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Este informe no está disponible en español. CARIBBEAN BUSINESS Divided We Stand Partisan battles threaten Puerto Rico’s future economic growth as a pro-commonwealth governor and pro-statehood Legislature claim the mandate from voters to impose their agendas. Will consensus be achieved? By ELISABETH ROMAN January 13, 2005 Whose mandate is it anyway? Puerto Rico embarks on a historic political journey with a pro-commonwealth governor and pro-statehood Legislature and resident commissioner. Can consensus be achieved to help re-ignite the island’s economy or will it be four more years of political battles? The ballots have been counted and recounted, federal and local courts have ruled on the issue of mixed votes, and the final results remain unchanged from the night of Nov. 2, when Puerto Rico’s electorate voted in a bipartisan government. Island voters elected Popular Democratic Party (PDP) candidate Aníbal Acevedo Vilá governor by the slimmest of margins, New Progressive Party (NPP) candidate Luis Fortuño won the resident commissioner seat in the U.S. Congress, and the Puerto Rico Legislature–both Senate, and House of Representatives–was placed firmly in the hands of an NPP majority. Plus, 43 of Puerto Rico’s 78 municipalities–45%–voted in NPP mayors. When the State Elections Commission completed its tally, Acevedo Vilá obtained 963,303 votes (48.40%), the victor by a mere 3,566 votes (less than two-tenths of 1%, out of nearly 2 million votes), over his opponent, former Gov. Pedro J. Rosselló, who received 959,737 votes (48.22%). Puerto Rican Independence Party (PIP) candidate Rubén Berríos, received only 2.74% of the votes. Acevedo Vilá won thanks to mixed voting, which allowed Puerto Rico voters to cast a straight-party vote, yet still vote for candidates from the other parties. While a total of 1,990,372 voters went to the polls in November, almost 450,000 registered voters abstained, for a voter participation rate in the 2004 election of 81.57%, the lowest of any local general election to date. Despite losing the election, the NPP obtained 926,619 (49.3%) straight-party line votes, while the PDP had 910,657 votes (48.4%), an indication that the pro-statehood party continues to grow compared to the PDP. The results also showed the pro-commonwealth party couldn’t win the general election with only straight-party line votes, which is why it was forced to appeal to pro-independence and independent voters. The PIP received 43,399 straight-party votes (2.3%), about half the number of votes the party typically obtains in general elections. New governor seeks alliance In his inaugural address, Gov. Acevedo Vilá called for an alliance between the political parties, while stating he would confront any opposition without fear. The new governor requested political and ideological differences be left behind and make way for what he called "Puerto Rico’s agenda," without stating what it was nor what party agenda would prevail. "Let’s forget the colors that divide us, and remember only the colors of the flag that unites us," Acevedo Vilá said in an inaugural message that was full of political rhetoric and, at times, sounded more like a campaign-stop speech. Calling for an "alliance for a first-class Puerto Rico"–a line he repeated throughout his inaugural speech–Puerto Rico’s eighth elected governor invited NPP leaders to set aside their "partisan fratricide." "What I reject, and what everyone in Puerto Rico should repudiate, is blind fanaticism, partisan sabotage, and irresponsible obstructionism without any regard to the impact it can have on the people of Puerto Rico," Acevedo Vilá stated during the event, as PDP supporters distributed white flags bearing the words peace and harmony. "We will confront–without fear–the merchants of divisionism, those who feed on discord and blind fanaticism, because they derive their power and money from it. "A shared government doesn’t have to be inefficient…[T]he key is respect, tolerance, and good faith in favor of the people," the new governor added. "Let’s take on the issue of status with intelligence and energy, so we can embark in Washington, [D.C.], and Puerto Rico on the road to a final resolution. I will work so a divided country is a thing of the past, where ideas are appreciated because of their value, and not because of who came up with them, where the merit and ability of our people are rewarded." NPP Resident Commissioner Fortuño and several NPP mayors attended the inaugural event, however, neither NPP nominees for Senate chairman nor his counterpart for House speaker, Kenneth McClintock, and José Aponte, respectively, were present. Also, the White House didn’t to send a representative to the governor’s swearing-in ceremony, as has been the custom in previous years. Challenges for the new administration Acevedo Vilá’s call for alliance, peace, and harmony may be easier said than done. From the start, the new administration will not only have to work with an NPP-dominated Legislature, it also will have to juggle a series of economic challenges and obstacles created or left unresolved by the Calderón administration. Add to that the fact the governor is in debt with the independence party voters who helped him get elected. Acevedo Vilá inherits from the Calderón administration a public debt that reached $40 billion by the end of 2004. He also takes over a bloated, and often inefficient government bureaucracy, with more than 327,000 employees; high levels