Puerto Rico-Bootstrap to "Initiative"

...The U.S...

...merchant ships, whose rates are generally higher than others...

...Hernandez Agosto also proposes freeing the island from import restrictions on crude oil so it can take advantage of the longterm credit and low interest rates that Mexico and Venezuela are offering Central American and Caribbean buyers of their oil...

...But," he adds, "'' the problem is, Puerto Rico is not an economic model anymore...

...Commerce Department, in a 1979 study commissioned by President Carter, agrees with this view, as does the party that governed Puerto Rico during Bootstrap's most prosperous years, the Popular Democratic Party...

...This amount does not even approach the kind of federal aid that Puerto Rico got under Operation MaylJune 1982 Bootstrap for the development of roads, ports, power plants and airfields-the essential building blocks of industrialization...

...Virgin Islands," he would propose "special measures to insure that they also will benefit and prosper from this program...

...It, also proposes a $350 million supplemental foreign aid appropriation for fiscal year 1982 and additional appropriations for 1983 designed to improve serious balance of payment deficits...

...No such measures have been proposed to date...

...Puerto Ricanization" "The CBI is an attempt to make the Caribbean look more like Puerto Rico, to establish a model the U.S...

...None of this is likely to stem the tide of Puerto Rico's economic decline, chiefly because the U.S...

...Though probably skeptical in private, several regional leaders have endorsed the CBI, among them Charles of Dominica, Simmonds of St...

...We must be careful not to rehabilitate an outmoded model of enclave development in the region," Fishlow concluded...

...In addition, because Puerto Rico is subject to the U.S...

...M.M...

...One Washington observer said that the Coalition perceived the CBI 'to be in danger of "dying from insufficient public interest" and that it was gearing up to lobby private liberal and church groups...

...The alcoholic beverage industry in Puerto Rico employs some 2,000 people...

...markets...

...Lucia and Monge of Costa Rica...

...Kenhedy Simmons, St.Christopher-Nevis...

...and M.D...

...Despite such warnings, the Reagan Administration seems to be forging ahead with its plan, relying completely on private sector investment, capital-intensive industry and economic development designed to benefit the rich...

...The U.S...

...Two subcommittees under the House Foreign Affairs Committee added a proviso imposing a ceiling of $75 million on direct aid to any one country, a reaction to the growing U.S...

...and 4) a strengthening and integration of police and intelligence forces...

...And its future is highly uncertain...

...Puerto Rico, as a Commonwealth of the United States, is subject to all U.S...

...For example, as part of its effort to achieve more self-sufficiency, the Puerto Rican government instituted a "12-Year Plan for Modern Agriculture" in 1977...

...foreign policy schemes...

...Seen in this light, the United States is financing the plan with its savings from Puerto Rico," says Rodriguez Beruff...

...In reaction to the uncertain outlook for the CBI, a number of corporations doing business in the area, business lobby groups and non-profit organizations have formed "The C.B.I...

...And, in a situation that parallels Puerto Rico's "special relationship" as a U.S...

...When Reagan introduced the CBI to the Organization of American States in February, he said that given "our special valued relationship with Puerto Rico and the U.S...

...The island had been dominated ideologically and politically by the United States since the U.S...

...That is completely ignored in the whole U.S...

...All of these are being grown under Puerto Rico's 12-Year Plan...

...In the process, it is promoting an Initiative that fosters competition, rather Speaking at a recent conference On an April trip to Barbados, the Reagans met local leaders, I to r: Vere Cornwall Bird, Antigua & Barbuda...

...firms...

...The question now is whether the CBI will emerge intact from Capitol Hill," reports In Action, the newsletter of the pro-Administration Caribbean/ Central American Action, and a major CBI promoter...

...But to do this, we need time," pleads Hernandez Agosto...

...In the process, however, it crushed Puerto Rican agriculture and most local industry, and it condemned the island to chronic dependency on foreign capital...

...military penetration of the Caribbean, and enhance investment opportunities for U.S...

...In May, the House Ways and Means Committee's trade subcommittee passed an amendment exempting leather goods from the dutyfree import list and restricting dutyfree access of Caribbean rum to U.S...

...The planners of the Caribbean Basin Initiative are, therefore, logically unconcerned about Puerto Rico's economic development, a fact which they hardly even bother to conceal...

