DOMINICAN POLITICS #10: SANTO DOMINGO, BETWEEN

C O N F I D E N T I A L SECTION 01 OF 05 SANTO DOMINGO 006472 SIPDIS STATE FOR WHA/CAR, WHA/EPSC, WHA/USOAS, EB/TPP/BTA, EB/IFD/OMA, EAP/CM, EAP/TC; STATE PASS AIT/W; NSC FOR SHANNON, MADISON; LABOR FOR ILAB; USCINCSO ALSO FOR POLAD; TREASURY FOR OASIA-LCARTER STATE PASS USTR FOR VARGO, RYCKMAN, MALITO, CRONIN USDOC FOR 4322/ITA/MAC/WH/CARIBBEAN BASIN DIVISION USDOC FOR 3134/ITA/USFCS/RD/WH; DHS FOR CIS-CARLOS ITURREGUI E.O. 12958: DECL: 12/02/2009 TAGS: PREL ETRD EINV EPET CH TW DR XE SUBJECT: DOMINICAN POLITICS #10: SANTO DOMINGO, BETWEEN TAIPEI AND BEIJING REF: A. TAIPEI 3667 (NOTAL) ¶B. TAIPEI 3666 (NOTAL) ¶C. SANTO DOMINGO 6298 ¶D. USDAO SANTO DOMINGO IIR 6 827 9970 05 231631Z NOV 04 (NOTAL) ¶E. BRIDGETOWN 2684 (NOTAL) Classified By: DCM Lisa Kubiske for reason 1.4 (b) and (d). ¶1. (U) This is #10 in our current series on politics in the Dominican Republic: Santo Domingo, Between Taipei and Beijing (C) Summary and comment: Beijing's global campaign to isolate Taiwan has reached the Dominican Republic, the largest Caribbean island nation that maintains diplomatic relations with Taipei. The Fernandez administration is clearly interested in the People's Republic of China as a way to expand his nation's economic opportunities and broaden its international relationships. Fernandez has said he wants to "strengthen ties" with the PRC and talks of making a swing through ethnically Chinese Asia and South Korea next spring, and he has named a deputy director for a planned Dominican trade office in Beijing (in addition to the existing office in Hong Kong). Privately, the Foreign Minister commented to the Ambassador November 18 that Dominican recognition of Beijing might be inevitable over the long term, but not right now. Comment: All of this activity comes in the context of a Dominican Republic in dire need of economic support, headed by a president who, in his first term, opened Dominican relations with Cuba. We don't foresee Dominican recognition of Beijing in the near future, but cannot rule out the possibility sometime in the next few years. End summary and comment. Renewed Expressions of Interest -------------- (SBU) Beijing's global campaign to gain international ground over Taiwan has reached the Dominican Republic, the largest Caribbean island nation that maintains diplomatic relations with Taipei. Two commercial/investment technical delegations from the People,s Republic of China (PRC) visited in early November, a PRC music and dance troupe performed here November 27-30, and a Chinese athletic group is expected in December. (SBU) In addition, nine of the 32 Dominican senators were in China November 22-29 as guests of the PRC; the group included Senate President Andres Bautista (opposition PRD) and the only senator of the ruling PLD, Jose Tomas Perez. Their itinerary included meetings and/or dinners with the PRC vice ministers of foreign affairs and trade, leaders of the National People's Assembly (NPA),subdirector Wang Yulin of the international department of the Central Committee of the Chinese Communist Party, and local officials in Beijing, Guaylin, Shenzhen, and Shanghai. We understand that the group received VIP treatment with motorcade escorts and was accompanied throughout the 10-day visit by Vice Foreign Minister Ji Peiding. Many PRC officials, including the NPA president, reportedly expressed their government's desire for diplomatic relations with Santo Domingo. (SBU) This visit follows a recent trip to the PRC by Dominican Ambassador to the United States Hugo Guilliani Cury, seeking Chinese investment in export-oriented factories in the Dominican Republic. Dominican senators had also been guests of Taipei authorities in mid-2004 and caused a brief stir when a Taipei legislator reported speculation by PRD Senator Ramon Albuquerque that the incoming administration might want to recognize the PRC. Pressure for Recognition -------------- (C) During a call by the Ambassador on President Fernandez November 9, one of the PRC delegations was waiting in the anteroom to meet with Fernandez. The group was led by Huai Zhongmin, president of the Association of Foreign Exchanges of Dalian municipality, and accompanied by PRC commercial representative in Santo Domingo Cai Weiquan. Long-time Dominican leftist Miguel Mejia, recently named as a minister without portfolio, arranged the meeting and accompanied the visitors. A former MFA official in charge of Caribbean affairs, Mejia has regularly served as a behind-the-scenes facilitator for Dominican contacts with the PRC, Cuba, and Venezuela. He is said to have contacts with North Korea and to have traveled there as well. (C) Taipei's ambassador to the Dominican Republic Feng Chi-tai (John) told poloff that Huai in his meeting with Fernandez had "crudely" and explicitly conditioned the proposed investments on the Dominican Government's recognizing the PRC. Fernandez, resenting the pressure, abruptly terminated the meeting, according to Feng. (C) The MFA official in charge of Asian affairs told us that the Chinese delegation, in a separate meeting with Foreign Minister Carlos Morales Troncoso, had proposed establishment of diplomatic relations. Foreign Minister Carlos Morales Troncoso subsequently commented to the Ambassador that recognition of China might be inevitable over the long term, but not now. China is a reality, Morales said, and the Dominicans have probably benefited Taipei more than Taipei has benefited them. Proposed Investment in Technology and Tourism -------------- (C) Morales told the Ambassador that the PRC provincial officials were interested in investment in technology. A Chinese firm was bidding on a "turnkey investment" in Higuey in the eastern Dominican Republic that would involve bringing in almost 300 Chinese laborers and technicians. An under secretary of tourism informed us that PRC investors were SIPDIS looking at tourism investments in the country, reportedly "if the Dominican Republic recognizes Beijing." As we have already reported (Ref C),the three most likely bidders for a 50 percent interest in the new Caucedo container port are two mainland Chinese companies and one Hong Kong firm. (U) Chinese