DOMINICAN PRESIDENT OUTLINES TO DAS SHAPIRO

C O N F I D E N T I A L SECTION 01 OF 04 SANTO DOMINGO 000556 SIPDIS STATE FOR WHA, WHA/CAR, WHA/EPSC, INL; NSC FOR SHANNON AND MADISON;LABOR FOR ILAB; USCINCSO ALSO FOR POLAD;TREASURY FOR OASIA-LAMONICA 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: 01/18/2015 TAGS: PGOV EFIN BEXP ENRG PREL DR SUBJECT: DOMINICAN PRESIDENT OUTLINES TO DAS SHAPIRO INTENTIONS ON HAITI, VENEZUELA, AND ECONOMIC PROGRAM Classified By: DAS Charles Shapiro. Reason: 1.4 (b) and (d). ¶1. (SBU) Summary. Dominican President Leonel Fernandez spoke at length with visiting Deputy Assistant Secretary Charles Shapiro on January 14 on Dominican concerns about Haiti, Haitian reconstruction, and cross-border security issues. Fernandez and his administration will engage closely with the Haitian provisional government. DAS Shapiro emphasized U.S. interest in completing ratification of the free trade agreement with Central America and the Dominican Republic and USG appreciation for cooperation in law enforcement. Fernandez is optimistic about Dominican economic prospects. End summary. Foreign Minister: Dominicans are Engaging with Haiti - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - ¶2. (SBU) Before WHA Deputy Assistant Secretary Shapiro and the Ambassador called on Dominican President Fernandez on January 14, Foreign Minister Carlos Morales Troncoso met them privately for an overview of bilateral relations. He mentioned the visits to the palace that day of UN Senior Representative of the Secretary General (SRSG) for Haiti Juan Gabriel Valdes and several newly accredited ambassadors (from Germany, Qatar and Russia). Morales Troncoso and his Haitian counterpart will exchange visits in February and March, probably as a preliminary for a possible state visit by Fernandez to Port-au-Prince in May. The Foreign Minister said that during his January 11 visit to the UN he had convened Dominican consuls general from Boston, Philadelphia and New York to emphasize to them the requirement to adhere to proper diplomatic procedure. Venezuela - Chavez's "Obsolete" Politics - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - ¶3. (C) President Fernandez welcomed Shapiro for a conversation that lasted more than an hour. Fernandez immediately raised Venezuela, commenting that Hugo Chavez is pursuing "obsolete" policies, such as redistribution of land - - with high symbolism for Venezuela -- but otherwise completely out of step with the times, especially in a country like Venezuela where agriculture is a minor portion of GDP. Shapiro agreed, stressing that the United States has tried to establish a normal relationship with Venezuela but without success. "Power is a fragile thing," commented Fernandez. He pointed to the danger of the unexpected, such as the September 11 attacks or the devastating tsunami in Asia. U.S. Priorities - - - - - - - - - - ¶4. (C) Shapiro recapped his contacts in his 24-hour visit and mentioned that the previous night he had replied to Dominican interlocutors that the current U.S. priorities for the bilateral relationship are "CAFTA, CAFTA and CAFTA." Fernandez agreed but said that the general theme of security is equally vital. Fernandez says he is trying to make the Dominican economy grow in synch with that of the U.S., with special emphasis on Puerto Rico, south Florida, New York, and the high-tech industries of central Florida. Shapiro said this would be a good advice for Fernandez to give Chavez. Fernandez said he had already shared his views with Chavez, but Chavez was not interested. Haiti - - - - ¶5. (C) The visit of UN SRSG Juan Gabriel Valdes that day had gone very well, Fernandez commented, "and we can work together. We see several key points. We all want a government in Haiti with legitimacy derived from elections, and the provisional government must organize things to fulfill that requirement." Disarmament and violence " of all sides" is important. More than that, security must be re-established for all Haitians. Reconstructing police and security forces would also help fight the growing narcotics traffic. Fernandez sees the Mexican Federal Elections Institute as very capable and welcomes their offer of assistance to Haiti, and Morales Tronocoso emphasized the need to motivate Haitians to participate in the elections. Fernandez wants to examine the political situation more closely, eventually with a visit to Port au Prince, in order to know better any potential Haitian leadership. "Disorder or collapse in Haiti directly affect us here," he said, citing health issues, including the malaria outbreak in eastern Dominican Republic that had led to cancellations of tourist charters from Canada and Europe. ¶6. (C) The President said he had read proposals from a Harvard professor who had worked with community groups in Haiti to fight HIV/AIDS; DAS Shapiro replied that the USAID program of $40 million dedicated to fight HIV/AIDS was obtaining good results from a similar approach, and he briefly reviewed other pledges of assistance. Fernandez said that economic reconstruction for Haiti and cross-border security are the Dominicans' primary initial concerns. "People need jobs," Fernandez replied, and Foreign Minister Morales mentioned the prospect of Dominican investment in Haiti. The Ambassador offered the example of Dominican garment producers "Grupo M," their cross-border contracting of garment assembly and their requests for better security. DAS Shapiro said that with MINUSTAH troops now totaling more than 6,000, the security situation had improved markedly since mid-December. Economic Development for Both Sides of Hispaniola - - - - - - - - - - - - - - - - - - - - -- - - - - - - - - - - - - - - - ¶7. (C) "Our commercial strategy includes Haiti," Fernandez said. The Dominican aim is to move domestic production into activities involving higher technology and greater value-added, while turning to Haiti for labor-intensive factory work. "The Dominican Republic has gotten out of this rhythm recently, with the acceleration of technology." Fernandez foresees biotechnology and targeted agribusiness as promising prospects. The administration is working in these areas with firms in Miami and Palm Beach, seeking to establish joint ventures. Educational ventures with Florida International University and Miami-Dade Community College will help provide the emerging technologies needed for the Americas. "All we need is to establish the first successful firm," Fernandez commented, "and then development in this area will get started." He hopes to attract young, U.S.