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Americas Review World of Information


September 23, 2002
Copyright © 2002 Walden Publishing Ltd and Quest Economics: Janet Matthews Information Services.
All rights reserved. 

Historical profile

1493 The island was inhabited by some 100,000 Taino Indians (an Arawak culture that also occupied most of Hispaniola and part of Cuba) at the time of the first European sighting by Columbus. A member of the expedition, Juan Ponce de Leon, was given permission to settle the island, which he named San Juan.

1898 The island was ceded to the US by Spain at the end of the Spanish- American war. The US ruled it as an unincorporated territory.

1917 The inhabitants became citizens of the US.

1948 Puerto Rico elected Luis Munoz Marin as its first governor.

1952 A new constitution designated Puerto Rico a self-governing commonwealth within the US.

1967 A plebiscite rejected the option of becoming a state of the US.

1993 The statehood option was rejected for a second time in a national referendum.

1998 In December, Puerto Ricans again narrowly rejected the option of statehood in favour of maintaining the constitutional status quo.

2000 Sila Maria Calderon Serra became the first female governor in November.

2001 In January, Mrs Calderon announced the creation of the Blue Riband Commission to review all large transactions made by the previous (Rossello) administration. In the same year, the US government agreed to cease its naval exercises in Puerto Rico by 2003.

2002 In January, in a move which angered Puerto Ricans , a US judge dismissed the lawsuit by Puerto Rico aimed to stop US naval training on the island. This allowed the US navy to continue their naval operations.

Political structure

The island is a self-governing commonwealth within the US constitutional system.

The local government consists of executive, legislative and judicial branches. Puerto Rico has 78 municipal governments.

Detailed laws governing the status and relationship of the Commonwealth of Puerto Rico with the US cover, among other aspects: military conscription, tax and trade, social security, citizenship, constitutional changes, internal autonomy.

The governor of Puerto Rico is elected by popular vote in November every four years, along with Puerto Rico 's Resident Commissioner to the US Congress, as well as all legislative and municipal officials throughout the island.

Form of state

Both the Constitution of Puerto Rico and the US Constitution are applicable - Puerto Rico is an overseas Commonwealth Territory and freely associated state of the US. Puerto Ricans have US citizenship with local self-government but not full political rights as US citizens.

The executive

The governor heads the executive branch, and is the head of state and chief commander of the state militia.

Cabinet members, consisting of department secretaries and other agency heads are appointed by the governor with the advice and consent of the Senate.

National legislature

The Asamblea Legislativa (Legislative Assembly) has two chambers. The Camara de Representantes (Chamber of Representatives) has now 51 members, elected for a four year term, 40 elected in single-seat constituencies - 11 at large by proportional representation and an additional three to allow the opposition to have one-third of the seats. The Senado (Senate) has 28 members, elected for a four-year term - 16 members elected in two-seat constituencies and 11 at large by proportional representation and one additional seat to allow the opposition to have one-third of the seats.

The legislature convenes each year from January through April, but the sessions usually extend into May or June to complete pending legislation.

Last elections: November 2000 (national elections)

Next elections: By November 2004 (national elections)

Political parties

Ruling party: Partido Popular Democratico (PPD)/Popular Democratic Party (PDP)

Main opposition party: Partido Nuevo Progresista (PNP)/New Progressive Party (NPP); Partido Independentista Puertorriqueno (PIP)/ Puerto Rican Independence Party (PRIP)

Population: 3.8 million (census, 2000). The population is estimated to reach 4.5 million by 2025.

The annual population growth rate was 0.5 per cent in 2001 and is expected to be 0.7 per cent between 2002-2015. Approximately another three million Puerto Ricans live in the US.

Population density: 432 inhabitants per square km. Urban population: 2.7 million (2001).

Ethnic make-up

There is a fusion of three main cultures: native Indian, European and African.

The Spanish conquistadores initially came to the New World without wives or family and married into the native population, producing the mestizo (Spanish and Taio) and the mulatto (Spanish and African) groups.

