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 
 
¶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 
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¶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 
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 
- 
 
¶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 
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¶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