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Puerto Rico: At election time, hurricane recovery takes priority
The Miami Herald / November 9, 1998

By Larry Luxner

Despite the recent devastation wrought by Hurricane Georges, Puerto Rico will apparently go ahead with a plebiscite next month to determine the island's future political status.

On Dec. 13, residents of this densely populated U.S. commonwealth of 3.8 million will get to choose whether they want to retain their current status, declare independence or become the 51st state; it also allows a 10-year transition period if either statehood or independence should win a majority.

Opinion polls indicate that 45% of the island's eligible voters are likely to support continued commonwealth status, while 36% will vote for statehood and 4% will support independence; the remaining 15% of voters are said to be undecided.

Puerto Rico Gov. Pedro Rossello and his allies aren't wasting any time mobilizing voters to support statehood -- an option they say is Puerto Rico's only long-term economic solution.

"It is our view that the uncertainty regarding our current territorial status has been and continues to be a serious impediment to Puerto Rico's ability to reach its full economic growth potential," says Marcos Rodriguez-Ema, president of the island's Government Development Bank. A number of economists have concluded, he said, that "a change in status would, over a short period of time, vastly increase incomes and other key elements of economic development in Puerto Rico."

But what's really on the minds of Puerto Ricans is cleaning up after the devastation wrought in late September by Hurricane Georges. The storm killed 11 people, destroyed 28,000 homes, damaged 62,400 others and caused losses of up to $5 billion on the island.

It's not yet clear how much of the rehabilitation effort will be carried out by local Puerto Rican firms, how much by private U.S. mainland construction companies and how much by the U.S. Army Corps of Engineers.

All the experts can do at this point is compare Georges to Hurricane Hugo, which struck the island in 1989, causing an estimated $1.2 billion in damages. All 78 of Puerto Rico's municipalities were declared "disaster zones," compared with 57 municipalities when Hugo hit. And as powerful as it was, Hugo's winds ripped apart only 5,000 units -- while the much more dangerous Georges destroyed nearly 30,000 homes and seriously damaged another 60,000.

The loss to manufacturing -- the mainstay of Puerto Rico's economy -- was estimated by the Rossello administration at $212 million a day ($1 billion in the first week). Two weeks after the storm, a survey of 938 factories showed that only 301 -- less than a third -- were operating.

Meanwhile, the Puerto Rico Electric Power Authority reported $100 million in damages, mostly to ininsured transmission and distribution lines, while agricultural crops have been decimated. Georges caused nearly $400 million in damages to the farm sector. Puerto Rico lost 55% of its coffee crop and 90% of its plantain and banana crops. To-Ricos, the island's major poultry processor in the town of Aibonito, sustained $50 million in damages from toppled infrastructure, sales losses and the loss of 90% of its chickens.

In the tourism sector, 3,544 hotel rooms were damaged, while 8,365 continued in service. The Hyatt Regency Cerromar Beach Hotel in Dorado suffered substantial damage and was closed, while the Palmas del Mar resort in Humacao was also hard hit.

"The net impact of Hurricane Georges on Puerto Rico's GDP will depend on the magnitude of compensation from FEMA (Federal Emergency Management Administration) and other federal agencies, and on insurance compensation," said an Oct. 5 report issued by Santander Investment. "The experience with Hugo indicates a high probability that the net impact in Puerto Rico will be positive. This is because the multiplier effect of reconstruction expenses will generate a level of income higher than the initial compensation from insurance and FEMA. By the same token, this can produce a net positive impact related to rehabilitation efforts, which will extend throughout 1999 and 2000."

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