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