The Spanish settlers brought in African slaves to work in the sugar- cane fields and plantations. When migration restrictions were relaxed, more Spanish came, together with a large contingent of Corsicans and a small number of Irish.

Thousands of mainland Americans have established themselves in Puerto Rico and migrants have also come from the Dominican Republic, Canada, Europe, Asia, Cuba and South and Central America.


99 per cent of the population are Christians (85 per cent Roman Catholic). Religion has traditionally played an important role in the island's history. The religious groups have been instrumental in fostering community co-operation and providing health and educational services.

Main cities

San Juan, capital (population estimated at 500,000; metropolitan San Juan 1.6 million (2000)), Bayamon (232,000), Ponce (190,000), Carolina (189,000), Aguadilla, Arecibo, Caguas, Mayaguez and Guaynabo.

Languages spoken

Although English and Spanish are official languages, Spanish is the primary language of the vast majority of Puerto Ricans .

English is an important second language. It is taught in public and private schools from first grade through high school and also in college.

Government affairs are conducted in Spanish. English is the language of commerce.

Official language: Spanish, English



Dailies: The three main dailies widely circulated include El Vocero de Puerto Rico , Nuevo Dia Interactivo and San Juan Star (English). Other regional dailies and those published from San Juan are Apuntenlo, El Cronista, La Esquina, La Estrella de Puerto Rico , El Expresso, El Impacto, Impresiones, El Periodico, Primera Hora, Puerto Rico Herald and Vieques Times.

Weeklies: Caribbean Business is a weekly publication.

Periodicals: Que Pasa is an Official Visitor's Guide published bi- monthly in Puerto Rico .


Around 115 national commercial radio stations and nine television stations broadcast.


By international standards the economy is in a parlous state. Puerto Rico has few natural resources and is heavily dependant on federal aid from the US government. Real improvements to Puerto Rico 's economic status will only come with an upswing in the US economy. The Calderon government has brought about major improvements to Puerto Rico 's business environment. Changes included the slashing of capital gains taxes and lowering operating costs for manufacturing plants. Approximately 50 per cent of the economy is supported by special exemptions for foreign firms. There still exists a high degree of red tape and Puerto Rico has yet to adopt a private sector mentality.

Despite the recession of 2001, the manufacturing sector was experiencing growth towards the end of the year. In 2002, as part of the government's economic development plans, many enterprises were expanding to deal with changing global conditions and in an effort to create more jobs. There is little support for high technology innovation companies in Puerto Rico and many companies have been forced to transfer their operations elsewhere.

The weaknesses in Puerto Rico 's manufacturing sector are being addressed, essential if exports are to remain steady and economic growth sustained. Regional agreements such as the North American Free Trade Agreement (NAFTA) have made countries such as Mexico attractive low wage, tariff free alternatives to Puerto Rico . However, Puerto Rico is hoping to gain from the implementation of the Free Trade Area of the Americas (FTAA) in 2005.

External trade

There has been a regular trade surplus since 1985 due to increased exports of manufactured goods. The balance of payments is, however, still reliant on US federal aid flows.

Puerto Rico ranks among the 10 largest world customers for mainland US products. The US accounts for over 75 per cent of the island's imports and exports, much of which are intra-company shipments of parts from US companies and exports of finished goods in return. This flow of materials and products creates profits for private companies and jobs for workers in Puerto Rico and the US.

Other major trading partners include Japan, Dominican Republic, UK, Venezuela and a number of neighbouring Caribbean countries.

The Free Trade Area of the Americas (FTAA) is to be created in 2005. With this in view, Puerto Rico is hoping to transform itself into a 'trade bridge' between North and South America, and between the Americas and Europe.


Principal exports are medical drugs, office, computing and accounting machines, beverages, surgical, medical and dental instruments and supplies, industrial organic chemicals, communication equipment, soap, detergent and cleaning preparations, perfumes, cosmetics and other toilet preparations, agricultural chemicals, miscellaneous food preparation and kindred products, electric transmission and distribution equipment.

Main destinations: US (typically 75 per cent of total), Dominican Republic (3 per cent), Japan (1 per cent).


