(Reuters) - Puerto Rico's turquoise Caribbean waters lap white sandy beaches under year-round sun, making the island a safe place to relax.
But beyond its shoreline, U.S. investors see a threatening view, a tropical version of a near-bankrupt industrial city - Detroit, whose stressed finances are run by a state-appointed manager.
"A lot of the same drivers that have been going on in Detroit are at work in Puerto Rico," said Robert Donahue, of Municipal Market Advisors, Inc, pointing to an underfunded government pension system, a shrinking population, heavy borrowing and an eroding tax base.
Credit agencies hold Puerto Rico debt just a step above the junk level with a negative outlook, meaning that another cut is possible. Donahue said receivership may be in the cards adding, "the political system is not solving the problems."
OCEAN OF DEBT
The fourth-largest Caribbean island, the Commonwealth of Puerto Rico stands at the crossroads between North and South America and is a U.S. territory that has flirted with becoming the 51st state. Its residents are U.S. citizens but are unable to vote in federal elections; they also do not pay federal income taxes.
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Jaume Plensa's "Tel Aviv Man" at Art Basel, the world’s premier trade fair for leading galleries and collectors focused on modern and contemporary art.
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Biotech giant Monsanto refused to send a representative to testify at a Puerto Rico Senate hearing on the subject of developing and selling seeds. The Puerto Rico Senate Agriculture Committee met last week to create a Seed Board which will determine the policies governing these important matters.
Monsanto explained that they do not sell seeds in Puerto Rico, and therefore would not be subject to the rulings of the Seed Board.
It is true that Monsanto does not sell seeds in Puerto Rico. However, they have been using the island as a testing ground for genetically modified plants since 1987. Trails have been conducted in the open air, raising concerns that new strains might go native on the island.
Monsanto has also run afoul of Puerto Rican law because it has 1,500 acres in production. Puerto Rico’s constitution forbids agricultural landholdings greater than 500 acres. Since Monsanto is registered as a biotech company rather than an agricultural company, they have been able to take advantage of a loophole to get around the maximum acreage law. This circumstance led to protests against the company in San Juan last month, along with the fact that Monsanto also tested Agent Orange in Puerto Rico
Monsanto has faced some reputation management issues on the mainland, as well. GMO wheat was found growing wild in Oregon, and studies questioning the safety of GMO foods have recently been published.
Not everyone is opposed to Monsanto’s work. Dr. Robert Fraley of Monsanto recently received this year’s World Food Prize.
Still, Monsanto’s refusal to accept Puerto Rico’s authority is significant. Since Puerto Rico is a territory of the United States, Monsanto insists (according to activist site Truthout) that Puerto Rico cannot make laws about GMOs that are stricter than U.S. federal laws. Monsanto also claims that any regulations created by the Seed Board will not affect Monsanto.
