Puerto Rico's Alexandra Lúgaro, First Independent Candidate for Governor, Unveils Plan for the Future
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Alexandra Lugaro wants to change things in Puerto Rico and break free from the shackles of a dysfunctional two-party system that has brought the island to its knees.
Lugaro, a 33-year-old attorney and businesswoman, is running as the first independent for governor of Puerto Rico. The candidate's lack of party affiliation places her outside the political circles, but she aims to inject new life, hopes, and ideas into the territory's government.
Born into a family that struggled economically, Lugaro credits education for her success, saying it offered her the tools to improve herself. She went on to earn a Bachelor's Degree in Business Administration at the University of Puerto Rico and later a Juris Doctor at the same school. She then earned a Master's in Laws, LLM from the Universidad Complutense de Madrid and is currently finishing her Doctorate in Tax Reform at the same.
Although the battle to Puerto Rico's presidential mansion, La Fortaleza, may be an uphill one, Lugaro remains adamant she can improve things on the island.
"I saw our country's deep economic, educational, and social decline and I decided I could not longer watch my country collapse," she told Latin Post.
During a phone interview with Lugaro, the candidate explains her plans to bring Puerto Rico out of its current economic crisis as well as other ideas to reform the island of 3.5 million people.
This interview has been translated from Spanish and edited.
Rodrigo Ugarte: As Puerto Rico's first independent gubernatorial candidate, do you think your candidacy is revolutionary, that it could be something that changes the rules or the election's trajectory?
Alexandra Lugaro: Definitely. This is not happening only in Puerto Rico; this is a global shift that is moving to break the traditional two-party system we've had for many years. An independent candidacy also helps inform the public about the negative repercussions affecting the country, especially the economic and educational problems.
There is an extreme polarization between the two parties. In Puerto Rico's case, the public tends to vote on the island's status, be it the party that supports statehood, independence, or the associated territory instead of voting for the candidate who can govern best. The world is changing and is giving independent candidates a chance to participate in the decision-making process and political activity.
Ugarte: Speaking of Puerto Rican politics, what is your opinion of the status quo and how the parties govern the island?
Lúgaro: Regrettably, for many years, the traditional parties have been swapping power -- four years for one, four for another -- without change. Every time a new government is elected, it destroys all the projects of the previous ruling party, removing all their public officials and civil servants and replacing them with the new party's people. This deprives Puerto Rico of stability. Successful programs are dismantled simply because they were started by the other party. This rivalry between parties only propagates the problem and is not condemning the country's continued deterioration because here governments do not plan ahead; it's believed they will only rule for four years. Therefore, we stop all planning and researching and are constantly improvising, resolving problems at the last second and patching up the system rather than dealing with the root causes.
We have candidates whose decisions are based solely on what votes they'll gain or lose. "If I side with this decision, I will lose votes, so I won't side with it." Or, there are those who fear financial support for their campaigns will be lost. "If I favor this decision, I may lose the financial banking of banks and businesses." We have reached a point in which decisions are not made in favor of the country but the financing of political campaigns.
Ugarte: Puerto Rico is experiencing one of its toughest crises. With a public debt of about $73 billion and employment between 13 and 14 percent, what is your plan to revitalize the economy or improve the situation?
Lúgaro: We have to be honest. I have analyzed our debt with various economists in the country and we have looked at the numbers and our debt is unpayable because the income Puerto Rico is generating is not enough to pay. The first thing we have to do is tell the public and bondholders the truth. How will we end this debt? We do not only have the associated territory's debt but the debt of all our public agencies, from the electrical company (PREPA) to the Departments of Health and Education. They are all in a fiscal crisis. We have to raise taxes but we also have to do something that has been forgotten for some time: economic development.
Puerto Rico must develop an aggressive economic development plan in which the country takes advantage of what sets it apart from other nations. One example is tourism, which has been neglected for many years. This area has not been properly developed, unlike in the Dominican Republic. And now, with the opening up of Cuba, Puerto Rico's tourism sector will be affected. There are also many other areas that Puerto Rico could develop. We possess the human capital, the tools, and the needed infrastructure. We must incentivize companies to do business in Puerto Rico, especially to create jobs. Not only should we attract local investment, but foreign investment as well, which we are already achieving through some laws that provide some benefits to foreign companies operating in Puerto Rico. The agreement stipulates that they will create jobs, will remain in the island for a specific length of time, and will leave some capital.
