DOMINICAN PRESIDENT FERNANDEZ - VISIONS FOR THE

C O N F I D E N T I A L SANTO DOMINGO 001898 SIPDIS SIPDIS DEPT FOR WHA, WHA/CAR, WHA/PPC, WHA/EPSC, EB/IFD/OMA,EB/TPP/BTA/EWH; DEPT PASS AID/LAC; DEPT PASS USTR; WHITE HOUSE PASS USTR; TREASURY FOR JLEVINE; SOUTHCOM ALSO FOR POLAD E.O. 12958: DECL: 06/05/2031 TAGS: PREL EAID ETRD KDEM KIPR DR SUBJECT: DOMINICAN PRESIDENT FERNANDEZ - VISIONS FOR THE REST OF HIS TERM REF: SANTO DOMINGO 1858 Classified By: Ambassador Hans H. Hertell. Reason: 1.4(b) and (d) ¶1. (SBU) Summary. On June 2 President Leonel Fernandez described to the Ambassador his ambitions for the two years remaining in his term, including a "democratic revolution" including grassroots consultations on institutional change. He asked for a friendly hearing and "some modest concession" to accept even just one of the Dominican Republic,s arguments on CAFTA-DR implementation, sought an impromptu briefing on U.S. assistance via the Millennium Challenge Corporation, and emphasized his interest in building democracy by strengthening institutions. End summary. ¶2. (SBU) President Leonel Fernandez received the Ambassador, DCM and EcoPol counselor on June 2 to discuss the Santo Domingo meeting of the OAS General Assembly (OASGA) June 4-5 and related events. President Fernandez had no staffers present. The Ambassador congratulated the President on his party's convincing victory in the May 16 elections, which resulted in majorities for the ruling party both in the Senate and in the House of Representatives. The Ambassador expressed the Secretary's regrets at her inability to attend the OASGA and discussed with Fernandez the Iran issue that had intervened (reftel). Fernandez commented that the multilateral initiative on Iran was an intelligent first step that merited support. Towards CAFTA Implementation -------------- ¶3. (C) Fernandez welcomed the scheduled participation in the OASGA of Deputy Secretary of State Robert Zoellick and confirmed that he would receive him as scheduled earlier for the Secretary. He expected to take advantage of the Deputy Secretary's trade background by including Secretary for SIPDIS Industry and Commerce Francisco Javier Garcia and presidential Technical Secretary Temistocles Montas, both of whom have policy responsibility for the free trade agreement DR-CAFTA. Fernandez said he would confirm Dominican intentions to move rapidly to CAFTA entry into force, particularly since the country currently stands at a competitive disadvantage to other CAFTA countries. 
 ¶4. (C) He asked for understanding of Dominican sensibilities in the ongoing discussions about measures required for USTR to confirm Dominican readiness for implementation. The Dominicans were concerned about the requirement for a law to confirm obligations exonerating U.S. companies in future from the law on dealers and representations. The theme of data protection was also difficult, since over the past 20 to 25 years the pharmaceutical manufacturing sector had grown significantly. Dominican manufacturers were apprehensive that a full application of measures requested by USTR would significantly limit their activities. ¶5. (C) The Ambassador suggested that with CAFTA's guarantees for investment and transparent regulation, the Dominican industry might in fact be able to expand. He offered the example of Puerto Rico, with one of the world's greatest concentration of pharmaceutical manufacturers, some of whom might well be interested in investing in the Dominican Republic, once CAFTA implementation measures are worked out. Fernandez replied, "Much of the investment here is Dominican, and I am concerned at protecting local capital and knowledge. There is a powerful international pharmaceutical lobby." ¶6. (C) The Ambassador noted that Dominican interests had recently managed to obtain the cancellation of important patents belonging to two U.S. pharmaceutical houses. "Respect for intellectual property and patent rights enforcement are essential. An inability to achieve those would be a deal-breaker for CAFTA-DR." ¶7. (C) In a wider context, Fernandez said, in the Dominican system, treaty obligations override local law. "With all due respect," replied the Ambassador, "The U.S. view is that the laws and regulations should clearly reflect treaty obligations. For example, the agreements on government procurement must be set in the law. The case is the same with data protections and procedures for coordination between national agencies. Adversaries of CAFTA-DR would seek to use any contradictions to their own advantage." ¶8. (C) Fernandez commented that the text of CAFTA-DR was not elaborated with the Dominicans, who entered at a later stage. "Between friends," he said, "We should be able to work something out. We recognize that we will pay a cost for our late arrival, and some sectors will pay the price. We depend upon trade with the United States, so we have no