[Editorial] From Ukraine With Love
With the buzz of Team Puerto Rico’s performance in the World Baseball Classic and Rafael Campos’ top-10 showing at the Puerto Rico Open now subsiding, se acabó la fiesta in these Mambo Tropics. Nothing like an ice-cold bath—the naming of former Ukraine Finance Minister Natalie Jaresko to become the executive director of the Puerto Rico Oversight, Management & Economic Stability Act (Promesa) board—to bring us back to reality. Jaresko’s appointment is the sort of rude awakening that signals stern measures will be coming down the pike.
A daughter of Ukrainian immigrants who fled to Chicago from Stalin’s Russia, Jaresko is a Harvard-educated policy wonk well-versed in economics and fluent in Ukrainian. She earned her stripes running point on Russian affairs when that nation imploded, an experience that bolstered her stride when she accepted the post of Finance Minister for Ukraine. She left a private equity fund that she founded to join the Ukrainian government, where she served from 2014 until 2016.
No sooner had she been named, that the naysayers were out in force—they criticized her $625,000 annual salary across at least four years. Apparently, she was the more palatable candidate from a short list that surfaced in the months after Bill Cooper balked. Jaresko is a consensus choice AC (After Cooper), who surfaced last month after a second candidate had to be scratched for demanding a $1 million annual salary, a chauffer and relocation expenses that included tuition payments for his children. No can do.
Enter Jaresko. Her experience as the Ukranian Finance Minister reveals a no-nonsense approach to fiscal austerity that promises to put the cabritos into the corral. A person who takes on an economy burdened by triple-digit hyperinflation, a 21-point decline in industrial production and a 69% drop in the value of the Ukrainian hryvnia against the U.S. dollar under the rule of kleptocrats will not bat an eye in her junta recommendations.
As this newspaper was going to press, the board sent a letter to Gov. Ricardo Rosselló stating: “The Government and the Board must now cooperate to make sure that the measures required to comply with the Fiscal Plan are implemented, and that actions that would be inconsistent with the Fiscal Plan are avoided. To that end, and as required by Section 204(a) of the Puerto Rico Oversight, Management & Economic Stability Act, the Board asks that you submit to the Board, not later than seven business days after enactment, every law and joint resolution approved by the Puerto Rico Legislative Assembly and signed by you.”
The iron maiden’s arrival and the letter’s delivery come in a cadence that is not coincidental. One source close to the selection process said that it should come as no surprise because Jaresko is prone to calling things by their name. When is debt not debt?—when it is paid.
The source explained that Jaresko has already sunk her teeth into current debt restructuring with opinions, and will likely hold the government’s hand to the fire if it deviates from the certified actions. At the same time, she has been clear on the importance of economic development.
During an interview with former White House senior adviser David Axelrod on the University of Chicago blogpost The Axe, Jaresko shared her views on the importance of economic development. “If you create enough jobs in small and midsize businesses, you ensure democracy,” she told Axelrod back in January. How ironic that the head of this most antidemocratic junta will mandate painful measures that could strangle job creation for the foreseeable future.
We must all work to create those jobs–and bring democracy back. Puerto Rico could be exploring the use of private activity bonds to get critical projects moving. The debate being waged over the use of Title III v. Title VI is depriving the patient of oxygen—it behooves us to push the projects under Title V for the revitalization of infrastructure for desperately needed jobs.