We must work with various variables, including the taxation of marijuana, following its legalization, which will create revenue. Thus, we create an aggressive economic plan that accelerates the development of companies in Puerto Rico and incentivizes young businessmen.
Ugarte: Speaking of tourism, some opinion pieces argue Puerto Rico should exploit its tourism potential more since there are other islands like the Dominican Republic, which you mentioned, that in the last couple of decades have been building more hotels, etc.
Lúgaro: Of course. Unlike Puerto Rico, the Dominican Republic opened a lot of hotels and with more available rooms, it has expanded the market. However, Puerto Rico should take advantage of what distinguishes it from the Dominican Republic. As a territory of the U.S., we share the same currency and one does not need a passport to travel here. Many people are bilingual or are used to English, so there is no language barrier. Puerto Rico should exploit these advantages and dedicate time and effort to the tourism industry.
Ugarte: What other industries or businesses would you like to see flourish or create in Puerto Rico, aside from tourism?
Lúgaro: First, I believe it's important for any country to develop and emphasize its agriculture because a country must be self-sustainable. In Puerto Rico we import most of our foodstuffs. One of the three import companies, Horizon Lines, has left the island ... Now, with low supply, stores are running low on merchandise; we are seeing many stores close because they no longer receive merchandise they received before.
I would also like to see local businessmen who work in different areas succeed too. The music and artistic industry is an area where Puerto Rico is known worldwide. We have the human capital -- our singers, musicians, songwriters, arrangers, and sound engineers -- for the music and cinema industry...
We also have a pharmaceutical infrastructure, since at one point we had [Section] 936 (which granted companies in Puerto Rico tax credits but was abolished in 1996). Despite slowly losing this infrastructure, we still have the experienced people in this industry and we must develop an economic plan in which we can include benefits and subsidies for companies so that they can see we can compete with other countries.
Labor, for example in Mexico and Peru, it's much cheaper than in Puerto Rico. But, businesses do not need to build any infrastructure here. That way they can begin establishing jobs, because employment is what moves the economy forward. Puerto Rico has not come out of recession, as it has seen 24 consecutive months of diminishing activity, and this time it is not a good idea to implement aggressive taxes since it'll contract the economy. Small businesses would fold, as they'd be unable to compete with multinationals, so we are paralyzing the economy. We must do the opposite. We must encourage people to shop and to look for work. We will make it easier for people to start businesses in Puerto Rico so that entrepreneurs can start businesses, creating jobs, and we can economically improve to sustain the island.
Ugarte: You mentioned how import companies have left the island, leaving only two. Because of Puerto Rico's status, ships importing anything into the island have to first stop through U.S. mainland ports. If you're elected governor, would you suggest changing this policy so ships dock in Puerto Rico first?
Lúgaro: Definitely, the ambiguity of our status has left us with the repercussions of the coastal trade laws and tariffs. This dates back to 1917, and Alaska, Hawaii, and Puerto Rico want to establish this coastal trade, which has serious repercussions for the economy of these states. In Puerto Rico's case, all the products we lack are more expensive because, unlike other states, we have to pay for the bureaucracy of inspectors since everything must be sent to the U.S. first. The only one that can do this is the U.S. Congress. But, Congress has not taken up this issue and Puerto Rico has also not taken up the issue to Congress in a serious manner...
Right now we need to form a group of economists to evaluate the monetary costs and how these shipping laws have affected the country. They will present it to Congress so they can finally decide against the status and on the shipping laws.
Ugarte: I would also like to ask you about emigration. According to the Pew Research Center, around 48,000 Puerto Ricans leave the island each year for the U.S. Many of them are young and university-educated. What is your plan to keep Puerto Rico's next generation? What would you tell them to convince them to stay and improve the island?
Lúgaro: First, we need to start with school. Perhaps we should adopt a model similar to Singapore's, in which the Singaporean government prepares a person and determines a position for them even before the position becomes available. For example, beginning at school, someone is trained as an engineer to be in charge of a factory so the government invests in his or her education as a future investment for the country.
I think Puerto Rico may have to start doing this since there are many people studying careers for which we have no openings while we have unfilled positions in other areas and not enough qualified people to fill them. We have to guarantee employment for all young people graduating, so we have to work with schools and universities to steer students towards jobs that need to be filled.
