VZCZCXYZ0004
PP RUEHWEB

DE RUEHDG #0130/01 0221043
ZNR UUUUU ZZH
P 221043Z JAN 07
FM AMEMBASSY SANTO DOMINGO
TO RUEHC/SECSTATE WASHDC PRIORITY 7178
RUEHC/DEPT OF LABOR WASHDC PRIORITY
INFO RUEHZA/WHA CENTRAL AMERICAN COLLECTIVE PRIORITY
RHEFDIA/DIA WASHDC PRIORITY
RUEAIIA/CIA WASHINGTON DC PRIORITY
RUEATRS/DEPT OF TREASURY WASHDC PRIORITY
RUMISTA/CDR USSOUTHCOM MIAMI FL PRIORITY
RUCPDOC/USDOC WASHDC PRIORITY 1614

UNCLAS SANTO DOMINGO 000130 
 
SIPDIS 
 
SENSITIVE 
SIPDIS 
 
DEPT FOR WHA/CAR, WHA/EPSC, EB, EB/OFD/OMA, EB/OFD/OIA, 
EB/ESC/IEC/EPC; SOUTHCOM ALSO FOR POLAD 
 
E.O. 12958: N/A 
TAGS: ELAB PGOV ENRG EFIN ASEC DR
SUBJECT: DOMINICAN TRANSPORTATION SECTOR THREATENS STRIKE 
TO KEEP LPG SUBSIDIES 
 
REF: SANTO DOMINGO 3439 
 
¶1.  SUMMARY:  There are signs that in the face of threatened 
transportation strikes the Fernandez administration may back 
down from the commitment to the IMF to limit access to 
subsidized propane gas (LPG).  The largest associations of 
private passenger transporters had announced plans to strike 
beginning on January 30 unless the government responded to 
their January 9 demands.  Their key "proposal" was that the 
government subsidize more than 60 percent of their 
operations, mirroging its subsidies to state-owned transport 
providers.  The new subsidy would offset the expected loss of 
the subsidy to liquid propane gas, which they had been buying 
at the same subsidized rate as households.  Past 
transportation strikes have been known to block major 
thoroughfares and paralyze the country, but they are not 
always successfully coordinated.  The Fernandez 
administration has backed down before over this issue.  END 
SUMMARY. 
 
- - - - - - - - - - - - - - - - 
BACKGROUND ON PROPANE SUBSIDIES 
- - - - - - - - - - - - - - - - 
 
¶2.  The Dominican government has subsidized liquid propane 
(LPG) for domestic consumption since the 1980s, a policy 
intended to minimize the use of wood and charcoal for 
cooking.  Today LPG is provided at a subsidized rate to 
households and transportation providers (both private and 
public). Since 2004 the industrial and hotel sectors have 
been excluded from the program. In recent years spiraling 
gasoline costs have driven significant numbers of private 
transport providers ("transportistas") to convert their 
vehicles to LPG consumption; this change has been driven by 
LPG's comparative price advantage, largely attributable to 
the subsidy.  Today estimates of the proportion of 
transportistas whose cars run on propane range from 80 to 98 
percent.  In 2005 private and public transportation absorbed 
54 percent of LPG in the country. Most most agree that this 
proportion has grown since then. 
 
¶3.  As price and consumption of GLP have increased, so, too, 
has the cost of maintaining the subsidy, from RD 2.4 billion 
(USD 75 million) in 2005 to an estimated RD 5.6 billion (USD 
175 million) last year.  Strapped for cash and under 
continued pressure from the International Monetary Fund 
(IMF), last October the administration announced that as part 
of the letter of agreement with the IMF, from February 2007 
authorities would no longer provide subsidized GLP to the 
transport sector. 
 
- - - - - - - - - - - - - - - - - 
"TRANSPORTISTAS" AND THEIR CLOUT 
- - - - - - - - - - - - - - - - - 
 
¶4.  Last November's announcement was not the first of its 
kind: in fact, the government had intended the same change in 
mid-2005.  Organizations representing transportistas 
responded in force then, vowing to stage nationwide protests 
and strikes.  In June 2005 President Fernandez announced in a 
televised address that he was abandoning plans to end 
transportation workers' access to the subsidized GLP, for the 
sake of "social harmony." 
 
¶5.  How did they do it?  The answer lies in the numbers and 
the organization of the transportistas.  They have long 
bullied successive political administrations into 
accommodating their demands.  Transportistas group themselves 
into business associations, which they call "unions," tasked 
with organizing routes and representing the sector's 
interests on a national level.  The two largest unions, 
FENATRANO and CONATRA, claim to manage around 95 percent of 
all private passenger transit around the country.  The 
Technical Office of Land Transport (OTTT) oversees union and 
route regulation; officials report that some 24,000 
privately-owned vehicles are registered for passenger 
transport around the country.  A significant but unknown 
number of transportistas is unregistered: in 2004 CONATRA 
president Antonio Marte claimed his organization represented 
71,000 vehicles in Santo Domingo alone.  Transportistas say 
they shuttle approximately 2 million passengers - nearly a 
 
quarter of the country's population - to and from work each 
day.  Their figures are almost certainly exaggerated, but 
they have earned their popular nickname "the owners of the 
country." 
 
