Puerto Rico on brink of ‘humanitarian crisis,’ economists weigh in
President Trump said Tuesday that he plans to visit Puerto Rico next week, as the U.S. territory desperately struggles to hang on after not one, but two massive hurricanes hit the island in less than a month, leaving millions of residents without power, shelter and clean drinking water.
“There is food coming [but] it’s a little bit slow. The logistic process of delivery is [a] little bit harder because we lost telecom and energy,” Puerto Rico Governor Ricardo Rossello told FOX Business’ Melissa Francis on Monday. “The problem right now is the air traffic control has been very limited, to give you a sense, it is about 20% of what normal air traffic control [is] to Puerto Rico because some towers are limited. Notwithstanding, it is critical we get those resources.”
Making a dire situation even worse, one of its dams is on the verge of collapse. Rossello said the island was on the brink of a “humanitarian crisis.”
Trump tweeted about the devastation late Monday saying,“Texas & Florida are doing great but Puerto Rico, which was already suffering from broken infrastructure & massive debt, is in deep trouble. It's old electrical grid, which was in terrible shape, was devastated. Much of the Island was destroyed, with billions of dollars owed to Wall Street and the banks which, sadly, must be dealt with. Food, water and medical are top priorities - and doing well. #FEMA.”
Texas & Florida are doing great but Puerto Rico, which was already suffering from broken infrastructure & massive debt, is in deep trouble..— Donald J. Trump (@realDonaldTrump) September 26, 2017
...It's old electrical grid, which was in terrible shape, was devastated. Much of the Island was destroyed, with billions of dollars....— Donald J. Trump (@realDonaldTrump) September 26, 2017
...owed to Wall Street and the banks which, sadly, must be dealt with. Food, water and medical are top priorities - and doing well. #FEMA— Donald J. Trump (@realDonaldTrump) September 26, 2017
Norman Bristol Colon, special assistant to Pennsylvania’s Secretary of State, whose family is currently living in Puerto Rico and who was born and raised there, tells FOX Business that the island desperately needs funds from the U.S. to get residents back on their feet.
“The island needs an injection of dollars to restart its economic engine and for these funds to go directly to buy what’s left of goods after the devastation of Hurricane Maria. The Port Authority needs to open its ports and airports for relief to arrive and assistance in the clean up efforts. The assistance of medical professionals is crucial to ensure that in the days to come, there is not a break of any epidemics related to flooding. The infrastructure for electric, water and telephone service is priority to begin the process of normalizing government operations so services can be assessed and delivered to the thousands of individuals affected by this natural catastrophe. We need Congress and the federal government to support what is anticipated to be a long, difficult journey for the island and its citizens,” Colon says.
Before the latest storm hit, the country was already suffering a 10-year recession and owed billions of dollars to investors. Earlier this year, the country filed for a form of bankruptcy after years of borrowing money to cover budget deficits. The former governor declared its $70 billion in public debt load unpayable, which has prompted an independent investigation into its financial disclosures.
Puerto Rico Econ Woes— Fox News Research (@FoxNewsResearch) September 21, 2017
•Storm Costs: ~$30B+
•May: record bankruptcy
•Pension liability: $49B
•Poverty: 45.5% pic.twitter.com/5h92Bv6kev
Early estimates say overall damage from Hurricanes Irma and Maria will cost about $30 billion, Enki Research reports. But some economists say that while the country was already on a downward spiral before the latest catastrophes, the current devastation may help to loosen creditors grip on the country to help them get back to normalcy.
“You can’t squeeze water out a turnip,” Nobel-Prize winning economist and professor at Columbia University Joseph Eugene Stiglitz tells FOX Business. “The bottom line is [Puerto Rico] is going to need a massive amount of help. Without relief from bondholders or from the federal government, they are going to continue on their downward spiral which means for the creditors that they would be better giving them more debt relief because in the future, it will have to come. They are not going to be able to repay anything back.”
Jose Antonio Ocampo, professor of Professional Practice in International and Public Affairs at Columbia University who served as Under-Secretary-General for Economic and Social Affairs at the United Nations, agrees, saying he believes the hurricanes have now “increased the proportion of debt that should be written-off.”
“All will depend on how much the U.S. supports [Puerto Rico] in the reconstruction of the major damages incurred by the island,” he tells FOX Business.
Stiglitz adds that not only is “a very large ‘haircut’ needed among creditors, it is imperative that the federal government give them relief and mentor it with what they are giving other parts of the country that have been also hit, like Houston.
“If they don’t get those additional funds from the government, it just means the education system—which is already being strangled—will prevent the country’s ability to return to normalcy. Anything that can be cut will be cut now,” he says.
Arthur Gonzalez, former chief judge of the U.S. Bankruptcy Court for the Southern District of New York and NYU’s Senior Fellow, tells FOX Business that it’s simply “too early to tell what impact [the hurricanes] may have on [Puerto Rico’s] debt crisis.” “The focus now is on the recovery efforts to ensure the health and safety of the people of Puerto Rico,” he says.