Principal imports: medical drugs, motor vehicles and equipment, industrial organic chemicals, petroleum refining, electronic components and accessories, surgical, medical and dental instruments and supplies, miscellaneous food preparation and kindred products, office, computing and accounting machines, crude petroleum and natural gas, miscellaneous manufacturing equipment.

Main sources: US (typically 75 per cent of total), Dominican Republic (6 per cent), Japan (4 per cent).


The agricultural sector is small-scale, contributes around 1 per cent to GDP and employs 2.3 per cent of the workforce.

Only 10 per cent of land is suitable for agriculture. An additional 25 per cent of the island is composed of uplands, partially suited for certain agricultural purposes.

Dairy and livestock farming is of increasing importance.

Farming on the island has changed considerably since the 1940s and 1950s, when traditional small-scale farming methods prevailed, and sugar-cane, coffee and tobacco were the dominant crops. Of these, only coffee has survived, but it lags behind milk and poultry production. Milk production accounts for 34 per cent of total gross farm income. Changes in consumer preferences are slowly taking place as the population ages.

Around 90 per cent of food requirements are met by imports.

Almost all of Puerto Rico 's farm output is consumed locally, although small quantities of coffee are exported to Europe and Japan. Some fruit and vegetables, mangoes, tomatoes and onions also go to Europe.

In its effort to encourage farmers to diversify and invest in modern, efficient commercial farming projects, the government offers generous incentives, including a 50 per cent tax incentive credit (Law 225).

Industry and manufacturing

The industrial sector forms the mainstay of the economy, contributing approximately 45 per cent to GDP, and employing 20 per cent of the workforce. Most of the island's manufacturing output is shipped to mainland US.

Industrialisation has been the focus of government economic policy since the late 1940s when a programme known as Operation Bootstrap was launched. In 1950, there were 82 industrial plants in Puerto Rico , but by 1965 there were around 1,000. Since then industrial development has tended to be more capital intensive and dependent upon highly skilled labour.

Production is centred on food processing, textiles, petrochemicals, rum distilling, pharmaceuticals, metal fabrication and assembly of electrical/electronic components.

Most of the assembly industries are US-owned and are heavily dependent on the US market. Much manufacturing investment had been encouraged by Section 936 of the US tax code. These benefits were revoked in 1996 leading to the loss of jobs in the sector. Section 30-A of the US tax code was under consideration for renewal in 2002. This offers incentives for US firms operating in Puerto Rico .

The US Commerce Department's Foreign Trade Zones Board has approved the conversion of all the island's industrial parks into free trade zones (FTZs). This, together with Puerto Rico 's generous incentives package and skilled workforce has in the past made the island a prime destination for companies looking to expand or relocate. However, competition from Mexico in particular has had an adverse effect. The period for approving applications for FTZ operations has been cut from 18 months to 90 days, reducing the cost of applications from US$150,000 to US$5,000.

The island's agricultural industry makes an important contribution to the economy through the food industry services of prepared food and retail sales.

In 2002, the manufacturing sector was expanding, in response to changing global conditions. Abbott Laboratories Barceloneta, a pharmaceutical company, was planning an expansion worth US$100 million. The pharmaceutical industry is crucial to Puerto Rico . Nine of the top 10 pharmaceutical drugs in the US are manufactured in Puerto Rico and all the leading US manufacturers are represented, some with major investments. There is heavy investment by US computer and electronics companies, footwear and rubber goods manufacturers. The K-Mart Corporation, the US retailing group, is well represented in Puerto Rico .


Tourism is traditionally a key source of income for the island, with over three million tourists annually. About 70 per cent of visitors come from the US. The Puerto Rico Tourism Company (PRTC) is determined to make the island a world-class destination. Between 2001-04, the PRTC is planning the addition of 5,000 hotel rooms and a new Puerto Rico Convention Centre. The Centre will be completed in 2004 and is expected to be the largest convention facility in the Caribbean. It is a crucial part of the Golden Triangle project, a tourism development project to maximise the potential of San Juan.