¶6.  Given the important role they play, a well-coordinated 
work stoppage would severely disrupt Dominican life.  But 
transportistas do not stop there.  In their most damaging 
strikes they have used their vehicles to block major and 
minor thoroughfares, effectively paralyzing the 
transportation network.  Strikers sometimes throw rocks at 
vehicles they see ignoring the call to strike and sometimes 
clash with police.  Typically, to avoid the chaos, many 
Dominicans, even those with vehicles of their own, elect to 
stay home from work during transportation strikes.  This is 
particularly true when the strikes are timed to coincide with 
the working day immediately following a national holiday, as 
was the case with the most successful strikes, in November 
2004 and February 2005. 
 
¶7.  Not all transportation strikes have been implemented so 
successfully.  Many have been cancelled when it became clear 
that they lacked solid support from drivers.  Last November a 
smaller transportation union, the National Center for Unified 
Transit Workers (CNTU), announced plans to lead a strike over 
access to subsidized GLP and other issues (reftel).  Union 
leader Ramon Perez Figueroa told poloff and others that he 
had received assurances from the larger unions and opposition 
political parties that they would participate in the strike. 
The larger unions withdrew their support at the last minute, 
and the strike failed to materialize. 
 
- - - - - - - - - - 
THE CURRENT DISPUTE 
- - - - - - - - - - 
 
¶8.  This month's dispute appeared more likely to produce 
coordinated strikes, as the larger unions had formally 
declared their solidarity this time around.  On January 9 
representatives of FENATRANO, CONATRA and CNTU jointly 
presented a list of proposals to the OTTT, the government 
agency that oversees transportation unions and route 
regulation.  Their primary demand was for subsidies at the 
rate of 17 pesos per route of 7 to 13 kilometers, which is 
the subsidy rate provided to government-owned public 
transport provider OMSA. Transportistas compete with OMSA for 
passengers and are concerned that a similar scale of 
subsidies will be provided to the Santo Domingo metro once 
construction is completed. They said that if their demands 
were not met, the elimination of the GLP subsidy would force 
them to charge customers around 27 pesos per route, instead 
of the 10-15 pesos they currently charge. 
 
¶9.  Transportistas said that unless they received from the 
administration a formal and satisfactory reply to their 
proposals, they would stage a series of three or more 
transportation strikes.  The first of these was scheduled for 
January 30, the Tuesday workday that will fall immediately 
after a national holiday. 
 
¶10.  Additional strikes were threatened.  In an interview 
with newspaper Diario Libre Juan Hubieres, President of 
FENATRANO, said, "If we have to carry out the strike on 
January 30, then we will.  But if it becomes necessary to 
hold another strike afterwards, and another, and as many 
others as it takes, then we will do so even in the face of 
beatings, prisons, and whatever else.  That type of response 
won't stop us." 
 
- - - - - - - - - - - - 
FERNANDEZ TO BACK DOWN? 
- - - - - - - - - - - - 
 
¶11.  President Fernandez has backed down before in the face 
of threatened transportation strikes, and there are signs his 
administration has decided to do so again.  A January 18 
story in Listin Diario, quoting an anonymous senior 
administration official, stated that Fernandez was working to 
secure IMF approval for maintaining as much of the LPG 
subsidy as possible, despite his prior commitment to end the 
program.  The official said that ending the subsidy would 
 
amount to "too high a political cost" for the administration 
at this stage in Feranndez's political term. 
 
¶12.  Administrative Secretary of the Presidency Luis Manuel 
Bonetti, in comments to the newspaper HOY  published January 
19, appeared to confirm that the administration was backing 
down on GLP subsidies.  He called the strike threats 
"harebrained" and unnecessary.  He denied that the IMF 
opposed continuation of the GLP subsidies, saying that the 
decision to maintain the costly program "has already been 
made." 
 
COMMENT 
 
¶13.  If Bonetti's statements do indeed reflect administration 
policy, the strikes will be unlikely to materialize.  The 
union's unreasonable demand of an alternate subsidy of 17 
pesos per route per passenger was probably only a way to 
allow Fernandez retain LPG subsidies without being seen as 
caving entirely.  Bonetti, of course, seized the opportunity, 
lambasting unions at the same time he announced Fernandez's 
about-face on GLP subsidies. 
 
¶14.  Still, we are reluctant to read too much in this 
isolated Hoy interview.  It is possible that the 
administration decided to allow transportistas continued 
access to GLP subsidies, but they have made no promises yet 
about the amount, the mechanism or the duration.  They could 
still cut the amount of the subsidy considerably.  Or this 
could be a tactical retreat until after next year's 
presidential election. 
 
¶15.  Drafted by Alexander T. Bryan 
 
¶16.  This report and extensive other material can be 
consulted on our SIPRNET site, 
http://www.state.sgov.gov/p/wha/santodomingo/  
HERTELL