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FM AMEMBASSY SANTO DOMINGO
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RUEHUB/USINT HAVANA PRIORITY 0185
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RHEFDIA/DIA WASHDC PRIORITY
RUMISTA/CDR USSOUTHCOM MIAMI FL PRIORITY

C O N F I D E N T I A L SANTO DOMINGO 001023 
 
NOFORN 
SIPDIS 
 
STATE FOR WHA/CAR 
 
E.O. 12958: DECL: 06/23/2028 
TAGS: PREL PGOV PBIO ECON ENRG EAID EAGR CACS HA DR
SUBJECT: AMBASSADOR'S MEETING WITH FERNANDEZ: CHEVRON, 
HAITI, POLITICS 
 
Classified By: P. Robert Fannin, Ambassador, Reasons 1.4(b), (d) 
 
¶1. (C) Summary:  In the Ambassador's June 19 meeting with the 
President, Fernandez agreed to intervene in Chevron's 
investment dispute to prevent violence, but not to settle the 
dispute itself, stating that -- despite the contract -- there 
had to be a negotiated settlement.  The President described 
conditions in Haiti as "worrisome;" said the situation 
resulted from social, not political, issues; and took the 
donor community to task for what he termed insufficient aid 
programs.  Fernandez said he sees a threat of political 
instability in his own country as well, given the rising food 
and oil prices, and argued that more regulation is needed on 
the oil futures market.  The President said that his 
political opposition had initially attempted to disrepect the 
results of the election, but that they are over their 
concerns now, given his landslide victory.  End summary. 
 
Congratulations 
--------------- 
 
¶2. (U) On June 19, the Ambassador met with President 
Fernandez at the Presidential Palace.  The Ambassador was 
accompanied by Acting DCM, FCS Chief, and POLOFF; Fernandez 
was alone.  The Ambassador presented Fernandez with the 
original, signed copy of President Bush's letter of 
congratulations for Fernandez's recent re-election victory. 
Fernandez read the letter carefully and said that he would 
frame the correspondence "for historical purposes." 
 
Bilateral Relationship 
---------------------- 
 
¶3. (SBU) The Ambassador said that we were pleased with the 
good collaboration between our two countries over the last 
four years (i.e. Fernandez's term in office).  For example, 
as a result of our excellent cooperation on fighting 
HIV/AIDS, the Dominican Republic has been designated as a 
"Compact Country" for the President's Emergency Plan for AIDS 
Relief (PEPFAR).  This will result in an increase in our AIDS 
funding from $7 million to $17 million for this year alone. 
 
¶4. (SBU) Another positive in the bilateral relationship, the 
Ambassador said, is the upcoming visit of U.S. Commerce 
Secretary Gutierrez, who will lead a CAFTA-DR trade mission 
that will bring U.S. companies here September 28-30.  The 
Ambassador said he hoped that the Fernandez would be able to 
meet with the Secretary.  The President welcomed the visit, 
but questionned whether it might coincide with the start of 
the UN General Assembly -- "I usually see the President 
(POTUS) in New York then."  (Note: There is not necessarily a 
schedule conflict -- UNGA officially opens on September 18 
and the General Debate starts on Septemer 25.) 
 
Chevron 
------- 
 
¶5. (C) The Ambassador then turned to the main issue of the 
meeting, Chevron's investment dispute involving the company's 
inability to implement its new fuel hauler program in a safe 
and secure manner.  The Ambassador said that the U.S. has had 
some difficulties with our investors here.  We were informed 
this afternoon that, once again, Chevron's trucks are being 
blocked at the gate of the refinery by the union.  Some of 
the vehicles were vandalized.  If these problems cannot be 
resolved, Chevron will have to close down all operations, 
including ceasing deliveries to the electricity companies and 
airports. 
 
¶6. (C) Fernandez replied that he had personally told the 
Chief of Police that he wanted "dialogue."  There are 
"sensitivities" -- Chevron has a "legal right" to implement a 
new contract, but "from a humanitarian perspective, we want 
to work something out."  The workers' "livelihoods" are at 
stake.  We want a solution that is beneficial for Chevron. 
Unfortunately, Fernandez continued, the workers are not 
allowing enough time for a settlement -- they stopped their 
 
blockade for one day, but then came back. 
 
¶7. (C) Re-engaging the President, the Ambassador said that 
this dispute sends a bad message to investors.  We are asking 
you adhere to the contract and stop the workers from blocking 
the gates.  At your Government's request, Chevron had agreed 
to put off implementation of the new contract for one year, 
and later the company agreed to another delay until after the 
election.  So the firm feels put upon:  They agreed to these 
delays, but still cannot implement the contract.  Now there 
is a possibility of violence. 
 
