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UNCLAS SANTO DOMINGO 000707 
 
SIPDIS 
 
LA PAZ FOR A/DCM LAMBERT 
 
E.O. 12958: N/A 
TAGS: ECON EFIN ETRD ENRG EAIR SENV DR
SUBJECT: SANTO DOMINGO ECONOMIC-POLITICAL ROUNDUP, JUNE 23, 
2009 
 
(U) In this edition of the roundup: 
 
¶1. GODR Announces Sale of 49 percent of Government-owned 
Refinery to Venezuela 
¶2. Government Revenue Falls Sharply in First Quarter; 
Fernandez Rules Out IMF Program For Now 
¶3. Caribair Suspension Lifted 
¶4. Protests Over Plans to Build Cement Plant Near National 
Park 
 
¶1. (U) GODR Announces Sale of 49 percent of Government-owned 
Refinery to Venezuela 
 
The GoDR announced at the Petrocaribe Summit that Venezuela 
has agreed to purchase 49 percent of the capital of Refineria 
Dominicana, S.A. (Refidomsa), the country's sole oil 
refinery, for USD 130 million.  Refidomsa was a joint venture 
with Shell until the GoDR bought out Shell's stake in the 
company in November 2008 for USD 110 million.  Although the 
government cited strategic national interests in 
consolidating state ownership of the 30,000 barrel-per-day 
facility, the Fernandez administration simultaneously urged 
Venezuela to participate in the acquisition.  In addition to 
the USD 20 million profit from the sale, the GoDR has cited 
the possibility of increasing the amount of Venezuelan crude 
it imports under the Petrocaribe financing program as 
justification for the sale.  The Refinery would have to 
expand its volume capacity before it could increase imports. 
Dominican business and opposition leaders have been largely 
critical of the deal, noting that it may subject the local 
hydrocarbon supply to increased dependence on a single 
provider as well as the political whims of the Chavez 
administration.  Other commentators say that with Refidomsa 
providing less than one-third of finished oil products 
consumed in the country, these fears may be exaggerated. 
More details may emerge later this month as Chavez has 
announced he will visit the Dominican Republic on June 30 (to 
participate in events commemorating the 100th anniversary of 
Juan Bosch's birth).  However, Chavez has said he would visit 
before and has not done so. 
 
¶2. (U) Government Revenue Falls Sharply in First Quarter; 
Fernandez Rules Out IMF Program For Now 
 
In May, the GODR released official fiscal results for the 
first time since October 2008.  Data from the general tax 
office indicate that government revenue and spending were 
down sharply in January-March.  Current revenue dropped 18.3 
percent year on year, with earnings from taxes down 17 
percent.  Income from customs led the fall in tax revenue. 
Total spending was down 18.1 percent year on year in the 
first quarter, although employee wages were up 21.6 percent. 
The dramatic decrease in capital spending, 58.4 percent year 
on year, has been widely criticized by the private sector. 
According to the Dominican Center for Export and Investment, 
exports decreased by 23.4 percent in the first quarter, due 
in large part to the closing of the ferronickel mine in 
August 2008.  As a result of the decrease in revenues, the 
GODR continues to seek other financing options.  On June 10, 
the Minister of Finance announced that the government would 
issue a USD 1 billion sovereign bond with half of that amount 
going toward government expenses and the other half to be 
used as a cushion for unforeseen circumstances.  A week after 
the Central Bank Governor and Minister for Economy, 
Development and Planning called for an IMF agreement, 
President Fernandez ruled it out at this time.  However he 
left the door open for the future if it is needed. 
 
¶3. (U) Caribair Suspension Lifted 
 
On June 12, the Dominican Civil Aviation Institute (IDAC) 
announced that it had rescinded the one-year suspension of 
Caribair less than five months after it sanctioned the 
airline for safety violations.  The original suspension 
cancelled all Caribair pilot and aircraft certifications but 
allowed the airline to begin flying within nine months if its 
pilots and aircraft were recertified.  Explaining the change 
of course, IDAC director Jose Tomas Perez said only that 
Caribair had begun to satisfactorily complete its 
recertification.  The lifting of the sanction allows Caribair 
limited operations; Caribair can fly using only recertified 
equipment and personnel.  Just two of its six aircraft and 
two of its 23 pilots have been recertified.  Also, Caribair 
 
may not register new aircrafts and cannot operate outside of 
the Caribbean region.  Caribair advertisements in numerous 
daily newspapers announced that the airline would resume its 
normal routes and schedules to Port Au Prince and Aruba as 
well as provide charter service throughout the Caribbean and 
South America.  A Caribair telephone receptionist also told 
EconOff that the airline would provide charter service to New 
York. 
 
¶4. (U) Protests Over Plans to Build Cement Plant Near 
National Park 
 
Environmental groups and their allies continue to put 
pressure on the GoDR to permanently rescind permits it 
granted to a cement company to install a cement mine near the 
Los Haitises National Park.  The production facility would be 
located in Gonzalo, Monte Plata, just outside the buffer zone 
of the park.  Protests organized by environmental NGOs and 
student groups, and supported by opposition groups such as 
the country's influential transportation union, have taken 
place in Gonzalo, Santiago and Santo Domingo.  In Santo 
Domingo, riot police broke up hundreds of marchers en route 
to the Presidential Palace.  Although the Ministry of 
Environment and Natural Resources (SEMARENA) approved the 
company's environmental permit on April 14, some officials 
from SEMARENA have spoken out against the decision.  The 
protestors have been particularly critical of Environmental 
Minister Jaime David Fernandez Mirabal, who had previously 
enjoyed vast popularity among environmentalists for boosting 
enforcement of local environmental laws.  The protestors have 
accused the company, Consorcio Minero Dominicano, and the 
government of colluding to facilitate the project. The 
project's defenders cite the jobs it will create in this poor 
region of the country and accuse other cement producers of 
financing the vocal opposition.  On June 19, a civil court 
judge provisionally suspended the cement factory's permits 
while she studies the case. 
BULLEN