Identifier
Created
Classification
Origin
03SANTODOMINGO6582
2003-11-15 20:42:00
UNCLASSIFIED//FOR OFFICIAL USE ONLY
Embassy Santo Domingo
Cable title:  

HOW BEST TO SUPPORT U.S. INTERESTS IN THE

Tags:  PGOV PREL EFIN ETRD DR 
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UNCLAS SECTION 01 OF 02 SANTO DOMINGO 006582 

SIPDIS

SENSITIVE

FROM AMBASSADOR HERTELL TO THE DEPUTY SECRETARY AND TO WHA
ASSISTANT SECRETARY NORIEGA; DEPT TREASURY FOR U/S TAYLOR;
NSC FOR SHANNON; DEPT ALSO FOR EB, G/TIP, INL, WHA/CAR
(GILROY)

E.O. 12958: N/A
TAGS: PGOV PREL EFIN ETRD DR
SUBJECT: HOW BEST TO SUPPORT U.S. INTERESTS IN THE
DOMINICAN REPUBLIC -- RECOMMENDATIONS


UNCLAS SECTION 01 OF 02 SANTO DOMINGO 006582

SIPDIS

SENSITIVE

FROM AMBASSADOR HERTELL TO THE DEPUTY SECRETARY AND TO WHA
ASSISTANT SECRETARY NORIEGA; DEPT TREASURY FOR U/S TAYLOR;
NSC FOR SHANNON; DEPT ALSO FOR EB, G/TIP, INL, WHA/CAR
(GILROY)

E.O. 12958: N/A
TAGS: PGOV PREL EFIN ETRD DR
SUBJECT: HOW BEST TO SUPPORT U.S. INTERESTS IN THE
DOMINICAN REPUBLIC -- RECOMMENDATIONS



1. (SBU) The difficult economic situation in the Dominican
Republic, coinciding with the early stages of a presidential
campaign, presents a complex of challenges to United States
interests in the country. I consider it essential to
continue to support the administration of President Hipolito
Mejia. I take into account Mejia,s pro-U.S. policies on
Iraq and the Middle East, his close law enforcement
cooperation, his advocacy of free trade, and his signature
of an Article 98 agreement. Equally important, and
transcending the relationship with the current
administration, is the need to assure institutional
stability, with transparency and inclusiveness of political
process, while strengthening economic, judicial and political
reforms.


2. (SBU) I believe that all significant political actors and
the Dominican public will respond positively to USG actions
and statements supporting GODR efforts to face economic and
political difficulties squarely and responsibly. The USG can
help shape dialogue on the key issues, so as to focus on
positive actions and institutional reforms rather than on the
casting of blame. The United States is necessarily a major
presence for the Dominican Republic, through trade,
investment, shared values and interests, geography, and the
number of Dominicans residing in the United States. Our
voice and example have an extraordinary weight in Dominican
domestic events.


3. (SBU) Following are my proposals to the Department and
other agencies for constructive actions to be undertaken in
the short term by the USG:

-- Senior level civilian visits. I suggest that Assistant
Secretary Noriega and Treasury Under Secretary Taylor make

SIPDIS
separate one-day working visits to Santo Domingo before the
end-of-year holidays. The senior visitors could deliver a
frank admonition to President Mejia to stay on track with the
IMF despite the election pressures and could meet with other
prominent political and congressional leaders to deliver a

message of support to Dominicans generally. In particular,
Assistant Secretary Noriega could deliver strong words of
encouragement to combat corruption and prosecute individuals
for corrupt behavior, further developing the testimony to
Congress which received a great deal of attention here. The
Embassy can program a full, appropriate round of media
contacts. Senior USG visitors could address the joint houses
of the legislature, for example, or could speak at other
prestigious local institutions. The general political
message would be distinct but complementary to that of U.S.
Trade Representative Zoellick at the mid-January opening in
Santo Domingo of bilateral trade talks.

-- Military visits and assistance. I would welcome the visit
of appropriate Pentagon officials or senior military, such as
Commander of Southern Command General Hill. I understand
that DOD and State may have the option to increase various
categories of military assistance and are studying the
possibility of doing so. If a senior visitor could make
early public announcement of such measures, this would
emphasize U.S. solidarity with the GODR and would show valued
appreciation for GODR willingness to shoulder
responsibilities in the Coalition of the Willing. This U.S.
engagement would stress the principled nature of the decision
to send the Quisqueya Battalion to Iraq for a year and would
help to counteract the emphasis by some of the downside risks.

-- Accelerating IFI consideration. Assistance from the
international financial institutions will be crucial in
overcoming the crippling financial plight of the GODR and of
the financial system. The GODR must come to terms, quickly,
with the IMF negotiating team arriving tomorrow. I believe
that they will do so and I will continue to stress that
message. Once the standby is renewed, the GODR will need to
tap other sources of lending. I understand the previously
developed World Bank loan of USD 200 million for electric
sector reform cannot be carried forward, given the
government's buy-back of Union Fenosa holdings in the system.
USG agencies and the U.S. Executive Director at the World
Bank can urge the Bank to draw up a fast-disbursing
structural adjustment loan to help meet the urgent needs to
plan restructuring and to cover arrears in the electricity
sector. The USG can advocate a similar approach at the IDB.

-- Increased support for Dominican institutional reform. One
of the massively contributing causes to the current
macroeconomic plight of the country is banking fraud at
Baninter, Bancredito and Banco Mercantil, the tally for which
has now risen to near USD 3 billion (approximately 15 percent
of GDP). The instability in the exchange rate and many
financial indicators stems in large part from the distrust of
the public in its own financial institutions. USG agencies
are already active in legal cooperation and investigation --
Homeland Security, Treasury, DEA, State/INL, and Justice,
most prominently. This work is extremely valuable and should
be reinforced and given additional funding, particularly for
programs that promote technical training, professionalism and
effective practice by the Dominicans. A U.S.-based
prosecution of Dominican criminals would deliver a powerful
message. Increased assistance to financial regulation, to
the judiciary, and to fraud investigation would demonstrate
our conviction that sound institutions are fundamental to
sustainable economic development. In this connection I ask
that Washington fund fully and as quickly as possible USD
300,000 to support technical assistance related to complex
banking fraud.

-- Election monitoring. We are six months away from a
presidential election. This Embassy has requested financing
for electoral observers and understands that NDI and IFES
have drawn up proposals. I consider it vital that the
Dominican public understand that the United States is
completely impartial in this contest, regardless of our good
relations with the Mejia administration. It is equally vital
that we provide financial support for effective election
monitoring to ensure public faith in the democratic process
and its results. An early pledge will emphasize our policy
that citizens must be empowered with full rights of
participation and a voice in choosing their government, in
free, fair and transparent elections.

-- Law enforcement support. Key enforcement priorities in
the Dominican Republic include counter-terrorism,
counter-narcotics, anti-trafficking-in-persons, illegal alien
smuggling, visa and passport fraud, counterfeiting, and
money-laundering. Any additional funding for these programs
would bring a direct benefit to U.S. interests and a pay-off
in further increases in cooperation.
HERTELL