How Hedge and Vulture Funds Have Exploited Puerto Rico’s Debt Crisis

For this island teetering on bankruptcy, debt renegotiation is imminent—but on whose terms?

By Ed Morales


New York–born Puerto Rican activist David Galarza spent this sultry summer Monday
picketing a meeting of bondholders by day and meeting with professionals, students, and
working people in the evening concerned about the increasingly scary crisis over the
island’s $72 billion debt. “I picked up a Freddy Krueger mask on the way down there—a
little bit of theater, you know?” Galarza told me. He had come to get a look at Anne
Krueger, the former IMF official behind a recent report suggesting solutions to the
crisis—solutions that imposed Draconian neoliberal “adjustment” burdens on the islands’
distressed population and didn’t hesitate to read her body language as she entered the
building. “She looked a little mystified, like she was bewildered that we were even there.
She seemed to have an ‘I’m trying to help you people’ attitude.”

Krueger, a former IMF economist, could be said to lack the one-dimensionality of
the horror movie icon at least in her IMF role in Argentina, where she apparently was
first given that nickname in 2001, only to testify in a New York court last year in favor of
Argentina against the country’s holdout bondholders, decrying the “negative
consequences” of their attempt to collect debts in full. In the case of Puerto Rico, where
she was hired by the Commonwealth’s government to produce her report with two other
IMF functionaries, she once again sent mixed messages. Her ambivalence most likely
results from her role, which is to be “fair” while “balancing” the concerns of wealthy
investors with everyday citizens who are stuck on the wrong side of the balance sheet,
doomed to an ongoing global project of exclusion and increasing inequality.

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