Ugarte: Gov. Alejandro Garcia Padilla has proposed a new value-added tax (VAT) and you've said in previous interviews that this would prevent the growth of Puerto Rico's economy because it'll make things more expensive for people. What alternatives would you propose, since Gov. Garcia proposed the law in part to decrease the number of tax evaders?
Lúgaro: There are two issues with the proposed VAT. First, the government has given tax breaks to 850,000 people, which is basically a political strategy to make people believe this is a constructive idea. However, he proposes the VAT will earn $2.5 billion a year. He has said the VAT has proved a successful revenue stream in various countries, citing 160 of them that have employed it successfully. However, none of them implemented the VAT in similar dire economic situation like Puerto Rico's. Enacting the VAT has been debated since 1988 when Puerto Rico was in a very different economic situation.
A value added tax now of 16 percent would constrict the economy and be detrimental to the economy. The sales tax we have, which was approved in at a rate of 6.5 percent (in 2006), was designed to raise the government's income, but there is less income. Now, we hope by raising it to 16 percent income will increase. But, Gov. Garcia is only focusing on this, disregarding the need for an economic development plan. How we will bolster our existing industries? How will we distribute [the income] in an efficient manner? How will we internationalize our products?
The governor is making snap decisions. What's happening is the government is desperate because we have to pay $2.9 billion in July and we'll be left only with around $100 million for running the government. However, the Treasury Department is currently unable to effectively implement the VAT. But, we are making hurried decisions for problems we have been dragging for decades instead of sitting down with economists, academics and sociologists to establish a good economic plan. We have to establish a repayment plan over the next ten years to pay off the debt and oversee the income of our agencies. This way we can establish an interrelationship with bondholders and negotiate with them what we will pay each year. Though we will negotiate with bondholders, we cannot allow our public agencies to collapse because, if our government collapses, we will be unable to pay our debt and the country will cease to function. We all win with a serious, coherent, interdisciplinary, and multi-ideological analysis.
Ugarte: Puerto Rico is unable to pay its $73 billion debt. What plan would you propose because you've previously mentioned following the example of Iceland...
Lúgaro: Yes. Iceland's people voted in a referendum and 93 percent decided against paying their debt and amended their constitution. They refused to pay for all the mistakes of previous administrations and banks. In Puerto Rico, we are obligated to pay the debt because of our constitution. Truthfully, this would not be my first alternative but it is an option.
My first alternative would be to renegotiate (the debt) with bondholders. I would tell bondholders: "We do not intent to forgo paying our debt but at this time this is Puerto Rico's numbers; these are our projections; this is what we're going to invest in agencies." I believe bondholders would prefer this rather than not paying the debt.
Ugarte: Banks and investment firms have expressed worry over the possibility of Puerto Rico being unable to pay its debt. As you have mentioned, not paying the debt would also affect the U.S. economy, as the two are linked. What would be your plan to renegotiate the debt?
Lúgaro: First, Puerto Rico has not revealed its whole debt, including the debt of government agencies together. This should be our first step. The governor has to reveal the debts of each agencies and when each of their payments are due. The government also needs to reveal what these government agencies are taking in and what it is each agencies' projected earnings. We need an analysis of our ability of paying back the debts by their due dates and, if we are unable, I want for the Puerto Rican people to have a relationship with the bondholders so they know we will pay them back. Nonetheless, the government and Puerto Rico need to be courageous and admit the government has mismanaged agencies. Our best option is to talk with bondholders, renegotiate the debt, and come up with new payment conditions.
Ugarte: There are a lot of people evading taxes, claiming they make less to hide their true incomes. There is also the problem of drug traffickers using the island as a stop in the route between South America and the U.S. What do you propose to pursue those who are truly evading taxes as well as the drug issue?
Lúgaro: Right now in Puerto Rico there is a big underground economy and, according to sources from the DEA, Puerto Rico has become a bridge between the U.S. and South America since the Mexican border became more guarded. I will work on these problems.
Currently, the Treasury doesn't have the manpower to pursue tax evaders. ... In Puerto Rico, like the U.S., there is the ability to tax income of illegal origin through the income tax. This started with Al Capone who was only caught by the federal government after being charged with tax evasion. Therefore, people earning illegally can declare their illegal income on tax forms so as to avoid being charged twice once they're caught-for their tax evasion and, say, drug trafficking.
