WORKPLAN FOR DOMINICAN REPUBLIC - HOW THE UNITED

UNCLAS SECTION 01 OF 06 SANTO DOMINGO 006952 SIPDIS SENSITIVE FROM AMBASSADOR FOR WHA ASSISTANT SECRETARY NORIEGA; DEPT FOR WHA/CAR, WHA/PPC, WHA/EPSC, EB S DONNELLY, EB/OMA R FRISBEE; DEPT PASS USAID/LAC, USTR; NSC FOR SHANNON, H CRUZ; TREASURY FOR U/S TAYLOR, N LEE, R TOLOUI, L LAMONICA; SECDEF FOR OSD; JUSTICE FOR OIA E.O. 12958: N/A TAGS: PREL EAID EFIN PHUM MARR DR SUBJECT: WORKPLAN FOR DOMINICAN REPUBLIC - HOW THE UNITED STATES CAN PURSUE ITS GOALS REF: A) SANTO DOMINGO 6582 B) E-MAIL FROM ASSISTANT SECRETARY NORIEGA ¶1. (SBU) At your request in response to my thoughts reftel, I am providing to you in this message my suggestions for a calendar-based plan for U.S. Government actions to exert a positive influence on the economic and political situation in the Dominican Republic. I was heartened by Washington's rapid response to my earlier message, particularly to the very productive visit of a delegation headed by Treasury Under Secretary John Taylor and including a representative of the National Security Council. ¶2. (SBU) The fundamental problem and challenge in the Dominican Republic is the weakness of its institutions. The Dominican public still believes that most of their public officials are motivated by greed and self-interest. Those with influence and money continue to consider themselves above the law. This deep, historically rooted hopelessness is at the heart of our most pressing challenges -- seeing that the presidential elections deliver the democratic choice of the country, and securing prosecution and conviction of the criminals whose large-scale banking fraud sank the country's finances. Unless institutions can be made to function, the ordinary Dominicans will lose faith in democracy and will have little hope of sharing the benefits of growth, globalization and free trade. ¶3. (U) Dominicans have immense respect for the United States and for its government. Senior U.S. officials visiting Santo Domingo can have a great impact, successfully pushing Dominicans away from their worst demons. I make several suggestions below for visits. In particular, I believe it's important for you to come here and speak in favor of a clean democratic electoral process, good governance, and aggressive enforcement of the law. In addition, I consider it very important that we find funds of about $200,000 for international observers for the May 2004 presidential elections. These two key steps would help the Embassy ensure that the next administration (whoever wins) begins its term with credibility and public support. ¶4. (SBU) This embassy's goals and work plan has long emphasized institution building. The dramatic Baninter banking fraud and its consequences, both economic and political, brought an immediate need for technical assistance aimed at improving financial supervision, financial investigation, and judicial prosecution. To confront these problems properly now, I ask for at least $350,000 for technical assistance. ¶5. (SBU) Cooperation in peace keeping and international law enforcement can benefit Dominicans directly and can help shape their beliefs about their domestic institutions. I ask for closer cooperation with the Dominican military, as well as assistance to improve their skills, capabilities, and professionalism. I will continue to press for prosecution of those who traffic persons and welcome Washington visitors to stress that message. I believe there can be great mutual benefits from establishing closer cooperation with the Department of Homeland Security, particularly by creating a permanent DHS position at this Embassy. ¶6. (SBU) International trade in goods and services will be the basis for sustainable growth in the Dominican Republic. Bilateral cooperation over the past year in the Trade and Investment Council has prepared both public and private sectors for free trade negotiations during the first quarter of 2004. The U.S. messages on the benefits of trade will coincide with the presidential campaign. I welcome the prospect of this public debate and expect it to help focus Dominican public opinion on the promises of the future in contrast to the failures of the past. ¶7. (SBU) Following is the detailed proposed action plan containing these and other requests for the period between now and the next Dominican administration. This plan has the support of the entire Country Team. NOW IN COURSE -- EXPANSION POSSIBLE FINANCES - - Finances/Tax Reform. Urge GODR, leading political parties and private sector to find consensus on immediate tax changes in order to qualify for IMF standby; urge the need to close standby negotiations and deliver on pre-conditions; urge all concerned to initiate consultations elements of a tax reform program. (Note: USAID is already engaged with the GODR in fiscal policy reform and stands ready to support the process of identifying an integrated reform package in 2004 if USD 100,000 in additional funds are available.) - - Assistance: Central Bank debt. USAID is currently assisting Central Bank in defining methods and approaches to converting USD 1.5 billion in short-term debt instruments into longer term instruments with lower interest rates. The Central Bank needs to develop a comprehensive strategy to develop appropriate markets and instruments. (Further USAID involvement in 2004 would require USD 350,000 in additional program funds; as an alternative, Treasury could supply this technical assistance.) USAID could provide technical assistance in liquidating foreclosed real estate, cleaning up titles and enhancing the value of properties so as to realize full market value. (This assistance could be provided in 2004 with an additional USD 150,000 in