VZCZCXYZ0016
PP RUEHWEB

DE RUEHDG #1907/01 2271825
ZNR UUUUU ZZH
P 151825Z AUG 07
FM AMEMBASSY SANTO DOMINGO
TO RUEHC/SECSTATE WASHDC PRIORITY 8956
INFO RUEHZA/WHA CENTRAL AMERICAN COLLECTIVE PRIORITY
RUEHWN/AMEMBASSY BRIDGETOWN PRIORITY 2088
RUEHCV/AMEMBASSY CARACAS PRIORITY 0802
RUEHGE/AMEMBASSY GEORGETOWN PRIORITY 0995
RUEHKG/AMEMBASSY KINGSTON PRIORITY 2777
RUEHPO/AMEMBASSY PARAMARIBO PRIORITY 1129
RUEHPU/AMEMBASSY PORT AU PRINCE PRIORITY 4666
RUEHSP/AMEMBASSY PORT OF SPAIN PRIORITY 1830
RUEAIIA/CIA WASHINGTON DC PRIORITY
RHEFDIA/DIA WASHDC PRIORITY
RUEHC/DEPT OF LABOR WASHDC PRIORITY
RUEATRS/DEPT OF TREASURY WASHDC PRIORITY
RUCPDOC/USDOC WASHDC PRIORITY 1681
RUCOWCV/CUSTOMS CARIBBEAN ATTACHE MIAMI FL PRIORITY
RUEFHLC/HQS DHS WASHDC PRIORITY
RUMISTA/CDR USSOUTHCOM MIAMI FL PRIORITY

UNCLAS SANTO DOMINGO 001907 
 
SIPDIS 
 
SENSITIVE 
SIPDIS 
 
STATE FOR WHA, WHA/CAR, DRL, INR/IAA; USSOUTHCOM ALSO FOR 
POLAD; TREASURY FOR OASIA-JLEVINE; DEPT PASS DEPT OF LABOR 
(INTERNATIONAL); DEPT PASS USDA FOR FAS; 
USDOC FOR 4322/ITA/MAC/WH/CARIBBEAN BASIN DIVISION; USDOC 
FOR 3134/ITA/USFCS/RD/WH; DHS FOR CIS-CARLOS ITURREGUI 
 
E.O. 12958: N/A 
TAGS: PGOV ECON ENRG DR
SUBJECT: SANTO DOMINGO ECONOMIC-POLITICAL ROUNDUP, AUGUST 
15, 2007 
 
REF: A. SANTO DOMINGO 1748 
     ¶B. SANTO DOMINGO 1781 
 
(U) In this edition of the Roundup: 
 
¶1. PRD Alleges Corruption in Power Plant Contract 
¶2. Refinery Sale Complications 
¶3. New Focus in Tourism Development Announced 
¶4. Chambers of Commerce on DR-CAFTA 
¶5. PLD Strives for Unity as Presidential Campaign Approaches 
 
¶1. (SBU) PRD Alleges Corruption in Power Plant Contract 
 
Controversy over the construction of a new coal-fired power 
plant has sparked a political battle between the main 
opposition Dominican Revolutionary Party (PRD) and the ruling 
Dominican Liberation Party (PLD).  The PRD issued a formal 
complaint to President Fernandez on August 9 and referred the 
case to the Supreme Court based on objections to the 
negotiation of terms for the plant, alleging that the PLD's 
negotiation process violated the state electricity law and 
the terms of reference for the bid.  The PRD has also stated 
that the PLD is paying an exorbitant price and alleges that 
conflicts of interest exist in the structure of the deal.  In 
a press conference the executive vice president of the 
Dominican State Electrical Enterprises Corporation (CDEEE), 
which is the entity that signed the deal with a Chinese 
company (Sichuan) to build the plant, attacked the PRD 
leadership for its accusations and demanded that proof be 
submitted within 48 hours.  CDEEE's executive vice president 
offered as proof of the legitimacy of the contract that the 
Dominican congress recently approved letters of credit for 
the initiation of the projects, although it omitted the fact 
that the measure was approved on a party-line vote by the 
PLD.  In what appeared to be a calculated political maneuver, 
the opposition Social Christian Reform Party (PRSC) changed 
course and threw its support behind the PLD on this issue on 
August 10. (ref A) 
 