-educated Dominicans back to the country to make this a reality. A task force with New York is part of this vision. "In 10 years, through the multiplier of CAFTA, the Dominican Republic will be a growth leader for the region." He is looking for USG help, he said, and particularly for U.S. officials to be present for meetings with the U.S. private sector, to motivate the process. Outsourcing production of Spanish language computer programs to the Dominican Republic will be of mutual advantage. ¶8. (SBU) Fernandez recalled his October visit to Miami, when his lunch with the private sector, initially expected to include 40 persons, had expanded to 400 attendees. A recent offering of townhouses in La Romana at Altos de Chavon had been 40 percent sold immediately, he said, "many of them to some of the same persons who attended that lunch." ¶9. (SBU) The President said that Dominican love of baseball offers opportunities for branding the country,s tourism offerings and for providing off-season baseball activities. The administration is looking to attract U.S. major league teams later in 2005 for games to be carried by sports network ESPN in the United States. Theme parks and baseball clinics could reinforce this effort. In similar fashion, the administration is seeking to establish a film festival in La Romana at Casa de Campo and Dominican promoters have already been in contact with George Hamilton, Al Pacino, Steven Spielberg and Barry Diller. Economic Prosperity and the Rule of Law - - - - - - - - - - - - - - - - - - - - ¶10. (C) "Effective law enforcement and cooperation are positive factors for investment," DAS Shapiro pointed out, briefly describing his positive impression of Attorney General Dominguez Brito and other legal professionals the Ambassador had hosted that day at lunch. DAS Shapiro thanked Fernandez for the determination and clarity of the administration,s support for bilateral legal cooperation. ¶11. (C) Fernandez cited the current Paulino Castillo cocaine case, in which the Attorney General had just endorsed the U.S. request for extradition. "This traffic and the organizations behind it have been developing over the last decade; I talked during the campaign and before about this issue, to the surprise of many of my university friends." Fernandez spoke with concern of narco success in buying support from naive poor populations. He cited the funeral the previous week of an assassinated Santo Domingo drug dealer, in which most of the neighborhood had turned out, carrying the coffin draped with the Dominican flag through the public streets. "Yes, that is a major challenge to us - - but do not question our determination to address it, no matter who turns out to be involved.. Anyone complicit with narcotics trafficking will be prosecuted." Choice of an OAS Secretary General - - - - - - - - - - - - - - - - - - - - - ¶12. (C) The Ambassador asked about the visit earlier in the week of Francisco Flores, candidate for OAS Secretary general. "We support Flores, in principle," Fernandez replied, "and our position is that there should be a consensus candidate from Central America." Fernandez said Dominican support for Flores is related to the free trade agreement; the Dominican Republic sees itself as part of Central America. The fact that the Central Americans have not reached that consensus gives the Flores candidacy a certain fragility, and Flores has lost momentum. Insulza of Chile is appearing increasingly vigorous as an alternative to Flores. Fernandez commented that he does not see the candidacy of Derbez of Mexico as realistic, but rather as a tactic convenient for domestic Mexican politics, in other words, a way to ensure Derbez does not run for President. Fernandez does not foresee a Caribbean candidate, because the Caribbeans are aiming at a Deputy Secretary General position eventually. ¶13. (C) Fernandez inquired about prospects for changes at the Department of State with the confirmation of Secretary-designate Condoleeza Rice. DAS Shapiro pointed to SIPDIS the designation of USTR Amb Zoellick as an indication that the President is determined to press the international trade agenda. "You can expect the administration to bring CAFTA into being," he said - - to which Foreign Minister Morales, a veteran of the sugar sector, replied, "Which will cause some economic damage here." Fernandez reminded DAS Shapiro that the Dominican Congress is dominated by the opposition and said that ratification by the Dominican Senate is no sure thing. The DCM told the President that Commerce Minister Javier Garcia had made an eloquent extemporary presentation during DAS Shapiro,s arrival dinner, vividly describing the inevitability of globalization and the opportunities that CAFTA would bring. ¶14. (SBU) The Dominican economy has recovered faster than expected, Fernandez noted, turning around so quickly that it posted 2 percent growth for 2004 instead of contracting; he expects that growth in 2005 could approach 4 percent. Inflation for 2004 was nearer to 25 percent than the expected 42 percent, and in December prices had fallen, month-on-month. The peso has appreciated. ¶15. (C) The electricity sector is a continuing concern, he commented. He added that he is still interested in bringing in coal-fired plants currently available in Texas, as a way of increasing competition and strengthening the administration,s hand in negotiations with existing generating firms. The administration is interested in renewable sources of energy, including wind and solar power; Foreign Minister Morales added to that list of potential sources the production of energy from burning biomass from the sugar sector. ¶16. (C) Fernandez briefly described the energy agreement with Venezuela and affirmed, in response to Shapiro,s question, that there had been "no political price to pay." Venezuelans were offering to invest in refinery capacity and other initiatives, such as Chavez,s idea of a regional petroleum firm ("Petrocaribe"). Fernandez expressed interest in exploring EXIMBANK financing for U.S. exports of fuel, particularly cooking gas. ¶17. (SBU) After mentioning that day,s accreditation ceremonies for new ambassadors, Fernandez noted that Qatar previously had relations in the hemisphere only with Havana and Caracas. ¶18. (U) This message was cleared by Deputy Assistant Secretary Shapiro. SIPDIS ¶19. (U) This piece and other reporting from Embassy Santo Domingo can be consulted at our SIPRNET site http://www.state.sgov.gov/p/wha/santodomingo< /a> along with extensive other material. HERTELL