choice. But I have the feeling that in many aspects there are U.S. corporate interests heavily influencing the U.S. positions. If we must, we will haul down our flags and enter, but we have the feeling that we always lose with the United States." ¶9. (C) The Ambassador said that a free trade agreement is the best tool for sustainable economic development and its balance of benefits is good for all. Fernandez replied, "I am discussing the form of the negotiation, not the concept itself. The United States never pays attention to the rationale offered by its counterparts." He acknowledged concessions made in the agricultural schedules, and said that they were good. He took out a paper on pharmaceutical data protection and began to read the text aloud; after half a page, he excused himself long enough to go get three photocopies of the three-page document. The document (faxed June 2 to the Department) puts forth the Dominican pharmaceutical manufacturers' interpretation of CAFTA-DR obligations: in essence, that despite a law requiring submission of data for pharmaceutical patents, a presidential decree in effect at the time of the CAFTA-DR signing waived the requirement and should be considered as the point of reference for implementation. Fernandez did not comment upon the content of the position paper, other than to say, "These are our arguments, offered for a friendly bilateral negotiation process. Please hear them out. It would help greatly if the United States could make a concession, even a small one, rather than insisting on take-it-or-leave-it." ¶10. (U) The Ambassador informed Fernandez that the U.S. authorities had just completed arrangements to approve Caucedo port for the Container Security Initiative, and an agreement would be ready for signature later in the month. Millennium Challenge Corporation - - - - - - - - - - - - - - - - ¶11. (SBU) Fernandez asked about the structure of the U.S. assistance initiative through the Millennium Challenge Corporation (MCC) and followed with close interest as the DCM described the international objective indicators, mentioned criteria for programs, and gave examples of compacts already agreed. Fernandez was aware that Technical Secretary Montas had formed working groups with Dominican officials and Embassy representatives to assess prospects of improving Dominican results. He expressed the hope that the country might qualify as early as 2007. Development Topics, including the Challenge of the Electricity Sector - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - ¶12. (SBU) Other development topics briefly mentioned were the HIV/AIDS program, in which local government agency COPRESIDA has not yet established a management structure acceptable to administrators of the UN's Global Fund for HIV/AIDS, and the electricity sector. Fernandez said that he expected to take dynamic action between now and the end of December 2007; "We have 18 months to get it right before electricity again becomes a political issue." ¶13. (C) The next day's meeting of heads of the System for Central American Integration, President Fox of Mexico, and Preside Uribe of Colombia would have little direct benefit for the Dominican Republic, he said. He was hoping that Mexico would come through on the offer made earlier in Cancun to set up a line of credit to finance a portion of petroleum sales when prices are above USD 60 per barrel. Mexico did not appear particularly enthusiastic about the idea. Colombia was willing to finance up to USD 200 million per year, with a credit of two years, in those circumstances, providing a safety net. Dominican purchases from Petrocaribe brought helpful subsidies, although with occasional uncertainty of supply schedules. ¶14. (SBU) On electricity, Fernandez considered that sustainable supply of power would be the key -- only once the service became reliable would clients be willing to accept necessary increases. The government is constructing transmission lines with which to feed power from the South into the central Cibao region when needed, and the two coal-fired plants for a total of 1200 megawatts were scheduled to come on line in December 2007. Authorities are discussing possible conversions of petroleum-fired generators of COGENTRIX and AES San Andres to natural gas, while they are seeking price concessions from Qatar on gas. A Fundamental Democratic Revolution - - - - - - - - - - - - - - - - - ¶15. (C) Fernandez wants to create a "democratic revolution" as his legacy to the country. He briefly traced the history of the move away from authoritarianism to democracy, expressing the opinion that under Hipolito Mejia the PRD had been unable to break away from heavy party control of the state, evidenced in its appointments to the National Electoral Board and to the Supreme Court. The PRD had strongly resisted the results of the May 2006 elections, he said, and until only 4 days earlier