DOMINICAN REPUBLIC ELECTIONS: LEONEL FERNANDEZ ON

UNCLAS SECTION 01 OF 02 SANTO DOMINGO 005135 SIPDIS SENSITIVE E.O. 12958: N/A TAGS: DR EFIN EPET ETRD PGOV PREL VE SUBJECT: DOMINICAN REPUBLIC ELECTIONS: LEONEL FERNANDEZ ON US, VENEZUELA, DOMESTIC ISSUES REF: A. (A) SANTO DOMINGO 4915 ¶B. (B) SANTO DOMINGO 5003 (NOTAL) ¶1. (SBU) Summary: Former president and presidential pre-candidate Leonel Fernandez (PLD) emphasized to the Ambassador September 9 the importance of the Dominican Republic's relations with the United States, commented on the Dominican Republic's bumpy relations with Venezuela and the recent interruption of oil supplies from there, and claimed to be the front runner in voter preferences for the May 2004 elections. Fernandez reiterated opposition concerns about the GODR's election preparations, fiscal problems that he believes will be left for the next administration to solve, and free trade negotiations. The Ambassador stressed the USG's interest in a free and fair election, with international observers, in strengthening democratic institutions, and in completing negotiations quickly on a free trade agreement that would integrate the Dominican Republic with the Central America Free Trade Agreement (CAFTA). End summary. Relations with the United States - - - - - - - - - - - - - - - - - ¶2. (SBU) Former president (1996-2000) and declared opposition presidential candidate in elections next May, Leonel Fernandez, discussed international and domestic issues with the Ambassador on September 9 at the spacious new headquarters building of Fernandez's NGO, Global Foundation for Democracy and Development (www.funglode.org). Fernandez declared that he considers the United States the most important foreign country for the Dominican Republic's future. The Ambassador expressed appreciation for the Dominican Republic's participation in the Coalition of the Willing in Iraq. Fernandez replied that he strongly supports the war on terrorism, but quipped, "President Mejia's administration doesn't have a monopoly on good relations with the United States" and cited his own prior record in this regard. Fernandez also reviewed various projects that are planned or underway between his "Global Foundation" and U.S. universities and NGOs, mainly in Florida and New York. Venezuelan-Dominican Relations - - - - - - - - - - - - - - - - ¶3. (SBU) Fernandez dismissed as "exaggerated" Venezuelan President Chavez's recent accusation that the GODR was condoning local activity by coup plotters seeking to overthrow the GOV. The Venezuelan had based his charges on "inaccurate intelligence," and in any case President Mejia would have no interest in actions that might jeopardize DR-Venezuela relations. Fernandez characterized former Venezuelan president Carlos Andres Perez as a "very active" anti-Chavez expatriate in Santo Domingo, but claimed that Perez is making numerous enemies here and has "no capacity to harm Venezuela." "I'm the only friend he has left here," Fernandez claimed. Another Chavez adversary, Venezuelan businessman Gustavo Cisneros, stirs suspicions in Caracas every time he has a meeting at the Casa de Campo resort (in La Romana, Dominican Republic),according to Fernandez, but Cisneros, he claimed, has limited political clout. Fernandez recalled that Chavez had been "very upset" with President Mejia for granting political asylum to two Venezuelan military officers. Election Prospects - - - - - - - - - - ¶4. (SBU) Fernandez confirmed what we had heard from other leaders of his Dominican Liberation Party - PLD (ref B) that recent presidential preference polls conducted by the party showed Fernandez leading the pack of pre-candidates with some 60 percent of voter intentions -- far ahead of President Mejia (PRD) or Eduardo Estrella (candidate of the Reformist Social Christian Party - PRSC). However, Fernandez repeated concerns we have heard from other opposition contacts (reftels) that the Central Electoral Board may be biased in favor of Mejia's reelection bid and is moving too slowly to resolve problems with electoral registration and organization. He echoed his party's charges that Dominican Army chief of staff Radhames Zorrilla Ozuna is illegally meddling in the election campaign. Some opposition critics, according to Fernandez, are saying that Mejia believes the USG will let him get away with such irregularities because of his administration's support in Iraq. The Ambassador stressed the USG interest in a free, fair, and transparent election and in the strengthening of democratic institutions. Financial and Trade Issues - - - - - - - - - - - - - - ¶5. (SBU) The Ambassador raised his concern about the economic impact of the BANINTER bank corruption scandal and the USG's interest in judicial independence and due process in the resolution of this case. Fernandez replied that the PLD platform advocates judicial reform, but asserted it would have to start "from zero" because of lower-level judges' susceptibility to improper influence. He commented that the Central Bank's quasi-fiscal deficit resulting from the bank collapse would impose a "terrible" crunch on government finances within a year and that the only solution would be an international bond issue. Fernandez predicted that GODR would fail to meet the IMF-imposed deadline of July 2004 for a tax reform, which he expected to slip until one to three months after a new administration takes office. When the Ambassador asked about prospects for legislative approval for the GODR to negotiate a bilateral free trade agreement to "dock" with the Central American Free Trade Agreement (CAFTA) and reiterated strong U.S. interest in this proposal, Fernandez expressed support, but complained that the PLD's 42 members in the Chamber of Deputies needed to be better informed about the talks. Fernandez also raised agricultural subsidies, which he said should be dealt with in technical committees (e.g., the Trade and Investment Committee). He said the GODR's recent announcement of a 5 percent tax on exports and a 2 percent tax on imports should be rescinded to boost the nation's competitiveness and prepare it for free trade. (Comment: The Senate has subsequently voted against the 5 percent export tax, and it is likely to be shelved. End comment.) Comment - - - - ¶6. (SBU) As a former president, remembered favorably by many Dominicans for the nation's greater prosperity during his tenure, Fernandez appears to be the front-running presidential candidate -- but he will meet a tough match when, as seems likely, President Mejia settles current quarrels within his own PRD and secures the nomination. Fernandez also faces unresolved allegations of his financial ties to Ramon Baez Figueroa, the imprisoned kingpin of the BANINTER scandal, including speculation that the Global Foundation's lovely new headquarters was built with siphoned-off bank funds. ¶7. (SBU) Fernandez attended elementary and junior high school in New York City in the 1960s and feels close ties to the United States, despite his leadership of a historically leftist party. He showed little sympathy for Venezuelan President Chavez and took a nationalist line against Chavez, while also criticizing the Mejia administration for provoking the Venezuelan in the handling of the asylum cases. Now that Chavez has publicly confirmed his intention to continue the measures he took against the Dominican Republic last month -- the oil embargo and withdrawal of the Venezuelan ambassador -- opposition leader Fernandez may have little choice but to show solidarity with the current GODR on this matter. ¶8. (SBU) Fernandez's comments on financial and trade issues may foreshadow the line he will take during the campaign -- charges of financial mismanagement against Mejia, who is particularly vulnerable during the current economic slump, and skepticism on specific aspects of a free trade agreement. His comments on the election campaign are staple rhetoric of the PLD -- the leading opposition to President Mejia and the PRD -- but also reflect a need for the Central Electoral Board to do more to build public confidence in what will probably be a generally free and fair electoral process. HERTELL