Unlike companies or U.S. states that have trouble servicing their debts, Puerto Rico can’t formally declare bankruptcy. So the Fiscal Oversight and Management Board—known as “La Junta”—was imposed by Congress and the Obama administration in 2016 to oversee the debt restructuring process and the island’s finances, executing effective veto power over plans made by its democratically-elected government. The legislation that created the board, known as PROMESA, doesn’t require most of its members to be from or living in Puerto Rico. Its chair is one of the intellectual architects of the board, law professor David Skeel Jr., who’s consistently argued that indebted governments are better off having democracy taken away from them.
The model isn’t exactly new. Skeel and his fellow travelers took inspiration in part from the fiscal control board imposed by the state onto New York City in the 1970s as a response to the fiscal crisis there, an early testing ground for sweeping neoliberal reforms executed in the name of fiscal responsibility. More recently, Michigan’s former Republican governor Rick Snyder imposed emergency managers onto mostly majority-Black cities facing financial distress. Among the members of La Junta is former Michigan budget director John Nixon, who was one the officials that hired the emergency manager who urged engineers to keep repairs to Flint’s ailing water system to a minimum. Earlier this summer, the board sued the Puerto Rican government to stop it from implementing a law expanding private sector employees’ vacation and sick time, overtime pay, and meal breaks, arguing it would slow economic growth.
Like structural adjustment packages imposed by the International Monetary Fund on low and middle-income countries across the globe, La Junta promised to bring Puerto Rico back from the brink of financial ruin in exchange for a series of reforms, typically under the guise of cultivating a positive investment climate to restore better access to financial markets. Those recommendations have included mass privatizations, steep cuts to pensions and benefits and a drastic shrinking of the public sector workforce—frequently with the enthusiastic support of right-wing politicians there. The privatization push has been a breeding ground for grifters looking to make a quick buck. Before full privatization, PREPA’s leadership courted a series of disastrous private-sector contracts. The most high-profile was awarded to the novice Montana-based firm Whitefish Energy to rebuild power lines after Maria, though there were several others. As I reported in 2020, private equity billionaire and Milwaukee Bucks owner Wes Edens has built a business model around growing demand for methane gas in the Caribbean, including in Puerto Rico. New Fortress Energy Inc., which Edens founded and runs as CEO, was awarded a $1.5 billion contract that left ratepayers to foot the bill for burning more expensive imported fuel that was, ironically, pitched as a means to make energy more affordable.
