The Industry

Who Is Puerto Rico’s Recovery For?

Naomi Klein discusses her new book—and the politicians, “disaster capitalists,” and cryptocurrency obsessives who want to remake the U.S. territory.

Left, People look on at a section of a road that collapsed and continues to erode days after Hurricane Maria swept through the island on October 7, 2017 in Barranquitas, Puerto Rico. Right, Naomi Klein.
Photo illustration by Lisa Larson-Walker. Photos by Joe Raedle/Getty Images, Cole Bennetts/Getty Images.

The newest book by Naomi Klein is The Battle for Paradise, about two groups hoping to rebuild Puerto Rico after Hurricane Maria in very different ways—the entrepreneurs, financiers, and politicians pushing for a more privatized, less regulated future for the territory, and the activists, farmers, lawyers, and others hoping to build an electrical, water, and even political system on the island that is less dependent on entities from the mainland. Klein is the author of, among other books, No Logo and The Shock Doctrine, the latter of which detailed many of the trends of postcrisis recoveries—austerity, privatization—that are playing out in Puerto Rico today. In an interview for Slate’s technology podcast If Then, I spoke with Klein about the recovery, the activists she met on the ground, and why digital-coin enthusiasts want to turn Puerto Rico into “crypto island.” Our discussion has been edited for concision and clarity.

April Glaser: You’ve written about this phenomena that you call disaster capitalism, which you wrote about in your 2007 book The Shock Doctrine, wherein after a crisis, private contractors move in and suck up funding for rebuilding efforts, which often results in shoddy work and infrastructure that more often than not doesn’t serve the needs of the people who live in these places. It also encourages a kind of austerity and privatization that justifies cutting billions from government budgets. That appears to be happening in Puerto Rico. Could you tell us what brought you to Puerto Rico after Maria, and what groups you met and worked with when you arrived?

Naomi Klein: Sure. I published this book, The Shock Doctrine: The Rise Of Disaster Capitalism, more than a decade ago. It came out in 2007, and almost instantly after the book came out, I started to hear from Puerto Ricans, particularly Puerto Rican academics at University of Puerto Rico, that I should’ve had a chapter in The Shock Doctrine about Puerto Rico. The Shock Doctrine is a book about how disasters have been systematically harnessed to push through policies that benefit a small corporate elite in country after country and using the state of emergency and panic and the fact that people are just focused on staying alive after a huge natural disaster or after a war or in the midst of a devastating economic crisis, and so people are in this state of shock, this state of distraction. It’s easier to push through policies that people oppose, that people understand are not going to be in their interest. Hurricane Katrina is a classic example of this, because the city was under evacuation when the New Orleans school system was completely remade and reinvented, and it became the most privatized school system in the United States with the highest number of charter [schools] per capita.

In Puerto Rico, this was happening already using the economic crisis that got so much worse in 2006, to push through a radical austerity agenda. That’s really what brought me to Puerto Rico, because after Maria, I started hearing from Puerto Ricans again, “It’s getting even worse.” Puerto Rico is quite a unique example of what I call the shock doctrine, because you have a shock-after-shock doctrine. This mechanism was already very much in play using Puerto Rico’s debt crisis before Maria hit, and this had been going on for well over a decade of exploiting the debt crisis to push a plan to privatize the island’s infrastructure, to radically downsize its public education system and privatize it, huge layoffs in the public sector, huge deregulation, big giveaways to corporations and the ultrarich to encourage them to relocate to Puerto Rico. Then Maria hits, and the whole thing goes into hyperdrive. The fact is, Maria hadn’t even made landfall before you started to see speculation in the business press that this was going to be the opportunity to privatize the electricity system.

When you came to Puerto Rico, you actually met with activists that were trying to build a different future. Can you tell us a little bit about some of the groups that you met there?

