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Think Strategically: Begin Again, Rebuild Again, Succeed Again

By on October 13, 2017

President Trump & Vice President Pence Visit Puerto Rico: What to Expect After the Visits

As a matter of record, President Trump’s visit was the first working presidential visit since 1961 or 56 years ago, when then-President Kennedy paid a visit to then-Gov. Luis Muñoz-Marín. However, President Trump is the first president to visit Puerto Rico after a disaster. Ordinarily, presidential visits like these are used not only to provide enhanced assistance to the disaster area, but also to provide an on-the-ground intelligence of the actual impact to the territory. These visits also enable the president to hear and listen from local elected officials, first responders, the armed forces and ultimately from the impacted families that have lost everything.

Do we perceive that the federal government is making a serious commitment to the relief effort? Absolutely, and more and more aid will follow.

However, some of the things the president did were not well received.

Take for example:

  • “Puerto Rico, you have thrown our budget out of whack, but that is fine, we saved lives.”
  • Downplaying the damage to Puerto Rico, saying ours wasn’t a “real catastrophe like Katrina.”
  • Starting a Twitter attack with San Juan Mayor Carmen Yulín Cruz, which by the way became a Saturday Night Live skit.

These actions make the president come across to many as insensitive, especially when thousands lost everything in the hurricane. However, what we need is the increased media coverage, action and execution a presidential visit can produce.

It has been close to three weeks since Hurricane Maria struck Puerto Rico and our island is in terrible shape. About 91% of all citizens still do not have electricity and only 63% have water service, as of this morning. We are only learning of more deaths associated to Hurricane Maria. By any measure, this is an extraordinary tragedy for our nation.

Retired Gen. Russel Honore, who handled the federal response to Hurricane Katrina in Louisiana in 2005, mentioned during a recent interview that during the Katrina response, he had 20,000 troops under his command. He further added with all the devastation and considering the terrain and size of Puerto Rico, he would have required 50,000 troops—more than twice the current deployment.

According to the Federal Emergency Management Agency (FEMA) website, there are 16,500 federal civilian and military personnel on the ground in Puerto Rico; this means we are short 3,500 using the Katrina response as a benchmark or 33,500 if we use Gen. Honore’s numbers and expert opinion.

The federal executive branch bureaucracy is large, slow and cumbersome, and does not automatically shift gears quickly when a president decides to implement changes or aid. For any government to move on any single crisis, leaders need to send clear, consistent signals on what they want to happen. We should expect increased actions from the White House.

All these actions must continue to happen in tandem to provide the most robust support possible from the executive branch that an extraordinary effort must occur for Puerto Rico. We can always count on the professionalism of FEMA, the military and all the other agencies involved, and they will do their best to succeed in their mission. However, if they are not well staffed, their task may become insurmountable.

White House Requests a $4.9 Billion Loan for Puerto Rico

Congress is considering a White House request to grant Puerto Rico access to a $4.9 billion low-interest loan from the U.S. Treasury to avert the possibility of the local government running out of money as we recover from the devastation of Hurricane Maria.

This facility would provide a crucial financial lifeline to Puerto Rico, a U.S. territory of 3.4 million people that has been operating in bankruptcy, which makes it virtually impossible for the government to access markets or borrow on its own. The loan authorization may be added to a $29 billion disaster assistance bill set to be voted on in the U.S. House this week.

Let’s compare how much the federal government paid out in Katrina and the similarities to Maria.

Twelve years ago, Hurricane Katrina was one of the strongest storms to affect the United States with hurricanes Rita and Wilma following shortly after that. Insured losses from the three storms taken together were estimated by insurance companies to total $57 billion, not including $17 billion in claims paid by the National Flood Insurance Program.

The most significant deliberate response was additional appropriations of $104 billion targeted to disaster-affected areas. The most notable share of those funds ($50 billion) was for FEMA.

Significant funding also went to the U.S. Department of Housing & Urban Development ($20 billion), the U.S. Army Corps of Engineers ($16 billion) and the U.S. Department of Defense ($9 billion).

As stated by catastrophe-modeling firm AIR Worldwide, Hurricane Maria resulted in $72 billion in losses to Puerto Rico alone and if we include uninsured properties, the losses reach close to $100 billion, if not more. We find the Katrina numbers are similar to what Puerto Rico may ultimately need to rebuild again.

We must consider that the federal government paid north of 65% of Katrina’s total of $160 billion losses. For Puerto Rico’s reconstruction, maximizing federal appropriations is crucial.

House Speaker Paul Ryan to Visit Puerto Rico Today

National Hockey League Hall of Famer Wayne Gretzky used to say that “I skate to where the hockey puck is going to be, not where it has been.” This quote is most relevant today, as the delegation Ryan is leading are with the leaders who will approve all of Puerto Rico’s emergency funding requests. Speaker Ryan will be accompanied by Rep. Cathy McMorris Rodgers (R-Wash.), who is House Republican Conference chairwoman; House Appropriations Committee Chairman Rodney Frelinghuysen (R-N.J.); the committee’s ranking Democrat, Rep. Nita M. Lowey (N.Y.); and Resident Commissioner Jenniffer González. We expect that this delegation will focus their tour in the central western part of Puerto Rico that has been devastated.

The House is poised this week to vote on a $29 billion hurricane package that would provide $12.7 billion for general disaster assistance.

The group plans to meet with local officials and emergency responders and hold a news conference.

Puerto Rico Update:  On the Path to Recovery, Checking the Facts

The catastrophic impact of Hurricane Maria to Puerto Rico has been life changing, as we enter our 20-plus days since Maria hit. Puerto Rico is slowly recovering.

Let’s review our progress so far this week, according to the local government’s website

The latest forecasts from the authorities point to having by Oct. 30 about 25% of all the population with electricity and 80% with water. Electric power is the most significant challenge we are currently facing. The U.S. Corps of Engineers granted their first contract to repair the Palo Seco energy generation plant with a contract of $35.1 million to Weston Solutions. Brig. Gen. Diana Holland, South Atlantic Division Commander, said “We look forward to continuing these efforts to bring normalcy to the people of Puerto Rico.” Repairing Puerto Rico’s fragile and severely impacted energy infrastructure is the most significant challenge the island faces in the aftermath of Maria.

So far, FEMA has granted close to $210 million in aid, including $70 million for the Puerto Rico Electric Power Authority and nearly $55 million for the Puerto Rico Aqueduct & Sewer Authority.

Final Word: Keeping the Faith in Ourselves

Our goal is to rebuild a better Puerto Rico; this is a goal we all want to achieve. Every ending is also a new beginning; we just do not know it at the time. This national crisis may produce another crisis that could affect Puerto Rico and that is the massive immigration of our citizens.

Puerto Rico may soon face a significant population shift if we compare what transpired in New Orleans after Katrina. The population of New Orleans fell from 484,674 before Katrina (April 2000) to an estimated 230,172 after Katrina (July 2006)—representing a decrease of nearly 50%. By July 2015, however, the population was back up to 386,617—about 80% of what it was in 2000. Should Puerto Rico lose 20% of its population, we could see an additional population reduction of 700,000; these are alarming numbers for the island.

The best and most beautiful things in the world cannot be seen or even heard, they must be dealt with our hearts, and Puerto Rico is in the hearts of everyone.

—Francisco Rodríguez-Castro is president & CEO of Birling Capital Advisors LLC


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