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S&P500
2365.38
+14.22
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NASDAQ
5865.95
+27.37
+0.47%
NYSE
11578.25
+67.34
+0.59%
GOOG
831.66
+3.59
+0.43%
YHOO
45.5
+0.4
+0.89%
AAPL
136.7
+0.98
+0.72%
AMZN
856.44
+11.37
+1.35%
FB
133.72
+0.19
+0.14%
BPOP
45.42
+0.05
+0.11%
EVTC
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+0.29%
OFG
13.45
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FBP
6.54
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Entre Broma y Broma

By on September 8, 2016

Our Spanish saying, “Entre Broma y Broma, la Verdad se Asoma,”—the equivalent to the English “Much Truth is Said in Jest,” would be an apt disclaimer to news making its way through the halls of the U.S. Congress that a draft for a Puerto Rico independence bill is picking up traction. The draft legislation stipulates that “it is the intention of Congress to approve legislation, in close consultation with the Executive branch of the United States, to assure that the Commonwealth of Puerto Rico will attain full sovereignty as an independent country not later than seven years after the date of the enactment of this act.” That is the main dish.

The side dishes in the bill—just to add a little spice: “After over a century of external and internal debates, there is no consensus for statehood, nor is there a nationwide desire for admitting a 51st State.” Can you say we hold these truths to be self-evident?

Then, just to put the people on edge, a double shot of espresso under Section IV of the bill titled “Treaty,” which stipulates, among other things such as a common currency, that “United States citizenship may be maintained or renounced by people who are United States citizens [on the date of the enactment of this Act] but shall not pass to the children born after the enactment of this Act.”editorial-philipe-schoene

The draft legislation contains such questions in brackets as “[what if this treaty is not entered into? There is no way to require Puerto Rico to enter into a binding treaty]” would lead one to believe that this is a trial balloon to push a different agenda.

One lobbyist on Capitol Hill with ties to the GOP told this newspaper that the bill is in direct response to action being contemplated by creditors in the monoline bond insurance and hedge-fund camp who reportedly intend to hold the United States accountable for part of Puerto Rico’s debt based on the U.S. Supreme Court’s decision in Sánchez Valle vs. the Commonwealth of Puerto Rico.

In a 6-2 decision, the Supremes determined that Puerto Rico does not have the sovereignty to prosecute someone for the same crime that has been charged in federal court. The decision bolstered the claim being made in some creditor camps that a Puerto Rico that is not sovereign should not be on the hook for its debt.

So, the draft legislation to cut our umbilical cord is reportedly a pre-emptive move to establish Puerto Rico’s sovereignty once and for all. At this writing, there are representatives on both sides of the aisle who would reportedly back a bill such as this. We don’t buy it.

Yes, there are supreme acts of cynicism such as Gov. Alejandro García Padilla naming Richard Ravitch to represent him on the control board. García Padilla is quick to mention that Ravitch’s experience in retooling New York City’s financial mess as the former lieutenant governor of that state makes him deserving of the post. It should not be lost on García Padilla that Ravitch has a clear conflict of interest as he sits on the board of Build America Mutual (BAM), a bond insurance company that would stand to gain from any actions that might adversely affect the credit ratings of monoline bond insurers that are on the hook for some $16 billion in Puerto Rico debt (Ravitch resigned from the BAM board on Sept. 6). Although creditors in the monoline camp have told Caribbean Business that they will give Promesa a go, the naming of Ravitch points to potential challenges to interpretations in the law.

The Obama administration’s best efforts to convoke a board chock-full of cynicism points to the unlikelihood that the United States would set its colony free. If they wanted to help Puerto Rico create jobs and get back on its feet, they might consider independence—but all they want is for Puerto Rico to pay its debt. Good faith and credit, or bust—que triste.

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