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Sale of telephone company sparks bitter debate over Puerto Rico’s future

October 1, 1997

SAN JUAN, Puerto Rico (AP) _ The strength of a general strike called for Wednesday to protest plans to sell the Puerto Rico Telephone Co. will be a measure of the power of embattled unions, which are losing ground under an ambitious privatization program.

The unions ``are fighting a battle for their survival,″ said management professor Elias Gutierrez at the University of Puerto Rico. ``They know they’re up against the wall. If they lose this, there’s no future.″

As with every issue here, a battle line has been drawn between Gov. Pedro Rossello, who wants Puerto Rico to join the United States as its 51st state, and opponents who favor the status quo.

The governor wants to sell the profitable telephone company to improve efficiency and telephone rates in a territory where it’s more expensive to call from one island town to another than to call San Francisco.

The company makes $100 million a year and employs 8,000 people in what some economists have called a management-heavy bureaucracy.

Rossello has refused to guarantee that there will be no layoffs in a takeover.

Union leaders have called for a march on the capital Wednesday.

The government has warned opposition politicians not to use state funds to bus protesters, and has voiced support for employers who punish absent workers.

Before Rossello took office in 1993, the government sold 80 percent of shares in its long-distance telephone company. Under Rossello, the march toward privatization continues. A money-losing shipping company was switched to private hands, and there are plans to sell 100 public health clinics and some luxury hotels.

All were once union bastions. But unions hold little sway in the private sector and are losing ground in the public sector, which employs 25 percent of the work force.

Rossello supporters insist they’re not out to break the unions, just bring their leaders down to size.

``What they are trying to do is protect their own benefits and fat salaries,″ Marcos Rodriguez-Ema, head of the government Privatization Committee, said last week.

The unions claim the government is grasping for ways to bankroll exorbitant building projects. One union leader, Alfonso Benitez Rosa, said sale proceeds would disappear into a bureaucratic black hole.

Rossello announced the move in March even as investigators pursued tax evasion charges against telecommunications firms that received $650 million in contracts from the telephone company. The company’s president, Agustin Garcia, resigned.

Rossello says sale profits would help ease a $5 billion shortfall in the state retirement fund, repair a leaking water system and ensure continued benefits to telephone workers.

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