Rum War(t)

Keep moving. There's nothing to see here.

That's what I'd say if someone asked Me about the "rum war," the pseudo-economic, mondo-political grandstanding going on in Washington by Pedro "Head Beggar" Pierluisi, assorted local functionaries and soon to feature the inimitable stylings of The Larva himself, Our (non)governor Luis Fortuño.

Here's the skinny: Diageo, producer of Captain Morgan Rum, second in worldwide sales to Our Bacardí, was offered $70 million a year and a brand spanking-new distillery by the U.S. Virgin Islands. The money would come from what's known as the "rum cover tax," a tax on rum sold in the States that returns to Puerto Rico and the USVI. What the USVI did was pledge a portion of their future tax monies to establish Captain Morgan in St. Croix.

Winners: The USVI and Diageo/Captain Morgan.

Losers: Puerto Rico and Serrallés Distillery, the future former home of Captain Morgan.

End result: Puerto Rico cries "Foul!" and whines unceasingly about "unfair this and corporate welfare that" when the fact of the matter is: We were outmaneuvered, outsmarted and outworked.

The rum cover monies represent some $380 million a year to Puerto Rico and about $100 million to the USVI. Ostensibly, the idea is to use the money to build the rum industry on the islands, but the practical application is that it allows the U.S. of part of A. to simply transfer money without thinking about it at all. What do We do with the money? Not much. How much can we be doing if We let a $145 million tax producer simply up and leave?

Yes, this USVI coup will net them an extra $145 million which comes from Our side, from a producer who has spent over a decade on Our shores and because We dropped the ball, found a better deal elsewhere.

It's called business, and if you expect a corporate entity to stick around in mediocre or indifferent conditions when greener pastures are everywhere else, you are an idiot. So yes, I'm calling Our goverment idiotic. What else is new?

The Head Beggar and The Larva and others trundle up to Washington D.C. expecting Congress to settle the matter in favor of reducing the USVI's economy and damaging their investment. Yeah, right. I can imagine Congresscritters nodding somberly while Our party of crybabies pleads to have their boo-boo fixed, then retreating into their back rooms and guffawing at Our stupidity. An island group with less than 110,000 residents and a $2 billion economy figured out a way to beat the bejabbers out of an island with 4 million residents and a $64 billion economy. Hell, at least David had a sling.

Now here's the sad part, for Us: the USVI could do it again. They are planning and building while We screech and whine. Maybe if Our so-called leaders shut their yaps and paid attention, they'd pick up an idea or two from Our neighbors to the east. Since they can't innovate, they should try to imitate them. And not lose sight of the fact that the USVI has plenty of land, plenty of money and the moxie to not only swing Bacardí over to their shores, but several other things as well.

See, to them it's not a war: It's just business.

The Jenius Has Spoken.

[Note: 24 Feb 2010: The rum war goes corporate, with Bacardí taking aim at Diageo. Remember what I said above about swinging Bacardí to USVI shores. It's simply an extension of "If you can't beat them, join them." And Bacardí can't beat the deal, nor can Puerto Rico.]

[Note: 25 Feb 2010: And then more, but notice how Bacardí is aiming directly at the deal Diageo got: if it holds up, what's to keep Bacardí from getting the same from Us or from the USVI?]

[Note: 26 Feb 2010: Head Beggar Pierluisi acknowledges that his bill is not about stopping the "irrelevant" departure of Diageo ("Irrelevant"? The Head Beggar's got a forked tongue...), but about making sure a deal like this doesn't happen again, as reported in El Vocero. (Scroll down on this link to: Irrelevante la salida de Diageo según Pierluisi.) So...Diageo wins, the USVI wins, We lose and the USVI has a finite amount of time to pull off another game-changing deal. Oh, and Bacardí is a Bermuda corporation: watch it screech then go wherever it wants to.]