resources.) - - Debt. USAID has been providing assistance to the Ministry of Finance in resolving expropriation claims as a means to improve domestic debt management. This amount could be expanded to help the GODR quantify debt, publish results and develop a plan to reduce the percentage of GDP devoted to debt service. This would entail creating conditions for establishing a secondary market and strengthening financial institutions. This activity could start quickly, but a comprehensive program along these lines would require additional resources of USD 400,000. ENERGY - - Electricity. Urge GODR to make payments to generators, including COGENTRIX, so as to reduce scope and frequency of blackouts. - - Energy sector assistance. USAID consultants helping Dominican National Energy Council and Presidency to define short-term and medium-term steps needed to resolve energy crisis. Recommendations will feed into World Bank and IDB programs. (Underway, but follow-up work in 2004 will require USD 200,000 in additional funding from USAID Washington.) - - IDB. Urge IDB,s senior management to persuade lenders to COGENTRIX project to be patient while GODR and COGENTRIX renegotiate contract. (Note: GODR paid off all arrears in mid-2003 but COGENTRIX did not agree at that time to discuss renegotiation; GODR holds that clearing arrears was understood to be tied to renegotiation and has refused to honor "take or pay" provisions since then; new arrears of approximately USD 25 million have accumulated. COGENTRIX, under new ownership, may be more open to renegotiation.) ELECTIONS - - Elections/USAID. Work with civil society/democracy NGO to recruit qualified poll workers and train 600 local election observers (ongoing until election). (Funds already allocated.) * * Now to mid-December: GODR negotiates with IMF on terms for a new standby* * - - - - - DECEMBER - - - - - (** Note: December 7 and 14 rival PRD party conventions; December 19 closing of legislative session; December 21 Confirmation of PRD nominee. ** ) POLITICS - - Underway. December 3-5, Ambassador will host three major political parties separately for lunch discussions. Message: 1) U.S. impartiality in Dominican political process; 2) need for all political actors to support program with IMF; 3) need to put national interest above partisan political advantage; 4) encourage contenders within parties to settle differences; 5) encourage parties to address economic issues in responsible manner; 6) emphasize good governance. HUMAN RIGHTS - - Underway. Dec 8-9. Assistant U.S. Attorney General for Civil Rights will visit. AAG will deliver messages on trafficking in persons and respect for human rights; potential for a call on Chief of National Police to emphasize need for strict respect for civil rights in election process. IFIs AND LENDING - - Proposed. Energy. Energy and social sectors Structural Adjustment Loan (SAL). Urge World Bank to design a SAL emergency disbursement of USD 100 million as soon as possible, once a GODR budget is passed and the IMF standby is renewed. This would provide cash to reduce arrears due to generators and to replenish their fuel supplies. (Note: later disbursements under SAL would finance restructuring and would probably not occur until after the May presidential elections.) - - Proposed. IDB lending. Encourage the IDB to accelerate the processing of emergency lending for social and energy sectors as soon as (1) there is informal GODR agreement with IMF on resumption of a program and (2) GODR passes the required 2004 budget. Encourage the GODR to meet the conditionality to gain access to these funds as soon as possible. BANK FRAUD AND INSTITUTION BUILDING - - Underway. Public statements/speech by Ambassador high-level USG official(s),Embassy officers, emphasizing the need to bring perpetrators of bank fraud to justice, reinforcing the need to resist strong political and special interest pressure. Goal: encourage political will and consensus on need to complete prosecution of Baninter and other fraud cases, so as to restore faith in judiciary and in administration of justice. (This continues into 2004.) - - Proposed. USAID Washington identify USD 350,000 in resources to provide further assistance in institution-building and anti-corruption in context of the USD 3 billion in complex financial fraud. Targeted assistance would strengthen capacity of authorities to deal with current and any future financial fraud cases. (This assistance continues into 2004.) - - Proposed. USAID identify USD 200,000 in additional resources for programs to strengthen regulatory entities like the Superintendents of Banks, Securities, and Insurance, all of which are directly linked to the banking sector. Goal is to strengthen the GODR ability to fight corruption. (This continues into 2004.) - - Ongoing. Exchange of information among Embassy Santo Domingo, Department of Homeland Security (Customs),Treasury, DEA, Justice and U.S. Attorney,s Office, Miami on Baninter fraud case, asset identification and recovery, and examination of sources of funds deposited in Baninter. (This continues into 2004.) - - Proposed. Security/Fraud. Department of Homeland Security examines feasibility of permanent posting of DHS/Customs attache in Santo Domingo. ELECTIONS - - Proposed. Urge the GODR to make a formal invitation to the OAS to send election observers. - - Requested. Identify appropriate USG funding for election observation missions by IFES, NDI so as to ensure clean elections. This is needed to strengthen democracy and to raise confidence of the Dominican public in the electoral process. (Note: USAID Santo Domingo has approximately USD 75,000 programmed for these activities, but this is insufficient in fact