...Yet all these leaders have said that they fear the aid, small as it is, will be a long time coming...

...The reasons must be sought in the increasing inability of the United States government to impose its will abroad, combined with the country's military objectives in the region...

...It puts its faith in the private sector to stimulate industrial growth and development in Puerto Rico's 20-odd neighboring nations...

...Trickle-down economics under the palms...

...The Administration is suggesting a 10% tax credit for U.S...

...There was nonetheless an awakening middle class and a strong independence movement, a capable, populist leadership and far more resources than the U.S...

...The CBI package has been severely mauled by House and Senate Committees in Washington...and there is no guarantee that the final version will be what Reagan wants," Latin America Regional Reports wrote in their June 11 issue...

...He cites four recent trends that bolster this position: 1) an in45 Ccupdate updckate update., update creased capacity for direct U.S...

...This economic situation is not a cyclical phenomenon, not just the manifestation of the general recession in the United States," writes Puerto Rican Senate leader Miguel Hernandez Agosto in a 1982 study of the potential effects of the CBI on Puerto Rico...

...Proposed by President Reagan last February, the CBI calls for a threepart program of tax breaks, trade incentives and direct aid to the "Caribbean Basin" countries...

...government, as the CBI reveals, is not concerned with promoting an independent base for Puerto Rico's economy...

...Powerful domestic sugar interests have solidly opposed measures which could weaken their newly won import quotas...

...Puerto Rico, like any other state of the union, will be part of the nation's total effort in any action that it takes in relation to any country or any situation worldwide," Romero Barcelo told a San Juan daily in February...

...The U.S...

...investments have recently been negotiated in Jamaica...

...Puerto Rico became the Caribbean's only industrial country, 44 with per capita Gross National Product twice as large as Costa Rica's and 11 times that of its poorest neighbor, Haiti...

...When [Assistant Secretary of State Thomas] Enders talks about the CBI, he talks mainly about its military aspects," says Beruff...

...By offering tax incentives and highly favorable trade terms to Puerto Rico's neighbors, the CBI may well hasten the process of industrial exodus from Puerto Rico by companies seeking cheaper energy and labor elsewhere in the region...

...Critical Partners Finally, the Administration has run into trouble from the governments of Canada, Mexico and Venezuela, all of whom took part in preliminary discussions with the idea of co-sponsoring the Initiative...

...Atlantic Fleet command, and together with bases in Panama and Miami constitutes the naval and air complex with which the United States oversees its interests in Latin America...

...The Rockefeller founded, pro-business Council on the Americas was listed by a Coalition spokesperson as a major mover behind the new organization, although the Council denies any involvement with the lobbying effort and was not mentioned in the Coalition's literature...

...Both Hernandez Agosto and Romero Barcelo argue for making Puerto Rico an educational and training center for the Caribbean and a technical purveyor to CBI countries...

...It deals with a model of cheap colonialism which seeks to increase the economic dependence of the region without assuming financial responsibilities...

...Sagging Bootstraps Far from pulling itself up by its bootstraps, Puerto Rico has been unable to achieve even a minimally self-sufficient economy...

...investors in developing nations, has stepped up its involvement in the Caribbean as a result of the CBI...

...For example, of the $350 million in aid proposed under the plan for 1982, $128 million was earmarked for El Salvador alone...

...excise tax on Puerto Rican rum, which is currently returned to Puerto Rico, accounted for 10% of the Commonwealth's revenues in 1981...

...May/June 1982 47update u pdate update Update markets would directly challenge these recent efforts at improved production...

...Vincent & Grenadines...

...In reality, Central America, the Caribbean islands and the northernmost countries of South America have never thought of themselves as a political or geographic unit, and share neither language, history nor economies...

...It is just this kind of development model that the Reagan Administration seeks to impose on the Caribbean through the Caribbean Basin Initiative (CBI...

...In recent months, Romero Barcelo has increasingly stressed Puerto Rico's regional responsibilities and "strategic importance in the Caribbean...

...Security also seemed to be on Reagan's mind in his February CBI speech: "I wouldn't propose it if I were not convinced that it is vital to the security interests of this nation and of the hemisphere," Reagan stated...

...tariff policies, including the CBI...

