The Multinational Monitor



Puerto Rico: The Multinational Presence

An Interview with Dr. Neftali Garcia

The debate over the political future of Puerto Rico is entering a new phase, as the island's present status as a commonwealth of the U.S. faces a growing rejection by international bodies and the people of Puerto Rico.

In August 1979, the United Nations Special Committee on Decolonization declared that at present, the island must be considered a U.S. colony. It demanded a change in the relationship between the U.S. and Puerto Rico, and labeled statement an unacceptable alternative. Both in Washington and San Juan, political leaders are calling for a plebiscite to decide the island's fate. Governor Carlos Romero-Barcelo hopes to implement a referendum on statehood some time next year, and President Carter has voiced support for self-determination for the island's people.

The crucial element in the U.S. relationship with Puerto Rico is the activities of U.S. multinationals on the island. With a financial stake of $18 billion, U.S. corporations and banks are seen by Puerto Rico's present leadership as key to the island's economic development.

Other Puerto Ricans view U.S. corporations in a different light. Dr. Neftali Garcia, a chemist and prominent activist associated with Industrial Mission, a church-sponsored environmental group based in Hato Rey, sees large-scale penetration by multinationals as responsible for the economic deterioration and environmental destruction on the island.

Since 1968, the Industrial Mission has conducted research on the environmental impact of corporate activity in Puerto Rico. The organization has led opposition to a number of projects propose3d by mainland firms, including Kennecott's plans to develop copper mines in Central Puerto Rico, and General Electric's proposal to build a nuclear power plant in Aracebo.

The following interview with Dr. Garcia was conducted in several sessions during November, before the increased political turmoil occasioned by the ambush of U.S. navy personnel near San Juan.

MULTINATIONAL MONITOR: The United States' economic relationship with Puerto Rico has been a long and oftentimes controversial oone. In recent years we have witnessed increased investment by U.S. multinationals in heavy industries producing pollution but few jobs. Historically, what has been the pattern of American economic involvement on the island?

DR. NEFTALI GARCIA: The investment of U.S. capital in Puerto Rico has gone through three phases. The first phase included investment in sugar cane, tobacco, and the production of citrus fruits. It had a time span of 50 years during this century after the U.S. invasion. But the commercialization of agricultural production for export brought a contradiction: It destroyed the subsistence agriculture of the island and made it necessary for Puerto Rico to import food for consumption. The prices demanded for imported staple foods and other products were too high for the low wages paid to the workers. So there was a contradiction that had to be solved in one of two ways. Either the companies had to go from Puerto Rico to areas with viable local agriculture capable of meeting food needs at lower prices, or else they had to mechanize their operations in Puerto Rico. What they did was to go to Hawaii, the Dominican Republic and Cuba. What they did was kill the sugar industry in Puerto Rico, which had been labor-intensive.

Between 1950 and 1965, investment took place in light industries, with low investment in machinery and buildings, and high investment in total wages paid to the large number of workers employed. This pattern fell into a similar malaise, a similar contradiction. The corporations wanted to pay low salaries, but already by the middle of the sixties Puerto Rico was controlled by the agricultural monopolies of the U.S. for its food supply. Either the companies had to subsidize the industries, mechanize them, or get out. They went to Taiwan and the Dominican Republic.

Since 1965 investment has taken place increasingly in the areas of pharmaceuticals, petrochemicals and refineries, highly mechanized industries which use a lot of water, electricity and land, are heavy polluters, and generate few jobs. For example, with an investment of $1.6 billion, the petrochemical plants and refineries have created only 8,000 jobs. And 2,000 of them have been lost since 1974 when the economic crisis began in the U.S. and Puerto Rico. So after an investment of $1.6 billion, 6,000 jobs are left. In the case of pharmaceuticals, corporations have invested $750 million and created only 8,000 jobs. We have witnessed a tendency to increase the amount of capital used for machinery, raw materials and auxiliary materials and a relative reduction in the total capital going to wages. And all this on an island with a population density of 1,000 persons per square mile.

MONITOR: Can you provide details on U.S. investment in the oil, petrochemical and pharmaceutical industries in Puerto Rico?

