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/ Wednesday, March 2, 2022
Possible Impacts of the War in Ukraine on Puerto Rico
Economist José J. Villamil presents options for the future
T
Zoe Landi Fontana, The Weekly Journal
he impact of the Ukraine war on Puerto Rico will be felt in the ripple effects the crisis will have on the global economy as a whole. THE WEEKLY JOURNAL spoke with José J. Villamil of Estudios Técnicos for his insights on how various outcomes of the war in Ukraine could affect Puerto Rico. His main takeaway: “Integration makes for greater efficiency, but also for greater vulnerability.” In the short term, Puerto Rico will see an exacerbation of preexisting issues. Consumer prices will go up and inflationary pressures will increase - as has been seen in the first few months of this year already. Last year, construction material costs went up 40%; the price of PVC alone increased by over 200%. These pressures have been present since the pandemic hit, but the war in Ukraine will add yet another hurdle to the local economy’s recovery, still recuperating from Hurricanes María and Irma and COVID-19. “In the short term - one to two years - we should see high prices for food, fuels, and materials such as steel and aluminum,” said Villamil, “In the long term, we will see the changing of geopolitics, global composition, and power relationships.”
Shifts In The ‘Globalization’ Paradigm
“The whole process of globalization has changed. When discussions on globalization began in the 70s and 80s, the idea was that globalization was the expansion of the European and Western model to the rest of the world,” explained Villamil, “What is very clear now, is that the globalization
Status is an instrument, it’s not an end in itself. Looking at it that way, we have to understand what is waiting at the other end. José J. Villamil Economist
estimated 4.8 billion barrels of unleaded gasoline from Russia - representing about 17% of total imported gasoline. A shift to renewables, Villamil says, is practically an emergency issue. “The Ukraine situation has made it abundantly clear. The world is so integrated, the global economy, that it is very difficult to do things like, for example, sanctioning Russia by prohibiting their exports of petroleum and natural gas. Eliminating SWIFT for the Russians also implies a great deal of disruption for Western European countries and the US,” Villamil commented.
Puerto Rico’s Status
If, as a result of the conflict, the US is revealed to process still exists, but the key actors are very no longer be the world’s dominant power, Puerto different: We have China and other players.” Rico will have to reassess its relationship with the What is apparent, is that the volatility in the U.S. In discussions on Puerto Rico’s best options global scenario will probably for the future, no one is putting remain for a while, and Puerto into the equation the changes in Rico will have to continue to the United States. evolve in an unstable and volatile “We still have this idealized environment. Thus, the island’s version of the U.S. in the 1950s According to leaders must take steps to stable, consensus on social issues, data published by minimize such volatility. growing rapidly - and Puerto Rico the FOMB, Puerto Villamil identified some of these merited respect in Washington. Rico received an steps as a rapid transition to That relationship is no longer estimated 4.8 billion non-fossil fuel energy bases and there - Puerto Rico is not a model barrels of unleaded moving towards a more diversified and the U.S. is divided, race issues gasoline from Russia economy, which would naturally are cropping up again,” said - representing about create a larger risk buffer in case Villamil. 17% of total imported of other global crises. In the economist’s opinion, gasoline, in fiscal year In addition to positive the island should be closely environmental effects, the other 2021. watching these changes. All positive dimension of renewable movements - proponents of energy is that it doesn’t rely statehood, commonwealth, and on imports. Puerto Rico is still independence - should be looking dependent on natural gas at what is going on in the U.S. and petroleum imports from Russia and other mainland and decide what will be best for Puerto European countries. It’s worth noting that in the Rico in the long run. fiscal year 2021, according to data published by “Status is an instrument, it’s not an end in itself. the Financial Oversight and Management Board Looking at it that way, we have to understand what for Puerto Rico (FOMB), the island received an is waiting at the other end,” advised Villamil.
In fact,