...So why would the CBI's architects adopt aspects of a model they know to be fatally flawed...

...concessions on taxes and trade...

...He also proposes the creation of a "Caribbean Financial Corporation," based in Puerto Rico, which would manage U.S...

...In what the Administration calls the "centerpiece" of the Initiative, it is calling for a one-way free trade arrangement for 12 years on products coming into the United States from the Caribbean area...

...intervention...

...use Operation Bootstrap as a model of development in the Caribbean is not readily apparent...

...NACLA Reportupdate update update Update CARIBBEAN INITIATIVE The Caribbean Basin Intitiative (CBI) is now "in committee," or, more precisely, its various provisions are being examined by several Congressional committees...

...While competition among Caribbean countries for shares of the mainland U.S...

...analysis...

...However, its critics argue that the CBI was framed to lay the groundwork for a deepening U.S...

...The elimination of this tax, combined with cheaper labor and energy costs in other Caribbean countries, could induce Bacardi, Puerto Rico's largest rum manufacturer, to move its plant to the Dominican Republic...

...The stated intent of the Initiative is a neighborly effort to promote economic development in the region...

...The AFL-CIO, which fears a loss of U.S...

...Military Motivations Indeed, the direct aid provisions of the CBI-$350 million for the coming fiscal year-are abysmally low...

...Albert Fishlow of Yale University suggested that much of the private money flowing into the Caribbean under the CBI will be "investment that would have taken place in the region anyway, but now it gets a tax break...

...A series of high level meetings with U.S., Jamaican and other like-minded politicans and military men seem to indicate the governor's willingness to increase the island's role in U.S...

...An essential aspect of the CBI is the deliberate isolation of Nicaragua and Grenada, and an attempt to drag currently reluctant Mexico and Venezuela into an antisocialist front in the hemisphere...

...But after 30 years, 80% of the businesses in Puerto Rico are still in North American hands...

...Among these, he suggests permitting Puerto Rico to set its 48 own tariff rates, maintaining the excise tax on rum and allowing the island to use its own or foreign ships to reduce maritime transportation costs...

...It was welcomed, initially, as a possible model of development for the whole Caribbean...

...market might increase only slightly, the effects of Caribbean beef, rice, spices and produce coming onto the Puerto Rican market could cripple its infant agricultural industry...

...firms, rather than U.S...

...Island To Be CBI Casualty The situation on the island is grim and getting grimmer...

...At the end of World War II, Puerto Rico had 82 factories, four large, U.S -owned sugar centrales which processed 60% of the island's sugar, fairly extensive garment, coffee and tobacco industries and two new naval and air bases...

...The textile lobby has already won exemption of apparel and textiles from the CBI trade provisions...

...Objections and Amendments Various interest groups and business lobbies have voiced objections to the CBI which must be addressed if the package is to win final approval...

...In the short run, the United States is not offering its own market to its Caribbean neighbors but instead that of Puerto Rico," writes former Governor Raphael Hernandez Colon in the summer issue of Foreign Policy...

...investors in the region and expanded credit to domestic private sectors through Export-Import Bank guarantees...

...Critics also argue that the very concept of a Caribbean Basin is U.S.-defined...

...The plan also pointedly excludes Cuba, Nicaragua and Grenada from its benevolence...

...commitment to the region's economies but probably far from any genuine development aid...

...Tom Adams, Barbados...

...Of those remaining, 27.6% are officially unemployed...

...This year, the GNP is expected to decline by 3.4...

...By 1970 there were 2,000 U.S.-owned factories on the island...

...government has even been willing to admit...

...Puerto Rico now depends on some $4.7 billion annually in federal funds and imports 80% of its food, usually at inflated prices...

...Puerto Rico is trying to restructure its own economy to provide employment and growth opportunities...

...tariff laws, now pays high import taxes on oil, all of which must be imported...

...What the Reagan Administration appears to be most concerned about, as Jorge Rodriguez Beruff contends, are its military bases...

...and some 61% receive food stamps...

...Carlos Gallisa, president of the Puerto Rican Socialist Party, calls the statement "lip service" and says he doubts that significant protection for Puerto Rico could be incorporated into the CBI...

...Its economy-once billed as a miracle of progress-is in ruins...

