DOMINICAN POLITICS #13: PRESIDENT FERNANDEZ AND

UNCLAS SECTION 01 OF 02 SANTO DOMINGO 001146 SIPDIS SENSITIVE STATE FOR WHA, WHA/CAR, WHA/EPSC, WHA/USOAS, EB/TPP/BTA, EB/IFD/OMA; NSC FOR SHANNON AND 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: N/A TAGS: PGOV EFIN ETRD PREL DR SUBJECT: DOMINICAN POLITICS #13: PRESIDENT FERNANDEZ AND HIS NATIONAL DAY SPEECH ¶1. (SBU) This is #13 in our current series on politics in the Dominican Republic: Leonel Fernandez and the February 27 National Day Speech - - - - - - - - - - - - - - - - - - - - - Leonel Fernandez was addressing the nation live, on national television on a Sunday morning amid pageantry at the newly redecorated Senate chamber. The speech lasted one hour and 8 minutes. He received polite applause 14 times but the only enthusiastic, standing ovation came toward the end when he vowed to take measures to fight crime. We have been told that Leonel Fernandez writes his own speeches, and this text bears that out. He demonstrated his familiar fluent erudition, discoursing for almost half of the speech on "economic indicators" (the quotes around the term appear in the text). He quoted twice from the bond market newsletter of Bear Stearns, twice from U.S. professor Jeremy Rifkin on the "digital divide" and once from Keynes on the difficulty of overcoming "old ideas." The central message was unmistakably aimed at the capital markets, investors and the sophisticated private sector -- so much so that Fernandez half apologized for it: "I realize that these are very complicated technical terms, difficult for most people to understand, but since they are so vital for the proper conduct of our economy, the Dominican people need to listen to them and to understand the immense effort underway in the government to overcome our national problems." One very clear point in that regard: Fernandez and his team are determined to keep monetary policy tight so as to maintain the Dominican peso at its current overvalued exchange rate. Fernandez simply denied that the peso is too expensive: "Although some see the problem of manufacturing as a loss of competitiveness due to peso appreciation, the truth is that the phenomenon is much more complex. For this administration, there is no dilemma of choosing between competitiveness and an equilibrium rate of exchange. Both are dynamic concepts." That leaves no prospect of exchange rate relief for the country,s two leading sectors - - apparel manufacturing for export and tourism. His endorsement of the "free trade agreement with the United States" was a bloodless one offered in the context of a discussion of the mechanisms of adjustment to the pressures of globalization. He said not a word about foreign affairs- -) about Haiti, for example, or about international narcotics trafficking. There was no mention of the Dominican military. Though he spoke about making government work better, he did not speak about corruption (in contrast to his inaugural address, when he maintained that there would be "no clean slates" for those who engaged in corruption). Only in his list of measures for improving the police force was there a passing reference, in the promise of an effective Internal Affairs Division to investigate police malfeasance. Fernandez did not discuss domestic politics and in fact did not link the financial and economic crisis with any individual or group. The ability of his administration and party to govern is a concern of many. In the days immediately before the speech, the opposition-dominated Senate had suspended all action on special session legislation required for the IMF agreement. As a price for agreeing to resume, the senators demanded successfully that the administration reverse politically connected firings of government employees. In the opening address of the National Day session Senate President Andres Bautista reproached the administration directly on that issue. Fernandez,s most vivid images came from the opening portrayal of the Dominican Republic as a dangerously ill patient, just released from the emergency room but still in guarded condition - - and recovering, thanks to the "tourniquet" applied by the administration to its nearly lifeless body. Those images stood in strong contrast to his peroration in favor of the Metro project, a huge and potentially costly undertaking prepared in obscurity over the past six months. Fernandez acknowledged that the debate was still underway ("and I value all opinions") and proposed a comparison to FDR,s New Deal and to France,s decision to construct the Eiffel Tower. It was a weak argument. Neither is apt for the deliberately underestimated, technically questionable project. Dominican engineer Hamlet Hermann offered El Caribe a better comparison the next day: Balaguer,s Columbus Lighthouse, the huge, useless and costly white elephant built in 1992. Dominicans remember that project well; Hermann didn,t need to mention the mismanagement, malfeasance and corruption involved with that project. ¶2. (U) Drafted by Michael Meigs. ¶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. MARSHALL