commercial representative Cai Weiquan has been busy and visible. He told the media that the recent delegation offered technical assistance on "ocean areas," environment and natural resources, education, health, and other matters, and he suggested creating a mixed commission to oversee these efforts. The technical delegation is reported to have met with the Dominican ministers of environment, industry and commerce, and sports. According to some reports, the group also mentioned a possible Chinese purchase of Dominican bonds or Paris Club debt. Taipei's Ambassador Feng told poloff that a second PRC technical delegation, from Chongqing city (Szechuan province),had been in Santo Domingo shortly before the group from Dalian. Presidential Trip to Asia -------------- (C) President Fernandez, in a lunch with media executives November 25, said he planned to travel to Asia next spring: PRC, Hong Kong, Taiwan, Singapore, Malaysia, and South Korea. He wanted to strengthen ties, he said. He understood that Taiwan would be unhappy about this, but that the PRC was offering Taiwan a "one country, two systems" model in which Taiwan could keep its own systems. He thought many in Taiwan could accept such an arrangement. Taiwan Not Idle, but Pessimistic -------------- (U) Not coincidentially, investors from Taiwan led by Minister without Portfolio Lin Yi-fu (economic adviser to the prime minister) arrived November 21 for a one-day visit to inaugurate a technology-related project and explore others. Taipei's Ambassador Feng said that the visit was organized hastily in response to the PRC initiatives, came "unprepared," and would be unlikely to generate much investment. Feng's view: Taipei can only encourage investors to engage; Beijing can order them to do so. (SBU) Feng said the PRC has "targeted" the Dominican Republic to increase trade, investment, and assistance, part of an effort to obtain recognition. He said that Dominicans are exploiting the opportunity to extract maximum benefit from both China and Taipei. He shared his views on the margins of the dedication of a computer and English language training center in Santiago set up by PLD Senator Perez, entirely equipped with machines donated by Taiwan. (C) Taipei's ambassador sketched his beleaguered situation. Despite substantial Taiwan assistance here (approximately USD 70-80 million over the past 5-6 years),Feng sees his influence gradually slipping. But he seemed certain that diplomatic relations would survive for the time being. Prior to the August 16 inauguration of President Fernandez, he had told Feng that the Dominican Republic would continue to recognize Taiwan while expanding economic relations with the PRC. (C) Feng has had other frustrations as well. In July President Mejia inaugurated a new regional hospital in the southwestern city of Azua; Taiwan financed USD 15 million of the USD 19 million cost. But lacking essential equipment and staff to be provided by the government, the facility stands empty. (C) Feng's doubts about his position here are compounded by what he sees as Taiwan's deteriorating relations with the United States and divisive domestic politics. (Note: A member of the Nationalist Party, Feng spent seven years in Washington early in his career. End note.) He was critical of his government's acquisitions of expensive military equipment from the United States for defense against China at a time of escalating economic exchange and migration across the Taiwan Strait. Big-Ticket Investments -------------- (C) The assistance, investment, and trade offered by the PRC to the Dominican Republic far outstrip Taiwan's resources, Feng acknowledged. He said Caracas and Beijing have proposed exploration for offshore oil in Dominican waters, using Venezuelan capital and Chinese technical know-how. (C) China Minmetal's proposed USD 5 billion purchase of the Canadian Falconbridge mining enterprise could affect the situation here, according to Feng. Our mining sector contacts say that Falconbridge operations in the Dominican Republic have not been visited by any Chinese. Feng asserts that once the Canadian corporation is sold, the Dominicans will supply the PRC with iron and nickel, since the Chinese firm will have 87% of the shares of the Dominican affiliate. This "brilliant move" will also enable Beijing to leverage its investment clout into political and diplomatic influence in Santo Domingo, he fears. Trade with the PRC -------------- (U) PRC exports to the Dominican Republic amount to some USD 150 million annually and are more likely to grow than Dominican exports to China. The efforts of the PRC commercial office here since its establishment in 1994 have paid off in a trade surplus of more than USD 100 million. (C) The memorandum that established commercial relations provided for Dominican trade offices in Beijing and Hong Kong. The Dominicans converted their consulate in Hong Kong to a commercial office after the former crown colony's integration into the PRC, postponing plans for Beijing. According to MFA Under Secretary for Consular Affairs Rosario Graciano, President Fernandez has just named Roger Casado Alcantara as deputy director of an office in Beijing -- but has not yet named a director, provided a budget, or trained a staff. Investment and Aid from Taiwan -------------- (SBU) According to the press, current Taiwan investment here exceeds USD 100 million in more than 70 firms, which directly provide 3500 jobs. The Taiwan firms are active in free-zone administration and industries including paper, textiles, acrylics, plastics, aluminum products, printing, horticulture, photography, computing, and food processing. Taipei is also reportedly assisting small business development. In August, the Dominican Confederation of Small and Medium Enterprise (CODOPYME) signed a cooperation agreement with the Association of Small and Medium Enterprise of the Republic of China, the Textile Federation of Taiwan, and the Federation of Industries of Taiwan. ¶2. (U) Drafted by Bainbridge Cowell. ¶3. (U) This piece and others in our series can be consulted on our classified SIPRNET site http://www.state.sgov.gov/p/wha/santodomingo/ along with extensive other material. HERTELL