At least US$25 million a year has been spent on the promotion of Puerto Rico as a mix of Caribbean and Latin America, but with an American business culture.


Activity in this area is extremely small - production is centred on non- metals such as stone, sand, salt and clay.

There are small unquantified reserves of copper, nickel, cobalt, iron, chromium, lead, gold and silver.


Puerto Rico typically consumes over 160,000 barrels per day (bpd), all of which is imported. It exported around 11,000bpd to the US in 2001. The island's refining capacity is 49,000bpd, all of which is located at the Bayamon refinery owned by the Caribbean Petroleum Corporation. Sunoco was planning to close permanently its 35,000bpd Yabucoa refinery in May 2001. However, the refinery was saved from closure after it was sold to Shell Chemical, agreed in a letter of intent signed in September 2001.


Puerto Rico depends on imported energy fuels, mainly from Venezuela and the Netherlands Antilles.

The Puerto Rico Electric Power Authority (Prepa), with assets of US$2.5 billion, is the second-largest municipally-owned US utility.

Demand for power is growing at 3.5 per cent a year. Several plants are under construction and will be commissioned in 2002. Additional capacity is also being provided through the refurbishing of some Prepa power stations. This will add significantly to Prepa's capacity.

Prepa is spending US$1.9 billion during the period 2000-2003 to improve generating, transmission and distribution infrastructure.

Many companies still maintain their own generators as essential back- up.


The Puerto Rican commercial banking system comprises about 17 banks with around 300 branches. Financial deregulation and consolidation in the industry have improved operating conditions. Major US banks include Citibank, Chase Manhattan and First National Bank of Boston. Foreign banks include Royal Bank of Canada, Bank of Nova Scotia, Banco Central de Madrid, Banco Bilbao Vizcaya and Banco de Santander.

Banco Popular de Puerto Rico , Puerto Rico 's largest bank, continues to expand into US Hispanic markets.

Central bank: There is no central bank.

Such functions as fiscal agent for the Commonwealth of Puerto Rico and its public entities, and the provision of development loans to the public as well as the private sector, are undertaken by the Government Development Bank for Puerto Rico (GDB).

Time: GMT minus four hours


Puerto Rico comprises the main island of Puerto Rico , together with the small offshore islands of Vieques and Culebra and many other smaller islets, lying about 80km (50 miles) east of Hispaniola (Haiti and the Dominican Republic) in the Caribbean Sea. Roughly 160km long by 48km wide, Puerto Rico is the smallest and most westerly of the Greater Antilles. The centre of the island is composed of dead volcanoes, the highest of which, the Cordillera Central, has an elevation of 1,325 metres. To the north of the mountains lies a belt of broken limestone country, and then a fertile coastal plain. The whole island is well supplied with rivers. Only about 1 per cent of the country remains forested and is largely reserved.


Tropical with extremes of heat tempered by constant sea winds. There are occasional hurricanes. Temperatures are 28-30 degrees Celsius (C) in summer, and 21-26 degrees C in winter. Rainfall is heaviest in the second half of the year, especially June-October. Puerto Rico lies in the 'hurricane belt'.

Dress codes

Suits and ties are customary for businessmen since almost all offices are air conditioned. A jacket and tie may be required in first class restaurants. The Hispanic Caribbean guayabera, a long decorated shirt, is worn increasingly commonly.

Entry requirements


Required by all except nationals of US and Canada.


Required by all except nationals of US and Canada.

Currency advice/regulations

No restrictions on import/export of any currency to the value of US$10,000. Higher amounts must be declared.

Health (for visitors)

The standard of health care in both government and private hospitals is high, but expensive.

Hepatitis A occurrs in the northern Caribbean. There is also a risk of Rabies. Travellers should consider vaccination before travelling.

Dengue fever, transmitted by mosquitoes, is endemic in rural areas. Its initial symptoms may be similar to influenza. Bilharzia parasites may be present in rivers.

No special precautions are necessary for food and drink.

Mandatory precautions: None


There are several modern business hotels in San Juan. There are also paradores, government-owned inns, that are of a reasonable standard. Fifteen per cent tip usual.

