US embassy cable - 03SANTODOMINGO6952

UNCLAS SECTION 01 OF 06 SANTO DOMINGO 006952 
 
SIPDIS 
 
SENSITIVE 
 
FROM AMBASSADOR FOR WHA ASSISTANT SECRETARY NORIEGA; DEPT 
FOR WHA/CAR, WHA/PPC, WHA/EPSC, EB S DONNELLY, EB/OMA R 
FRISBEE; DEPT PASS USAID/LAC, USTR; NSC FOR SHANNON, H 
CRUZ; TREASURY FOR U/S TAYLOR, N LEE, R TOLOUI, L LAMONICA; 
SECDEF FOR OSD; JUSTICE FOR OIA 
 
E.O. 12958: N/A 
TAGS: PREL, EAID, EFIN, PHUM, MARR, DR 
SUBJECT: WORKPLAN FOR DOMINICAN REPUBLIC - HOW THE UNITED 
STATES CAN PURSUE ITS GOALS 
 
REF: A) SANTO DOMINGO 6582 B) E-MAIL FROM ASSISTANT 
 
     SECRETARY NORIEGA 
 
1. (SBU) At your request in response to my thoughts reftel, I 
am providing to you in this message my suggestions for a 
calendar-based plan for U.S. Government actions to exert a 
positive influence on the economic and political situation in 
the Dominican Republic.  I was heartened by Washington's 
rapid response to my earlier message, particularly to the 
very productive visit of a delegation headed by Treasury 
Under Secretary John Taylor and including a representative of 
the National Security Council. 
 
2. (SBU) The fundamental problem and challenge in the 
Dominican Republic is the weakness of its institutions.  The 
Dominican public still believes that most of their public 
officials are motivated by greed and self-interest.  Those 
with influence and money continue to consider themselves 
above the law.  This deep, historically rooted hopelessness 
is at the heart of our most pressing challenges -- seeing 
that the presidential elections deliver the democratic choice 
of the country, and securing prosecution and conviction of 
the criminals whose large-scale banking fraud sank the 
country's finances.  Unless institutions can be made to 
function, the ordinary Dominicans will lose faith in 
democracy and will have little hope of sharing the benefits 
of growth, globalization and free trade. 
 
3.  (U) Dominicans have immense respect for the United States 
and for its government.  Senior U.S. officials visiting Santo 
Domingo can have a great impact, successfully pushing 
Dominicans away from their worst demons.  I make several 
suggestions below for visits.  In particular, I believe it's 
important for you to come here and speak in favor of a clean 
democratic electoral process, good governance, and aggressive 
enforcement of the law.  In addition, I consider it very 
important that we find funds of about $200,000 for 
international observers for the May 2004 presidential 
elections.  These two key steps would help the Embassy ensure 
that the next administration (whoever wins) begins its term 
with credibility and public support. 
 
4.  (SBU) This embassy's goals and work plan has long 
emphasized institution building.  The dramatic Baninter 
banking fraud and its consequences, both economic and 
political, brought an immediate need for technical assistance 
aimed at improving financial supervision, financial 
investigation, and judicial prosecution.  To confront these 
problems properly now, I ask for at least $350,000 for 
technical assistance. 
 
5.  (SBU) Cooperation in peace keeping and international law 
enforcement can benefit  Dominicans directly and can help 
shape their beliefs about their domestic institutions.  I ask 
for closer cooperation with the Dominican military, as well 
as assistance to improve their skills, capabilities, and 
professionalism.  I will continue to press for prosecution of 
those who traffic persons and welcome Washington visitors to 
stress that message.  I believe there can be great mutual 
benefits from establishing closer cooperation with the 
Department of Homeland Security, particularly by creating a 
permanent DHS position at this Embassy. 
 
6.  (SBU) International trade in goods and services will be 
the basis for sustainable growth in the Dominican Republic. 
Bilateral cooperation over the past year in the Trade and 
Investment Council has prepared both public and private 
sectors for free trade negotiations during the first quarter 
of 2004.  The U.S. messages on the benefits of trade will 
coincide with the presidential campaign.  I welcome the 
prospect of this public debate and expect it to help focus 
Dominican public opinion on the promises of the future in 
contrast to the failures of the past. 
 
7. (SBU)  Following is the detailed proposed action plan 
containing these and other requests for the period between 
now and the next Dominican administration.  This plan has the 
support of the entire Country Team. 
 
NOW IN COURSE -- EXPANSION POSSIBLE 
 
FINANCES 
 
- - Finances/Tax Reform.  Urge GODR, leading political 
parties and private sector to find consensus on immediate tax 
changes in order to qualify for IMF standby; urge the need to 
close standby negotiations and deliver on pre-conditions; 
urge all concerned to initiate consultations elements of a 
tax reform program.  (Note: USAID is already engaged with the 
GODR in fiscal policy reform and stands ready to support the 
process of identifying an integrated reform package in 2004 
if USD 100,000 in additional funds are available.) 
 
