Identifier
Created
Classification
Origin
06SANTODOMINGO3655
2006-12-06 11:00:00
UNCLASSIFIED//FOR OFFICIAL USE ONLY
Embassy Santo Domingo
Cable title:  

SCENESETTER FOR CODEL ENGEL VISIT TO THE DOMINICAN

Tags:  PGOV EAGR EPET PHUM PREF PREL ETRAD ECON DR 
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VZCZCXYZ0007
PP RUEHWEB

DE RUEHDG #3655/01 3401100
ZNR UUUUU ZZH
P 061100Z DEC 06
FM AMEMBASSY SANTO DOMINGO
TO RUEHC/SECSTATE WASHDC PRIORITY 6828
INFO RUEHZA/WHA CENTRAL AMERICAN COLLECTIVE PRIORITY
RUEHPU/AMEMBASSY PORT AU PRINCE PRIORITY 4420
UNCLAS SANTO DOMINGO 003655 

SIPDIS

SENSITIVE
SIPDIS

DEPARTMENT FOR WHA/CAR:WMIELE; H:BFLECK

E.O. 12958: N/A
TAGS: PGOV EAGR EPET PHUM PREF PREL ETRAD ECON DR
SUBJECT: SCENESETTER FOR CODEL ENGEL VISIT TO THE DOMINICAN
REPUBLIC, DECEMBER 8-10

UNCLAS SANTO DOMINGO 003655

SIPDIS

SENSITIVE
SIPDIS

DEPARTMENT FOR WHA/CAR:WMIELE; H:BFLECK

E.O. 12958: N/A
TAGS: PGOV EAGR EPET PHUM PREF PREL ETRAD ECON DR
SUBJECT: SCENESETTER FOR CODEL ENGEL VISIT TO THE DOMINICAN
REPUBLIC, DECEMBER 8-10


1. (SBU) The United States Mission in the Dominican Republic
warmly welcomes your planned December 8-10 visit to Santo
Domingo. Space permitting, Ambassador Hans Hertell will
greet you in Washington, DC on the day of your departure, and
travel with you via milair to Santo Domingo. We have arranged
meetings for you with President Fernandez and other
high-level government officials, human rights activists
working on behalf of persons of Haitian descent, the owners
of a large sugar company, labor unions and farmers'
organizations who oppose DR-CAFTA, and business groups and
academics who support Dominican accession to the trade
agreement. We believe your schedule will be intense but
rewarding.


- - - - - - - - - - - - - - -
DOMINICAN POLITICAL OVERVIEW
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2. (SBU) President Leonel Fernandez, inaugurated in August
2004 for a second (non-consecutive) four-year term, heads the
Dominican Liberation Party (PLD). In May the PLD won
majorities in both chambers of Congress during congressional
and municipal elections. The principal opposition party is
the Dominican Revolutionary Party (PRD),a populist group
strong in rural areas and in poor urban neighborhoods; under
President Hipolito Mejia, the PRD held the government from
2000 to 2004. Though Fernandez he has not yet announced his
intent to stand for reelection in 2008, it is widely believed
that he will do so. A principal challenger to any reelection
attempt will be the President's ex-Chief of Staff, Danilo
Medina, who split from Fernandez and is currently wrestling
for control of the PLD.


External Relations


3. (SBU) President Fernandez sees himself as close friend of
the United States, but has nevertheless managed to maintain
cordial relations with both Venezuela and Cuba, the former
based in part on a beneficial trade package focused on cheap
Venezuelan oil, the latter perhaps based on the historical

tilt of the PLD toward the "left."

