>> Reporter: ALONG THE STREETS

OF SAN JUAN, PUERTO RICO,

GRAFFITI READING "NO MORE ABUSE"

AND "FASCISM IN PUERTO RICO" ARE

A WINDOW INTO THE UNREST SPARKED

BY THE LARGEST FINANCIAL CRISIS

IN THE ISLAND'S HISTORY.

SINCE JANUARY, THOUSANDS HAVE

PROTESTED AUSTERITY MEASURES AND

CUTS TO PUBLIC SERVICES IMPOSED

ON THIS U.S. TERRITORY THAT'S

HOME TO 3.4 MILLION U.S.

CITIZENS.

BUT PUERTO RICO CURRENTLY OWES

CREDITORS A MASSIVE $72-BILLION

DOLLARS.

LAST YEAR, FOLLOWING A SERIES OF

DEFAULTS ON DEBT PAYMENTS,

CONGRESS PASSED, AND PRESIDENT

OBAMA SIGNED, THE PUERTO RICO

OVERSIGHT MANAGEMENT AND

ECONOMIC STABILITY ACT, OR

"PROMESA," WHICH MEANS "PROMISE"

IN SPANISH.

THE LAW GAVE A FINANCIAL

OVERSIGHT BOARD VETO POWER OVER

PUERTO RICO'S BUDGET AND

PROVIDED A PROCESS TO

RESTRUCTURE THE DEBT.

DID YOU REALIZE WHAT YOU WERE

GETTING YOURSELF INTO?

>> I DID NOT.

>> Reporter: JOSE CARRION, WHO

RUNS A LARGE INSURANCE BROKERAGE

IN SAN JUAN, CHAIRS THE

APPOINTED SEVEN MEMBER BOARD.

>> THE BUDGET WAS UNBALANCED BY

AROUND $3-BILLION DOLLARS.

SO WE HAD TO BEGIN GETTING OUR

FISCAL AFFAIRS IN ORDER, AND

THAT ENTAILED DIFFICULT

DECISIONS AS TO, YOU KNOW, MAJOR

SPENDING.

>> Reporter: THOSE DIFFICULT

DECISIONS INCLUDED CUTS TO

PENSION PAYMENTS FOR RETIRED

GOVERNMENT WORKERS, REDUCING

SPENDING ON HEALTHCARE, CLOSING

179 PUBLIC SCHOOLS AND REDUCING

THE GOVERNMENT WORKFORCE.

SINCE 2013, NEARLY 30,000

GOVERNMENT WORKERS HAVE LOST

THEIR JOBS.

ROXANA PEREZ HAD WORKED AS AN

ADMINISTRATIVE ASSISTANT FOR THE

POLICE DEPARTMENT IN CAROLINA, A

TOWN OUTSIDE OF SAN JUAN.

>> ( translated ): I LOVE

SERVING MY COUNTRY.

>> Reporter: SHE'S NOW LOOKING

FOR A NEW JOB, BUT IT'S NOT

EASY.

THE UNEMPLOYMENT RATE IN PUERTO

RICO IS 11%, TWO-AND-A-HALF

TIMES THE U.S. RATE.

I ASKED WHETHER SHE WAS WORRIED

THE POSITION COULD BE CUT, GIVEN

THE DEBT CRISIS.

>> ( translated ): I HAD FAITH

THAT MAYBE THERE WOULD BE AN

OPPORTUNITY TO CONTINUE.

THERE IS A REAL NEED FOR CIVIL

EMPLOYEES HERE AT THE PUERTO

RICAN POLICE, BELIEVE ME.

>> Reporter: THIS SPRING,

STUDENTS AND FACULTY PROTESTED A

PROPOSED $450-MILLION DOLLAR

BUDGET CUT TO THE UNIVERSITY

SYSTEM OVER THE NEXT FOUR YEARS.

ARCHITECTURE STUDENT MINETTE

BONILLA WAS PART OF A DELEGATION

THAT MET WITH THE FISCAL

OVERSIGHT BOARD.

>> WE ASKED THEM POINT BLANK,

"DO YOU KNOW WHAT THE

CONSEQUENCES WILL BE OF THOSE

CUTS? DO YOU KNOW WHAT THE

CONSEQUENCES WILL BE FOR

STUDENTS AND THEIR ACCESSIBILITY

TO EDUCATION?"

