The hall is a sea of pink and white. About 350 Puerto Ricans, mostly women, have come to hear their First Lady speak in what they hope will be the final push towards a new relationship between their island and the United States.

When Beatriz Rosselló, the 32-year-old wife of the governor of Puerto Rico, finally appears at the rally outside the capital San Juan, the room erupts into a frenzy of flag-waving. The American Stars and Stripes with its 50 stars, and the Puerto Rican emblem, with its single one, intertwine amid the flurry, giving the illusion that they have fused: 51 stars in a single banner of red, white and blue.

Which is precisely the message that Beatriz Rosselló wants to transmit when she manages to fight her way through the selfie-taking crowd to the microphone. “Imagine this,” she says in Spanish. “Imagine that everyone agrees that it is time to take down the American flag and raise it up again with one more star for Puerto Rico. Imagine how beautiful that would be.”

Rosselló and her supporters of the governing Partido Nuevo Progresista (PNP) hope to take that spirit of unification to the polling stations on Sunday when Puerto Rico holds its fifth plebiscite on statehood in 50 years. The ambition is to deliver such a resounding cry from the island’s 3.4 million citizens that Washington will be forced to take Puerto Rico on board as the 51st state of the United States.

It is a forlorn hope, coming at a time of singular anguish for this Caribbean territory that has been an unincorporated US territory since the Spanish-American war of 1898. The island is struggling after a decade-long recession that has seen its unemployment rate reach 12.4%, compared with 4.7% in the US as a whole, and its overall debt burden and pensions shortfall rise to more than $120bn.

Last month, Beatriz Rosselló’s husband Ricardo hit the nuclear button and took Puerto Rico into a form of bankruptcy – the first time in history that any US state or territory had done so. That followed the imposition last year by the US Congress of a fiscal control board that exerts federal oversight of the island’s finances, imposing excruciating cuts to public services including education, health care and benefits.

Twenty minutes’ drive away from the pro-statehood rally, the devastation of the past few years is laid bare at the Río Piedras campus of the University of Puerto Rico. The gates of the institution are padlocked and barricaded with old wooden crates and iron bars, and the tree-lined grounds are empty save for some workers clearing up rubbish.

For the past 71 days students have occupied the campus in protest over cuts, terminating all its classes and turning Rio Piedras into a wasteland. Though the strike ended on Friday, the walls of the academic buildings are still festooned in strikers’ graffiti: “A country unemployed, a people tired – we must demand more,” says one slogan.

One of the strikers, Juan Collazo, 22, personifies the problems now faced by millions of Puerto Ricans. He decided to join the strike, he said, when cuts were announced that, by some accounts, would slash up to $512m from the university’s $900m annual budget, destroying its historic standing as a place of learning for thousands of poor citizens.

Collazo calculates that if the cuts go ahead he will find his tuition fees rise from nothing – they are fully covered by federal grants – to $1,600 a year. That’s an amount he says he could no way afford: jobs have all but dried up.

The fallout of the financial crisis is hurting other members of his family, too. His mother has just lost her job as an elementary teacher; her workplace was one of 184 public schools shuttered in the latest round of school closures.

Amid such personal hardship, Collazo is left unmoved by Sunday’s referendum on whether or not to become America’s 51st state, in which he has no intention of participating. He calls himself an “independista”, wanting full sovereignty for his country.

He believes the vote is worse than pointless, it is manipulative: “They are spending $8m holding this vote, and yet will the US Congress take any notice of it? No, they won’t. This is just another attempt to divide and conquer us.”

These are some of the disgruntled feelings that the governor, Ricardo Rosselló, is battling against having called the statehood vote. All opposition parties in the country have vowed to boycott the Sunday poll, further threatening its credibility.

Rosselló dismisses the boycott as a ruse on the part of the opposition to disguise their own political weakness. He says $8m is small change if it addresses the much greater cost of being a colony.

“The current status is shameful,” he says. “It is shameful to be a colonial territory in the 21st century, and for the United States to own one. The nation that is the standard bearer of freedom and democracy should not be in this position – it’s hard to go to Cuba and Venezuela and voice your support for democracy when you’re not doing it at home.”

Rosselló said: ‘It is shameful to be a colonial territory in the 21st century, and for the United States to own one.’ Photograph: Bloomberg/Getty Images

Rosselló speaks to the Guardian in the Throne Room, the gilded centerpiece of the 1530s governor’s mansion known as La Fortaleza that was designed to welcome Spanish royalty. (They never showed up). The room stands as the embodiment of 500 years of colonial rule –under Spain and then the US – which make it the oldest colonial territory in the world.

The governor says that the melding of Spanish and American culture is a strength for Puerto Rico to embrace, not a liability to discard with independence. “Some people will say you need to choose one over the other but I think this is a false narrative. Puerto Rico is the perfect connector of the Americas – the Latin American and the North American.”

Even in the age of Trump? The president who has denigrated Mexican “rapists and murderers”, promised to build a wall to keep Latinos out, sneered at Puerto Rico’s desire for a “bailout”?

“My view is, I don’t know that he is anti-Latino,” Rosselló says with studious diplomacy. “Obviously I’ve heard some derogatory remarks but I don’t know him personally, and it doesn’t deter me.”

But is there any sign that the US Congress is prepared to move an inch towards granting statehood? “If we establish that the people of Puerto Rico want statehood and reject the current colonial status, then the nation that professes democracy is going to need to act,” he says.

Behind all this frenetic talking and disagreement is a key Puerto Rican paradox: the islanders are united at least by their unanimous obsession with the United States. You can see it in the framing of their major parties, which all define themselves in terms of their desired relationship with the mainland – Rosselló’s PNP in favour of becoming the 51st state, the opposition Partido Popular Democrático (PPD) broadly in favor of the status quo, and a small but influential independence party calling for a clean break.

You see it with the exodus: more than 400,000 inhabitants have left the troubled island since the last status vote in 2012, overwhelmingly to the US. There are now almost 5.2 million Puerto Ricans living in the US, almost 2 million more than at home, making them an increasingly powerful voice in electorally sensitive states such as Florida.

Domestically, you see the paradox played out on the streets of San Juan, a Spanish-speaking Latin American city with US chain stores on every block. You see it too in the high prices of food and other daily products, with more than 80% of the island’s food imported, largely from the US and all of it, by law, under the flag of the (very expensive) US merchant navy.

Above all, you see Puerto Rico’s fraught connection to the US in the strange legal context that was bestowed on its people under the terms of the 1917 Jones Act that granted them US citizenship but not the federal vote. From that legislation a host of contradictions and insults have flowed.

The most glaring of those is that Puerto Ricans living on the island cannot vote for US president, though if they move to one of the 50 states, they can.

In short: Puerto Rico remains the awkward embarrassment of the US. America, a nation founded on the rejection of the imperial yoke continues to hold on to its own colonial outpost, 119 years after the fact.

“The issue of eradicating colonialism is extremely important, not only for us as a country that’s going through very hard times, but for the US which has been a beacon of freedom around the world, or at least has portrayed itself as that,” says the mayor of San Juan, Carmen Yulín Cruz. A member of the opposition PPD, she wants to see the island acquire full sovereign powers while retaining close links to the US – a sort of middle ground between statehood and independence.

She thinks becoming the 51st state would only lock in Puerto Rico’s dependence on its powerful overlord, which is why she’s boycotting Sunday’s vote. “You don’t fight injustice by asking to become part of the system that committed the injustice against you in the first place. That’s like a freed slave striving to become a slave owner.”