C O N F I D E N T I A L SANTO DOMINGO 001912

SIPDIS

SIPDIS

DEPT FOR D, WHA, WHA/CAR, WHA/CEN,WHA/EPSC, EB,
EB/TPP/BTA/EWH, EB/TPP/IPE, EB/ESC/IEC/EPC, INL, INR/IA,
IO, IO/UNP; DEPT PASS AID/LAC; SOUTHCOM ALSO FOR POLAD
DEPT, WHITE HOUSE PASS USTR

E.O. 12958: DECL: 06/06/2016
TAGS: ENRG PREL PGOV KCRM KIPR KUNP HA DR
SUBJECT: DEPUTY SECRETARY,S TOUR D,HORIZON WITH PRESIDENT
FERNANDEZ JUNE 4

Classified By: AMBASSADOR HANS H. HERTELL FOR REASON: 1.4(b) and (d)


1. (C) Summary. Dominican President Fernandez used a
wide-ranging meeting with the Deputy Secretary June 4 to
elicit support from within his own implementation team to
take the steps needed to bring CAFTA-DR into force by August.
Urged by the Deputy Secretary to support Guatemala for a
seat on the UN Security Council, President Fernandez
explained that his government had been waiting to see how
support develops; he suggested that the Dominican Republic
would make a good consensus candidate if one were needed. On
Haiti, President Fernandez called President Rene Preval "the
only potentially effective leader Haiti has" and urged
international support to ensure Preval demonstrated
effectiveness before time ran out on him. President
Fernandez listened carefully to the Deputy Secretary,s
description of the importance of the Aleman money laundering
case and the desirability of Dominican cooperation in the
lead-up to the November 2006 Nicaraguan elections. In energy,
President Fernandez described the Mexico-Central American
Mesoamerica Initiative as being of significant utility for
Central America, but of more limited benefit to the Dominican
Republic. Back in the Dominican Republic, President
Fernandez said he planned to use his party,s recent
electoral mandate to build a democracy based on institutions
rather than personalities and, with the help of the team
organized by his Technical Secretary, work to bring the
Dominican Republic up to standard on the objective indicators
used to guide selection of assistance recipients by the
Millennium Challenge Corporation (MCC). End summary.


2. (C) The Deputy Secretary, accompanied by Ambassador

Hertell, WHA PDAS Shapiro, and staff met June 4 with
Dominican President Leonel Fernandez in the Presidential
Palace. Fernandez was accompanied by the Secretary of
Industry and Commerce, Francisco Javier Garcia; the Dominican
Ambassador to Washington, Flavio Dario Espinal, and the head
of the Dominican implementation team for CAFTA-DR, Vilma
Arbaje. The meeting took place on the margins of the OAS
General Assembly.

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CAFTA-DR
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3. (C) President Fernandez began by noting that the
Dominican Republic is in the final stages of the effort to
bring CAFTA-DR into effect in his country and that he hoped
to have it fully implemented by August. (Note: When
Secretary Rice telephoned him on June 3, Fernandez stated

SIPDIS
that he hoped CAFTA-DR "would be put into force by late July
or early August." End note. ) At his request, Vilma Arbaje,
the head of the team working with USTR on implementation,
briefly presented the Dominican positions on dealer
protection ("Law 173") and data protection in terms similar
to the ones used in the May review talks with USTR. After
some back and forth, Fernandez concluded that the Dominican
Republic was making progress on Law 173. On data protection,
and after some dialogue in which Arbaje started to argue that
CAFTA language does not obligate the Dominican Republic to
protect data, Fernandez elicited an opinion from her that the
best course of action for the Dominicans was to do in fact
what CAFTA says and bring Dominicans on board with the
agreement,s requirements.


4. (C) The Deputy Secretary then explained his principal
interest: getting the agreement put into effect and helping
the Dominican Republic within the context of the bilateral
relationship and overall development assistance. He praised
Susan Schwab, the President,s nominee to be the next U.S.
Trade Representative, as a good closer of agreements. He
encouraged Fernandez to use the political power earned in the
May elections quickly to resolve the final issues, including
in the areas of dealer protection, regulations on patents,
data protection, and government procurement. He urged
Fernandez to find technical experts on data protection who
understood the requirements and political experts who would

make data protection a reality in the country. He concluded
by telling Fernandez that he had been impressed by
Fernandez, strategic vision that CAFTA was important for the
country. Fernandez had been a great partner on CAFTA.
"Let,s get this done," he urged. Secretary of Industry and
Commerce Garcia noted that all sectors now favored CAFTA.

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The Guatemala-Venezuela Race for a UN Security Council Seat
-------------- --------------


5. (C) The Deputy Secretary highlighted the importance of
the UN Security Council and of this seat for issues of
international scope such as Iran. Think what Venezuela as a
member of the UN Security Council would do on Iran, for
example, he urged. He noted that there was strong support
from the Central Americans for Guatemala, but less from
Caricom. Overall, there wasn,t much doubt that Guatemala
was ahead, just a question of whether it could garner two
thirds of the votes required for blocking Venezuela,s bid
for the UNSC seat.


