US embassy cable - 03SANTODOMINGO6664

UNCLAS SECTION 01 OF 02 SANTO DOMINGO 006664 
 
SIPDIS 
 
SENSITIVE 
 
DEPT FOR WHA - A/S NORIEGA,DAS DESHAZO; WHA/CAR, WHA/PPC, 
WHA/EPSC, INR/AA; NSC FOR SHANNON; TREASURY FOR U/S TAYLOR, 
LEE, TOLOUI; SECDEF FOR OSD 
 
E.O. 12958: N/A 
TAGS: PGOV, EFIN, ETRD, DR 
SUBJECT: DOMINICAN ELECTIONS SERIES #1: SIX MONTHS TO THE 
PRESIDENTIALS 
 
 
1.  (SBU) Following is the first in a series on the 
presidential elections in the Dominican Republic. 
 
(begin text) 
 
       SIX MONTHS TO THE PRESIDENTIALS 
 
Incumbent Hipolito Mejia of the Dominican Revolutionary Party 
(PRD) is hitting about 20 percent in various polls in the 
Dominican Republic, while former president Leonel Fernandez 
(1996-2000) of the Dominican Liberation Party (PLD) is 
comfortably scoring almost 60 percent when matched with any 
of the other declared aspirants. Those polls come well ahead 
of any serious direct debate between the two; researchers are 
varied and may be slanting questions; though far apart, the 
numbers will narrow.  Perpetually in third place, Eduardo 
Estrella is dealing with a grumbling opposition within the 
Reformist Social Christian Party (PRSC) but is generally 
considered to be an unlikely third-place (and perhaps 
third-rate) performer. 
 
Six months of campaigning will change those numbers. 
 
President Mejia should not be counted out, despite widespread 
and deep discontent with his economic policies.  "He has a 
fuel to burn yet," Santo Domingo's most prominent attorney 
told Ambassador Hertell last week.  Mejia is dividing his 
time between presiding and running for office.  In both roles 
he is perpetually in motion. 
 
As President, Mejia is working toward an accommodation with 
the IMF following his precipitous decision in early September 
to buy back two electricity distribution firms from Spanish 
firm Union Fenosa.  He obtained from monetary authorities a 
5.15 percent increase in exchange charges for imports and on 
November 18 finally got a reluctant PRD-dominated Senate to 
approve a 5 percent levy on exports (the measure now goes to 
the House).  He successfully challenged exporters and 
hoteliers to commit to defined contributions to meet GODR 
revenue goals previously set with the IMF.  He has just 
ridden out a mostly peaceful --  and successful -- national 
strike on November 11, while reminding citizens in rhetoric 
and with a display of police and military presence that he is 
still in charge. 
 
As candidate for re-nomination, Mejia is playing a boisterous 
game with six rivals within the PRD and just secured a formal 
agreement from the three most prominent of them to contest 
the nomination in a party convention in December.  The 
disbursement this week of USD 100 million by the 
Inter-American Development Bank for the social sector gives 
him the means to deliver on small-scale projects across the 
country.  Mejia pitches his comments in vigorous and 
frequently vulgar colloquialisms toward the common citizen 
and seeks to come across as a "crafty peasant." 
 
Fernandez, in contrast, is busy sounding presidential. 
Heading his own lavishly-funded 'Global Foundation for 
Development,' he recently traveled to deliver speeches in 
Madrid, San Juan and New York (Columbia University and the 
UN).  He comfortably criticizes Mejia for the fall in the 
value of the peso, for the banking scandals, for falling into 
the hands of the IMF - - in brief, for all the country's 
ills.  In September at a political event he went so far as to 
assert the collapse of the (notoriously corrupt) Banco 
Intercontinental (Baninter) "was not the fault of the bank's 
officers, it was the fault of the 
government."  Intellectuals, one of the PLD's traditional 
constituencies, have begun to fulminate about Fernandez's 
"triumphalism" and his mendacity.  The PLD continues 
presenting him as a smooth-talking statesman blameless for 
Dominican ills. 
 
There's a long game ahead.  There are a lot of longtime PRD 
stalwarts mooting the idea that Mejia would do best for the 
country simply by dropping his campaign for re-election.  If 
Mejia secures the PRD nomination - - and his command of 
patronage and party structures suggests that he can if he 
wants to do so - - then Hipolito Mejia will carry out some 
serious savaging of Leonel Fernandez.  Many expect that 
Fernandez's acceptance of generous retainers from Baninter 
will provide the starting point. 
 
Some big issues will affect the fortunes of both, and of all 
candidates: 
 
- - The IMF and austerity.  With inflation approaching 40 
percent and the peso at barely half its 2002 value in 
exchange markets, the challenge to Mejia is to make the IMF 
agreement comprehensible to the public and to make it work. 
He will need to convince them that Fernandez is at least 
partly to blame for the corruption and fraud that drove the 
government to seek IMF help.  Fernandez will put the blame 
for every pinch and groan on Mejia. 
 
- - Corruption and impunity of malefactors.  Each will seek 
to tar the other.  The enrichment of associates and families 
will be alleged; Fernandez's Global Foundation, set up and 
constructed with generous private donations, will be 
presented as built on graft. 
 
- - Free trade negotiations with the United States.  Mejia's 
team is ready and is convinced of the possible benefits to 
gain in the tight schedule of negotiations, January to March 
of 2004, just as the election race reaches white heat. 
Dominican negotiators understand the parameters and the 
limits set by the U.S.-Chile model.  Mejia will portray the 
outcome to his advantage, whether an agreement is reached or 
not.  Fernandez will criticize every step of the way, 
suggesting undue U.S. influence and scaring farmers and 
workers.  Conservative voters may perceive Fernandez becoming 
more firmly anti-U.S. and 
will recall even more vividly his establishment of diplomatic 
relations with Cuba. 
 
- - Electricity.  There's plenty of blame for both sides on 
this one and little prospect that power supplies will improve 
significantly before the May elections.  The privatization of 
state enterprises occurred on Fernandez's watch and was 
unpopular then; the continuing blackouts and the government 
failure to make the system work are Mejia's headache.  Some 
observers think that Mejia can take credit for throwing out 
the "rascals" of Union Fenosa, while others think his 
agreement to buy their shares at a premium was the worst 
possible solution. 
 
- - Dominican soldiers in Iraq.  Mejia knows that any injury 
or death in the Quisqueya battalion in Iraq will prompt an 
outcry that could affect the course of the elections. 
Dominican partnership in the Coalition of the Willing will be 
hotly debated and Fernandez will use it to argue that Mejia 
is too close to the United States.  We believe that Mejia 
will be steadfast in seeing the batallion serve out his 
formal twelve-month commitment, even despite these risks, 
especially if he perceives greater appreciation from 
Washington. 
 
In sum, the game is just beginning in the Dominican 
presidential elections.  Embassy Santo Domingo expects to be 
providing a lively account throughout the next six months. 
This piece is the first of a series of reports, which we aim 
to make them short, focused, frequent and relatively 
informal. 
 
(end text) 
 
2.  (U) Drafted by: Michael Meigs. 
KUBISKE