of government spending, and a budget deficit estimated to range from $550 million to $900 million, and Puerto Rico’s negative credit ratings from Standard & Poor’s. In its final report, Acevedo Vilá’s Transition Committee recognized the biggest problem the new administration will have to urgently address is the central government’s massive size, and its exorbitant spending levels. Transition Committee Chairwoman Marisa Pont–a private-sector public relations executive who last week was officially nominated secretary of State–stressed the need to reduce the government’s presence in all areas, a recommendation well-received by many in the private sector. A president of a major international bank on the island pointed out "you can’t make a move in Puerto Rico without stumbling into a government wall." Pont added, "The basic problem that has characterized the government’s budgetary policy for years is that the government spends more that it receives. This produces a deficit, according to the Treasury Department (Hacienda), that will reach at least $550 million this fiscal year." Acevedo Vilá’s Transition Committee’s comments are similar to those released by former Gov. Sila Calderón’s 2000 transition team. When Calderón took office, her transition team, headed by Ramón Cantero Frau and Enrique Vilá de Corral, anticipated the high government debt, at the time $23.8 billion, and the $206 million deficit were the government’s major problems, and both needed to be addressed immediately. The then outgoing Rosselló administration was severely criticized for increasing the public debt and budget deficit. The Calderon administration had promised to balance the budget and improve Puerto Rico’s credit rating, a feat that remained unaccomplished when she left office Jan. 2, leaving a higher debt and higher deficit than four years earlier. It will require skillful politicking on the part of Acevedo Vilá to bring government spending under control and get his major projects approved. Reducing government spending can have a negative impact on both Puerto Rico’s economy and jobs, given the island’s dependence on public spending. However, Acevedo Vilá publicly has stated government spending can be reduced without having to lay off public employees, which would only add to Puerto Rico’s already double-digit unemployment rate. Among the major economic challenges the governor must face are the issue of Puerto Rico’s political status, tax reform, structurally high unemployment, an estimated $8.1 billion unfounded pension liability; as well as the lack of industrial incentives, globalization, competition for U.S. markets from other economies, the high cost of oil, and infrastructure tribulations (utilities and waste management), besides the widening economic gap between Puerto Rico and the poorest U.S. state, Mississippi. Improving public education, reducing crime, and the illegal drug trade are also among the serious problems Acevedo Vilá must immediately handle and will require bipartisan support. The battle lines are drawn While it’s true the governor, Legislature, and resident commissioner may share many ideas regarding how to strengthen Puerto Rico’s finances and re-ignite the economy, their political platforms differ in major areas regarding economic development, with both sides claiming a mandate from the electorate to carry out their own agendas. The NPP majority in the Legislature claims Puerto Rico’s electorate chose their political, social, and economic policies. "The situation is clear. We have a mandate," said House Speaker José Aponte. "The NPP won the elections, most of the municipalities were won by the NPP, as were the majority of the legislative seats, and this means the people voted in favor of the NPP political platform," he said, pointing out the PDP won the elections because it pleaded for votes from other political parties. However, Aponte said this doesn’t mean a good legislative bill presented by the PDP minority immediately would be rejected. "There is room for negotiation, and the people of Puerto Rico are demanding an efficient government and services, and that is where we are heading," he said. Aponte already has begun making changes to reduce, consolidate, and reform the number of House committees. He has created the Budget & Assignments Committee, to be chaired by Rep. Ángel Pérez Otero, which will relieve the Treasury Committee of the responsibility of approving the commonwealth’s budget. The speaker of the House also has included among his priorities to improve the legislative body’s image and services, providing specialized training sessions for lawmakers and putting into action legislation aimed at growing Puerto Rico’s economy. Aponte plans to eliminate the excise taxes on alcohol, beer, tobacco, and sport utility vehicles (SUVs) imposed by the Calderón administration. The Puerto Rico Senate is following in the House’s footsteps. Just hours after it was sworn in, the new Senate leadership filed projects to eliminate the excise taxes on SUVs, increase police officers’ salaries, repeal the new Penal Code, and eliminate pork barrel funds, known in Spanish as the barril de tocino and barrilito. One economic issue that has the PDP and NPP on opposing sides is the redevelopment of the Roosevelt Roads Naval Station in Ceiba. Former Gov. Calderón established a Local Redevelopment Authority for Roosevelt Roads, which consisted of several former government agency heads, among them the secretary of Economic Development & Commerce, then resident