Puerto Rico’s economy in limbo as governor rejects debt deal

Puerto Rico’s government announced in 2015 that it was unable to pay its more than $70 billion public debt load and filed for the largest US municipal bankruptcy in May 2017. (AFP)
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Updated 10 February 2020

Puerto Rico’s economy in limbo as governor rejects debt deal

  • Gov. Wanda Vázquez says settlement places too heavy a burden on the island’s retirees and noting that it still requires legislative approval
  • Puerto Rico filed for the largest US municipal bankruptcy in May 2017

SAN JUAN, Puerto Rico: Puerto Rico’s fragile economy is facing an uncertain future after the island’s governor rejected a settlement announced late Sunday with bondholders that would reduce the US territory’s public debt by 70 percent.
The settlement is the biggest one to date since the island’s government announced in 2015 that it was unable to pay its more than $70 billion public debt load and filed for the largest US municipal bankruptcy in May 2017.
It’s unclear whether the deal will become final, with Gov. Wanda Vázquez saying it places too heavy a burden on the island’s retirees and noting that it still requires legislative approval. The deal also has to be approved by a federal judge overseeing a bankruptcy-like process for Puerto Rico.
“If the bondholders receive better treatment in the bankruptcy process, so should retirees,” she said. “This is an issue of basic justice.”
She said bondholders received new legal protections in amendments made to a September 2019 adjustment plan, but that retirees did not receive anything additional.
It’s the latest clash between Vázquez and a federal control board overseeing Puerto Rico’s finances, which reached the deal with several groups of bondholders to reduce the island’s bond debt from some $35 billion to roughly $11 billion.
Natalie Jaresko, the board’s executive director, said the island’s bankruptcy needs to be resolved.
“The new agreement is another step forward for Puerto Rico, one that gets the island much closer to ending bankruptcy and to the beginning of a true economic recovery,” she said in a statement.
Board members did not respond to the governor’s rejection of the settlement, and a board spokesman did not return a call for comment.
The announcement comes as Puerto Rico struggles to recover from Hurricane Maria, which hit as a Category 4 storm in 2017, and a series of strong earthquakes that have damaged or destroyed hundreds of buildings along the island’s southern region.
Over the weekend, Puerto Rico government officials including Vázquez accused the board of delaying approval to release funds to help those affected by the quakes, accusations that the board denied in a letter earlier on Sunday before it announced the debt deal.
“Allegations that the...board has over 50 pending requests including for food, water and portable toilets are untrue,” it said. “None of the ten requests received were for portable toilets or water. All requests were processed within hours of receipt.”
Many have criticized Vázquez’s administration over its response to the 6.4 earthquake that killed one person on Jan. 7 as heavy aftershocks keep further damaging buildings.
Meanwhile, Puerto Rico economist José Caraballo told The Associated Press that he worries the deal could threaten basic government services and leave the island without sufficient funds to respond to the pending needs from the hurricane and earthquakes.
“The risk of a second bankruptcy and a prolonged recession is bigger than before,” he said.
Puerto Rico is mired in a 13-year recession, and roughly half a million people have left the island in the past decade, fleeing from the economic crisis and the aftermath of the hurricane and earthquakes.


Tanker off UAE sought by US over Iran sanctions ‘hijacked’

Updated 16 July 2020

Tanker off UAE sought by US over Iran sanctions ‘hijacked’

  • The circumstances of the hijack are still unclear and the boat has been tracked to Iranian waters

DUBAI: An oil tanker sought by the US over allegedly circumventing sanctions on Iran was hijacked on July 5 off the coast of the UAE, a seafarers organization said Wednesday.

Satellite photos showed the vessel in Iranian waters on Tuesday and two of its sailors remained in the Iranian capital.

It wasn’t immediately clear what happened aboard the Dominica-flagged MT Gulf Sky, though its reported hijacking comes after months of tensions between Iran and the US

David Hammond, the CEO of the United Kingdom-based group Human Rights at Sea, said he took a witness statement from the captain of the MT Gulf Sky, confirming the ship had been hijacked.

Hammond said that 26 of the Indian sailors on board had made it back to India, while two remained in Tehran, without elaborating.

“We are delighted to hear that the crew are safe and well, which has been our fundamental concern from the outset,” Hammond told The Associated Press.

Hammond said that he had no other details about the vessel.

TankerTrackers.com, a website tracking the oil trade at sea, said it saw the vessel in satellite photos on Tuesday in Iranian waters off Hormuz Island. 

Hormuz Island, near the port city of Bandar Abbas, is some 190 kilometers (120 miles) north of Khorfakkan, a city on the eastern coast of the United Arab Emirates where the vessel had been for months.

The Emirati government, the US Embassy in Abu Dhabi and the US Navy’s Bahrain-based 5th Fleet did not respond to requests for comment. Iranian state media did not immediately report on the vessel and Iran’s mission to the United Nations did not immediately respond to a request for comment.

In May, the US Justice Department filed criminal charges against two Iranians, accusing them of trying to launder some $12 million to purchase the tanker, at that time named the MT Nautica, through a series of front companies. 

The vessel then took on Iranian oil from Kharg Island to sell abroad, the US government said.

Court documents allege the scheme involved the Quds Force of Iran’s paramilitary Revolutionary Guard, which is its elite expeditionary unit, as well as Iran’s national oil and tanker companies. The two men charged, one of whom also has an Iraqi passport, remain at large.

“Because a US bank froze the funds related to the sale of the vessel, the seller never received payment,” the Justice Department said. “As a result, the seller instituted a civil action in the UAE to recover the vessel.”

That civil action was believed to be still pending, raising questions of how the tanker sailed away from the Emirates after being seized by authorities there.

Data from the MT Gulf Sky’s Automatic Identification System tracker shows it had been turned off around 4:30 a.m. on July 5, according to ship-tracking website MarineTraffic.com. Ships are supposed to keep their AIS trackers on, but Iranian vessels routinely turn theirs off to mask their movements.

Meanwhile, the 28 Indian sailors on board the vessel found themselves stuck on board without pay for months, according to the International Labor Organization. It filed a report saying the vessel and its sailors had been abandoned by its owners since March off Khorfakkan. The ILO did not respond to a request for comment.

As tensions between Iran and the US heated up last year, tankers plying the waters of the Mideast became targets, particularly near the crucial Strait of Hormuz, the Arabian Gulf’s narrow mouth through which 20 percent of all oil passes. Suspected limpet mine attacks the US blamed on Iran targeted several tankers. Iran denied being involved, though it did seize several tankers.