GARCIA: As I said, investment in refineries and petrochemical companies is approximately $1.6 billion. The investments in this area have been made mainly by Commonwealth Oil Refining Company (CORCO), which also has petrochemical plants, and by Union Carbide. Union Carbide has $500 million in Puerto Rico in petrochemicals and also in a plant producing graphite electrodes, and one that produces plastic covers for sausages. Other companies with investments include Phillips, Sun Oil, and Gulf. But those are minor investments compared to Commonwealth and Union Carbide.

The island accounts for 15 percent of all the benzene produced in the U.S., and more than 15 percent of the ethylene glycol. In general, more than 15 percent of many other chemicals that present health hazards during the production process are made in Puerto Rico.

MONITOR: What are the conditions in the plants for the workers?

GARCIA: The problems are many. On the basis of interviews the Industrial Mission recently conducted in the plants, we have found a high correlation between leukemia and employment in the petro chemical plants, particularly in the aromatic plants, those producing benzene and xylens. Also, 90 percent of the workers employed by CORCO, and a majority of workers in the Union Carbide factories, are suffering from hearing losses apparently linked to working conditions.

MONITOR: What has been the environmental and health impact of these plant: on the surrounding communities?

GARCIA: We have concentrated most of our research in this area on respiratory functions. In a controlled study of ten communities, we found that the rate of obstructive diseases, I mean a reduction in the capacity to breathe, ranges from ten to 25 times higher in communities affected by pollution than in communities not affected by pollution.

MONITOR: How does the frequency of respiratory diseases in Puerto Rico compare with the rate in the mainland United" States?

GARCIA: According to U.S. government statistics, between 0.3 and 0.4 percent of the mainland population suffer from obstructive diseases. We have located Puerto Rican communities where up to 5 percent of the people-over ten times the U.S. average-are afflicted with respiratory ailments. For example, in Yabucoa, where Union Carbide Graphito is located, we have found that 3.5 percent of the population suffers from obstructive diseases. In Catano, near San Juan, where there are oil-fired thermo-electric plants and a refinery, 5 percent of the people are diagnosed as having respiratory ailments. We have also found ten cases of throat and nose cancer in Ingenio, a barrio of 2,000 people in Yabucoa. A clear pattern emerges from our work in these communities.

MONITOR: U.S. industrial health and safety regulations apply to corporations in Puerto Rico. The Industrial Mission is on record as criticizing lax enforcement of these standards. How has the Occupational Safety and Health Administration (OSHA), the federal agency responsible for enforcement of these laws, failed in policing working conditions on the island?

GARCIA: OSHA has never taken a company to court for health and safety violations in Puerto Rico. The agency employs a total of 11 people for all of Puerto Rico, of which about half are inspectors. This manpower level compares quite unfavorably with the situation on the mainland.

Not only is there a shortage of personnel: the agency's enforcement priorities are misdirected. Workers complain that the OSHA inspectors worry only about whether a factory has enough fire extinguishers and properly covered machines. Now, in a petrochemical plant those are dangers, but they're not the main dangers. OSHA doesn't spend enough time investigating the impact of exposure to chemicals on workers' health.

MONITOR: Critics of U.S. health and safety policy maintain that OSHA has always been strapped by a manpower shortage, even on the mainland, which limits their ability to enforce regulations....

GARCIA: Yes, this is true, but the situation on the island is still far worse than anything on the mainland. OSHA has failed to act on even the most flagrant abuses of worker health and safety regulations, and workers have lost all faith in OSHA's desire to enforce the laws. OSHA seems to look the other way. They have an unwritten agreement with the companies not to push them too much. It's a general code of conduct.

MONITOR: Can you give us any examples of this lack of concern?

GARCIA: Yes. OSHA took no action against Becton-Dickinson, even though 33 workers were poisoned by mercury at the plant. The plant. produced thermometers. Thirty-three were poisoned, and five died. The records of the causes of death of these five disappeared from the hospital. OSHA did nothing. The workers-many of the surviving ones had by now been fired by the company-tiled a suit against Becton-Dickinson. Eventually, the two parties reached an out-of-court settlement. The company paid them $2.5 million.

