Identifier
Created
Classification
Origin
04SANTODOMINGO3626
2004-06-22 10:57:00
UNCLASSIFIED
Embassy Santo Domingo
Cable title:  

DOMINICAN TRANSITION # 3: SIDES ENGAGE ON IMF AND

Tags:  PGOV PINR EFIN DR 
pdf how-to read a cable
This record is a partial extract of the original cable. The full text of the original cable is not available.
UNCLAS SECTION 01 OF 03 SANTO DOMINGO 003626 

SIPDIS

STATE FOR WHA/CAR, WHA/PPC AND DRL;NSC FOR SHANNON AND
MADISON;LABOR FOR ILAB;TREASURY FOR LAMONICA AND OASIA;
USDOC FOR 4322/ITA/MAC/WH/CARIBBEAN BASIN DIVISION
USDOC FOR 3134/ITA/USFCS/RD/WH
DHS FOR CIS-CARLOS ITURREGUI

E.O. 12958: N/A
TAGS: PGOV PINR EFIN DR
SUBJECT: DOMINICAN TRANSITION # 3: SIDES ENGAGE ON IMF AND
TAX REFORM; EMBASSY SPENDS A DAY WITH THE INCOMING
ADMINISTRATION

REF: A. SANTO DOMINGO 3313


B. SANTO DOMINGO 3358

UNCLAS SECTION 01 OF 03 SANTO DOMINGO 003626

SIPDIS

STATE FOR WHA/CAR, WHA/PPC AND DRL;NSC FOR SHANNON AND
MADISON;LABOR FOR ILAB;TREASURY FOR LAMONICA AND OASIA;
USDOC FOR 4322/ITA/MAC/WH/CARIBBEAN BASIN DIVISION
USDOC FOR 3134/ITA/USFCS/RD/WH
DHS FOR CIS-CARLOS ITURREGUI

E.O. 12958: N/A
TAGS: PGOV PINR EFIN DR
SUBJECT: DOMINICAN TRANSITION # 3: SIDES ENGAGE ON IMF AND
TAX REFORM; EMBASSY SPENDS A DAY WITH THE INCOMING
ADMINISTRATION

REF: A. SANTO DOMINGO 3313


B. SANTO DOMINGO 3358


1. (U) This is cable no. 3 in our series on the transition
to a new administration in the Dominican Republic.

SIDES ENGAGE ON IMF AND TAX REFORM

--------------
Fiscal reform, necessarily the hot topic
--------------

As the power outages continue and the balance sheets show
more red than black, the Dominican Republic is faced with the
critical need for fiscal reform sooner rather than later. At
a full day PLD-Embassy transition conference on June 17, PLD
transition leader Danilo Media confirmed that President-elect
Leonel Fernandez and President Hipolito Mejia will meet for a
mini-summit on Tuesday, June 22, under the benevolent
sponsorship of Msgr Agripino Nunez, rector of the catholic
university PUCCMM. They will announce the joint initiative
to have a fiscal reform package to Congress no later than
July 15. An IMF technical advisor arrived in the country on
June 21 to assist the PLD and PRD teams in preparing a reform
package that will satisfy both sides and comply with the
terms of the IMF agreement. In effect, the PLD is already
negotiating with the Fund.

The technical teams for both parties are experienced and
realize the gravity of the situation. They met three times
at a senior level, and for almost a week the mid-level
technicians from Finance and the Presidency have been working
directly with the PLD to elaborate a proposal to discuss with
the Fund. The aim is to have a proposal ready by July 10 and
for President Mejia to forward the PLD plan to Congress on
July 15th. Daniel Toribio, former finance minister in
Fernandez's first administration and one of the key PLD
transition committee members, told us that fiscal reform, "is
a political problem and nothing else. The numbers are there,
we have to make it work." Carlos Despradel, PRD Technical
Secretary of the Presidency, says that the PLD now

SIPDIS
understands the extent of the fiscal challenge.

Monsignor Agripino Nunez will be the mediator at the

mini-summit on June 22. Behind the scenes, former Spanish
President Felipe Gonzalez, the Spanish Ambassador, the EU
Representative, and Ambassador Hertell have played
significant roles in bringing the two sides together.