Drug traffickers, for example, can put down they earn $1 million from cocaine sales, and other police agencies will not pursue them. However, that person will pay taxes on it. There are a lot of drug traffickers in Puerto Rico and, when they are caught, we only try them for drug trafficking and not for tax evasion so, after serving their time, these men continue to be millionaires. We have to give the Treasury more power to catch tax evaders and we have to find a way to verify the purchase of luxury and high-ticket items. That way when someone buys something expensive a flag is raised and we verify who this person is, what they're paying in taxes, and if their income justifies the purchase. Thus, Puerto Rico could manage its income better.
Ugarte: Aside from economics, I want to ask you about social issues. You've said before you are in favor of same-sex marriage. What is your opinion of the current government's decision to not protect the island's same-sex marriage ban in court?
Lúgaro: It is embarrassing that at this time we are still debating whether we should allow same-sex couple the right to marry. Marriage is part of Puerto Rico's civil code, which is Spanish in origin. I'm a supporter of our constitution, which enshrines the separation of church and state. This is a principle constantly being criticized. But, the separation of church and state, I believe, means there should exist, within a democratic state, a way in which we are all treated equally. The separation of church and state prevents the state from meddling in church affairs. In the same way, the church can impose rules on its members but not the rest of society.
Within the same legal framework, the gay community can defend their rights as equal members of our society protected by the constitution. ... The case is, however, that there are 96 benefits obtained through civil marriage, but the governor, who has said he's in favor of same-sex marriage, has said nothing about allowing gay people these benefits. These benefits include inheritance rights, the ability to make medical decisions for a spouse, and adoption ... The government has no right entering the private lives of people and I hope our country moves forward with the times and finally understand this is a human rights issue and makes a just and correct decision.
RU: You've also mentioned the legalization of marijuana. Could you explain why you will legalize marijuana? How do you think legalizing it would help Puerto Rico?
AL: When people talk about legalizing marijuana people tend to think about licentiousness, that young people will be more inclined to use it. Studies have show, however, marijuana usage remains the same after legalization. What I propose is two paths. The first would be the path of taxation. We would tax marijuana sales just like we do tobacco or liquor. Puerto Rico would also benefit from the sales of licenses for establishments to sell medical or recreational marijuana.
Because of this, the money police use to search for marijuana dealers and users can be used for those trafficking in cocaine and other harmful substances. Legalization would not only free up police, it'd free up the judicial system, allowing them to pursue other criminals, especially violet criminals. Similarly, the corrections system would be relieved of some people who are imprisoned for minor offenses but still serve three to eight years, the penalty for marijuana possession. Most of these people are young first-time offenders. This also doesn't include the costs of $65,000 a year per prisoner.
We have a system that doesn't rehabilitate prisoners but only punishes. Once released these people will struggle to find work with criminal records. Last week, when I spoke with police officers, they said most crimes concern fighting over drug distribution sites. By legalizing marijuana, these people would likely stop fighting since most of these fights are over marijuana distribution. Legalization would not only end these fights but also earn income through taxes, save money for the police and other agencies and improve public safety. So, it seems to me legalization is an obvious answer to many problems.
RU: I would like to ask you about education reform. You have previously talked about in length about reforming education and improving the relationship between schools and universities. Could you explain more about these ideas?
AL: I would first work with the universities concerning the acceptance of students aspiring to be teachers. Our acceptance standards are very low and needs to change. I demand that universities be more rigorous in both the criteria for perspective students who want to educate and their curriculum. Their studies need to follow contemporary times as teaching changes. We need more innovative pedagogy. One no longer sees students studying by paying attention to a chalkboard since now they can Google information on their cell phones. We need to change teaching methods and integrate technology.
Right now we are teaching our students only what is needed to pass standardized tests. On the other hand, other countries are placing emphasis on developing their students' critical thinking, analytical and investigative skills. Similarly, these countries' labor sectors are developing better. It isn't only Puerto Rican students. The whole U.S. education system has fallen to the 39th spot in global education. A system that before was a role model for the world has been left behind ... education is not something we can plan immediately and see progress in two years. We need a continuous education plan.
Instead of changing staffs and programs with each new party, we need an Education Department that is full of qualified and capable people regardless of political affiliation. We will have performance evaluations to determine who goes and stays. Our teachers are at the heart of all this. We need to pay them more for their work, based on their experience, qualifications, and their students' development.
We have the funds to restructure the education system but what we lack is political will to adequately manage them. We are losing federal money because we don't use it within the timeframe allowed by the federal government.