The Becton-Dickinson episode took place in the early seventies. More recently, a plant owned by Westinghouse has been producing fluorescent lamps in Cayey. In July of 1979, after only nine months of operation, workers developed high levels of mercury in their blood and urine. We got the data and held a press conference. OSHA didn't know anything. We filed a complaint, and as far as we know the agency has not done anything.

MONITOR: Have workers themselves taken similar initiatives?

GARCIA: Workers fear for their jobs, and have no faith that OSHA will support them if they do come forward. For example, in December 1978 ten workers from a chloroalkaline plant owned by PPG Industries [formerly Pittsburgh Plate Glass] held a press conference to announce they had mercury poisoning, but only after the company had notified the workers that it was closing the plant and laying them off. During the press conference the workers indicated that they didn't go to OSHA simply because their experience, and the experience of other Puerto Rican workers, is that if you do go to OSHA, you can get fired and still get no results.

MONITOR: You referred earlier to the small number of jobs created by U.S. corporations and the consequently high level of unemployment, because of the capital intensity of their investments. At the same time, many Americans view Puerto Rico as a haven for welfare and food stamp recipients. What role do these welfare programs now play in the Puerto Rican economy?

GARCIA: First, we should consider the political role. The period between .1968 and 1974 was characterized by a high number of strikes, more militant strikes, and student activity on campus. If one had to characterize the period, it would be called a time of social turmoil on the island. The economic crisis of 1974-75 made social problems even more acute. Food stamps were introduced in 1975. Since then, we have seen a smaller number of strikes, fewer hours per worker lost due to strikes, and a' lower level of militancy.

Most Puerto Ricans are taught how much we receive from the US., but few learn about the capital the corporations are taking out. Each year, US. companies repatriate $2 billion from Puerto Rico. American taxpayers are putting in almost as much each year. Through food stamps, and other social service programs, American taxpayers are subsidizing the presence of U.S. companies on the island and allowing them to reap greater profits. Food stamps enable the corporations to keep wages low, by defusing the pressures for better wages to meet the needs of families which often have one or more who is unemployed. The food stamps and other programs dampen the contradiction between the highly mechanized, capital--intensive industries that provide few jobs, and the high levels of relative overpopulation.

So taxpayers are subsidizing the presence of U.S. companies on the island. And this hasn't done any good for Puerto Rico or the Puerto Ricans. We would prefer to be working, to be in control of our natural resources, protecting our health and generating jobs for Puerto Ricans under Puerto Rican control. Welfare doesn't solve the problem-unemployment and underemployment stand at 50 percent, food stamps are used by over 50 percent of all Puerto Ricans, crime is very high, and social problems are immense. Who is benefiting from this? The corporations. And who is paying? Workers from the U.S.. and Puerto Rico.

MONITOR: So what you are saying is that the corporations, rather than the people of Puerto Rico, are the prime beneficiaries of the transfer payments?

GARCIA: Exactly. And the subsidies to the U.S. corporations work at a second level: It is food from the U.S. mainland that the Puerto Ricans buy with their food stamps.

The main system used by U.S. companies such as Grand Union and Pueblo Supermarkets to destroy Puerto Rico's economic structure has been dumping, that is, selling food from the U.S. to Puerto Rico that is in surplus. This has taken place in 'the areas of chicken and eggs. Over the last 20 years, Puerto Ricans developed relatively modem egg and chicken production, and they developed a market for such products. During the last ten years, eggs and chickens in increasing amounts have been brought into Puerto Rico from Florida and other places in the south. The products have usually been lower in quality-type C poultry for example-but they are sold temporarily at a low price. After companies have captured a large part 'of the market, they then start raising the prices to monopoly levels.

The companies push out those Puerto Rican industries at a lower level of technological development, and only those with a high level of technology or government subsidies can survive. For example, chicken production has disappeared from central Puerto Rico over the last few years.

Furthermore, agriculture has been wiped out. We no longer produce much rice and beans, the staples of the Puerto Rican diet.