Internal Issues


4. (SBU) President Fernandez has been reluctant to spend his
"political capital" on tackling issues of importance to most
Dominicans. His two signature projects have been the
construction of a dubious, multi-million dollar metro (with
projected outlays outstripping the nation's combined
education and health budgets) and an initiative to reform the
country's constitution. Neither issue has generated
significant public support. Fernandez has thus far declined
to meaningfully address either corruption or the rampant
theft that plague the country's grossly mismanaged
electricity system and, despite publicly supporting Dominican
accession to U.S.-Central American Free Trade Agreement
(CAFTA-DR),has done little to secure its implementation.
His popularity plunged 15 points to 40 percent in a recent
poll, with "negative" ratings increasing 11 points to 29
percent. Despite recent troubles, Fernandez remains a
relatively popular and successful leader in comparison to
others in the hemisphere.


5. (SBU) Widespread perceptions of corruption plague
Dominican politics and business, a legacy of 70 years of
authoritarian rule. Virtually all government jobs are
assigned under the political spoils system, turning over with
changes of administration. Many government jobs are awarded
with the understanding that the recipient will not be
required to work, a practice referred to a "bottle" or
"botella." Journalists continue to uncover examples of
corruption in the operation of the country's judiciary,
though the situation appears to be improving, thanks in part
to effective and significant USAID assistance programs.
QFTA-DR contains important provisions requiring stricter
controls on government procurement and use of public tenders;
it requires the criminalization of bribery affecting trade
decisions.


- - - - - - - - - - - - - -
DOMINICAN ECONOMIC OVERVIEW
- - - - - - - - - - - - - -


6. (SBU) The Dominican Republic had one of the fastest
growing economies in the world in the 1990s, expanding at an

average rate of 7.7 percent per year from 1996 to 2000.
Tourism is still the leading foreign exchange earner;
telecommunications and free-trade-zone manufacturing are also
important industries. Agriculture remains an important part
of the economy. The Dominican Republic owed much of its
success to the adoption of sound macroeconomic policies in
the early 1990s and greater opening to foreign investment.
Growth turned negative in 2003 (-0.4 percent),due to the
effects of a major bank fraud and reduced demand from the
United States owing to an economic slowdown. The economy
appears to have turned the corner; GDP grew 9.3 percent in
2005 and the Central Bank predicts at least a 9 percent GDP
growth rate for 2006. Per capita income is about USD 3200
(2005).


7. (SBU) Following two failed IMF programs under the previous
government, the Fernandez administration successfully reached
a Stand-By Arrangement with the IMF worth approximately USD
665 million in early 2005. The government has met or exceeded
the macro targets under the program but has been slow to
implement a series of required structural reforms. This
failure has caused a delay in the IMF review process. Midway
through 2006 the IMF detected that the government was running
in deficit and it is now expected to end the year with a
fiscal deficit in excess of one percent of GDP. The
Dominicans are working to pass a fiscal reform package
required by the IMF which is designed to compensate for the
deficit in 2007.


8. (SBU) The United States is the country's most important
trading partner, providing 87 percent of export revenues.
Other markets include Canada, Western Europe, and Japan. The
Dominican Republic exports free-trade-zone manufactured
products (garments, footwear, etc.),nickel, sugar, coffee,
cacao, and tobacco, and it imports foodstuffs, petroleum,
industrial raw materials, and equipment.


9. (SBU) On August 5, 2004, the Dominican Republic signed a
Free Trade Agreement with the United States and five Central
American countries to integrate it with the U.S.-Central
American Free Trade Agreement (CAFTA-DR). The Dominican
Republic ratified the agreement in September 2005 and the
government has met several times in 2006 with USTR to
determine legislative and regulatory reforms necessary for
the Dominican Republic to fulfill its obligations under the
agreement. The process has been slow partly due to lack of
coordination and capacity within the Dominican government and
partly because of opposition from various sectors, most
notably agriculture and counterfeit pharmaceuticals. Full
implementation of remaining obligations and entry into force
is expected in early 2007.


10. (SBU) Remittances from Dominicans abroad in 2005 were
estimated at over USD 3 billion, with well over half that
amount originating from the United States. When remittances
are calculated as a share of GDP, the country is ranked 12th
highest in the world, with remittances equal to about 13.2
percent of GDP in 2004.


