes effective governance amid the emergency.
That said, the Congress must look carefully at the unprecedented situation facing its territory and decide if it implements a clear public policy that addresses the multiple challenges we face. Not acting would only aggravate the situation and multiply the problems, as well as the costs for the Federal Government.
If there is no soon return to normal, the emigration of at least one million Puerto Ricans to the mainland is a real scenario in the short term. Even worse, the waste of federal aid could weaken the reconstruction process in Puerto Rico, and raise discontent in large sectors of the United States.
Congress must avoid having a failed state within the federal system.
In short, immediate action from the federal power is urgently needed before things become more serious, problems multiply, and the social and economic costs of the crisis transcend the local capacity and the government of the United States.