ASSISTANT SECRETARY NORIEGA MEETS DOMINICAN

UNCLAS SECTION 01 OF 03 SANTO DOMINGO 007421

SIPDIS

SENSITIVE

STATE FOR WHA AND DRL
NSC FOR SHANNON AND MADISON
LABOR FOR ILAB
TREASURY FOR OASIA-LAMONICA
USDOC FOR 4322/ITA/MAC/WH/CARIBBEAN BASIN DIVISION
USDOC FOR 3134/ITA/USFCS/RD/WH

E.O. 12958: N/A
TAGS: DR ECON EFIN PGOV PREL
SUBJECT: ASSISTANT SECRETARY NORIEGA MEETS DOMINICAN
OPPOSITION LEADERS

REF: SANTO DOMINGO 7395


1. (SBU) Summary: Visiting Assistant Secretary Roger Noriega
on December 11 discussed the presidential election campaign
and proposed economic reforms with leaders of major
opposition groups, including dissident factions of the ruling
Dominican Revolutionary Party (PRD). He said the USG wants
to help but they share the responsibility forconcluding an
IMF agreement, respecting its conditions, and holding a clean
presidential election. The USG will seek to fund
international election observers and will not interfere in
the election. Opposition leaders welcomed the visit,
criticized Mejia, and discussed policy alternatives. The A/S
warned the PLD against anti-United-States stances like those
of Venezuela's Hugo Chavez; PLD leaders emphasized the
party's 1996-2000 record supporting democracy and free
markets. End summary.


2. (SBU) On December 11 WHA A/S Noriega, accompanied by the
Ambassador, DCM , WHA/CAR Deputy Director, WHA Executive
Assistant and poloff, held separate meetings December 11 at
the Embassy with PRSC presidential candidate Eduardo Estrella
and vice presidential candidate/Senator Jose Hazim Frappier;
with PRD presidential pre-candidates Vice President Milagros
Ortiz-Bosch, Tourism Secretary Rafael "Fello" Subervi, and
Enmanuel Esquea; and with PLD senior advisor Temistocles
Montas and PLD secretary general Reinaldo Pared Perez.

PRSC Candidates
- - - - - - - -


3. (SBU) PRSC presidential candidate Estrella emphasized the
need for the Mejia administration to eliminate the
troublesome fiscal deficit by slashing his bloated government
payroll instead of imposing more taxes. He said the 5
percent tax on exports pending in Congress would act as a
brake on economic growth. The export tax, he said, should be
designed to be in effect only for a defined range in the
dollar-peso exchange, decreasing in stages when/if the dollar
falls. Estrella expressed his "fear" that the GODR would not
comply with the conditions of a new IMF agreement. He said a
PRSC administration would stimulate foreign investment and
job creation and lower interest rates. He concurred with
Noriega's emphasis on fiscal discipline.


4. (SBU) Estrella advocated attacking money laundering,
narcotrafficking, and corruption. He criticized President
Mejia for having the Central Bank reimburse wealthy
depositors in the BANINTER bank collapse scandal. He
expressed worry that the Central Election Board (JCE) might
not be evenhanded in the upcoming election. At a recent
meeting in Venezuela of the Christian Democratic Organization
of the Americas (ODCA),Estrella requested ODCA obervers for
the Dominican election, in addition to observers from the OAS
and other organizations that he hoped would come.

PRD Pre-Candidates
- - - - - - - - - -


5. (SBU) The three PRD pre-candidates planning (at that time)
to compete in a nominating "convention" (primary election)
with President Mejia, amid deep divisions in the party, told
A/S Noriega that they want to restore their party's
credibility and unify its broad base in the electorate. Vice
President Ortiz-Bosch advocated "deepening the reforms" to
include institutional modernization, for example in
education, rather than "cosmetic reforms." Reforms should
be passed before the 2006 legislative elections, while the
PRD still controls the Congress. She emphasized the need to
focus public attention on general issues, such as reform,
rather than on the short-term deterioration of salaries and
purchasing power. Subervi said the private sector was more
interested in concluding an IMF accord than the government
was. The Assistant Secretary replied that the GODR should
set up an information campaign to explain the IMF program to
citizens, so as to prevent political upheaval such as that
which occurred in Bolivia.


6. (SBU) Note: Since then, all three decided to withdraw from
competition with Mejia at the PRD convention (reftel).
Dissident PRD candidate and PRD secretary general Hatuey De
Camps turned down our invitation to this meeting, after
Embassy declined his request to bring a legislator belonging
to his faction currently serving as "interim president" of
the Hatuey-organized leadership. Poloff explained that the
meeting was limited to candidates and pre-candidates.
(Embassy had earlier agreed to a De Camps suggestion to
invite another PRD pre-candidate from the Hatuey faction,
Senator Rafael Albuquerque, but this did not materialize.)
De Camps had attended a meeting with Treasury Under Secretary
Taylor on November 22.

PLD Representatives
- - - - - - - - - -


7. (SBU) Temistocles Montas -- former technical secretary of
the presidency during the Leonel Fernandez administration --
and PLD secretary general Pared Perez represented candidate
Fernandez, who was out of the country. They doubted that the
JCE would organize a clean election and urged that
international election observers from recognized entities
such as NDI and IFES -- and, crucially, the USG -- should
monitor the whole process, beginning in January. They also
raised the possibility that economic deterioration could
trigger a political crisis, which could produce "another
Haiti." This lends special urgency to election observation.


8. (SBU) To address "the worst economic crisis in 20-30
years," the PLD leaders called for thoroughgoing reforms, not
piecemeal measures, to avert a descent into
"ingovernability." They want a fiscal reform, not just tax
reform, and a refinancing of the public debt. The current
debt service burden is unsustainable, they argued. Debt
renegotiation would also impose budget discipline. The PLD
leaders told Noriega that his presence would help ensure that
the GODR fulfills its commitments.


9. (SBU) The Assistant Secretary commented that in the heat
of the campaign, Fernandez might be tempted to contrast his
proposals with President Mejia's so-called "neoliberal
model." Noriega warned against the temptation to take an
anti-United-States stance for domestic political purposes. He
pointed to the example of Venezuela's Hugo Chavez, who has
polarized the situation in Venezuela at a high cost to that
country. Montas replied that the PLD when in office
(1996-2000) had shown its commitment to democracy and free
markets. "We want to build the type of society you have
built in the United States," he emphasized. Asked whether
Fernandez opposes a free trade agreement with the United
States, Montas answered, "No, no, no." Concluding the
discussion, the Ambassador noted that he had suggested to
Fernandez that he call on USG officials when visiting
Washington in February.



10. (U) This message was not reviewed by Assistant Secretary
Noriega.
HERTELL