PRESIDENT FERNANDEZ REQUESTS CONTRACT EXTENSION

C O N F I D E N T I A L SANTO DOMINGO 001185

SIPDIS

PLEASE PASS TO USTR (DOLIVER)

E.O. 12958: DECL: 07/21/2018
TAGS: ECON ETRD DR
SUBJECT: PRESIDENT FERNANDEZ REQUESTS CONTRACT EXTENSION
FOR TRANSPORTERS WHILE BLOCKADE OF CHEVRON CONTINUES

REF: SANTO DOMINGO 1023

Classified By: Charge d'Affaires Roland Bullen


1. (C) On July 18, the Civil and Commercial Court of San
Cristobal ruled in favor of Chevron,s petition that a
blockade of the refinery by a transportation union is illegal
and should be halted immediately. President Fernandez called
the Ambassador on July 21 to convey a request from the
transporters for a one-year extension of the fuel delivery
contract, and offered his personal assurances that the
contract would end after one year. The Embassy delivered
this message to Hector Infante, Chevron,s Manager for
Caribbean Global Downstream, who told Econoff that a one year
extension would not be acceptable. President Fernandez then
requested a meeting with Chevron on July 22, presumably to
deliver the same message. Chevron is considering next steps
and has indicated an interest in raising this issue at a
higher level in Washington, including with the Department of
Commerce and USTR. Embassy will meet with Chevron on July 23
to discuss options. End Summary.


2. (U). On July 18, the Civil and Commercial Court of San
Cristobal ordered the transportation union and its leaders to
immediately stop blockading the refinery and to allow the
free transit of Chevron trucks. The court also ordered the
payment of 100,000 pesos (USD 2,941) per day until the
blockade, which has been in place since June 9, is lifted.
The union leaders have announced that they plan to appeal the
ruling and do not intend to stop the blockade. Vice
President Alburquerque, who heads the government commission
named by the President to mediate the dispute, told the press
on July 21 that the government is seeking an opinion from the
executive branch legal advisor before it takes any decisions.


3. (C) On July 21, President Fernandez called the Ambassador,
who is currently in the U.S., to convey a request from the
transporters for a one-year extension of the fuel delivery
contract. Fernandez said the transporters needed one more
year in order to pay off bank obligations, although he added
that they had asked for two years and Fernandez pushed them
to accept one instead. Fernandez said that he was willing to
meet with Chevron to offer his personal assurances that the
contract would not extend beyond one year. (Note: The
President requested a meeting with Chevron on July 22.) The
Ambassador questioned why Chevron would accept such an offer
after having already delayed implementation of the contract
for over a year at the request of the government. He
promised to deliver the message to Chevron and get back to
the President with their response. (Note: As a clear sign
that this issue is not about labor or social issues as the
President previously insisted (ref),Fernandez did not raise
these issues during the call. In a previous phone call with
the Ambassador on July 16, Fernandez had acknowledged that
Chevron had made a fair offer of compensation to the drivers
who would be losing their jobs.)


4. (C) Econoff delivered the President,s message to Hector
Infante, Chevron,s Manager for Caribbean Global Downstream,
who said that a one-year extension of the contract would not
be acceptable. Infante told Econoff that Chevron would
consider other options such as a possible offer of
compensation for what one year of the contract might be
worth. Infante requested a meeting with the Embassy on July
23 to discuss next steps, including raising the issue at
higher levels in Washington and requesting advocacy from
other USG agencies such as Commerce and USTR.


5. (U) Public support for Chevron has been increasing as
media attention has focused on the power of the union to
distort free trade and the failure of the government to take
action to address the situation. On July 17, the union
temporarily extended the blockade of the refinery to include
all fuel deliveries when it discovered that Chevron had been
receiving supplies from a competitor. As a result, the
competitor ended the agreement and more Texaco gas stations
have since closed due to lack of fuel. Several private
sector groups, including the American Chamber of Commerce,
have spoken out in the media about the negative impact this
dispute is having on the investment climate in the country.
In a statement on July 16, the influential non-governmental
organization FINJUS called for the government to maintain
public order and enforce the law against those seeking to use
force and intimidation to resolve the conflict. On July 20,
the leftist tabloid newspaper El Nacional reported that the
Minister of Industry and Commerce was offered a bribe of
approximately USD 750,000 to decide in favor of the
transportation union. The Minister declined to comment on

the allegations.


6. (C) Comment: With public support of Chevron increasing
and a court order issued to stop the blockade, President
Fernandez has a difficult political decision to make. He
appears to have dropped all pretense of concern for the
drivers who will lose their jobs and is seeking to appease
the union leaders, with whom he and his family are reported
to have close ties. In doing so, Fernandez has shown no real
concern for the impact this dispute has had on the investment
climate and the negative message that this sends about the
government,s willingness to enforce the rule of law. So far
Chevron has not raised the issue of CAFTA-DR in the media or
in conversations with the Embassy. However, CAFTA-DR is
being mentioned in the media and the government has also
acknowledged that it must evaluate how the treaty may apply
to this dispute. The Ambassador has now raised this issue
with Fernandez several times and the President continues to
support the union,s request for a contract extension, an
unacceptable solution to Chevron. Therefore, it is likely
that Chevron will request higher level advocacy from
Washington, a request that the Embassy would support. End
comment.
BULLEN