commissioner in Washington, D.C. Acevedo Vilá, the secretary of Natural & Environmental Resources, the president of the Planning Board, the Ports Authority executive director, and the Tourism Co. executive director, and the mayor of Ceiba. Most of the authority’s members, if not all, inevitably will change when new agency heads take office in the Acevedo Vilá administration. The changes may impact Roosevelt Roads’ redevelopment timetables and projects slated during the Calderón administration. The NPP is in favor of converting the former naval base into a transshipment port, while the PDP plans mixed-use and tourism-related projects. House Speaker Aponte has expressed his support for legislation that will redevelop Roosevelt Roads into a transshipment port and transforming the Port of San Juan into a cruise and tourism activities site. The PDP has stated it will support the continued development of a transshipment port in Ponce, despite the fact that studies conducted by Ocean Shipping Consultants, contracted by the Calderón administration, reveal the Port of the Americas, now called the Rafael "Churumba" Cordero Port, in Ponce, won’t have sufficient capacity to handle the transshipment cargo required to successfully compete in the region. The report indicates that, in the long run, Ponce can only be a regional port. The battle over the future development of Roosevelt Roads has raised concerns the property may remain underdeveloped and underutilized, as occurred with the former Ramey Air Force Base in Aguadilla, the Culebra federal lands, Sabana Seca base, and other federal military sites ceded to the government of Puerto Rico. Other areas that may generate major controversies between the executive and legislative branches are the future of Project 2025, formerly a government effort transferred to a private entity called Corporación Todos Por Puerto Rico, and the billion-dollar Special Communities project, initiated by the Calderón administration. However, one major infrastructure development that both the PDP and NPP support is the creation of an islandwide railway transportation system. Sen. Roberto Arango (NPP-S.J.) presented a resolution last week to investigate the $1 billion fund assigned to the Special Communities Project, which had been managed by former Gov. Calderón’s husband, Ramón Cantero Frau. Also, Reps. Rolando Crespo (NPP-at large), Albita Rivera (NPP-S.J.), and Jennifer González (NPP-at large) announced they too would investigate the funds’ disbursements. Arango stated in a press conference that it was necessary to find out what has been done with the $1 billion "perpetual" fund, the projects that are pending, and how much of the fund is still available. The Senate resolution calls for a full investigation of how and why projects were awarded funds, their current construction stages, the cost estimates presented for the projects vs. real costs, and how the Special Communities Office distributed the funds. Puerto Rico Senate President Kenneth McClintock said the people of Puerto Rico shouldn’t worry about an all-out power struggle between the executive and legislative branches. At CARIBBEAN BUSINESS’ closing time, an opening in the Senate following the resignation of Sen. Víctor D. Loubriel (NPP-Arecibo), was to be filled by former Gov. Rosselló. McClintock, a four-term senator, made it clear he would address the challenges of a bipartisan government while working to develop the NPP’s platform. He agrees with House Speaker Aponte that voters in the November election chose the NPP political, social, and economic platform. "The initial months will be difficult but hopefully we [the majority and minority party senators] will come to terms, respecting each others’ political power while remaining committed to our constituents and working things out," McClintock said. McClintock supports a general sales tax, which also is backed by many PDP leaders, including the mayors of Ponce and Caguas, Francisco Zayas Seijo, and William Miranda Marín, respectively. However, the NPP Senate leader doubts a pro-statehood legislative majority and the pro-commonwealth governor will be able to reach any agreement on the issue of Puerto Rico’s political status, adding that the NPP would lobby both Washington, D.C., and Congress for statehood. McClintock’s plans for the Senate include reducing the number of committees by 45%, from 30 to 16; reviewing Senate employee salaries, and creating a fair compensation system; as well as providing senators with ongoing training through workshops and seminars conducted by experts and professionals. The future of federal relations For the first time in Puerto Rico’s history, the resident commissioner in Congress isn’t from the same political party as the governor. While Gov. Acevedo Vilá and Resident Commissioner Fortuño publicly have expressed a desire to work together, the two are expected to have differences on many issues, particularly on the subject of the island’s status and its relationship with the federal government. Acevedo Vilá, who is pro-commonwealth, doesn’t accept that Puerto Rico is a colony, although he publicly has stated the island’s relationship with the federal government must undergo changes that will allow the island more autonomy. He maintains Puerto Rico needs the ability, not as a republic, but as a commonwealth, to develop commercial trade agreements within the Caribbean. The governor also has stated federal laws applied to Puerto Rico must be democratically endorsed by local