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