MONITOR: From your remarks thus far, it seems clear that you believe U.S. involvement in' the Puerto Rican economy has eroded the quality of life for most of the people on the island. Recently, there have been discoveries of important mineral deposits, as well as potentially large offshore petroleum reserves. Do these resources perhaps hold the key to a brighter economic future for the island's, population?

GARCIA: Yes, but only if the discoveries lead to independence for Puerto Rico. There is a turmoil, both political and social. The present colonial status is under fire from all quarters, even from those that defended it completely in the past, The pro-statehood and pro-independence forces have been growing in the last ten years. Traditionally, the discovery of oil has had the effect of moving an area closer to statehood. That was the case with Alaska. I would say that the discovery of oil, together with, the fact that we have copper and nickel, cobalt, gold and other metals, will favor statehood or independence.

Why independence? Because after all, we have been told that we are a country without natural resources. The colonized peoples are always told they don't have resources. The discovery of oil and minerals will help to start decolonizing the people, help them to outgrow the mentality that we can't become self-sufficient. On the other hand, the pro-statehood forces now say that our resources will provide us with the economic base to pay U.S. taxes.

MONITOR: So political change is clearly coming to Puerto Rico. Who is going to win out?

GARCIA: I' would say that the U.S. will have to move in the direction of solving the Puerto Rican problem in an international forum. The U.S. will try to secure its control over our non-renewable resources, and its $18 billion in investments on the island.

The move towards independence would be a long and difficult process after 500 years of being a colony, first of Spain and then of the U.S. But in the minds of the people, the Commonwealth status is doomed, and I would say that the statehood forces have lost ground in the past two years.. The cultural reaction, the political reaction, the economic reaction in Puerto Rico by Puerto Ricans and by U.S. companies has not been completely favorable towards a fast pace towards statehood. Puerto Ricans fear that what has been going on in terms of pollution and economic destruction would continue under statehood.

It is difficult to predict what the outcome will be. One thing is certain: political conflict on the island is heightening. There is a span of four or five years for Puerto Rico to decide where we are going, and for the U.S. to react. I expect that the pro-independence forces will grow in the next few years, when people see that independence is the only concrete solution to Puerto Rico's problems.

A Call for Statehood

On December 3, the Monitor conducted a brief interview with Carlos Romero Barcelo, Governor of Puerto Rico, in Washington, D.C.

Governor Romero, a former mayor of San Juan and co-founder of the New Progressive Party, is a leading advocate of Puerto Rican statehood. The Governor was not asked to respond directly to any statements made by Dr. Garcia.

MULTINATIONAL MONITOR: What has been the attitude of most U.S. corporations on the island towards the statehood question?

GOVERNOR CARLOS ROMERO: Originally, before we [the New Progressive Party] won in 1976, I think the attitude of most U.S. corporations in Puerto Rico was against statehood, because they saw statehood as something that might affect their pocketbook directly. But as we have been meeting with them we have made them realize that statehood gives everyone, not only the Puerto Ricans, but everyone who is interested in Puerto Rico, a greater sense of security, including the corporations.

For instance, I am sure that many times, investments in Puerto Rico might have been discussed by a board of directors in Minnesota or Iowa and somebody might have asked, "What is Puerto Rico, a commonwealth? It can't go independent, can it?" And they were planning to make a$100 million investment in Puerto Rico and they wind up making a smaller investment, just to see what it feels like for the next ten or 20 years before they make the big investment. This type of attitude has hindered our development.

MONITOR: So statehood can decrease the corporate risk for investment?

ROMERO: Oh, definitely, because then there will be no fear of what would happen in Puerto Rico. Puerto Rico as a state-and a Spanish-speaking state-can offer tremendous opportunities for commercial relationships, business and trade, with Latin America.

Here's an example. If you manufacture typewriters to send to the Latin American market, maybe all of a sudden someone forgets that there is an "n" in the Spanish alphabet. They make a lot of typewriters without the letter, and they can't sell them. In a plant in Puerto Rico, even the people down in the production line would realize there , was something wrong with the typewriters before, they got off the assembly line. And to have a sales force that speaks Spanish-the accountants, lawyers and economic ado visors who are bilingual-everyone will feel more at ease. To be in the U.S. but also in a Latin American environment.

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