"WE HAVEN'T DONE THOSE STUDIES."

SO THEY'RE JUST CUTTING OUT OF

SHEER NUMBERS WITHOUT KNOWING

ANY IMPLICATIONS FOR THE PEOPLE

THAT ARE SUFFERING THOSE CUTS.

>> Reporter: MORE BROADLY,

STUDENTS ALSO WANT A THOROUGH

AUDIT OF THE ISLAND'S PUBLIC

DEBT BY AN INDEPENDENT BODY.

BUT ABOVE ALL, STUDENTS LIKE

MARIO GONZALEZ NEVARES ARE

CRITICAL OF THE PROMESA LAW,

WHICH CREATED THE BOARD IN THE

FIRST PLACE.

>> PROMESA IS THE EXAMPLE OF

COLONIALISM IN THE 21ST CENTURY.

THIS LAW WAS CREATED

UNILATERALLY BY THE U.S.

CONGRESS, AND IT WAS IMPOSED

OVER PUERTO RICO. AND IT'S ONLY,

ONLY REASON TO EXIST IS TO MAKE

SURE THE BONDHOLDERS ARE PAID.

>> Reporter: PUERTO RICO'S $72-

BILLION DOLLAR DEBT IS OWED TO

BONDHOLDERS, OR CREDITORS, WHO

BOUGHT BONDS THAT FINANCED THE

ISLAND'S GOVERNMENT.

THAT INCLUDES LARGE INVESTORS

LIKE MUTUAL FUNDS AND HEDGE

FUNDS ON THE U.S. MAINLAND, AS

WELL AS LOCAL PUERTO RICANS.

THERE ARE THOSE ON THE ISLAND

WHO BELIEVE THAT THE BOARD IS

MORE CLOSELY ALIGNED TO THE

NEEDS OF THE CREDITORS, HOW DO

YOU RESPOND TO THOSE CRITICISMS?

>> I DON'T CONSIDER MYSELF

BEHOLDEN TO ANY PARTICULAR

BONDHOLDER CLASS.

WE'RE TRYING TO DO THE BEST WE

CAN UNDER EXTREMELY DIFFICULT

CIRCUMSTANCES, BUT THE REALITY

IS THAT WE'RE TAKING EVERYTHING

AND EVERYBODY INTO CONSIDERATION

AND TRYING TO BALANCE ALL THOSE

INTERESTS.

>> Reporter: BUT BONDHOLDERS ARE

WORRIED.

RAFAEL ROJO IS A SAN JUAN REAL

ESTATE DEVELOPER AND CHAIRMAN OF

BONISTAS DEL PATIO, A GROUP

REPRESENTING SOME OF THE 60,000

PUERTO RICAN BONDHOLDERS.

HE ESTIMATES THEY'RE OWED $15-

BILLION DOLLARS.

>> BEHIND WALL STREET, THERE'S A

LOT OF INDIVIDUAL PEOPLE WHO

HAVE THEIR SAVINGS IN THESE

INSTRUMENTS.

>> Reporter: ROJO IS ALARMED BY

THE PUERTO RICAN GOVERNMENT'S

PLAN TO PAY BACK LESS THAN A

QUARTER OF THE DEBT IT OWES OVER

THE NEXT DECADE.

>> IT'S QUITE CLEAR, AND IT'S

SCIENTIFICALLY IMPOSSIBLE TO SAY

OTHERWISE, IT IS THE BONDHOLDERS

WHO HAVE BEEN TARGETED AS THE

ONES WHO ARE GOING TO PAY FOR

THE CRISIS.

AND I THINK THAT'S A HUGE

MISTAKE.

>> Reporter: HE'D LIKE TO SEE

THE SIZE OF PUERTO RICO'S

GOVERNMENT SHRUNK EVEN MORE, AND

THE 78 SEPARATE MUNICIPALITIES

ON THE ISLAND CONSOLIDATE THEIR

SERVICES.

THE OVERSIGHT BOARD FORECASTS

THE ISLAND'S ECONOMY WILL

CONTINUE TO SHRINK THROUGH 2021

BEFORE STARTING TO GROW.

YET OUTSIDE ECONOMISTS, SUCH AS

NOBEL LAUREATE JOSEPH STIGLITZ,

WARN THE BOARD'S AUSTERITY

MEASURES WILL ALL BUT GUARANTEE

A SOCIAL AS WELL AS AN ECONOMIC

CATASTROPHE.