Public holidays (2002)

Fixed dates

1 Jan (New Year's Day), 10 Jan (De Hostos' Birthday), 22 Mar (Emancipation Day), 4 Jul (US Independence Day), 18 Jul (Munoz Rivera's Birthday), 25 Jul (Constitution Day), 19 Nov (Discovery Day), 25 Dec (Christmas).

Variable dates

Epiphany (Jan), Washington-Lincoln Day (Feb), Good Friday, Memorial Day (May), Barbosa's Birthday (Jul), Labour Day (Sep), Columbus Day (Oct), Veterans' Day (Nov), Thanksgiving (Nov).

Working hours

Banking: Mon-Fri: 0830-1430. (Some banks 0830-1700; some banks open Sat.)

Business: Mon-Fri: 0800-1700.

Government: Mon-Fri: 0800-1630.


Puerto Rico 's telecommunications system is fully integrated with that of the US. The telephone system is digital with more than 900,000 lines. A high capacity undersea cable is available for instant data processing, and there are earth stations capable of dealing with high- speed computerised data of up to 1.5 megabits per second. A cellular radio service began operation in 1986.


The telecommunications infrastructure base will have to be continuously upgraded in order to accommodate the increasing demand. In 2001, there were 1.3 million wired telephone lines in Puerto Rico , 93 per cent of which are owned by Puerto Rico Telephone Company (PRTC).

Mobile phones

In 2001, there were 1.4 million mobile phone users in Puerto Rico . The main providers of mobile phone services are Centennial, Cingular, MoviStar, Suncom, Verizon and Sprint PCS.


Puerto Rico has acquired a presence in the Internet Access Point of the Americas. Two systems are emerging to replace telephone lines: digital subscriber line (DSL) and Internet through cable television. An island- wide DSL system is expected to be in operation in 2002. Two cable television companies are also preparing for the launch of Internet services in 2002.

Electricity supply: 120V AC

Social customs/useful tips

Despite links with the US and the almost universal ability in the business community to understand English, the use of Spanish by the visitor is appreciated.

Hotel and restaurant staff, and taxi drivers, may expect tips of 15 to 20 per cent. Service charges are rarely included in restaurant bills.

Puerto Rico combines the lifestyle and social customs of the modern US and the traditional Spanish-speaking Caribbean.


Poverty and unemployment have helped to contribute to a growing crime rate, particularly in San Juan. As in all cities, it is unwise to leave articles unattended in parked cars or hotel rooms.

Getting there


There are direct flights from Europe. Latin American countries are connected via Miami. There are also numerous other connections via New York. Other US cities are also well connected to Puerto Rico .

Main airport: Luis Munoz Marin (SJU), 14.5km east of San Juan; duty- free shop, bar, restaurant, bank, post office, shops, hotel reservations, car hire.

Airport tax: None


Main ports: Ponce, Mayaguez and San Juan (major Caribbean hub for maritime shipping). Cruise lines running services to San Juan are Carnival, Celebrity, Costa, Cunard, Norwegian Cruise Lines and several others.

Getting about

National transport

Air: American Eagle links San Juan, Ponce and Mayaguez.

Road: Modern highways link all main centres. The island's roads are being extended.

Buses: Regular bus (guagua) service operates in San Juan from central terminal at Plaza Colon.

Buses are scarce after 2100.

City transport

Taxis: Within San Juan: metered - small charge for taxis ordered by telephone. Also shared taxis (publicos) which have yellow number plates and run to all parts of the island. Fifteen per cent tip usual.

Car hire

It is advisable to book through the airline well in advance. Foreign licences are acceptable.


Official name: Commonwealth of Puerto Rico

Head of State: President of the US George W Bush

Head of government: Governor Sila Maria Calderon Serra (PPD) (elected Nov 2000)

Ruling party: Partido Popular Democratico (PPD)/Popular Democratic Party (PDP)

Area: 8,897 square km ( Puerto Rico comprises the main island plus two smaller islands ( Vieques and Culebra) and numerous smaller islets.)

