AMBASSADOR BRINGS TOGETHER DOMINICAN PRESIDENT AND

C O N F I D E N T I A L SECTION 01 OF 02 SANTO DOMINGO 003199

SIPDIS

STATE FOR WHA, WHA/CAR, WHA/EPSC, EB, EB/TPP/BTA/EWH;
NSC FOR SHANNON AND MADISON; USCINCSO ALSO FOR
POLAD;TREASURY FOR 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: DECL: 05/24/2015
TAGS: ETRD PGOV EFIN DR CAFTA
SUBJECT: AMBASSADOR BRINGS TOGETHER DOMINICAN PRESIDENT AND
LEGISLATORS FOR CAFTA

Classified By: DCM Lisa Kubiske. Reason: 1.4 (b) and (d).


1. (SBU) At the Ambassador's initiative, Dominican President
Leonel Fernandez convened a meeting at the presidential
palace on Tuesday evening, June 14, with the presidents of
the Dominican Senate and House, mediator Monsignor. Agripino
Nunez of the Catholic PUCMM university, the Ambassador and
DCM to discuss timing of legislative ratification of the free
trade agreement with the United States and Central American
states (CAFTA).


2. (SBU) By the end of the meeting, the Dominicans had all
agreed:

- - that they all supported CAFTA;

- - that they would convene a public "hearing" at the Palace
on Wednesday morning next week with President Fernandez
chairing at least the opening and closing sessions, to give
the principa interested parties a chance to voice their
concerns and be heard at a national level. They will
probably include the press. Afterwards, they announced this
much to the press (some reporters mistakenly wrote that the
session would be today instead of next week). Msgr Agripino
Nunez will convene the meeting in his capacity as chair of
the ad hoc "National Dialogue."

- - that there would be no commitment to legislating
immediately to fulfill any of the concerns expressed, but
that the information could be factored into later discussions
about the budget and public spending bills for 2006 and
eventual fiscal reform. Fernandez was categorical in his
insistence that the government would adhere to the 2005
budget as already voted, despite any moves to craft fiscal
reform, as required by the IMF agreement.

- - that it should be possible to have the Dominican congress
vote to ratify a week later, i.e., by around the end of June.


3. (SBU) Comment: We know from experience that lots of
follow up will be needed. However, the agreement to hold a
hearing and for President Fernandez to lend his prestige and
stature to the exercise breaks several weeks of CAFTA inertia
in the Dominican Republic. Fernandez agreed readily late
last week when the Ambassador proposed such a meeting, the
guest list for it, the focus, and the presentation. Msgr.
Nunez was a skillful "closer."


4. (C) The Ambassador's pitch was that the timing of
Dominican ratification matters greatly, as it will send a
signal to Washington of interest in the trade agreement by
the Dominicans as a people and country with close relations
and a sizable trade with the US. He argued that there is
little downside to ratifying before the U.S. Congress takes
action and a lot to lose from delay.


5. (SBU) Fernandez insists on de-linking the vote on CAFTA
from the process of deciding on fiscal reform and any
eventual "compensatory measures." The Ambassador noted the
good outcome reported from the Senate Finance Committee's
mock mark-up earlier in the day. He complimented Fernandez
for exercising presidential leadership.


6. (SBU) The congressional leaders agreed that giving
special interests a chance to "be heard" would be sufficient
before moving to a vote. (Note: Chamber president Alfredo
Pacheco has also just been elected as one of several national
vice presidents of the PRD.)


7. (C) In informal comments to the Ambassador, Senate
president and DCM before the meeting, Fernandez commented
that the free trade agreement would put a great deal of
pressure on Dominican businesses. He sounded
uncharacteristically pessimistic. Continuation of the
Caribbean Basin Initiative would have been easier for the
country, which in only a short period had moved from being
primarily an agricultural economy to being a service
economy, without the phase of significant industrial
development. The free zone industries were a thing apart
from the domestic economy, he commented, given that most of
them imported inputs and exported essentially their entire
production. He spoke of his desire to reinforce democracy
and institutions in the country, commenting that the United
States has its own brand of democracy, in which there is a
certain amount of control by opinion-makers. For example,
he said, when the New York Times recently printed an article
on the Dominican Republic that contained "inaccuracies,"
Fernandez wrote to the paper. The editors at first ignored
his comments and then, after some inquiries, agreed to print
excerpts but not the full text. Fernandez declined to accept
any editing, and the letter never appeared. In contrast, he
said, "Here, newspapers will print anything that anyone
says, regardless of whether the comments are truthful or
informed."

Other News


8. (SBU) Fernandez was scheduled to give a speech that same
evening delivering his decision on whether to proceed with
cuts in the subsidy for cooking gas agreed in the IMF
program. (septel follows). He previewed his approach,
stating that the government is NOT in a position to eliminate
it right now. (NOTE: Fernndez did tell the country that the
subsidy would be continued at its present level of 17 pesos
per gallon of LPG, approximately US 60 cents; he mentioned
the fact that the mechanisms and infrastructure are not yet
available to target the subsidy.) The President related that
when the government did the survey of poorest families, who
number about 180,000 it turned out that many were using wood
or coal, not gas. This being so, he said, targeting the
subsidy to the poorest group would not provide any comfort
to the neediest. Removal of the subsidy would hurt middle
class households and transportation operators. Political
pressure from the transportation sector has been vocal and
insistent; he seems to have decided that now is not the time
to remove the subsidy for these groups. He expressed the
hope that eventually more vehicles would use liquefied
natural gas, since it is cheaper and cleaner than gasoline.


9. (SBU) Fernandez highlighted to the congressional leaders
his hopes that the Central Electoral Board (JCE) and the
Camara de Cuentas, a government auditing body, could both be
staffed by non-partisan officials to give these groups
credibility. The Congressional leaders listened but did not
comment.

Hertell