TRANSITION #10 - THE AMBASSADOR MEETS WITH LEONEL

C O N F I D E N T I A L SECTION 01 OF 02 SANTO DOMINGO 004501

SIPDIS

DEPARTMENT FOR WHA/CAR (MCISAAC)
NSC FOR SHANNON AND MADINSON
TREASURY FOR OASIA AND LAMONICA

E.O. 12958: DECL: 08/05/2014
TAGS: PREL PGOV EFIN EINV ENRG MCAP DR
SUBJECT: TRANSITION #10 - THE AMBASSADOR MEETS WITH LEONEL
FERNANDEZ

REF: SANTO DOMINGO

Classified By: Ambassador Hans H. Hertell, reasons 1.4 (b) & (d).


1. (U) This is cable number 10 in our series covering the
transition between the Mejia and Fernandez governments.

President-elect Fernandez - Two weeks from power


2. (C) Summary. President-elect Leonel Fernandez told the
Ambassador in a private meeting on August 3, 2004, that his
government will renegotiate the IMF agreement, will receive a
total of US $750 million in assistance from Spanish hotel
owners and the government of Venezuela, will work to fight
corruption and will look for guidance in its efforts to
right-size the Dominican military. End summary.

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Economy and Energy
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3. (C) President-elect Leonel Fernandez told the Ambassador
on August 3, 2004, that he plans to renegotiate the GODR
agreement with the IMF as soon as practicable after taking
office on August 16. Fernandez was critical of President
Mejia and his handling of the economic crisis and the failure
of the PRD-led government to comply with the terms of the
current IMF agreement. Fernandez told the Ambassador that he
plans to travel to Washington soon after his inauguration to
meet with the IMF and USG officials.


4. (C) In order to provide capital to the country,
Fernandez has negotiated with hotel developers from Spain and
expects to receive US $500 million in return for rolling back
the proposed tax on hotel rooms. Fernandez told the
Ambassador that the assistance from Spain was a "firm
commitment."


5. (C) The Ambassador and Fernandez discussed the Dominican
energy sector. Fernandez told the Ambassador that Venezuela
would provide oil to the Dominican Republic at half the
current world rate per barrel. In addition, Venezuela would
provide US $250 million in assistance. Fernandez offered to
serve as a messenger between Venezuelan President Chavez and
the United States. He also speculated that President Chavez
would be successful in the upcoming Venezuelan referendum.

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Corruption
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6. (C) The Ambassador and Fernandez discussed potential
appointees to Fernandez's cabinet. Fernandez was grateful
for the USG offer to vet potential appointees and receptive
to the USG message that members of the in-coming
administration should be free of ties to corruption.
Fernandez assured the Ambassador that he will not allow
corruption in his administration. Fernandez criticized the
current Attorney General and said that he would "fry8 former
legal advisor to President Mejia, Guido Gomez Mazara.
Fernandez also said that current Attorney General Victor
Cespedes accepts sexual favors from incarcerated Colombian
nationals in return for their release.


7. (C) Fernandez denied rumors that he or his transition
team is brokering a deal to drop criminal charges against
former Baninter executives Ramon Baez Figueroa and Marcos
Baez Coco. Fernandez said that Baez Figueroa,s attorney,
Vinicio Castillo, is not only one of the best attorneys in
the Dominican Republic, but one of the best in the world. He
told the Ambassador that when the case goes to trial,
Castillo would implicate current President Mejia, Colonel
Pepe Goico, Central bank Governor Jose Lois Malkun and
members of the Baninter liquidation committee.


8. (C) Fernandez expressed dismay at the state of the
nation saying that there is &no Dominican Republic to
inherit8 and that he will be "restructuring the country from
scratch.8

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Military matters
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9. (C) Fernandez asked about methods for reducing the size
of the Dominican military and professionalizing the troops.
The Ambassador and Defense Attache suggested that the
military would provide a good opportunity for Fernandez to
demonstrate a &zero tolerance8 policy against corruption.
Defense Attache will provide Fernandez with information on
right-sizing the military and a copy of the current PRD
administration's regional security strategy that Fernandez
requested. The current Dominican regional security strategy
has not yet been implemented.

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Comment and action request:
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10. (C) Comment. Fernandez was open and pleased to meet
with the Ambassador. He appeared genuine when he told the
Ambassador that his door will always be open for the
Ambassador. Fernandez recognizes the importance of the
strong bilateral relationship between our countries. He is
predisposed to working with us, although he has a broader
world view than outgoing President Mejia and will most likely
dedicate more time to building relationships with Latin
American and European partners. End Comment.


11. (C) Action Request: Embassy Santo Domingo requests
Department assistance in scheduling the following meetings
with Dominican President-elect Leonel Fernandez as soon as
possible after Fernandez takes office (August 16): 1) The
President (or drop-by meeting); 2) The Secretary; 3) NSA Dr.
Condoleezza Rice; 4) Treasury Secretary Snow.


12. (U) Drafted by Angela Kerwin.


13. (U) This report and others in our transition and
election series are available on our SIPRNET site
http://www.state.sgov.gov/p/wha/santodomingo/ along with
other material.
MARSHALL