Last year the governor of Puerto Rico announced that it didn’t have the money to repay $72 billion in debt on bonds owed in the main to US financiers. On 2 May, it defaulted on $400 million due. Another $2 billion is due on 1 June.

In the past year, the Puerto Rican government has sought to renegotiate its debt with creditors, but they have stuck firm to their demand to be paid in full. The US government meanwhile sat on its hands, as did Congress. Now the White House has finally taken notice, and is urging Congress to do something.

This debt crisis has been gathering steam for the past 10 years. The response of the neoliberal Puerto Rican government has been not only to borrow more and more, but to impose austerity on its 3.5 million people. In 2009, then governor Luis Fortuno laid off 30,000 government workers despite a massive general strike. In 2013, he privatised Luis Munoz Marin Airport, the Teodoro Moscoso Bridge and toll highways. He gutted the pension system.

Austerity has continued under his successors.

The island has been in depression for the past 10 years, its gross national product declining 13 percent. Government debt to pay for basic services has increased. While being poorer than any of the 50 US states, Puerto Ricans now pay the highest electricity rates and the highest sales tax. All the proceeds of the sales tax go to pay the bondholders.

The cuts to health care have created a health crisis. To add imperialist insult to injury, last June the federal agency in charge of Medicare and Medicaid announced that it was slashing its allotment to Puerto Rico by 11 percent. The cuts will take $300 million from the island’s health care system.

Since Puerto Rico is poorer than the poorest of the 50 states, many of its citizens rely on Medicaid, the miserly program for the poor.

Even the White House warns that the recent outbreak of the Zika virus that has plagued much of Latin America and now is on the island cannot be treated because of the collapse of the health system.

Very high unemployment in the last 20-30 years, increased by the depression of the last 10, has resulted in a workforce participation rate of only 45 percent.

These and many other indicators add up to a major humanitarian as well as debt crisis. The result has been a mass migration to the US mainland. Puerto Ricans are US citizens, and can enter without the restrictions and deportations other Latin Americans (with the exception of Cubans) are subjected to. One thousand a week are fleeing the island.

Congress and the US courts have the final say over all Puerto Rican laws. Because of a law passed by Congress in the 1980s, Puerto Rico doesn’t even have recourse to declaring bankruptcy, an option available to the states and US cities.

Even if it did, US courts would decide how much the creditors would get and how much the Puerto Rican government would be allowed to restore some essential services, and in what order all this would be paid.

The White House has ruled out any bailout. It proposes a vague kind of federally supervised bankruptcy to renegotiate with the creditors when and how much they would be paid, while the Puerto Rican government would agree to further cuts and austerity. Actually, this is what the neoliberal government has been proposing to its creditors, which they have rejected.

The Republican-controlled Congress says that even this proposal amounts to a “bailout”, and instead sides with the creditors.

Under the thumb

Neither proposal would solve the immediate budget crisis, or its underlying cause: the status of Puerto Rico as a colony. Puerto Rico was a Spanish colony for a few centuries before it was wrested away by the US in the Spanish-American war in the last years of the 19th century.

Since then, it has been an outright colony of the US, although the US seeks to hide this fact by calling it a “territory”. But US Supreme Court decisions made early after the US captured the island make clear its status.

For example, one decision ruled that only those parts of the US constitution apply to Puerto Rico that Congress chooses to enforce. This ruling also stated that Puerto Rico belonged to but was not part of the United States. All major decisions involving the island are dependent on acts of Congress, as interpreted by US courts.

Just this past year, for example, when Puerto Rico passed its own bankruptcy law, it was overturned by a US court. When its government tried to raise taxes on Walmart stores on the island to help alleviate the crisis, a New York court overruled that action.

US capitalists have exploited Puerto Rico ever since it became a US colony, sucking untold hundreds of billions out of the country. At first this was done through sugar plantations. The forms of this exploitation have since changed.

In the face of the rise of the colonial revolution worldwide, and the rise of anti-colonial nationalism in Puerto Rico, some concessions were made after the Second World War. A limited form of self-government was enacted.

A new phase of imperialist exploitation opened when US corporations were encouraged to invest by turning the island into a huge tax haven. Mass migration to the mainland of unskilled labour was encouraged, to alleviate poverty somewhat, while still retaining a reservoir of cheap labour.

In the 1960s, faced with the victory of the Cuban Revolution and the rise of revolutionary movements in Latin America, these policies were intensified to turn the island into a “showcase” of the benefits of US imperialism. This was coupled with severe repression of any pro-independence activities and the building of a string of US military bases.

For a time, these policies did improve conditions in Puerto Rico. Annual growth rates jumped to 6 percent in the 1950s, but gradually dropped to 4 percent in the 1970s. The economy was stagnant in the 1980s. By then, Puerto Rico had become the most profitable place in the world for US corporations. But soon the cheap labour model started to find greener pastures in China, Bangladesh, Mexico, Vietnam etc.

In 1996, Congress began to phase out the tax breaks; they were gone by 2006. Big US corporations pulled out, and as the economy collapsed, vulture financial capitalism moved in with loans to keep the country afloat. More loans were necessary to repay earlier loans, in a vicious circle leading to the present crisis.

With the end of the Cold War, the US doesn’t need Puerto Rico to be a showcase any more. And it has other sources of cheap labour. The White House and Congress have no long term solutions, although Puerto Rico becoming the USA’s Greece is embarrassing politically.

What should socialists in the US mainland advocate, in conjunction with our fellow citizens on the island? We can appeal to progressives and even to all who retain an elementary sense of fairness and humanity to demand the full cancellation of the debt, which is obviously unpayable.

The US government, which paid billions to bail out the banks in the Great Recession, should be pressed to rebuild the island’s economy, partial reparation for the exploitation of Puerto Rico for more than a century.

While it will take time and a new mass movement to change Puerto Rico’s status as a colony, we should encourage every move that strengthens increased sovereignty for the island. Independence should be our goal.

We should educate about the true history of colonial oppression of Puerto Rico.

Finally, we should work to build a socialist movement in the US and on the island. That will help in fighting for the above immediate demands and others, and point the way toward eliminating imperialist exploitation by cutting out its root, capitalism, and replacing it with a socialist commonwealth.