Well, I met a great many people, including coalitions, economists, and lawyers who have been working very hard to question the legality and legitimacy of Puerto Rico’s debt, because all of this is premised on the idea that Puerto Rico spent beyond its means, got itself in this mess, and has to swallow the bitter medicine. If you look closely at how Puerto Rico’s debt was accumulated and how it increased exponentially, a lot of it may very well be illegal and violate Puerto Rico’s constitution because it invested so heavily in these really dodgy, questionable mechanisms. I met with those lawyers. There are a few lawsuits that are in play questioning what in Puerto Rico is called la junta, which is the fiscal control board that was created by Congress, with the so-called PROMESA law, questioning this idea that you can have an island that supposedly has the right to elect its representatives at least locally that can’t vote for the U.S. president but they can elect their governor, they can elect their mayors. Ever since the PROMESA law was passed by Congress, there has been this body. It’s like an emergency management board, like you have in Detroit and Flint, Michigan, which can override the local government. There’s an argument that this is illegal, that it violates the Constitution of the United States and the right of people to elect their representatives and to be governed that way. I met with some of those people. I also met with groups that have been fighting for a long time for a different kind of food system in Puerto Rico and pointing out the absurdity that you have this tremendously fertile island that imports around 90 percent of its food from the United States.

Puerto Rico is a colony of the United States, and the whole economy was built to be dependent on the United States, to be a captive market for U.S. food manufacturers. That exacerbated the humanitarian toll of Hurricane Maria, because all of the food comes through this one port, and that port was in absolute chaos, so people didn’t have food. There are lots of other examples of this, including the fact that there were groups that had been making a similar argument about Puerto Rico’s dependence on imported fossil fuels. Around 95 percent of Puerto Rico’s electricity comes from fossil fuels that are imported. Here you have this island that is bathed in sunshine, has very high winds, perfect conditions for wind and solar as well as wave power, and here they are importing fossil fuels from the U.S. once again because they’re a captive market. People saw how dangerous that was when Maria once again knocks out the port and people don’t have electricity, and you also have this very centralized electricity generation system, which we all know has yet to recover, and now we are in this year’s hurricane season.

There’s a wonderful farming activist in Puerto Rico named Dalma Cartagena, who I quote in the book, and recently she said, “Maria hit us very hard, but it also strengthened our convictions.” I think that really sums up a lot of what I saw in Puerto Rico, where there was a very strong analysis before the storm hit of what was wrong with Puerto Rico’s economy and this system of extreme dependence on imports and this extreme centralization at the ports, at the fossil fuel generation facilities, the electrical power facilities. They had plans to replace it with a much more decentralized Puerto Rican owned-and-controlled system, whether with renewable energy or with agro-ecological food systems where the food is grown in Puerto Rico and is providing food for the local communities surrounding the farms. Those plans and those small-scale experiments were in place, then Maria hits and basically they’re going, “We told you so. We tried to warn you and now we really need to have the change that we have been fighting for before the storm.” But they are in this pitched battle with the folks I call the disaster capitalists, who have their own vision for the island.

You describe how shortly after the storm, those who did use solar were back up and running, whereas so much of the island was dark for so long and people of course had medical needs, needed oxygen machines, and things like that.

We know the cost of this now, because we have this Harvard study that was published in the New England Journal of Medicine recently, which puts the number of dead after Hurricane Maria at close to 5,000, and that was as of the end of December, so six months ago. And they noted in the study that the number was still high when they stopped collecting their data. What they say in the study is that the largest cause of death was due to lack of medical care, and that is intimately tied to the loss of electricity, the collapse of the electricity system, and the collapse of the water system, which is tied to the fact that they didn’t have power for the water facilities.

There is also, as you mentioned, another group of people coming to Puerto Rico or are already there—cryptocurrency enthusiasts who want to actually buy a piece of land on the island and create a new kind of cryptocolony. Some are calling it a Crypto Island. Others are calling it Sol. They’re attracted to the island’s tax near tax-haven status. As you note in your book, U.S. citizens who move to Puerto Rico can avoid paying federal income tax on any income earned in Puerto Rico, zero capital gains tax. The list goes on. The governor of Puerto Rico has been supportive, making the case at a conference in February that Puerto Rico should be seen as a blank canvas for entrepreneurs who want to capitalize on the area’s relative lack of regulation. How likely do you think this bitcoin or cryptocurrency oasis is likely to come to fruition in your view? Does it seem like they have a chance at building their libertarian paradise?

