As Puerto Rico’s government marches on toward a critical financial deadline regarding its $72 billion “unpayable” debt, there are hopes for a jubilee of the kind espoused in Scripture.
Church leaders, like Archbishop Roberto González Nieves of San Juan, have offered diverse opinions about the effects of the crisis. His recent column in Time magazine was tinged with pastoral, political and solidarity overtones.
“The Bible itself provides us with a concept that seems perfect for the situation our island now finds itself in: the jubilee,” he wrote, citing a passage from Leviticus that speaks of debt forgiveness. “The jubilee is meant to prevent the poor from becoming too poor and serves as an economic clean slate that mirrors the forgiveness and new beginning proclaimed in the Gospels.”
Eric LeCompte, executive director of the Washington-based Jubilee USA Network was in Puerto Rico in mid-August working with church, political, business and organized labor leaders to develop a solution to the financial crisis which “invests in people” and ends deep spending cuts in education, health care and employment.
It is an idea that the Catholic Church in Puerto Rico welcomes. “I applaud the Jubilee USA Network, which is fighting for debt forgiveness for Puerto Rico and working to bring about a global jubilee—debt relief in times of crisis,” wrote Archbishop González, “but also long-term structures that prevent the next crisis.”
The archbishop cited “mismanagement, bad luck and [Puerto Rico’s] unique colonial status as neither a sovereign country nor a U.S. state” as the root causes of the financial woes.
Most of Puerto Rico’s debt is owed to “vulture funds,” companies that assume risks presented by unstable debtors by buying the debts for pennies on the dollar. These secondary financial markets commonly operate privately and are usually based in fiscally safe-haven countries and push the debtor entities to repay what they owe in full.
Aug. 30 was the deadline Puerto Rico faced to present a fiscal readjustment plan for the next five years based on recommendations from the International Monetary Fund. The date is a step ahead of several crucial end-of-September economic complications: empty coffers for public medical insurance plans and water and electric power utilities, plus federal funding cuts to Medicare and other programs.
Gov. Alejandro García Padilla appeared on local television on June 28 saying:
“The debt cannot be paid. There is no other option. I would love to have an easier option. It is not politics, it is math.”
After the sudden scramble his message caused in financial sectors, his first proposal was to consider the possibility of structuring a local bankruptcy system. Although federal courts have expressly denied the so-called “creole” bankruptcy’s constitutionality, Puerto Rico continues to pursue that avenue.
There is a growing push in Washington to pass legislation supporting it, but Congress has rejected the idea, opting to wait for the recovery plan before it even considers allowing bankruptcy.
Several prominent economists, however, have argued that accepting bankruptcy will not solve the “real causes” of the crisis, such as the island’s political status, innate sociological idiosyncrasies and outdated economic procedures. Many align with Pope Francis’ tying the world economic crisis to “unfettered capitalism” and defining it as “the failure of global capitalism to create fairness, equity and dignified livelihoods for the poor.”
Nevertheless, Archbishop Gonzá-lez supports the bankruptcy plan. “Although not a perfect solution, bankruptcy protection would provide a fairer, transparent system for resolving Puerto Rico’s debt burden and creating the fiscal space we need to grow our economy and serve our people,” he said.