-------------- --------------
EMBASSY SPENDS A DAY WITH THE INCOMING ADMINISTRATION
-------------- --------------

On June 17 the Ambassador hosted a day-long conference at his
residence between the PLD transition team with its advisors
and the staff of the Embassy. Medina's announcement to us of
the plans for the PLD/PRD mini-summit came at the kickoff
breakfast. The PLD transition team leaders (Medina, Montas,
Toribio, Puig, Morales Troncoso, Pena Guaba, Gonzalez
Espinoza and Prota - reftel A),the Ambassador and Emboffs
started the day with a discussion of common interests, the
need to look forward now (rather than wait until August 16)
and a reiterated offer by the Embassy to help bring the PLD
and PRD together on difficult issues.

After the breakfast, the conference continued with a morning
schedule of three hour-long meetings to share USG priorities
and perceptions with PLD leaders on the following areas: 1)
Trade issues/Macroeconomic Issues/D-CAFTA, 2) Anti-corruption
and Judicial sector issues, 3) Consular Issues and
Trafficking in Persons. A mid-day lunch allowed the PLD
transition team and emboffs to recap the morning's topics and
discuss the USG position on human rights. The afternoon
session included expanded exchanges on: 1) Military, Law
Enforcement and Counter-terrorism issues, 2) Energy, and 3)
Social Responsibility issues (Health, Education and the
Environment).
Our invitation to the conference had pressed the PLD to name
working level members for each of the group discussions,
which it did. On average, the meetings consisted of 18 PLD
members per subject meeting, four members of the core PLD
transition team, the Ambassador and eight Emboffs. Some 85
Fernandez people attended all or part of the sessions. Most
of the PLD attendees have prior government experience.

The conference also accomplished USG goals of sharing our
priorities and concerns on each topic, establishing working
links and pledging follow-up meetings in each area. In
addition, the PLD experts educated their own PLD transition
team in many areas, most prominently during the social
responsibility meeting on education, health and the
environment.

During the macroeconomic session, Julio Ortega asked if the
USG would provide a USD 25 million cushion for fuel
financing, to ease the situation for the poor. Emboffs
responded that the request might be given consideration after
the Dominican Republic got its house in order with the IMF.
During the discussion on law enforcement and
counter-terrorism, former national police chief Euclides
Gutierez Feliz noted the importance of the USG third border
initiative and asked for information on security guidelines
under this program. Emboffs will provide information as well
as port and airport security guidelines.

In the anti-corruption meeting, Onofe Rojas mentioned the aim
of PLD leaders to combat corruption, echoing the sentiments
of the new Secretary General of the OAS in stating that,
"corruption is the cancer of Latin America."


Numerous PLD attendees approached Emboffs to thank us for the
opportunity to discuss the issues and provide them with
contacts and a "jumping off point" for continued
collaboration. Throughout the day, and especially in the
Economic, Anti-corruption and Military/Law Enforcement
meetings, the PLD attendees expressed appreciation for the
early opportunity to confirm that the PLD and the USG share
many of the same goals. Max Puig, one the PLD core
transition team members who attended every meeting,
approached the DCM to express his "sincere appreciation for
U.S. efforts to make the transition in the Dominican Republic
the best one ever."


--------------
What's next?
--------------

Short term, the next priority for the PLD transition team is
the June 22 mini-summit. Medina told us that Fernandez had
specified that the summit needs to be, "more than a photo
opportunity," which it should be with the public announcement
of the fiscal reform pledge. The PLD will also have to
confront the ever worsening electricity situation (septel to
follow) in order to keep the lights on in the country.
Finally, the PLD will have to continue to work at the
technical level with their PRD counterparts, keeping in check
any impulses for mutual blame in order to ensure that there
is an adequate transfer of information and an otherwise
smooth transition from one administration to the next.
The Embassy will build on the transition conference, moving
to smaller group meetings with PLD counterparts on specific
issues. At all levels we will seek out the names of
potential nominees to key positions, pointing out the dangers
and potential repercussions of naming less than desirable
candidates to head ministries or agencies. We will
reemphasize our offer to bring the PLD and PRD together when
needed. Finally, we will continue to work closely with the
current administration to keep programs on track and
encourage cooperation between the outgoing and incoming
administrations.


2. (U) Drafted by Angela Kerwin.


3. (U) This report and others in the series are available
on our SIPRNET site at
http://www.state.sgov.gov/p/wha/santodomingo/ along with
extensive other material.
KUBISKE