It’s really hard to know. Anybody who’s spent time with the cryptocurrency crowd knows there is a really, really high level of fast-talking bullshit. I really can’t say whether they are going to do what they’re talking about, which is build their own city that is entirely built on blockchain technology and that you would need a passport and things like this. We’re hearing a lot, and it may simply be a philanthro-cover for the fact that people are really just moving there because they can get a mansion on the cheap in a gated resort community and because of these extraordinarily lax tax laws, they would be able potentially to convert their crypto cash into hard U.S. currency and not pay capital gains. That’s the real reason why they’re there. Whether they would build their libertarian fantasy land, I have no idea. I have no way of knowing what is fantasy talk and what is real at this point, but they are looking for large pieces of land.

They do seem to have support from the government that wants to see entrepreneurs come in like them and build businesses, even blockchain businesses.

The extraordinary thing about this is that Puerto Rico had a policy in the ’40s and ’50s and ’60s to attract U.S. companies to the island to build factories, and these were tax incentives that were tied to the creation of thousands and thousands of jobs. What’s extraordinary about these laws is that they’re not required to create any jobs at all. They don’t need to do anything but hire a gardener to benefit from these tax incentives.

We had folks like Elon Musk come in after the storm saying he was going to ship Tesla batteries in. Google said they’re going to fly their Project Loon balloons to provide internet over the island, and then just last week, I reported on the FCC announcing they’re going to give $900 million to companies to build internet infrastructure throughout Puerto Rico. I found out that that was a very inflated number and most of that money is coming from a fund from the FCC that’s also designated specifically to provide subsidized phone service and internet service for people who are 135 percent below the poverty line, so they’re draining a fund for people who are well below the poverty line to get subsidized phone service to rebuild Puerto Rico. It seems like a lot of that infrastructure they’re putting in is actually not going to be necessarily affordable in any way for people who live on the island. What are your thoughts on these private companies or even folks like Elon Musk or Google coming in and saying that they’re going to swoop in with some of their solutions?

Well, look, Tesla provided solar panels and batteries for a children’s hospital. Who is going to argue with that? That’s hugely important, but I also think there’s been a lot of talk and not enough follow-up on them almost using Puerto Rico as an advertising platform for some of these companies.

In terms of the follow-through that people so desperately need, there has not been nearly enough. What I found in my reporting on the island is that people want power, not just electricity. They also want political power. They want to have a say in how their electricity is generated. They’re worried about this green energy becoming a cover for privatization.

How can people who are in the U.S. on the mainland who are watching this happen, how can they help? What can they do?

Well, this book that I just put out is 100 percent a fundraiser for the most exciting political phenomenon happening in Puerto Rico in my opinion, which is the emergence of a coalition called JunteGente. It’s a coalition of 60 organizations that are putting forward what they’re calling a people’s platform for how the island should be rebuilt in the interest of Puerto Ricans, not in the interest of foreign investors. They’ve been having meetings all over the archipelago to get real input from communities that were very, very hard hit by Maria and saying, “What do you want? What kind of electricity do you want? What do you want your food system to look like? How do we prepare for the next shock?” This is a coalition that includes economists, lawyers, grassroots farmers, people who were involved in these extraordinary mutual support networks that got food to communities when FEMA failed. They’ve come together in this remarkable way to put forward their vision, and I would really encourage people to support JunteGente, to go to juntegente.org, make a donation. Any proceeds from my book will go directly to them. The whole advance goes to them. I’m not taking a cent, and I really believe that because the economic balance is so completely out of whack in terms of the people who have their fantasy libertarian idea of what the island should be have such deep pockets in order to make their dream a reality that it’s really important to fund the grassroots in this moment so that they can put another vision for Puerto Rico forward.