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Home Economy Perfect storms? From Katrina to Maria, some would profit from catastrophe

Perfect storms? From Katrina to Maria, some would profit from catastrophe

“I hate to tell you Puerto Rico, but you’ve thrown our budget a little out of whack.” –Donald Trump in Puerto Rico, Tuesday, Oct. 3rd

| News Analysis
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In their response to hurricanes Irma and Harvey, FEMA and other U.S. federal agencies appeared to have learned some of the lessons of Katrina. This earlier hurricane, which had been downgraded to a tropical storm by the time it hit New Orleans in late August of 2005, was a disaster made many times worse by the negligence of the Army Corps of Engineers in terms of the city’s levees and the incompetent response of state and federal authorities.

There was also a seeming indifference, among both officials and the media, to those without the resources to evacuate, many of whom were labeled looters when they sought food and water in the aftermath of the deluge. Unfortunately, this was something that was still a major aspect of the early coverage of these more recent storms.

What happened as New Orleans began to recover is something that should be considered in terms of Puerto Rico after Hurricane Maria, the third “once in 500 year storm” to batter the United States or its territories in a one month period. This is especially true for those who were already sympathetic to the suffering of many of these 3.5 million American citizens due to the territory’s political status and under-reported economic crisis.

Privatizing New Orleans

After Katrina, there was a big demographic change to New Orleans, with over 100,000 of the city’s poorest citizens, mainly African Americans, leaving permanently. The disaster was also used as an excuse to privatize many public services, including a continuing, problematic and widespread experiment in charter schools.

Despite this, New Orleans’ ‘rebirth’ has been hailed as a great success story by many free market cheerleaders in the years since.

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“Residents overthrew a corrupt government. A new mayor slashed the city budget, forced unpaid furloughs, cut positions, detonated labor contracts. New Orleans’ City Hall got leaner and more efficient,” wrote Kristen McQuery in a tone deaf opinion piece in The Chicago Tribune

10 years later, in which she seemed to yearn for a similar disaster to afflict her city.

One immediate target was New Orleans’ admittedly under performing public school system.where, “some 7500 unionized teachers and other school employees were put on unpaid leave, and eventually dismissed.” As multiple sources have reported, many of these teachers were African American and they were replaced by a rotating cast of younger, usually white, teachers, willing to work longer hours for less pay.

But it wasn’t just education that was in the sights of Washington’s free market (and religious) fundamentalists, whose big business handout wish list was quickly put together by a group of lawmakers led by the current Vice President of the United States, Mike Pence, and called a response to the crisis.

As Naomi Klein, a trailblazer who coined the term ‘disaster capitalism’ to describe the ideology of those who see opportunity in catastrophe, explained in The Guardian in July, “At the time Katrina hit New Orleans, Pence was chairman of the powerful and highly ideological Republican Study Committee (RSC), a caucus of conservative lawmakers. On 13 September 2005 – just 15 days after the levees were breached and with parts of New Orleans still under water – the RSC convened a fateful meeting at the offices of the Heritage Foundation in Washington DC.”

Although it isn’t well remembered, the RSC, with the help of Heritage’s hired guns, began the work of creating a list of “Pro-Free-Market Ideas for Responding to Hurricane Katrina” at this meeting. Surprisingly, much of what was proposed seemed to be more about helping oil and other monied interests than helping ordinary citizens recover from their losses.

The proposed responses to the humanitarian crisis included allowing more offshore oil drilling, making it easier to build new oil refineries on the Gulf Coast and allowing drilling in the Arctic National Wildlife Refuge.

Puerto Rico’s democracy deficit

New Orleans was a city in an American state with all the legal protections that this entails but it didn’t stop the crisis caused by Katrina from being used as an excuse to further gut public housing and sell school privatization as “choice”.

For its part, Puerto Rico has none of these protections, making it an even easier target for the free market ideologues who famously descended on Chile during the man made disaster of Augusto Pinochet’s fascist rule, creating an ‘economic miracle’ that enriched a few based on fear, murder and torture in the process.

Before Hurricane Maria, a Category 4 storm when it made landfall on September 20th, Puerto Rico was already heavily indebted, with most economic decisions handed to an oversight board, created by the PROMESA (Puerto Rico Oversight, Management, and Economic Stability Act) legislation passed by the U.S. Congress in June, 2016. The unelected seven member board has just one Puerto Rican member.

Somewhat oddly, although it could never alleviate the loss of life, Maria may actually benefit the territory economically over the long term if it leads to debt cancellation as some, including at one point, President Trump, have suggested.

However, powerful financial firms like Aurelius Capital Management are likely to fight tooth and nail to prevent this from happening. There are already multiple cases moving forward in U.S. courts contesting the officially named Financial Oversight and Management Board for Puerto Rico’s decisions, including one taken a little more than a month before the storm hit, allowing the island to declare bankruptcy and restructure its more than $70 billion in debt.

The board has received some praise for standing up to bond holders like Aurelius, sometimes referred to as ‘vulture capitalists’, who scooped up the island’s debt at cut rate prices and have long argued that they should be paid in full before the island is able to provide essential services to its people.

Still, this is a story with more than two sides, as reporter Kate Aronoff wrote recently on The Intercept, “for many residents the body (created by PROMESA) represents just the most blatant iteration yet of the United State’s colonial relationship to the island, which has officially been a U.S. commonwealth since 1952.”

Puerto Rican authorities over decades also need to take responsibility for the island’s dire economic straits as many used creative (some might say corrupt) means to get around constitutional limitations on debt and often used the money in irresponsible ways.

The oversight board, recognizing the ongoing crisis created by Hurricane Maria, has petitioned the U.S. government for low interest loans to rebuild the territory to the tune of just a little less than $100 billion. This will more than double Puerto Rico’s debt. The disaster itself is also almost sure to increase the exodus of working age people, something that was already eroding the island’s tax base in a vicious circle of ever increasing austerity.

One target of privatization efforts for some time has been Puerto Rico’s electric utility, Prepa. As if to prove the complaints being made by many Puerto Ricans about the unaccountable PROMESA board, four of its seven members wrote an article that appeared on the web-site of the right wing American Enterprise Institute (AEI) at the end of June, saying, “By shifting from a government entity to a well-regulated private utility, Prepa can modernize its power supply, depoliticize its management, reform pensions, and renegotiate labor and other contracts to operate more efficiently.”

When translated into normal English, these last two mean less money for retired people and workers.

There will be no choice but to rebuild the territory’s already decaying electrical grid, allowing authorities to introduce some renewable sources that could lower costs for ordinary citizens over the longer term. This seems unlikely with a Republican controlled Congress and Executive and some suspect that the island will soon become a big purchaser of fracked natural gas from the mainland of the United States.

More and more in recent months, politicians have made “thoughts and prayers” the go to response when citizens are traumatized by natural and man made disasters. In the case of Puerto Ricans, who far too many Americans don’t view as fellow citizens, this is not enough and they need to be treated with the same concern as people in Houston or other storm ravaged areas in the continental United States. At the same time, the left will need to be vigilant to ensure that the relief and rebuilding effort doesn’t become a profit making exercise, including for some NGOs, as it did to some extent in New Orleans and to a much greater degree later in Haiti.

Considering the strange antics of President Trump, who often seems in full control of the news cycle, and with another storm making its way to the U.S. mainland taking focus away from the island, we can only hope that Puerto Rico won’t be forgotten as the long process of rebuilding begins.




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