ARE THERE EXAMPLES OF ECONOMIES

ELSEWHERE IN THE WORLD THAT HAVE

EVENTUALLY GROWN UNDER

AUSTERITY?

>> PUERTO RICO'S SITUATION IS

VERY SPECIFIC.

IT IS UNLIKE GREECE IN THAT IT

IS NOT A SOVEREIGN NATION.

IF FOLKS HERE DO NOT CARE FOR

WHAT'S GOING ON, THEY WILL MOVE

OFF ISLAND.

COMPARISONS ARE DIFFICULT IN

LIGHT OF PUERTO RICO'S

TERRITORIAL SITUATION.

>> Reporter: PUERTO RICO HAS

BEEN UNDER U.S. CONTROL SINCE

THE END OF THE SPANISH-AMERICAN

WAR IN 1898, AND IN 1947 WAS

GRANTED AN ELECTED GOVERNMENT.

BUT AS AN UNINCORPORATED

TERRITORY, THE U.S. CONGRESS IN

WASHINGTON CAN OVERRIDE THE

ISLAND'S LAWS, AND PUERTO RICANS

CANNOT VOTE FOR PRESIDENT AND

HAVE NO VOTING REPRESENTATION IN

CONGRESS.

THE APPOINTMENT OF A FISCAL

CONTROL BOARD AND THE EFFECT OF

AUSTERITY MEASURES ON THE ISLAND

HAVE RE-IGNITED A DECADES-OLD

DEBATE REGARDING PUERTO RICO'S

RELATIONSHIP TO THE UNITED

STATES.

MANY PEOPLE HERE, INCLUDING THE

GOVERNOR, BELIEVE A SOLUTION TO

THE ECONOMIC CRISIS WILL NEVER

BE FOUND UNLESS THE TERRITORY'S

POLITICAL STATUS IS RESOLVED

ONCE AND FOR ALL.

>> THE VOICE OF THE PUERTO RICAN

PEOPLE WAS LOUD AND CLEAR.

>> Reporter: LAST MONTH, 97% OF

PUERTO RICANS VOTED FOR THE

TERRITORY TO BECOME THE 51ST

U.S. STATE IN A REFERENDUM

ORGANIZED BY THE ISLAND'S PRO-

STATEHOOD GOVERNOR.

YET ONLY 23% OF ELIGIBLE VOTERS

TURNED OUT.

THE VOTE WAS HEAVILY BOYCOTTED

BY THOSE FAVORING INDEPENDENCE

AND THE STATUS QUO OF REMAINING

A COMMONWEALTH.

IT'S UP TO CONGRESS TO RATIFY

STATEHOOD, BUT PREVIOUS

REFERENDA HAVE BEEN IGNORED, AND

THE CURRENT MOVEMENT HAS SCANT

SUPPORT ON CAPITOL HILL.

>> IF WE'RE AMERICAN CITIZENS,

WE SHOULD STRIVE TO HAVE FIRST-

CLASS TREATMENT IN PUERTO RICO.

>> Reporter: FORMER PUERTO RICAN

SECRETARY OF STATE KENNETH

McCLINTOCK IS PRESIDENT OF

EQUALITY FOR PUERTO RICO", A

PRO-STATEHOOD LOBBY GROUP.

>> ONCE WE MOVE TO ORLANDO, OR

NEW YORK, OR TEXAS, OR NORTH

CAROLINA, WE'RE TREATED AS FIRST

CLASS CITIZENS.

WE HAVE THE RIGHT TO VOTE, WE

HAVE THE RIGHT TO CONGRESSIONAL

REPRESENTATION, WE HAVE THE

RIGHT TO PARTICIPATE IN EVERY

FEDERAL PROGRAM.

>> Reporter: McCLINTOCK BELIEVES

PUERTO RICO'S TERRITORY STATUS

LED TO THE CRISIS, IN PART,

BECAUSE PAST GOVERNMENTS WERE

FORCED TO BORROW FOR ESSENTIAL

SERVICES LIKE ROADS AND HEALTH

CARE.

FOR EXAMPLE, PUERTO RICO

RECEIVES MUCH LESS FEDERAL

FUNDING FOR MEDICAID THAN U.S.