...Caribbeanizing Puerto Rico It is one of the consummate ironies of the CBI that Puerto Rico, precisely because it has suffered so much "development" at the hands of the United States, stands to lose the most if the program is adopted...

...And its fate is not at all certain...

...investors who open plants in the region...

...3) a rapid increase in arms sales and military aid to armies in the region...

...Coalition...

...NACLA Report 46update update update update tries of the region...

...Marines arrived on its shores in 1898...

...Mexico and Venezuela, though less vocal in their criticism, have economic problems at home and ties to Cuba, Nicaragua and Grenada that will not easily break...

...There is no mention of a Caribbean common market...

...Meanwhile, Puerto Rico is gearing up to endure the loss of some $450 million in federal budget cuts and an almost certain increase in social unrest and violent internal conflicts...

...Kitts-Nevis, Compton of St...

...u update pdate...

...Jamaican Prime Minister Seaga has staked his political fortunes on the sort of development aid that the CBI represents, and is perhaps the strongest Caribbean backer...

...2) a search for new bases...

...We want to suggest that in essence the plan deals with the Puerto Ricanization of the region with one element missing, and that is money," observes professor Rodriguez Beruff...

...Instead of generalizing the Puerto Rican model more widely through the region, we should be learning from it...

...Some of these suggestions make a good deal of sense, but since Hernandez Agosto is from the opposition Popular Democratic Party, partido non grata at least for the moment, his ideas will probably not be adopted...

...This provision has provoked controversy of various kinds...

...Eugenia Charles, Dominica...

...Operation Bootstrap, the U.S.sponsored industrialization plan for Puerto Rico, began in 1950...

...update 250 families had occupied empty farmland outside San Juan for 1 Y2 years when police moved in and smashed their homes...

...The island has already lost much of its competitive edge in the Caribbean...

...Gallisa cites the example of the Puerto Rican rum industry: a significant provision of the CBI would eliminate the excise tax on rum coming into the United States from Jamaica, the Dominican Republic and other Caribbean producers...

...At the same time, Jamaica, Reagan's new friend in the Caribbean, has petitioned the United States for relief from import duties for 27 agricultural products, among them tomatoes, peppers, eggplant, papaya, canteloupe and sweet potatoes...

...Thus why anyone would want to NACLAReportUpdate...

...Puerto Rico is now stuck with a dying petrochemical complex, pharmaceutical and electronics plants that are rapidly moving elsewhere and an inability to attract new industry...

...Jorge Sol, once Salvadorean minister of the economy, speaking at the same relationships...

...opposition to aid for El Salvador...

...The recession and resulting economic climate in the United States will not make it easy for the Administration to win approval of the CBI...

...Having neglected agriculture under Operation Bootstrap, Puerto Rico is still a young and relatively inefficient agricultural producer...

...government doesn't have enough money to save the Caribbean, and it is asking American business to do much of the job," wrote Allan Dodds Frank in the February issue of Forbes...

...military presence throughout the Caribbean and Central America...

...Largely because of OPIC activities, sizeable U.S...

...Roosevelt Roads, on Puerto Rico's eastern shore, is the seat of the U.S...

...Avenues of escape are being closed off, and the CBI, far from insuring that Puerto Rico will "benefit and prosper," merely adds fuel to the fire...

...No Caribbean nation looks to Puerto Rico for development ideas, because the failure of Bootstrap is well established...

...will feel comfortable with," says Jorge Rodriguez Beruff, a professor at the University of Puerto Rico and research director at the Caribbean Project for Peace and Justice...

...The Canadians seem to have backed off from sponsorship...

...A four-month strike at the University of Puerto Rico over a tuition hike this year was put down with repeated attacks by police riot squads, and a large squatters' community outside San Juan was bulldozed and destroyed in May...

...There are now fruit and vegetable projects on the south coast and the interior and a rice project in the north...

...The pursuit of economic stability has largely military purposes...

...While economic stability is a component of military control, actual prosperity is irrelevant, even threatening...

...Writing in the Summer 1982 issue of Foreign Policy, Abraham Lowenthal of the Woodrow Wilson International Center for Scholars said the CBI "reflects the Administration's interest in military security, political loyalty, and advantages for U.S...

...In his study of the CBI, Hernandez Agosto proposes several measures to counteract its potentially negative effects on Puerto Rico...