Population: 3.8 million (census, 2000)

Capital: San Juan

Official language: Spanish, English

Currency: US dollar (US$) = 100 cents

GDP per capita: US$6,842 (2000)

GDP real growth: 3.6% (2000)

Labour force: 1.3 million (2000)

Unemployment: 11.0% (2000)

Inflation: 5.7% (2000)

Balance of trade: US$11.5 billion (2000)

Visitor numbers: 5.0 million (2000)*

* estimated figure


Puerto Rico , separate and not equal, is working to develop an identity within the 'Commonwealth' status of the United States. As one of four US territories, Puerto Ricans enjoy American military protection and subsidies without paying any federal taxes. Puerto Ricans have no representation and no vote for American leadership. The island is a self-governing commonwealth within the US constitutional system, having its own executive, legislative and judicial branches, as well as 78 municipal governments. A governor, elected every four years, heads all Island affairs and the US president is the official head of government.

For years, Puerto Ricans have been polarised on the Commonwealth issue. Extremist groups have resorted to terror in their bid to gain independence, while as many Puerto Ricans want an upgrade to statehood. The island's politics have been defined by the mood of the people on this issue. Governor Sila Maria Calderon, the first female governor, elected in 2000, has committed her government to enhancing Puerto Rico 's status as a dependent territory of the US.

The discovery of a Caribbean gem

On Christopher Columbus's second voyage to the New World, he ran into the beautiful island of Puerto Rico . The native population made the mistake of showing the explorer gold nuggets pulled from the rivers, urging him to take all he wanted. Spain liked the proposition and took the entire island, naming it Puerto Rico (Rich Port) in optimistic anticipation of what more the island had to offer.

The first gold-hungry Spanish settlers came alone and married Indian women. African slaves were imported shortly thereafter, creating the ethnic diversity that exists today on the island.

The long growing season and fertile soil made Puerto Rico agriculturally important to Spain. Sugar, ginger and coconuts each took their turn as the island's cash crop. Small farms gave way to large coffee and sugar plantations, but the country was one of the poorest in the region until US occupation.

The US took possession of the island from Spain as a war payment following the Spanish-American War in 1898. In 1917, all Puerto Ricans were granted US citizenship, though the island developed its own constitution under Commonwealth status.

Statehood vs Independence

The politics of the island are influenced as much by the almost four million people living on the island as the three million Puerto Ricans living in the US. Politics focus on the single issue of statehood. The Partido Popular Democratico (PPD)/Popular Democratic Party (PDP), the party of the governor, is for enhancing Puerto Rico 's status as a self- governing state within the US constitution. The Partido Nuevo Progresista (PNP)/New Progressive Party (NPP), in control of the Senate, Congress and the ruling party for the last eight years, is pro- statehood. The Independence Party is for complete autonomy.

The pro-independence movement has sparked much violence, including armed attacks in the Capitol in 1954 and an assassination attempt on President Truman in 1950. In the 1970's Puerto Rico was the leading source of domestic terrorism in the US. Different independence groups claimed responsibility for more than 120 domestic bombings.

A tip-top territory

By Caribbean standards, Puerto Rico 's economy is the strongest, most dynamic in the region. Industry (45 per cent of GDP) has overwhelmingly replaced agriculture as the engine of economic activity and income. Tax- break incentives since the 1950s - first known as 'Operation Bootstrap' - have brought in US firms and manufacturers. Many major companies have transferred some of their operations to the island, producing food, textiles, fuel, rum, pharmaceuticals and electronics. But the tax breaks, allowing profits earned on the island to be tax-free, were revoked in 1996 and the manufacturing sector has noticed the difference. But although growth rate was slow in Puerto Rico , the economy showed positive growth for the fourth year running in 2001. If this is to remain the case in 2002, Puerto Rico must devise incentives to keep the business sector happy. Calderon hopes to persuade the Bush Administration to recommit to some type of tax relief.

No more than a groaning ghetto?

