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The collapse of compact theory should mean statehood for Puerto Rico

Whig Hall.
Angel Kuo / The Daily Princetonian

The following is a guest contribution and reflects the author’s views alone. For information on how to submit an article to the Opinion Section, click here.

Former president of the Puerto Rico Senate Eduardo Bhatia ’86, a visiting professor in the School of Public and International Affairs, spoke at a thoughtful colloquium on Puerto Rico’s territory status at an event hosted by the American Whig-Cliosophic Society on April 11. Bhatia retold the start of his career in politics and described the issues to which he has devoted his time in public office, namely: education, energy policy, and Puerto Rico’s debt. 


The main topic of Professor Bhatia’s talk was statehood for Puerto Rico. He presented the issue as a twofold one: a matter of civil rights and of Puerto Rican identity. Regarding the former, he said it should be a no-brainer — naturally, Puerto Ricans, as U.S. citizens, should be able to have a say in national affairs by voting for the President of the United States and sending voting representatives to Congress. But regarding the latter, he stressed the sensitivity of the politics of Puerto Rican identity and its many forms, implying that they may impede further integration with the mainland.

However, the cultural question is often overstated. The question is not whether Puerto Ricans wish to be admitted into the Union. That was already answered in the affirmative in a 2020 referendum. The question is whether Congress will admit them, which has been long delayed by special interests and legal ambiguities. One of the barriers to entry is the so-called “compact theory,” which posits the existence of a bilateral agreement, or ‘compact,’ between the United States and Puerto Rico, effectively suggesting that Puerto Rico became sovereign upon gaining Commonwealth status. This can present a hurdle to statehood, as it promotes the status quo as being a viable alternative. 

Yet compact theory is easily dismissed — and has been by the Supreme Court. Further, there’s low support for independence, and statehood won in the last referendum. All of this points to statehood being a question of “if,” not “when.” As we move beyond compact theory, politicians in both Washington and in San Juan should answer the call of statesmanship, reject identity and party politics, and admit Puerto Rico into the Union.  

Professor Bhatia gave a well-summarized legal history of Puerto Rico. Past insular cases deemed Puerto Rico “foreign … in a domestic sense” (Downes v. Bidwell), and they are still precedential law today (despite recent challenges). Puerto Rico is an unincorporated territory of the U.S. and has never been anything else. Though citizens of these United States since 1917, Puerto Ricans have never chosen our President or sent a voting representative to Congress, let alone had a meaningful say in which welfare programs we benefit from or which wars we fight in. This is true despite the fact that, for more than a century, Puerto Ricans have fought for our country in every major war and gallantly served it.   

Once he reviewed the legal history, Professor Bhatia discussed ‘compact theory’ through a story about his own role in Puerto Rico v. Franklin California Tax-Free Trust (2016). The case was prompted because the island lacked legal recourse for bankruptcy after it was partially removed from the Federal Bankruptcy Code in 1984. In the absence of coverage by the law, then-Senate President Bhatia drafted and passed a similar bankruptcy law in the Puerto Rico legislature. The law’s validity was premised at least partially on compact theory, supposing that if the island is sovereign it can set its own laws. The Supreme Court rejected the law and compact theory with it.

Indeed, the High Court has been repeatedly clear, then and since, that compact theory is no more than a myth. In Puerto Rico v. Sánchez Valle (2016), the court found that Puerto Rico is not a sovereign for double-jeopardy purposes. Justice Elena Kagan’s opinion for the Court completely debunked compact theory, affirming that the Commonwealth of Puerto Rico only exists by the imprimatur of the US Congress, given in Public Law 600 of 1950. “Put simply, Congress conferred the authority to create the Puerto Rico Constitution, which in turn confers the authority to bring criminal charges … The island’s constitution, significant though it is, does not break the chain.” 


This should come as no surprise. To accept compact theory is to break with all prior Congressional treatment of territories. Rather, as Columbia law professor Christina D. Ponsa-Kraus ’90 noted, “Congress merely did what Congress has always had the power to do under the Territory Clause: it conferred upon Puerto Rico a significant degree of autonomy — greater autonomy than any territory before it — but it did not relinquish U.S. sovereignty under the Territory Clause, nor could it have.” 

Why, then, does compact theory exist? As Professor Bhatia noted, the useful fiction benefited America on the world stage during the Cold War to argue that it had decolonized Puerto Rico. Also, the notion of a ‘special relationship’ between the US and Puerto Rico profited Governor Luis Muñoz Marín and his Popular Democratic Party, who were intent to both mollify and capitalize on nationalist sentiment — which, in the 1930s and 40s, had reached a fever pitch that has died down ever since. 

Though perhaps instrumentally useful in the 1950s, the proliferation of this theory has been ultimately harmful. The legal ambiguity of compact theory — and territorial status as a whole — serve to create a tax haven for corporate and private wealth. This is excellently documented by Alexander Odishelidze in his book Pay to the Order of Puerto Rico, which, though almost twenty years old, remains a highly relevant guide to the status question and to the use and abuse of tax breaks in Puerto Rico, both at the federal and local level. The rhetoric of a special relationship between Puerto Rico and the U.S. was always meant to disguise what Puerto Rico remains to this day: a territory. 

The death of compact theory was heralded by the 2016 Supreme Court cases and what followed. After Puerto Rico v. Franklin California Tax-Free Trust, Congress passed the PROMESA Act, which mandated a Financial Oversight Management Board to handle Puerto Rico’s debt. Its role in the island’s politics has been controversial ever since. Needless to say, this would not have happened if Puerto Rico had a voting Congressional delegation: a clear sign that Commonwealth status is simply untenable. 

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With Congress retaining the last word, Puerto Rico’s status must be finally settled by the legislative process. As many Princetonians flock to Washington for summer internships in Capitol Hill, they would do well to consider this national question for what it is: one of civil rights. 

Compact theory’s rejection by the Supreme Court speaks to the inherent problems of territorial status. This experiment has been tried and found wanting, which leaves only two options: statehood or independence. Statehood is not the panacea to all of the island’s woes, but it will best equip Puerto Ricans to promote their interests and fully participate in national affairs. Statehood alone would redeem the full value of the precious grant of American citizenship and thus secure the blessings of liberty for three million Americans. 

Ignacio Arias is a sophomore from Guaynabo, PR. He can be reached at