P.O. Box 9065950

San Juan

Puerto Rico 00906-5950

Phone (787) 748-2442

Fax (787) 748-2442


April 3, 1997


The Hon. George Miller

U.S. House of Representatives

Washington, D.C. 20515


Re: H.R. 856 Hearings April 21,1997, Mayaguez, Puerto Rico




Dear Congressman Miller:


Due to the time limitations on oral testimony during this week’s hearings, our panel seemed to have been unable to offer you a more ample reply to your question regarding the bill’s provision of a procedure authorizing that plebiscites be held every four years, should the proposed process in 1998 not produce a majority vote for any of the status options.


In direct answer to your question, it is our opinion that the provision be retained, and plebiscites held every four years until a permanent option is approved by a majority for the following reasons:


Historically, colonial relationships have terminated as a result of two main causes; one the result of wars of independence or transfer of sovereignty from one metropolitan power to another as a result of an act of war (as is the case of Puerto Rico); the other, and more prevalent during the course of this Century, as a result of economic exhaustion on the part of the metropolitan power.


In the case of Puerto Rico we are fortunate that the first of the two stated causes is not within the realm of possibility, leaving economic exhaustion on the part of the United States as a likely alternative that could produce a unilateral solution on the part of the Congress without consultation with the people of Puerto Rico.


Thus, it is our opinion that if the procedure authorizing prospective consultation is eliminated from H.R. 856, the people of Puerto Rico would loose this minimal guarantee against such possibility which as you know remains well within the powers of the

Congress under the "Territory Clause" of the U.S. Constitution.

This raises the question as to why the possibility of unilateral disposition of the territory, for economic, not political reasons, will become increasingly plausible in the immediate future. The answer, although somewhat complex, becomes self-evident:


1. The National Fiscal Situation

Traditionally, relationships between a metropolitan power and its colonial possessions were designed to bring, amongst other benefits, economic advantages to the metropolitan power or at least to some of its private economic interests. Such was the case of Puerto Rico from inception, starting with the U.S. sugar interests and ending with the phase-out of Section 936 of the Internal Revenue Code.


This is the first time since the relationship began when not only the federal government but the private economic U.S. interests are not deriving a net benefit from the relationship. In essence, if we look at the balance sheet, at the present time Puerto Rico represents a net economic loss to the national resources at a time of shrinking federal spending, and a bi-partisan commitment to balancing the national budget.


Notably, others have made the case of the importance of Puerto Rico’s commercial trade with the U.S., an argument that is dissolved considering the federal transfers that are required in order to stimulate consumer purchasing power.


Thus, as I mentioned during my oral testimony, it is our opinion that the tax-paying constituents and many of the members of the Congress will become increasingly aware of this situation and will seek to resolve it, if not by an act of mutual self-determination jointly with the people of Puerto Rico, by unilaterally disposing of the territory for the economic well-being of the nation.


2. Puerto Rico’s Political-Economic Model

During oversight hearings on the economy of Puerto Rico held by the House Interior and Insular Affairs Committee on May 22, 1986, and as part of testimony that included extensive economic data, I expressed a concern that our economic model was exhausted but that due to the reason that it had been designed as a hybrid for the express purpose of serving an equally hybrid political model, it would be impossible to change one without changing the other.


Then, and in the years since, that concern has gained wide recognition and if anything its solution become more urgent. One must accept, as is the case with the policies of the current local administration, that the current economic model can be made more efficient and less wasteful, but one must also recognize that it continues to fail as a tool that can

provide for economic growth and diversity.

Suffice it to state that if judged by any parameters, ranging from employment and labor participation rates to guidelines on poverty, Puerto Rico’s economy from 1952 to the present time has not only not reduced the gap with the national U.S. economy, but instead has increased it!


3. Re-establishment of Cuba as a Competitive Factor

In addition to the two previous considerations, the third important factor in the equation is posed by the increasing possibility that in the foreseeable future Cuba will re-enter as a competitive factor while Puerto Rico’s economy is restrained by its current economic model.


Other than by statistical data, few people recognize the transformation and influx brought Puerto Rico’s economy from 1960 and as a direct result of the Cuban situation which established an immediate need to create a regional substitute for such industries as tourism, light manufacture, construction, etc.


We are certain that if chronology determines a change in Cuba, prior to a change in Puerto Rico, this will result in such economic dislocation under the current condition, that it will also inevitably result in the displacement of large and productive segments of our population towards economically more stable areas in the nation such as Florida, the Northeast corridor, and possibly the Western United States. This in turn, would undoubtedly impose an even greater economic burden upon the federal government and also on the economy of these individual states and regions.


All three reasons, individually or combined, allow us to forecast that under the current economic and fiscal condition, in the future the dependency on the transfer of federal funds to Puerto Rico will be incremental and without a corresponding offset by our exclusion from the payment of federal taxes. As a result we conclude that if the present legislative process, or its intended plebiscite in 1998, were not to reach a definite permanent conclusion, the solution to the situation may come about through processes in which the people of Puerto Rico would be left with no recourse or viable alternative.


Mr. Miller, I also wish to take advantage of this opportunity to bring to your kind attention yet another concern on the stated possibility that the Congress may, within its unquestionable authority, offer yet another "hybrid" status option for consideration. While it would be at least presumptuous or improper on mine or anybody’s part, to assume considerations that are clearly the Congress’ prerogative, as fellow Americans many of us feel duty-bound to at least raise the issue of whether or not the inclusion of such a hybrid would be in the best national interest. Of particular concern would be the inclusion of a hybrid option that would not meet international parameters for de-colonization, leaving our nation vulnerable to criticism at a time when we are leading the World in the quest for self-determination and the elimination of all vestiges of colonialism.

In addition, and yet another major concern, is in the fact that during the past fifty years a great many of the good-willed people of Puerto Rico have been led to believe that in offering such "hybrid" options the Congress can act beyond U.S. constitutional parameters and powers, and in essence provide acceptable status definitions that allow equal attributes of "self -sovereignty" and "permanent union".


Thus, it becomes our sincere recommendation and our hope, not for considerations of political rhetoric or expediency but for the value of assuring the most accurate judgmental considerations, that if in the wisdom of its decisions the Congress determines that even if the inclusion of such a "hybrid" were to be in the national interest, that it also makes it clear and beyond doubt to the people of Puerto Rico that it is doing so within the U.S. constitutional framework.


I conclude by reiterating our desire to offer our assistance in providing any other information you may need, or in answering any questions you may have. I am referring a copy of this letter to the Committee with the request that it be considered as an addendum to my testimony and included as part of the record of the hearings.


Finally, I also wish to reiterate our personal and collective gratitude to you and other Committee members for your support and commitment to this process, and for your stated desire that it reaches a fruitful and productive conclusion.



Very Truly Yours,


A J Guzman

Arturo J. Guzman,






cc: House Natural Resources Committee


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