FERNANDEZ MAKES HIS CASE TO THE DOMINICAN PEOPLE

UNCLAS SANTO DOMINGO 000145

SIPDIS

SENSITIVE
SIPDIS

STATE FOR WHA/CAR, INR

E.O. 12958: N/A
TAGS: PGOV ECON DR
SUBJECT: FERNANDEZ MAKES HIS CASE TO THE DOMINICAN PEOPLE

REF: A. 07 SD 0233 (VARGAS WINS NOMINATION)


B. 07 SD 0329 (VARGAS' POLITICAL DIRECTOR)

C. 07 SD 0347 (PRESIDENTIAL PRIMARIES)

D. 07 SD 0348 (VARGAS FOREIGN POLICY)

E. 07 SD 0590 (FERNANDEZ TO RUN)

F. 07 SD 0685 (FERNANDEZ DEFENDS RE-ELECTION)

G. 07 SD 0846 (PLD DIVIDED)

H. 07 SD 1017 (VARGAS WITH DIPLOMATIC CORPS)

I. 07 SD 1078 (FERNANDEZ WINS PRIMARY)

J. 07 SD 1501 (ARISTY WINS PRIMARY)

K. 07 SD 1691 (CAMPAIGN TEAMS)

L. 07 SD 1710 (ESTRELLA LEAVES PRSC)

M. 07 SD 2143 (CENTRAL ELECTIONS BOARD)

N. 07 SD 2366 (ANALYTICAL OVERVIEW)

O. 07 SD 2568 (VARGAS WITH POLOFFS)

P. SD 0039 (RHETORIC HEATS UP)

Q. SD 0090 (VIEW FROM SANTIAGO)

R. SD 0124 (VARGAS WITH AMBASSADOR)

Summary
--------------


1. (SBU) On January 29, President Fernandez gave a major
campaign speech in which he took credit for reestablishing
macroeconomic stability, warned against returning the rival
PRD party to power during challenging economic times, and
promised a series of programs for his next term. While
engaging in some negative themes, most of Fernandez's speech
was focused on specific policy issues. This was a welcome
change to a campaign marked by personal attacks, even if we
doubt the government's ability to fund all of its promised
programs.

Mission Accomplished
--------------


2. (U) The official occasion for Fernandez's speech was his
acceptance of the PLD party's nomination for the presidency;
however, since he won the primary nine months ago, the event
served as a de facto campaign launch. After warm-up speakers
and merengue bands had fired up the faithful bedecked in the
PLD's trademark purple, Fernandez took the stage and reminded
the audience of the situation he inherited upon taking office
in 2004. He described the 2003-04 economic crisis as one of
the "most acute and traumatic" in the country's history. He
said that administration had sought to immediately
reestablish stability, growth, and investor confidence, and
that, "Almost four years later we can say with pride to the
Dominican people: Mission accomplished."


3. (U) Fernandez then sought to contrast his achievements
with the record of his opponent, former Minister of Public
Works Miguel Vargas Maldonado. The President listed a number
of nearly completed infrastructure projects that were turned
over to Vargas' ministry when the PLD left office in 2000,
and said, "Do you know what (Vargas did with the projects)?
He did nothing." Now the PRD is back, Fernandez said, but
all they have to offer is "insults."


4. (U) Fernandez advised against the complacency that could
result from the strong growth in recent years, saying that
"new storms are on the horizon, this time caused by changes
in the international arena." He listed as specific threats
the high price of oil, housing loan defaults in the U.S.,
poor performance of the Dollar against the Euro, and an
"imminent recession in the U.S. economy." Warning of a vote
for the opposition on May 16, the President said that in
times like these, "the people have never replaced sober and
restrained leaders.... What the Dominican Republic needs (at
this time) is to consolidate its accomplishments."

Promises, Promises
--------------


5. (U) For the first time in the presidential campaign,
Fernandez outlined his plans in detail should he be
reelected, including the following economic proposals:
-- Implementation of a National Competitiveness Plan;
-- Eliminating electrical blackouts by 2012 through the use
of alternative energy and sectoral reforms;
-- Creation of a national system of innovation and
technological development;
-- Development of textile and footware clusters;
-- Increased funding for small- and medium-sized enterprises;
-- Promotion of agrobusiness;
-- Diversifying the tourism sector and improving the quality
of its products;
-- Construction of 200,000 new homes; and
-- Carrying out a long list of infrastructure projects,
principally highways and bridges (note: the costly Santo
Domingo subway project was only mentioned briefly).


