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
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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
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- - - -


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
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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
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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