By the eighteenth century, Puerto Rico had become a major exporter of tobacco, coffee, and sugarcane. Yet discontent with colonial rule led to a growing independence movement on the island, and Spain granted Puerto Rico self-government in 1897. Just months later, however, the United States invaded the island during the 1898 Spanish-American War as part of a broader effort to push Spain out of the Caribbean and the Pacific.

It took more than five years of negotiations for a federally appointed oversight board to approve a restructuring plan, and controversy persists. As a territory, Puerto Rico’s options were limited from the beginning. It could not receive assistance from the International Monetary Fund, like insolvent countries such as Greece have. Neither could it file for Chapter 9 bankruptcy, which municipalities such as Detroit have used to receive legal protection against creditor claims while restructuring their payments.

Weekly. By entering your email and clicking subscribe, you're agreeing to receive announcements from CFR about our products and services, as well as invitations to CFR events. You are also agreeing to our Privacy Policy and Terms of Use. In the wake of World War II and a global wave of decolonization, U. policymakers faced pressure to increase Puerto Rico’s autonomy.

What does its territory status mean? Article 4, Section 3, of the U. Constitution, known as the territorial clause, gives Congress broad authority to govern U. territories. Puerto Rico is the most populous U. territory. Others include American Samoa, Guam, the Northern Mariana Islands, and the Virgin Islands. They are granted various measures of self-rule, but lack their own sovereignty. Though Puerto Ricans are U. citizens eligible for military conscription and subject to federal laws, they lack full congressional representation. A single member of the U.

Some say the U. -Puerto Rico relationship should remain as is. The centrist Popular Democratic Party (PPD) has historically championed the status quo, which is also called the commonwealth position. Enhanced commonwealth. Others, including some PPD members, advocate what they call an enhanced version of Puerto Rico’s current commonwealth status.

Some argue that cutting debt without requiring deeper structural reforms means problems are likely to repeat. Others worry that maintaining pension obligations—which amount to $2. 3 billion yearly—will prove unsustainable. Advocacy groups such as the Center for Popular Democracy say the deal will result in more economic austerity, including cuts to health care and education. They echo many critics who oppose the PROMESA process on the grounds that it undermines the territory’s already weak self-rule. PROMESA’s oversight board will remain in place until Puerto Rico meets several financial milestones—three more years at least.

Most notably, PROMESA created a seven-member financial oversight board appointed by the White House that was granted full control of Puerto Rico’s finances. It also created a debt restructuring process similar to Chapter 9 that governed negotiations with creditors to reduce debt payments. Those negotiations were beset by controversy, as it became clear that all involved—bondholders, Puerto Rican pension funds, and other public services—faced steep losses. Several versions of a sweeping plan to cut the island’s debt were floated, but creditors promised legal challenges, and efforts were paused due to the COVID-19 pandemic.

In January 2022, a federal judge approved a final plan between the PROMESA board and Puerto Rico’s government, paving the way for the island to escape bankruptcy and resume making payments to creditors. The deal cuts $33 billion in total debt obligations down to $7. 4 billion, lowering Puerto Rico’s annual debt payments from nearly $4 billion to just over $1 billion. Supporters say the deal puts the island on a sustainable path while avoiding any cuts to public pensions, which had been a major point of contention. However, critics are wary of the resolution.

This could include allowing the island to conduct its own foreign policy and exempting it from federal law. However, U. officials—including a presidential task force and the Justice Department—have repeatedly dismissed this option. Statehood. Proponents of statehood, including the island’s other major party, the New Progressive Party, say it would finally make Puerto Ricans full citizens. Additionally, the island could receive up to $12.