the PRD had been trying to overturn results for four senate seats. "The PRD sees politics as business, not as democracy." ¶16. (SBU) In public comments over the past weeks Fernandez has suggested his intention to institute a comprehensive national dialogue, to include proposals for constitutional change. It will include the elites, he said, but the bases for the undertaking will be provincial development committees. He foresees establishing these in law, with the requirement that governments of all levels must consult with them. National congressional representatives will participate in the committees. The aim is to revise the institutions of democracy, gathering suggestions through widely attended open meetings. ¶17. (SBU) This approach is different from that of calling a constitutional convention, he said. It would arise from the people rather than be imposed by ruling politicians. Politicians' efforts along these lines have failed in other Latin American countries -- in Colombia, the abstention rate of voters asked to judge proposals was 75 percent and in Argentina it was 70 percent. ¶18. (SBU) One topic he favors discussing is Dominican nationality, particularly the possibility of granting citizenship to those born abroad to Dominican parents, and the creation of formal representation in Congress for major Dominican communities abroad, proportionate to population. "One tenth of all Dominicans live in the United States, and our political parties are active there. That is why Dominican consuls have such a key role. It would be helpful if U.S. admission of status for legal permanent residents could take into account these realities." ¶19. (SBU) He would like to see the right of "amparo" (judicial writ of assistance to the citizen) written into the Constitution as a counterweight to the authoritarian culture of government officials. "We will teach our officials to be democrats; they need a culture of democracy here." ¶20. (C) Fernandez believes that the amendment that allowed Hipolito Mejia to run for a second term was poorly written ("the president may opt one time to present himself for re-election") and should be revised. He offered the example of the U.S. constitutional amendment that limits a president to two terms. "They would not necessarily be consecutive terms. But there should be a maximum of two." He declined to comment on his thinking about a possible run in 2008 for a third term, which would be a first consecutive re-election. "There is so much to be done. There are many things I could do, and many of them are more interesting that serving as president." ¶21. (SBU) Fernandez sees it necessary to espouse tolerance of diversity in Latin America. &I grew up in New York,8 he said, &and I have a great admiration for American institutions, and their independence.8 He said such institutions are rare in Latin America, where monied interests heavily influence government and other institutions. He offered the example of the Dominican judiciary, in which many judges have open political party sympathies are influenced by outside interests. Private sector interests have long accustomed themselves to purchasing congressional votes. ¶22. (SBU) "What we need is simple civic education," he said. "Something as basic as the pledge of allegiance to the flag." He wants to stress the duties of patriotic citizenship." Demographic changes, including especially the migration to the cities, have weakened civic ties. COMMENT - - - - ¶23. (C) This call, initially on protocol matters, turned into a thoughtful two-hour exposition by President Fernandez of his thinking for the rest of this term. "I have only about a year, perhaps a little more, in which to work before the approach of new elections. I want to make the most of it." His tactic of turning over the position paper clearly drafted by pharmaceutical association INFADOMI recalled his October 2004 delivery to Florida Governor Jeb Bush of a letter from sugar interests, formally submitting arguments which he appeared not to espouse. He is now able to state to INFADOMI, a group that includes shameless pirates of intellectual property, that he has delivered their case to the United States, exactly as they wish to have it argued. ¶24. (C) As always, the "big picture" Fernandez is an intelligent, articulate, and agreeable presence, speaking of fundamental principles of democracy and good government. As almost always, he was solo in this meeting with the Ambassador and U.S. government officials. His ability to negotiate and carry out change is strengthened by his huge electoral mandate from the people both in 2004 and 2006, but those who stand in the way of his democratic revolution have deep pockets, long memories, and great influence. The change he desires will come only very slowly, and in order to counter corruption he may eventually have to take on and defeat one or more of the very powerful. HERTELL