STATES DO.

>> THE TRUTH IS THAT THERE WILL

NOT BE A STABLE FISCAL

SITUATION, ECONOMIC SITUATION IN

PUERTO RICO, UNTIL THERE'S

ECONOMIC GROWTH.

AND THERE WILL NOT BE A HEALTHY

ECONOMIC GROWTH RATE UNTIL THERE

IS EQUALITY.

>> I'M ONE OF THE PEOPLE THAT

BELIEVE THAT WE SHOULD

DEFINITELY ATTEND TO THE ISSUE

OF STATUS.

BUT IT'S NOT A MAGIC WAND THAT

WILL RESOLVE ALL OF OUR

PROBLEMS.

>> Reporter: MANUEL NATAL, A

REPRESENTATIVE IN PUERTO RICO'S

OWN LEGISLATURE, FAVORS

REMAINING A COMMONWEALTH WITH

MORE ECONOMIC SOVEREIGNTY.

FOR EXAMPLE, HE'D LIKE CONGRESS

TO REPEAL THE CENTURY-OLD LAW

THAT REQUIRES ALL IMPORTS TO

ARRIVE ON AMERICAN MADE AND

MANNED SHIPS, WHICH MAKES ALL

FOOD AND GOODS MORE EXPENSIVE.

>> THE TOOLS THAT WE HAVE TO

ACHIEVE ECONOMIC DEVELOPMENT IN

PUERTO RICO, ONE CONGRESS MIGHT

GIVE IT TO YOU, ANOTHER CONGRESS

MIGHT TAKE IT AWAY.

>> Reporter: BUT FOR SOME ON THE

ISLAND, THE SOLUTION FOR PUERTO

RICO IS SEPARATING FROM THE U.S.

AND BECOMING A SOVEREIGN NATION.

>> PUERTO RICO IS A LATIN

AMERICAN, CARIBBEAN NATIONALITY

WITH ITS OWN IDENTITY.

>> Reporter: PUERTO RICAN

SENATOR JUAN DELMAU LEADS THE

PUERTO RICAN INDEPENDENCE PARTY,

THE THIRD LARGEST ON THE ISLAND.

>> ( translated ): AN

INDEPENDENT PUERTO RICO WOULD

HAVE POLITICAL AND LEGAL

AUTHORITY TO JOIN THE GLOBAL

COMMUNITY AND OPEN MARKETS WHILE

AT THE SAME TIME MAINTAINING

FRIENDSHIP AND COOPERATION WITH

THE U.S. BUT ON AN EQUAL

FOOTING, NOT IN POLITICAL

SUBORDINATION.

>> Reporter: WHILE CHALLENGES TO

THE STATUS QUO PERSIST, LAST

MONTH, THE FEDERALLY APPOINTED

FINANCIAL OVERSIGHT BOARD

APPROVED DEEP SPENDING CUTS TO

PUERTO RICO'S BUDGET.

>> REGARDLESS OF HOW ANYONE

FEELS ABOUT STATUS IN PUERTO

RICO, YOU NEED A BALANCED

BUDGET.

>> Reporter: THIS GRAFFITI ON

ONE SAN JUAN STREET READS "DOWN

WITH HIS MAJESTY JOSE CARRION"

>> IT MAKES ME SAD, AND YOU

KNOW, I'M NOT A POLITICIAN, SO

I'M LEARNING TO DEAL WITH

CRITICISM OF THAT NATURE.

>> Reporter: YET, CARRION SAYS

HE UNDERSTANDS THE CRITICISM

THAT HIS BOARD IS NOT

ACCOUNTABLE TO THE ISLAND'S

RESIDENTS.

>> THERE'S NO WAY ANYBODY COULD

CONCEIVABLY THINK THAT THIS IS A

DEMOCRATIC PROCESS.

BUT, HOW ABOUT LOOKING AT THE

POSITIVE SIDES.

THE LAW, IT PROVIDES US THE

OPPORTUNITY TO PROCURE A WAY

FORWARD, AND TO RESTRUCTURE, YOU

KNOW, $72-BILLION WORTH OF DEBT.

WE NEED TO TAKE THIS OPPORTUNITY

THAT CONGRESS HAS PROVIDED US

AND MOVE OUR PEOPLE AND OUR

ISLAND FORWARD.