By US standards, the economy has been troublesome. With all of the subsidies in housing, education, welfare and healthcare, per capita income was still only US$6,842 in 2000, less than half that of US poorest state, Mississippi, even though the US minimum wage laws apply. In 2000, 60 per cent of the population lived under the poverty level and unemployment was at 11 per cent.

In March 2001, the governor submitted a budget of US$20.1 billion to the US Congress, heavy on education and economic development and social welfare spending. Calderon hopes to use the money to create more jobs and rouse interest in farming in her country. In 2001, 90 per cent of the food consumed on the island was imported.

Big ambitions

The traditional forms of revenue, sugar and coffee, have given way to dairy production and other livestock products in the agricultural sector, which contributes only 1 per cent to GDP. Tourism brings in about 7 per cent of GDP. In 2001, visitors to the island dropped below the 2000 record of nearly 5 million tourists. Inflation, estimated at 9 per cent in 2001 on the island, and the world-wide tourism slump are blamed.

Puerto Rico ranks among the 10 largest world customers for mainland US products. The US accounts for over 75 per cent of the island's imports and exports, much of which are intra-company shipments of parts from US companies and exports of finished goods in return. This flow of materials and products creates profits for private companies and jobs for workers in Puerto Rico and the US

In 2005, the Free Trade Area of the Americas (FTAA) is to be created. With this in view, Puerto Rico is hoping to transform itself into a 'trade bridge' between North and South America, and between the Americas and Europe.

Some mumbling about the military

The small island of Vieques , off the shore of Puerto Rico , is both the home of 9,100 Puerto Ricans and the largest US naval training base. In 2001, co-operation between the US navy and the people was poor. For 60 years, the navy has performed military exercises with live ammunition. This is the only place in the world that the military trains so closely to a civilian population. Residents blame elevated cancer rates on depleted uranium, supposedly tested on an island just 80 square km in size but boasting some of the most beautiful beaches in the Caribbean. And there have been accidents that have further outraged Puerto Ricans . In 1999, two errant bombs killed a civilian security officer and wounded four others.

This issue consumes Puerto Ricans . Congressmen with large Puerto Rican populations, such as New York, New Jersey and Florida have applied pressure to phase out the military presence. In 1999, the Clinton administration offered to end live ammunition exercises by 2004 and toss in a US$40 million economic development package. There was talk that this deal was brokered to court the Puerto Rican vote in New York for Hillary Clinton's Senate bid. Whatever the motivation, President Bush committed to uphold Clinton's plan and leave the island before 2003, even with the war in Afghanistan. Some of the military exercises have already been moved to bases in North Carolina and Florida. Since 1999, hundreds of protesters have spent time in jail for trespassing on Navy lands in attempts to stop the exercises.

In June 2001, it seemed that Puerto Ricans had won a victory from the US after President Bush agreed to cease its military training exercises in Vieques by 2003. But in January 2002, a US Federal judge dismissed the entire lawsuit. This effectively allowed the US to continue using Vieques as a naval base.

Dangerous dudes on the rise

Puerto Rico has a crime rate twice that of New York City, having long been the entry port for a significant portion of the Colombian cocaine and heroin headed for the US. About 40 per cent of Latin American grown drugs smuggled into the US come through Puerto Rico because of the ideal conditions for drug pushers: Puerto Rico is the US Spanish speaking territory closest to Colombia with 300 miles of coastline and no US Customs checks on shipments to the mainland. While the Drug Enforcement Agency tries to crack down on drug smuggling, the exposure to the Dominican Republic gangs who run the drug and human smuggling trades in Puerto Rico , has increased all kinds of crime. The murder rate has topped the US charts for years and police corruption is still a problem.


At the beginning of 2002, statehood for Puerto Rico looked unlikely. The US Congress would have to give up at least six seats to Puerto Rico and spend an additional US$3 billion towards benefits not currently received. Independence is equally unlikely: Puerto Rico would have to develop a new government and military and do without millions of dollars in US subsidies. For now, things look to remain the same and the Vieques issue looks likely to dominate US- Puerto Rican relations.

Risk assessment

Economic - Satisfactory

Political - Good

Regional stability - Good

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