11. (SBU) Verizon announced in April plans to sell its three
Caribbean and Latin American divisions in separate deals
totaling USD 3.7 billion. Verizon Dominicana was to be sold
to Mexican telecom America Movil for USD 2.3 billion, but the
Dominican government held up authorization of the deal when
it determined that Verizon owed USD 523 million in capital
gains taxes related to the sale. Following months of
negotiations between Verizon and the Dominican government in
which the Embassy played a facilitating role, the two parties
agreed to a settlement on December 1. Under the plan,
Verizon, in exchange for payment of USD 170 million, was
released from any further tax obligation to the Dominican
government.


- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
-
US FOREIGN ASSISTANCE AND THE MILLENNIUM CHALLENGE CORPORATION
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-


12. (SBU) An overarching objective in US foreign assistance
to the Dominican Republic is to enable the country to meet
the requirements for a threshold program with the Millennium
Challenge Corporation (MCC). In November 2006, the MCC Board
did not approve a threshold program for the Dominican
Republic due to poor results on MCC qualifying indicators,
particularly on reducing corruption. However, the Dominican
Republic remains a strong candidate for a threshold program

in the future. President Fernandez has established a special
presidential office to help promote advancement on MCC
indicators, but needs to expand efforts to engage key
Dominican leaders, particularly in the Dominican Congress.


- - - - - - - - - - - - - -
DOMINICAN-HAITIAN RELATIONS
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13. (SBU) Deep tensions and a troubled history shape
Dominican relations with Haiti and Dominican treatment of
persons of Haitian descent. Haiti colonized the Dominican
Republic between 1822 and 1844; many Dominicans resentfully
discuss the Haitian occupation as if it were only yesterday.
From independence, Dominican nationalists began constructing
a separate Dominican identity, one defined in large part in
solidarity against the perceived Haitian threat. Expressions
of anti-Haitian sentiment (read: racism) are common at all
levels of society and incidents of violence against Haitians
in the Dominican Republic occasionally occur. Anti-Haitian
sentiment helps fuel broader racial discrimination against
darker skinned persons, including Americans.


14. (SBU) Poor Dominican border control and the lack of
economic opportunity in Haiti have fueled continuing Haitian
migration. Current estimates of the "Haitian" population in
the Dominican Republic range from 600,000 to 1.5 million.
The wide degree of variation owes to the lack of reliable
studies, but also to disagreement over the definition of a
"Haitian." Most Dominicans consider the Dominican-born
second- and third-generation descendents of Haitian migrants,
including those who do not speak Creole and have never set
foot in Haiti, to be Haitian rather than Dominican.


15. (SBU) In response to public pressure, the Dominican
government has taken steps to marginalize and isolate the
population of persons of Haitian descent in the Dominican
Republic. In 2004 the Dominican government modified the
country's immigration law to exclude the children of
non-resident foreigners from eligibility for Dominican
citizenship. Because the government has not yet implemented
a system to register the births of non-citizens, officials
are unable to issue birth certificates to the children of
non-resident mothers. Although this change has affected all
nationalities, it targeted Haitians.


16. (SBU) Without documentation, Haitian migrants and their
descendents face severe difficulties integrating economically
or socially into Dominican society. They are ineligible for
medical benefits, public schooling after the fifth grade, or
jobs in the formal sector. When these undocumented persons
come of age, they in turn are unable to register the births
of their own children, thus perpetuating a vicious cycle of
poverty. Of growing concern is the fact that an increasing
proportion of this community is effectively stateless -
ineligible for either Dominican or Haitian citizenship. They
congregate at the margins of Dominican society, in isolated
communities ("bateyes") on disused former sugar plantations,
in conditions of extreme poverty.


