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08SANTODOMINGO1340 2008-08-25 19:57:00 CONFIDENTIAL Embassy Santo Domingo
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1. (C) BACKGROUND: Danilo Medina is the second-most powerful leader in the PLD party, after President Fernandez himself, and is seen as the strategic brains behind the organization's rise from third-party status in the 1980s to control of the presidency and both houses of congress by 2006.

Medina served as Fernandez's Minister of the Presidency until late-2006. He then left the administration to challenge the President for the PLD's 2008 nomination after Fernandez, according to Medina, broke a pledge to support his candidacy and instead ran for re-election. Medina lost the 2008 PLD primary by a large margin, but later allowed his supporters to join the Fernandez campaign. On August 11, he attended his first party meeting since the break with the President.

2. (C) POLCHIEF met with Danilo Medina on August 20 and inquired about the prospects for constitutional reform.

Medina said that Fernandez called a meeting of the PLD's Political Committee on August 11 and that the President pressed for his proposed constitutional amendments to be endorsed quickly, citing a need for an agreement prior to his August 16 inauguration speech. A key proposed amendment would maintain the two-term limit on the presidency, but would permit the head of state to run again four years after leaving office. Medina said that he voted against the amendment, even though it would allow him to run in 2012, because he is against re-election in any form; however, the proposed constitutional change was approved by the party.

Medina was critical of the fact that Fernandez -- after calling the meeting on the 11th knowing the party would want to please him before cabinet appointments were made on August 16 -- did not introduce the proposed amendments during his inauguration speech.

3. (C) Medina was critical of Fernandez's inauguration speech, sharing the view of other commentators that the address proposed more public works projects than the Government can afford (Ref A). Medina argued that the Government will simply go into more debt to finance the President's projects. He was also critical of what he
considers the excessive defense of the peso, which has caused interests rates to rise, as well as of Finance Minister Bengoa, who he described as a "yes man."

4. (C) POLCHIEF praised the recent success of the Dominican justice system in achieving convictions in the Baninter bank fraud (Ref B) and inquired about the prospects for prosecution of public-sector corruption. Medina replied that
the fight against corruption should start within political parties, where the problem is serious. He said that many politicians accept campaign contributions from narcotics
traffickers. These types of contributions range, according to Medina, from officials who do not know (or fail to investigate whether) they are receiving narco money, to those
who proactively approach narcos in their districts to essentially shake them down. Regarding the recent drug-related multiple murder case in Bani, Medina praised
Sen. Wilton Guerrero (PLD-Peravia), who has made allegations of official complicity in the drug trade in that area (Ref C).

5. (C) In a review of opposition parties, Medina contradicted prevailing wisdom by saying that the PRD party is doing well. He argued that the PRD lost the presidential election not because of the party's reputation, but because their candidate, Miguel Vargas Maldonado, was widely seen as having been deeply corrupt during his prior government service. Medina noted that, if the votes of allied parties are not
counted, the PRD beat the PLD in a majority of the country's provinces. Regarding the PRSC, which received less than five percent of the vote, Medina said that the party does not have a clear future.

6. (C) COMMENT: Medina has always kept his criticism of Fernandez out of the press; however, this meeting showed that behind closed doors he has the dagger out for the President. At times, Medina sounded more like a member of the opposition than a fellow PLD leader. He is very powerful within the party, particularly in the congress, where the vote on constitutional reform will be an opportunity for him to flex his muscles. With Fernandez likely to be barred from running again in 2012, all indications are that Medina will be the front-runner for the PLD nomination.

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