6. (C) President Fernandez replied that the Dominican
Republic was taking a "wait and see" approach on pledging its
support for the seat. The country had wanted to run for a
UNSC seat in 1999, but dropped its bid at the request of
Mexico, in the interest of bolstering stronger regional
representation within the Council. It has already indicated
interest in running next year. If Guatemala didn,t succeed
this time round, perhaps the Dominican Republic would be good
candidate in its place, he offered. (Note: This discussion
may foreshadow an attempt on the part of the Dominican
Republic to shore up U.S. support for a future candidacy, in
exchange for full-fledged support for Guatemala,s current
bid. Regardless of this development, IO reports that the
Dominican Republic has been an active supporter of Guatemala
in the current UNSC seat race. End note.)

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Haiti and Haitians in the Dominican Republic
--------------


7. (C) The Deputy Secretary noted that President Fernandez
had taken important steps in Haiti and invited the
President,s views on the current situation.


8. (C) President Fernandez said that with President
Preval,s election, Haiti has another chance to overcome its
democratic difficulties. Preval did well in his first term,
and he is the only potentially effective leader Haiti has,
Fernandez thought. However, time is running out on him, and
the international community can ) and needs to -- help him
demonstrate effectiveness.


9. (C) The conversation turned to Haitians in the Dominican
Republic. President Fernandez estimated that there were some
700,000 in the country. Whereas traditionally they had been
the country,s sugarcane workers, now they worked in many
areas of agriculture (rice, tomatoes, and other crops in
addition to sugarcane) and in construction.

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Aleman and Money Laundering
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10. (C) The Deputy Secretary praised the Dominican Republic
for having established a new anti-money laundering office.
He then highlighted U.S. and Panamanian concerns about the
alleged involvement of former Nicaraguan president Arnoldo
Aleman in money laundering (i.e., movement of millions of
dollars to bank accounts in the Dominican Republic while he
was President.). Spain and the other 14 Schengen countries
have recently blocked Aleman,s entry into their territories.
The united States has revoked his U.S. visa and the visas of
his family members, and also undertaken forfeiture
proceedings against hundreds of thousands of dollars worth of
illicit assets that he has stowed in the U.S. Panama was

investigating. The Deputy Secretary urged Dominican
cooperation on the money laundering issue, particularly since
the investigative trail led to the Dominican Republic. There
were two key issues here: fighting corruption and sending a
message that Aleman,s day was past, that democratic
governments would not support corrupt officials even if the
alternative was a leftist government. In this case, a strong
position could even send a message to other candidates to
come forward in this race, another positive.


11. (C) President Fernandez said he had not been aware of
this case, but took note of the issue as the Deputy Secretary
described it. (Note: the Attorney General,s
anti-money-laundering unit interviewed a prominent Dominican
businessman on May 31, responding to a request from the
Panamanian authorities; an officer from the Embassy,s DHS
unit participated in the questioning.)


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Energy: Mesoamerica Initiative, Ethanol
--------------


12. (C) Conversation touched briefly on the just-concluded
Mesoamerica energy summit meeting of the presidents of
Belize, Colombia, Costa Rica, El Salvador, Guatemala,
Honduras, Mexico, Nicaragua, Panama, and the Dominican
Republic held in La Romana, Dominican Republic. President
Fernandez noted that the projects supporting the initiative
were largely focused on Central America, but that Dominican
Republic might get a safety cushion of oil financing from
Mexico (Note: Mexico will supply 65 percent of the crude at a
discount, with small volumes from Belize and Guatemala and
the rest from international markets. End note). Although an
observer to the La Romana meetings, a U.S. delegation headed
by WHA DAS Patrick Duddy reported to the Mesoamerica plenary
that the USG supports the initiative through ongoing
USTDA/EPA/AID clean energy work.


13. (C) Asked about sugarcane and ethanol, President
Fernandez said the Dominican private sector had looked at
ethanol production. Ethanol development would have to be a
private sector initiative, he said, but that the private
sector was not yet excited. They were deterred because of
the 5-6 year lead time raised concerns about profitability.
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Dominican Development: What Comes Next
--------------


14. (C) The Dominican Republic had a great economic year,
President Fernandez said: 9 percent growth in 2005 and an
even higher figure "12 percent annualized" for the first few
months of 2006. Services (banking, trade, tourism, and
finance) were growing fastest, though traditional agriculture
(sugar and tobacco) remained part of the mix.


15. (C) President Fernandez,s Dominican Liberation Party
(PLD) had just won control of both houses of the legislative
and nearly half of the municipalities. President Fernandez
said he wanted to use this mandate to continue the country,s
march toward democratic modernization, i.e., toward creating
a democracy rooted in institutions rather than in
personalities. Fernandez explained that he hoped to organize
a grassroots discussion that would identify reforms the
people wanted and lead to the development of a new
constitution. The Deputy Secretary noted that Fernandez,
goal dovetailed with the focus of the OAS private dialogue
held between foreign ministers earlier that day, which had
been on strengthening institutions.

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Millennium Challenge Corporation
--------------


16. (C) At the end of the meeting, the Deputy Secretary
reminded President Fernandez about the Millennium Challenge
Corporation and described its philosophy of giving aid to


countries who invest in their people and fight corruption.
The program fit naturally with President Fernandez own
current efforts. Thus, if the Dominican Republic could be
brought to the point of qualifying, it could receive a big
infusion of funds that can help the country enormously to
carry out its dreams. President Fernandez noted that with
CAFTA, the Dominican Republic might qualify on some of the
objective indicators and said his Technical Secretary,
Temistocles Montas, was leading a team of experts working to
bring the country up to standard in each of the indicators.
HERTELL