17. (SBU) The issue is a very sensitive one for Dominicans.
Outside attempts to address the treatment of the Haitian
minority within the Dominican Republic are declared to be
"foreign interventions" or a "violation of sovereignty" and
are met by suspicion and open hostility at all levels of
society. Ultra-nationalists, including some government
officials, suggest that the ultimate goal of the
international community is the reunification of Hispaniola,
with Port-au-Prince as the capital.


18. (SBU) However, Dominican officials do not hesitate to
profess to the international community the urgent need for
donor assistance to improve civil order and economic
opportunity in Haiti. Their message, oft-repeated, is that
the Dominican Republic is bearing an unfair share of the
burden, including for medical care and social services
provided to Haitians.


- - - - - - - - - - - - - - -
THE DOMINICAN SUGAR INDUSTRY
- - - - - - - - - - - - - - -


19. (SBU) Sugar has traditionally been a mainstay of the
Dominican economy, but its relative importance has declined
in recent years. Today private producers like the Vicini
Corporation and Central Romana (owned by the Fanjul family)

account for the overwhelming majority of sugar produced in
the country.


20. (SBU) The Dominican Republic is the largest holder of the
U.S. tariff rate quota (TRQ) for sugar and continues to
receive the highest single-country allocation (252,935 metric
tons for the current allocation). With the implementation of
DR-CAFTA, once the country meets the agreement's net-exporter
requirement, an additional 10,000 metric tons, with two
percent yearly growth, would be added to the quota - modest
gains that in the short term are unlikely to significantly
benefit the industry.


21. (SBU) We have arranged for you a visit to the Cristobal
Colon sugar plantation, which is owned by the Vicini Group.
The company is the second-largest private producer of sugar
in the Dominican Republic, and is responsible for around 13
percent of the sugar produced in the country. The Vicini
family has owned and operated the Cristobal Colon sugar
plantation since 1890.


22. (SBU) Like other producers in the Dominican sugar
industry, the Vicini Group has traditionally relied heavily
on undocumented Haitian migrants and their descendents to cut
and harvest the sugar cane it grows. Most workers are housed
in "bateyes" (company towns or barracks),which typically
lack such basic services as electricity and running water.
Critics allege that sugar producers exploit undocumented
workers by paying them inadequate wages and housing them in
substandard living conditions. Undocumented workers have
little choice but to accept these circumstances; their
ability to find well-paying jobs is severely limited by their
undocumented status, and outside the relative security of the
bateyes workers are at risk of harassment and deportation
from Dominican police officials.


23. (SBU) In recent years the Vicini Corporation has improved
working conditions associated with its Cristobal Colon
plantation and sugar refinery. These changes come amidst
company efforts to automate operations, which if successful
could reduce the consortium's seasonal workforce from 1,800
to 300 within five years. Improvements include company action
to stop using child labor, to allow employees the freedom to
leave their jobs, and to replace substandard living barracks
with more humane residences.


24. (SBU) However, issues remain. The lack of living wages,
especially during off (i.e. non-harvesting) season, remains a
problem, especially for children. Workers report that social
security is not paid to the elderly as promised. Activists
continue to demand job contracts, electricity, and medical
services for batey residents. After a brief lull, there are
some indications that the company has resumed importing
trafficked, undocumented workers from Haiti. We have
arranged for you to speak with a human rights organization
about the problems affecting workers at the Vicini
Corporation and other sugar producers. This visit will take
place at a batey on public property immediately prior to your
tour of Vicini property.


- - - - -
BIOFUELS
- - - - -


25. (SBU) The Dominican Republic imports all of its petroleum
products. During 2006, as in the preceding year, the
Dominican Republic is expected to spend nearly 8 percent of
its GDP on petroleum imports. Given these trends, the
government and others have begun considering alternative
sources of energy. Movement to build ethanol refineries
specifically has been slow but recently shows signs of
progress.


26. (SBU) The production of ethanol has its detractors.
Urban development is already threatening to outpace the
country's water supply. Environmental NGOs worry that if the
government increases sugarcane production for ethanol
purposes, the damage to the country's aquifers could be
irreversible, thereby forcing the country to build
desalinization plants.