...The Initiative offers tax credits to U.S...

...corporations...

...But it appears that this is just what will happen...

...Interestingly, total aid to the Caribbean has actually been decreased under the CBI, since federal budget cuts for Puerto Rico exceed the increase in economic assistance...

...should not be at the expense of Puerto Rico...

...The cost of electrical power to industrial users in Puerto Rico, according to Senate President Hernandez Agosto's study, is three times that of Costa Rica...

...It also seems to have given little or no thought to the Initiative's possible impact on the island...

...He argues further that the real motivations for the CBI are military: not simply an elaborate disguise for increased aid to El Salvador, but a mechanism for expanding U.S...

...The Overseas Private Investment Corporation (OPIC), which provides loans and low-cost political risk insurance to U.S...

...Puerto Rico is required to use only U.S...

...Throughout the 1950s and '60s, Bootstrap appeared to be fulfilling its promise of bringing prosperity to Puerto Rico...

...Run out of a Washington public relations firm, the organization listed in a recent brochure some 24 U.S.based groups and 14 in the Caribbean and Central America among its founding members...

...Milton Cato, St...

...Commonwealth" country, it offers "free trade" arrangements to Caribbean products coming into the United States...

...financial aid to Caribbean Basin countries...

...But today, in 1982, Puerto Rico is still a colony...

...Reagan himself conceded that about 87% of Caribbean exports are already exempt from import duties under the 1975 Generalized System of Preferences...

...Changing Countries Again Similarly, CBI tax credits combined with the prospect of cheaper labor may well motivate Puerto Rico's textile and apparel companies, which employ about 20% of the workforce, and its electronics industry, one of the most promising "growth" industries on the island, to relocate to other spots in the Caribbean...

...unemployment...

...concern for the region's long-term development...

...department stores, hotel chains, agribusiness ventures and oil companies, profits from these industries, tax free, generally left the island...

...However, just because the CBI is so important to the Administration's military objectives in the Caribbean Basin region, it is unlikely to die a quiet death in Congress...

...Instead, it may survive in some form-enough to at least give the appearance of a U.S...

...We need, also, the ability to provide incentives for investment in new industries and the capacity to protect both these industries in their development stages and older industries as they are cut back or phased out...

...Accepting A Regional Role The governor, Carlos Romero Barcelo of the pro-statehood New Progressive Party, has issued his own suggestions, seeking to trade Puerto Rico's strategic value for U.S...

...foreign policy toward Central America and the Caribbean held at the Columbia University Law School, Dr...

...Instead, our economic problems are structural...

...Revising An Outmoded Model on U.S...

...Now the CBI's free trade provision for Caribbean goods entering U.S...

...Fishlow added that the incentives are "perverse, because they make capital-intensive projects more attractive than laborintensive ones in the midst of a mass migration...

...While local initiatives were overpowered by U.S...

...The CBI is like a series of lines going from the United States to each country," said Dr...

...Eventually attracting billions of dollars in corporate investment, Operation Bootstrap moved the island rapidly through a stage of light, labor-intensive industry to a stage of heavy industry, capitalintensive and highly profitable for the U.S.-based concerns involved...

...Over two million Puerto Ricans have emigrated...

...And the exclusion of textiles, apparel and sugar-staples of Caribbean production-may limit its effectiveness...

...The plan also reflects this Administration's persistent infatuation with outdated economic theories...

...Because of the political volatility of the region in the last 15 years, many investors consider OPIC backing an essential component in their investment decisions...

...jobs if tax incentives go through, testified before the House trade subcommittee in March that "The Administration's trade incentives are illconceived and unthinkable when balanced against the miseries brought by [close to 10%] U.S...

...Maisie McAdoo is a writer and member of the Puerto Rican Solidarity Committee...

...The plan, which offered 100% exemptions from federal taxes for 17 years to any company opening a plant or office on the island, was based primarily on investment by U.S...

...Federal Fair Labor Standards Act, labor costs anywhere from two to six times what it costs in the rest of the Caribbean...

...Virtually powerless to protect its own industries by tariffs or import quotas, Puerto Rico stands to become a CBI casualty...

...The development of other Caribbean countries...

...One reason is that Puerto Rico, subject to U.S...