government, and not unilaterally imposed on the island. "We must find a mechanism that won’t allow a generic consent of federal laws in Puerto Rico, but will provide some form of democratic validation regarding their local applicability," Acevedo Vilá said. This is clearly an issue with which the resident commissioner may not agree. Fortuño, who has vowed to work on the issues of political status and the economy as soon as possible, is committed to working with Acevedo Vilá, unless it conflicts with his beliefs and principles. As resident commissioner, Fortuño will work toward obtaining more funding for Puerto Rico, a difficult feat at a time when a Republican-majority Congress is looking to reduce the federal government’s deficit and relations with Washington, D.C. are at a low point. Puerto Rico received a net $14 billion in federal funds in fiscal year 2004. Fortuño said he will seek to improve Puerto Rico’s relationship with the White House, and Congress, in addition to addressing the issue of federal tax incentives, Social Security, Medicare, and education, while establishing a positive working arrangement with the Puerto Rico Federal Affairs Administration (PRFAA) in Washington, D.C. Twice-defeated PDP candidate for mayor of San Juan Eduardo Bhatia, recently was appointed by Acevedo Vilá, as executive director of PRFAA, which is headquartered in Washington, D.C., and also has offices in such cities as New York and Chicago. The resident commissioner foresees many battles, which he conceded would occur regardless of who is governor. "We have to rock the boat, something people normally don’t want to do. I will be on their side to the extent we get individuals and professionals willing to rock the boat, regardless of their political party," Fortuño said, adding he already has been approached, and has begun working with mayors from both political parties. "I can work with people from either political party, but that isn’t really the issue. It’s about getting results and not simply spending more money. That’s not my philosophy. I believe in spending the money where it should be spent," stated Puerto Rico’s first Republican resident commissioner. Fortuño also plans to closely monitor the development of the former Roosevelt Roads Naval Station. "I intend to get directly involved in this issue to make sure what happened to Ramey [Air force Base in Aguadilla] doesn’t happen in Roosevelt Roads," he said. "I believe about half the acreage in Roosevelt Roads should be preserved, and intend to work with the federal government to make sure it is properly preserved to the extent that some of it can be enjoyed by visitors. We can’t make the mistake of having great wetlands and other ecosystems lost, and I intend to take care of that," Fortuño said. Regarding the plan for Roosevelt Roads that has to be presented to the federal government by the incoming administration, the resident commissioner said he would work with the Acevedo Vilá administration and the naval base’s surrounding municipalities to the greatest extent possible. "Whatever happens in Roosevelt Roads has to make economic sense, and must have the private-sector element as its core because it can’t be just a government project," Fortuño pointed out. He added that Roosevelt Roads’ development can have some PDP and NPP recommendations, "but the people who live in the area must be heard and I’m not sure they are being heard. I will see to it that this is corrected," Fortuño promised. Is consensus possible? Even though all–a PDP governor, the NPP majority in the Legislature, and NPP resident commissioner–have publicly stated their commitment to working together for the benefit of the people of Puerto Rico, it remains to be seen. In 1980, when he executive and legislative branches were controlled by opposing parties partisan battles led to budgetary setbacks, the rejecting of cabinet, and Supreme Court nominees; and the demise of infrastructure and economic development projects. Business leaders interviewed by CARIBBEAN BUSINESS remain positive a bipartisan government can come to a consensus that will drive forward an economic action plan for the island. "It can work for the good of Puerto Rico, and it better work," stated a Puerto Rico businessman. "It has worked in the past in the U.S., and locally, too." Others contacted expressed concerns the PDP administration will do nothing to improve the government’s permit-issuing process. "We hope it won’t be as bad as it was during the past four years," said one retailer, who is hopeful the NPP-led Legislature would pressure local regulatory agencies to improve the permit-issuing process, so business plans can flow more efficiently. The president of a major financial institution in Puerto Rico says he isn’t worried about the bipartisan government. "This could be a good thing," he noted. "We can be polarized, and nothing gets done or, hopefully, we can achieve a level of political maturity and communication on the island that will allow us to work together. We are optimistic the latter will occur," said the locally well-known banker, adding, "If these leaders want to be re-elected, they will have to demonstrate a certain level of maturity and the ability to get away from politicking to create valid policies and enact decisions for the benefit of all concerned." Proviana Colón Díaz, CB staff reporter, contributed to this article. This Caribbean Business article appears courtesy of Casiano Communications. or
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