- - - - - - - - - - -
DOMINICAN IMMIGRATION
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27. (SBU) The Dominican community in the United States has

been estimated at over a million strong. This community is
growing both in size and in influence: last year, our
immigrant visa section in Santo Domingo, serving a country of
only nine million people, was the third largest immigrant
visa operation in the world, after Ciudad Juarez, Mexico and
Guangzhou, China. Our consular section issued enough
immigrant visas in 2005 to send two Boeing 757 airliners full
of new residents to the United States every week for the
entire year.


28. (SBU) Increasing flows of travelers and trade between our
countries create opportunities for criminals to exploit.
Trafficking in persons, human smuggling of illegal migrants,
and narcotrafficking remain significant issues; the number of
criminals who flee the United States seeking to escape refuge
from justice in the Dominican Republic continues to grow.
The Embassy has worked with Dominican institutions to
strengthen efforts aimed at law enforcement, extradition and
prosecution and has, to date, received excellent cooperation.



- - - - - - - - - - -
DOMINICAN CONSULATES
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29. (SBU) The State Department is working closely with
Dominican officials to reform Dominican consular operations.
For many years, we have had problems with Dominican
consulates in the USA failing to fully adhere to U.S. laws
and regulations on consular procedures and accreditation.
The Dominican Government has repeatedly named U.S. citizens
or Legal Permanent Residents to run consulates, many of whom
have failed to take steps to gain proper accreditation by
renouncing their citizenship or LPR status. U.S. policy
remains that no person can be accredited as a consul general
while retaining U.S. citizenship.


30. (SBU) Dominican consulates lack oversight from the
Dominican Foreign Ministry. In August of this year, the
Dominican Foreign Ministry issued a press release denouncing
price increases in the New York Consulate General, which
according to media reports charges more for passports and
other services than all other Dominican consulates and
offices; Dominican passports at the New York consulate
reportedly cost more than any other passport of any country
in the Western Hemisphere. Media stories have focused on the
problems of Dominican consulates and how these problems
affect the lives of Dominicans in the USA.


- - - - - - -
PORT SECURITY
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31. (SBU) The Dominican Republic is centrally located in the
Caribbean, approximately 1080 miles from Galveston, 800 miles
from Miami, and 80 miles from Puerto Rico. The close
proximity of the Dominican Republic to Puerto Rico and the
continental United States and the high volume of freight
traffic make the Dominican Republic a potential security risk
for the United States. It has been a target of human
smuggling organizations specializing in the smuggling of
Special Interest Aliens to the United States and could
potentially become a target of organizations specializing in
the smuggling of arms or weapons of mass destruction via
container to the United States.


32. (SBU) Announced in January 2002, the Container Security
Initiative (CSI) is an initiative that was developed by U.S.
Customs, now U.S. Customs and Border Protection (CBP) to
protect the global trading system and the trade lanes between
CSI ports and the United States. CSI was first implemented
in the ports shipping the greatest volume of containers to
the United States. In April of 2005, U.S. Customs and Border
Protection (CBP) officers conducted a port assessment of the
Port of Caucedo and forwarded a detailed report of their
findings through CBP channels.


33. (SBU) On June 2, 2006, the Acting Commissioner for US
Customs and Border Protection made the decision to
incorporate the Santo Domingo port of Caucedo into the
Container Security Initiative. Customs and Border Protection
detailed one Immigration and Customs Enforcement Special
Agent and two Customs and Border Protection Officers to the
ICE Attach Santo Doming for a period of one year in order to
support the CSI initiative at the Port of Caucedo. The
detailed officials were intended to support CSI until

permanent positions became approved and filled.


34. (SBU) You will be given the opportunity to visit the Port
of Caucedo, speak with port management officials and DHS
agents, and tour the port's operations. This visit is
scheduled to take place on Sunday, December 10.
BULLEN