¶2. (SBU) Refinery Sale Complications 
 
The Minister of Finance, Vicente Bengoa, announced on August 
8 that the Dominican government has suspended its discussions 
with Shell Oil over the sale of Shell's shares in the 
country's sole oil refinery until Shell divulges additional 
information about the bidding process.  The refinery is a 
50-50 joint venture between Shell and the Dominican 
government.  Bengoa complained that the company has so far 
refused to share the names of pre-qualified bidders for the 
plant and said there would be no further discussions until 
Shell provides information regarding the bidders.  Despite 
Bengoa's statement, Shell's internal review process is likely 
to continue and a presentation of Shell's selected bidder is 
expected to be handed over to the Dominican government 
imminently.  It will then be up to the Dominican government 
to decide whether or not to accept the bid, or offer a 
counter bid to purchase the refinery in whole.  A local 
Dominican company, Propagas, which controls one of the only 
other oil import facilities in the country, announced on 
August 12 that it was the leading bidder for Shell's shares 
in an alliance with an English-Swiss company. 
 
¶3. (U) New Focus in Tourism Development Announced 
 
The Dominican Tourism Ministry announced on August 9 that it 
was scraping its old "Sun and Beach" tourism model for a new 
model based on health, golf, cultural attractions, aquatic 
sports, and business.  This new model is intended to 
 
integrate local communities into the development of the 
sector and appears to be a response to recent studies, 
including one funded by USAID, that exhibit consumer fatigue 
with the all-inclusive beach resort industry that currently 
dominates the Dominican tourism sector.  The model is 
detailed in a new 2007 National Plan for Tourism Competition. 
 Minister of Tourism Felix Jimenez described the new model as 
an opportunity to diversify the tourism products being 
offered to benefit a greater number of sectors of Dominican 
society. (ref B) 
 
¶4. (U) Chambers of Commerce on DR-CAFTA 
 
On August 1, the Charge attended a lunch hosted by the 
Santiago Chamber of Commerce and the Federation of Chambers 
of Congress, which included representatives from different 
parts of the country.  The main topic of conversation was 
DR-CAFTA.  While there was a general consensus that DR-CAFTA 
was good for businesses, most participants said they, and the 
members of their chambers, lacked a basic understanding of 
what DR-CAFTA entails and how businesses, especially small- 
and medium-sized enterprises, can benefit from it.  FCS and 
USAID indicated they would be willing to work with the 
chambers to provide additional information to local 
businesses regarding the treaty and to try to identify 
economic and development projects to build capacity and 
increase competitiveness. 
 
¶5. (SBU) PLD Strives for Unity as Presidential Campaign 
Approaches 
 
Efforts continue to reintegrate Danilo Medina and his 
supporters into President Fernandez's presidential campaign. 
Medina challenged Fernandez in the PLD party's May 6 primary, 
but was soundly defeated.  Carlos Amarante Baret, the 
Director of Migration and an important Medina supporter, has 
joined the Fernandez campaign as director for the PLD's 
efforts in Espaillat province.  In addition, the Governor of 
Santiago, Jose Izquierdo, told POLOFF that he expects most 
members of the party's Medina wing to join Fernandez's 
campaign, if for no other reason than to keep their 
government employment.  As for Medina himself, it remains to 
be seen if he will join the President's re-election effort, 
and on what terms. 
 
(U) This report and additional information can be found on 
Embassy Santo Domingo's SIPRNET site, 
http://www.state.sgov.gov/p/wha/santodomingo/  
BULLEN