Puerto Rico Debt Restructuring Returns Island Territory to US Colony

WASHINGTON (Sputnik) — Garcia Padilla called the legislation to restructure more than $70 billion in debts owed by Puerto Rico a mixed bag. On one hand, it protects the island from aggressive debt-collection efforts that could force a shutdown of programs such as hospitals, ambulance services and schools, he said.

However, the legislation also reverses the territorial status granted to Puerto Rico in 1953, which ended the island’s status as a US colony by establishing an elected government, Garcia Padilla explained.

"The bad side of Promisa messes with that," the governor said, using the name of an appointed board that will effectively take over the island’s taxing, spending and budgeting from elected officials. "So the United States needs re-enter the dialogue with the people of Puerto Rico so that we can achieve again the autonomy level that allows us not be a colony."

Legislation signed by President Barack Obama on July 1 sets up the Promisa board charged with restructuring debts of about $72 billion and resolving an additional $40 billion shortfall in unfunded pension liabilities.