6. (U) Addressing the issue of poverty, Fernandez argued
that, to aid the poor, "it is not sufficient to have
stability and economic growth." Putting special emphasis on
education, the President said that, "It is a fundamental
objective of the next PLD government to make Dominican
education free and obligatory through grade 12. This has
never been achieved in the history of our country."
Fernandez also announced plans for improved technical
institutes, additional funding for school meals, and
scholarships for international undergraduate study (10,000)
and PhD programs (2,000). In addition to improving
education, the President pledged to fight poverty by:

-- Doubling of recipients of the "Solidarity" food aid
program from 300,000 to 600,000 households and increasing the
monthly payment by 27 percent;
-- Establishing a financial assistance program for mothers
aged 13-18 who agree to stay in school; and
-- Increasing funding to the so-called "People's Pharmacies."


7. (U) As for the opposition, Fernandez said "they don't
discuss any of this.... The reason is clear -- they don't
have a vision of the future. They don't have a national plan
and only think about winning power and satisfying their
personal aspirations.

Vargas Responds
--------------


8. (U) The immediate response of Vargas' communications
director, Carlos Gabriel Garcia, was that Fernandez was
simply reading a long list of promises that he has no
intention of fulfilling. Garcia charged that in the national
budget approved only weeks ago, social spending was actually
reduced, and said that "what the people want are initiatives
such as the increasing of government salaries and
pensions.... The requests of youth and women haven't been
heard by Leonel Fernandez, nor has (he responded to) the
anguish of Dominican families (affected) by the uncontrolled
increase in crime."


9. (SBU) Vargas defended his professional accomplishments,
contrasting Fernandez's career as a professor, lawyer, and
public servant with Vargas' 34 years as a businessman engaged
in "productive activity generating and creating jobs." As
for the PLD, Vargas continued, the voters should ignore
promises and hold the ruling party to account for their
record in office: "What he is asking for is four more years
to continue violating the constitution, four more years to
invest less in education, four more years to carry out
projects like Sun Land." (Note: The Sun Land case concerns
the PRD charge that Fernandez violated the constitution in
seeking a US$130 million loan for public works. The
financial transaction was handled by The Sun Land
Corporation, a U.S.-based intermediary whose structure and
membership is opaque, but is rumored to be associated with
the President. The PRD alleges that the loan did not have
the required approval of Congress and that it is unclear
where the borrowed funds were allocated. The IMF has also
expressed concerns regarding the loan, which violated IMF
regulations under the Stand-By-Arrangement.)

PLD Unity
--------------


10. (SBU) Prior to the January 29 campaign event, there had
been much speculation over whether Danilo Medina would
attend. A powerful PLD leader and Fernandez's former chief
of staff, Medina had challenged the incumbent President in
the party primary and complained bitterly when defeated that,
"The state imposed itself." Medina did not attend; however,
while his personal relationship with Fernandez remains in
doubt, the negative impact on the party has been reduced
significantly by his instruction to his followers to actively
support the Fernandez campaign.

Comment
--------------


11. (SBU) Prior to this speech, Fernandez's campaign had been
primarily negative and focused on blaming the PRD for the
2003-04 economic crisis. We welcome the introduction of
specific policy proposals, even as we note that Fernandez's
discussion of social programs was far more focused on making
promises for the future than discussing past achievements.
The considerable time the President devoted to education is
noteworthy. The country has a poor record of achievement in
that sector, and the very low amount of government resources
dedicated to education is a significant barrier to potential
Millennium Challenge funding. Whether Fernandez, if
reelected, can achieve his lofty goals is an open question
given his government's limited budgetary resources.

(U) This report and additional information can be found on
Embassy Santo Domingo's SIPRNET site,
http://www.state.sgov.gov/p/wha/santodomingo/
FANNIN