¶8. (C) Referring to the potential for violent incidents, 
Fernandez replied that, "We can control that; I'll talk to 
the Police Chief again."  Let's go back to negotiations.  I 
see Chevron in a positive way -- this is a hard situation for 
everyone.  The workers' concern is that this is their way of 
living.  Perhaps this could be solved if Chevron bought the 
union's trucks.  What I want to avoid is "using coercive 
means." 
 
¶9. (SBU) As an aside, the Ambassador commented that in 
general we believe that Chief of Police Guzman Fermin is 
doing a excellent job. 
 
Haiti 
----- 
 
¶10. (C) The Ambassador expressed our concerns regarding the 
situation in Haiti, noted the high level of U.S. aid to that 
country, and asked Fernandez for his views.  The President 
described conditions in Haiti as "worrisome."  Food prices 
have risen, which has caused social tension that could lead 
to more street protests.  Preval is already putting together 
a new cabinet, so the situation is more a social problem than 
a political one.  Food prices are much higher in Haiti than 
they are here.  I spoke to Preval recently and he told me 
that they have to import eveything -- they are paying full 
price. 
 
¶11. (C) Fernandez described U.S. assistance to Haiti as "not 
enough."  Turning to the broader donor community, he noted 
that the World Bank's grant after the April riots was $10 
million -- only a dollar or two for each person in Haiti.  He 
said that he had felt compelled to mentioned this in Rome (at 
the FAO summit), and argued that Haiti merits more attention 
from the multilateral oranizations and the U.S. to help avoid 
a social breakdown. 
 
Social Problems 
--------------- 
 
¶12. (C) Regarding his own country, the President said that he 
sees the threat in the Dominican Republic of "political 
instability" resulting from high food and oil prices.  We 
will have to increase what we charge for electricity and 
transportation -- how will the people react?  When the Acting 
DCM commented that the solutions to these issues are 
long-term, Fernandez said that there is something that can be 
done now -- reducing speculation on oil.  President Lula of 
Brazil told me that it only costs US$35 to produce a barrel 
of oil.  We need more regulation.  The U.S. Congress, 
Fernandez stated, is already looking into it and the head of 
the U.S. Commodity Futures Trading Commission is "under 
heat."  I realize that "it's the end of cheap oil," but the 
key is to get the price down to $90 or $100.  Food and oil 
prices are connected. 
 
¶13. (SBU) The Ambassador inquired about the positive impact 
of biofuels on the cost of energy.  The President said that 
"it takes time," but now that 30 percent of the corn belt is 
dedicated to ethanol, biofuels could help control energy 
costs -- though at the same time it drives food prices up, 
Fernandez argued.  The Acting DCM asked if the President was 
planning changes to his agricultural policy.  Fernandez 
replied that he seeks to improve agricultural banking.  The 
priority is to ensure the Dominican people that we can feed 
 
ourselves.  We produce 80 percent of the food we consume, but 
have the potential to produce enough to export significantly. 
 
Politics 
-------- 
 
¶14. (C) Raising the current state of play in Dominican 
politics, Fernandez said that it was important to have a 
strong opposition.  The opposition is now "over their 
concerns."  (Note: The President was apparently referring to 
the criticism that he received from a broad spectrum of 
domestic and international observers, including the OAS, for 
using government resources to aid his political candidacy.) 
At first, the opposition tried to disrespect the results of 
the election; however, "by any measure, it was a landslide." 
I hope that they will not "torpedo and undermine" the 
government's work.  The future is not clear for the PRSC 
party (the junior member of the opposition) -- their problem 
is leadership.  We had been polling at 60 percent in the 
early spring, but our numbers dropped in tandem with the rise 
of food and oil prices.  (Note: Fernandez won in the first 
round with 54 percent of the vote.) 
 
Brewer Case and First Lady 
-------------------------- 
 
¶15. (SBU) The Ambassador thanked the President for the role 
that Attorney General Jimenez has played in the property 
dispute case of American citizen Randy Brewer.  The 
Ambassador also expressed his appreciation for the 
hospitality showed to Mrs. Fannin by the First Lady. 
 
Atmospherics 
------------ 
 
¶16. (C/NF) As we have observed before, Fernandez was in his 
element when discussing global issues, particularly economic 
development.  He appeared to enjoy the discussion and 
displayed an up-to-date, detailed knowledge of current events 
in the international economy, as is fitting for a man who 
founded a think tank upon departing office in 2000. 
Fernandez's signature infrastrucutre project is the Santo 
Domingo subway system, which is controversial because of its 
high cost and lack of transparency in procurement.  We 
therefore noted that there was a large model of a metro train 
on the coffee table.  Fernandez met with us alone and did not 
take notes, which is common for him. 
 
(U) Please visit us at 
http://www.state.sgov.gov/p/wha/santodomingo/  
FANNIN