Hurricane Maria

Hurricane Maria, a category 4 storm, caused severe damage to Puerto Rico when it struck the island on early Wednesday morning, September 20th, with winds up to 155 miles an hour. It was the most powerful storm to hit the island in nearly a century.

Only about 50% of the houses on the island were covered by insurance policies.1

The storm destroyed the island’s electricity infrastructure and crippled its cellular grid, which greatly impeded the coordination of relief efforts. Without electricity, internet service, and practically no telephone service, a nightly curfew was imposed and there was a need for armed escorts for fuel deliveries.

More than a week after the storm, truckloads of vital supplies to the island’s 3.4 million residents moved at a crawl because of the storm’s devastation. Increasing criticism was made that the response by the U.S. government had been sluggish. “This is a national emergency,” House Minority Leader Nancy Pelosi said. “We must move more quickly.”

New York State Governor Andrew Cuomo visited Puerto Rico on September 22. Hundreds of New York State and City employees helped and are helping the island recover from Maria.

New York City Mayor Bill de Blasio noted that thousands of New Yorkers had a personal connection to Puerto Rico. “People are struggling for electricity, for food, for water, for all the basics.”

Puerto Rico Governor Ricardo Rossello said at the end of September that somewhat improved conditions at airports and seaports had allowed for an increased flow of fuel, supplies and personnel onto the island. However, the devastation is huge.2

President Donald Trump made a short visit to the island on October 2.  He, however, repeated his earlier criticism that some Puerto Ricans were not doing enough to help themselves. Despite the roads being cleared and communications being re-established, he said truck drivers were not transporting enough supplies. “We need their truck drivers to start driving trucks,” he said. “On a local level, they have to give us more help.” To many, the criticism was not at all appropriate or justified.3

Many on the island have and are grappling with growing health concerns due to lack of reliable access to medical care, supplies and clean water. The official death toll as the end of October was 54 but the Mayor of San Juan, Carmen Yulin Cruz, had warned that the death toll will be much higher, perhaps 500 or more.4

The United Nations, in its report of October 30, 2017, faulted the United States’ response to the hurricane devastation in Puerto Rico calling it ineffective and lagging far behind the support provided for storm-struck states on the mainland. The report stated that five weeks after the storm, conditions remained “alarming” and called for a “speedy and well-resourced emergency response.”

Thousands of engineers had been deployed in Texas and Florida to reconnect homes to the electricity grid after hurricanes hit those states, a number far more than the crews deployed to Puerto Rico.

Estimates of houses destroyed on the island range from 30,000 to 90,000.5

More than six weeks after Hurricane Maria, the Federal Emergency Management Agency (FEMA) is still hobbled by the lack of electricity and reliable cell and internet service, stopping Puerto Ricans from accessing assistance they desperately need. Some examples are online aid forms that can’t be filled out because there’s no internet, follow-up calls missed because cellphones can’t get a signal, and federal officials who can’t speak Spanish and leave families waiting for weeks.6

Financial/Bankruptcy Developments

Puerto Rico Electric Power Authority (PREPA) entered into a $300 million contract with Whitefish Energy Holdings LLC, a little-known Montana energy firm. After FEMA indicated it had “significant concerns” about the transaction, Governor Rossello cancelled the contract. FEMA said it had questions about how the deal’s prices were negotiated. Whitefish was hired to rebuild the downed power grid and had about 350 workers working in Puerto Rico rebuilding electricity lines. But the firm’s small size and limited track record, as well as the terms of its contract, have raised concerns about management of federal disaster-relief dollars. More than a month after Maria’s devastation, service has been restored to less than a third of the island’s power customers.

The Federal Bureau of Investigation is reviewing this matter.

As previously reported, both Puerto Rico and PREPA have filed for bankruptcy protection under the Puerto Rico Oversight, Management and Economic Stability Act (PROMESA). The Oversight Board, created under PROMESA, took steps to install a retired Air Force colonel as “chief transportation officer” to take over PREPA’s operations. 7

In early October, Puerto Rico’s Treasury Secretary Raul Maldonado-Gautier said that Puerto Rico will need “tens of billions” of dollars in aid from Washington as it struggles to stabilize a humanitarian crisis in the wake of Hurricane Maria. He called on the U.S. Congress to “make a statement that approves additional funds for Puerto Rico” to help reconstruction efforts and to jump-start an already ailing economy.

Mr. Maldonado-Gautier said the devastation had interrupted the government’s ability to collect taxes, deepening questions about its financial future. “I don’t have revenues” he said. “This is a disaster like we have never seen.”

Economists say a central question is whether its residents – who have U.S. citizenship – stay in the island rather than moving to the U.S. mainland.8

Hundreds of students have resettled on college campuses across the mainland in recent weeks, and many more are considering leaving the island territory in the Spring, grateful for the opportunity to resume their studies. Between 17,250 and 32,721 adults, ages 18 to 24, are expected to leave Puerto Rico in the year after Maria, according to the Center for Puerto Rican Studies at Hunter College of The City University of New York.9

Endnotes

  1. Scism, Leslie and Nicole Friedman, “Maria Exposes Big Void in Home Insurance,” The Wall Street Journal, September 21, 2017.
  2. Smith, Jennifer, Paul Page and Arian Campo-Flores, “Puerto Rico Aid Trickles In,” The Wall Street Journal, September 29, 2017.
  3. Landler, Mark, “Trump Lobs Praise and Paper Towels to Puerto Rico Storm Victims,” The New York Times, October 3, 2017.
  4. Hernandez, Daniela, “In Puerto Rico, Health Concerns Grow,” The Wall Street Journal, October 5, 2017.
  5. Cumming-Bruce, Nick and Frances Robles, “Citing “Alarming Conditions, U.N. Report Faults U.S. Response in Puerto Rico,” The New York Times, October 31, 2017
  6. Milman, Oliver, “Six Weeks after Hurricane Maria, Puerto Rico still waiting for help from Fema,” The Guardian, November 9, 2017.
  7. Scurria, Andrew, “Puerto Rico Governor Cancels Power-Grid Contract,” The Wall Street Journal, October 30, 2017 and “FBI Probes Puerto Rico Power-Grid Deal, The Wall Street Journal, October 31, 2017.
  8. Platt, Eric, “Puerto Rico calls for ‘tens of billions’ in aid,” Financial Times, October 3, 2017.
  9. Platt, Eric, “Puerto Ricans consider departure,” Financial Times, October 2, 2017 and Korn, Melissa, “Many College Students Leave Puerto Rico,” The Wall Street Journal, November 9, 2017.