of the NGOs' initial cost estimates of up to USD 400,000.) - - Requested. Department (WHA/PPC, L/M) advise whether IFES, NDI can accept private funding and whether Embassy/Ambassador can solicit contributions. Embassy survey possible sources of private funding for election observers. MILITARY - - Requested. Determine availability of additional military assistance for GODR aimed at demonstrating advantages of close cooperation with U.S. military, including in Iraq, without making assistance a "quid pro quo" for Iraq service. Use funds to strengthen current cooperation against smuggling and illegal migration, to prepare Dominican military to undertake UN peacekeeping missions, to participate in intensified regional naval cooperation, and to manage the military more professionally. - - Requested. Senior DOD official visits Santo Domingo. Topics: 1) stress to senior military the appropriate role for armed forces during presidential elections, 2) outline possibilities of opportunities to participate in peace keeping operations, 3) discuss additional military assistance, 4) deliver public address to academia or other institution on U.S. policy in Iraq and our goals for the Iraqi people. - - - - JANUARY - - - - - - Proposed. Jan 12-13. OAS Special Summit in Mexico. Use opportunity for President Bush, Secretary Powell, Assistant Secretary Noriega to deliver message to President Mejia (if SIPDIS he attends, or at lower level, if not) on need for clean elections, continued compliance with IMF program, and need for progress in efforts to prevent trafficking in persons. - - Requested. Technical Assistance: Aviation. FAA follow up its examination of draft Aviation Security law with visit and technical assistance. (Text submitted to FAA in August, 2003; ref: Santo Domingo 6409 of November 6.) - - Tentatively scheduled. Sr. USG Visit/Trade: USTR. Mid-January. USTR Zoellick and team visit Santo Domingo for first round of FTA negotiations. Public diplomacy programming includes opening ceremony with President Mejia; address by USTR to joint houses of Congress; on-the-record conversation with leading print journalists; extended television interview with leading broadcaster. - - Proposed. Border Security. Department of Homeland Security proposes stationing in Santo Domingo of permanent DHS/Customs attache. - - Tentative. Sr. USG Visit/Energy. (TBD) Energy Secretary Abrahams visits Santo Domingo. Topics: 1) need for good regulation and governance in energy sector, 2) role of private sector in energy production, 3) energy and the environment. Public diplomacy programming includes luncheon address on energy and economic development, on-the-record conversation with leading journalists. - - Tentative. Elections. Initial working visit of election monitors (IFES, NDI, etc.),assuming funding was found. - - Planned. Elections. In coordination with other donor country embassies, Embassy will ask GODR Central Election Board to permit expanded and organized diplomatic observation of preparations leading up to elections and of election procedures on voting days. Subsequently present detailed proposal to Election Board. - - Planned. Elections. Two Embassy-organized workshops for local journalists on how to report on elections and on the role of the press in the elections process. - - Planned. Elections. Initiate regular meetings with the Election Board to follow development and to stress the importance of clean electoral process. (Continues through elections) - - - - - FEBRUARY - - - - - - - Proposed. Sr. USG Visit/Institution building. (Possibility for Assistant Secretary Noriega). Topics: 1) Importance of democratic process, particularly of free, fair and clean presidential election in May, 2) Anti-corruption, including 2003 draft treaty, 3) Banking fraud, including U.S. support for investigations, 4) Human rights, especially trafficking in persons. Public diplomacy programming would include speech to prestigious institution and on-the-record conversation with leading journalists. - - Tentative. Feb. 9-13 (tentative) FTA negotiations in San Juan. - - Proposed. Public Diplomacy. Speeches by Ambassador or USG visitor. Topics: 1) importance of further initiatives against trafficking in persons and need for stronger enforcement; 2) importance of free, fair and transparent electoral process. (Embassy officers will pursue these themes in other public appearances -- ongoing.) ** Feb. 27, Dominican Congress reconvenes.** - - - - MARCH - - - - - - Planned. Elections. Work with Department's Office of Congressional Affairs (H) to keep U.S. Congress informed on progress of electoral campaign in Dominican Republic. - - Planned. Elections. U.S. speaker or event to highlight civic responsibility to vote and need for public participation in monitoring elections. -- Proposed. Trafficking in Persons. U.S. Visitor emphasizes need for immediate prosecution action against senior official involved in trafficking of persons. - - Tentative. March 8-12: FTA negotiations in Washington. - - Proposed. Urge World Bank to refine program of lending for energy sector restructuring. - - - - APRIL - - - - - - Proposed. Elections. U.S. speaker event on use and abuse of polls, polling methodology. - - Planned. Elections. Training of diplomatic observers by USAID-supported pro-democracy NGO. - - Planned. Initiation of organized diplomatic observation process, to continue through both rounds of elections. - - - MAY - - - - - May 16: First round of presidential elections in Dominican Republic. International observers support local observers in monitoring election. - - - June - - - - - Note: June 30 is provisional date of any second round of presidential elections in Dominican Republic. (End text) HERTELL