- - Assistance: Central Bank debt.  USAID is currently 
assisting Central Bank in defining methods and approaches to 
converting USD 1.5 billion in short-term debt instruments 
into longer term instruments with lower interest rates.  The 
Central Bank needs to develop a comprehensive strategy to 
develop appropriate markets and instruments.  (Further USAID 
involvement in 2004 would require USD 350,000 in additional 
program funds; as an alternative, Treasury could supply this 
technical assistance.)  USAID could provide technical 
assistance in liquidating foreclosed real estate, cleaning up 
titles and enhancing the value of properties so as to realize 
full market value.  (This assistance could be provided in 
2004 with an additional USD 150,000 in resources.) 
 
- - Debt.  USAID has been providing assistance to the 
Ministry of Finance in resolving expropriation claims as a 
means to improve domestic debt management.  This amount could 
be expanded to help the GODR quantify debt, publish results 
and develop a plan to reduce the percentage of GDP devoted to 
debt service.  This would entail creating conditions for 
establishing a secondary market and strengthening financial 
institutions.  This activity could start quickly, but a 
comprehensive program along these lines would require 
additional resources of USD 400,000. 
 
ENERGY 
 
      - - Electricity.  Urge GODR to make payments to 
  generators, including COGENTRIX, so as to reduce scope 
  and frequency of blackouts. 
 
- - Energy sector assistance.  USAID consultants helping 
Dominican National Energy Council and Presidency to define 
short-term and medium-term steps needed to resolve energy 
crisis.  Recommendations will feed into World Bank and IDB 
programs.  (Underway, but follow-up work in 2004 will require 
USD 200,000 in additional funding from USAID Washington.) 
 
- - IDB.  Urge IDB,s senior management to persuade lenders 
to COGENTRIX project to be patient while GODR and COGENTRIX 
renegotiate contract. (Note: GODR paid off all arrears in 
mid-2003 but COGENTRIX did not agree at that time to discuss 
renegotiation; GODR holds that clearing arrears was 
understood to be tied to renegotiation and has refused to 
honor "take or pay" provisions since then; new arrears of 
approximately USD 25 million have accumulated.  COGENTRIX, 
under new ownership, may be more open to renegotiation.) 
 
ELECTIONS 
 
- - Elections/USAID.  Work with civil society/democracy NGO 
to recruit qualified poll workers and train 600 local 
election observers (ongoing until election).  (Funds already 
allocated.) 
 
 
* * Now to mid-December: GODR negotiates with IMF on terms 
for a new standby* * 
 
- - - - - 
DECEMBER 
- - - - - 
 
(** Note: December 7 and 14 rival PRD party conventions; 
December 19 closing of legislative session; December 21 
Confirmation of PRD nominee. ** ) 
POLITICS 
 
- - Underway.  December 3-5, Ambassador will host three major 
political parties separately for lunch discussions.  Message: 
1) U.S. impartiality in Dominican political process; 2) need 
for all political actors to support program with IMF;  3) 
need to put national interest above partisan political 
advantage; 4) encourage contenders within parties to settle 
differences; 5) encourage parties to address economic issues 
in responsible manner; 6) emphasize good governance. 
 
HUMAN RIGHTS 
 
- -  Underway.  Dec 8-9.  Assistant U.S. Attorney General for 
Civil Rights will visit.  AAG will deliver messages on 
trafficking in persons and respect for human rights; 
potential for a call on Chief of National Police to emphasize 
need for strict respect for civil rights in election process. 
 
IFIs AND LENDING 
 
- - Proposed.  Energy.  Energy and social sectors Structural 
Adjustment Loan (SAL).  Urge World Bank to design a SAL 
emergency disbursement of USD 100 million as soon as 
possible, once a GODR budget is passed and the IMF standby is 
renewed.  This would provide cash to reduce arrears due to 
generators and to replenish their fuel supplies.  (Note: 
later disbursements under SAL would finance restructuring and 
would probably not occur until after the May presidential 
elections.) 
 
- - Proposed.  IDB lending.  Encourage the IDB to accelerate 
the processing of emergency lending for social and energy 
sectors as soon as (1) there is informal GODR agreement with 
IMF on resumption of a program and (2) GODR passes the 
required 2004 budget.  Encourage the GODR to meet the 
conditionality to gain access to these funds as soon as 
possible. 
 
BANK FRAUD AND INSTITUTION BUILDING 
 
- - Underway.  Public statements/speech by Ambassador 
high-level USG official(s), Embassy officers, emphasizing the 
need to bring perpetrators of bank fraud to justice, 
reinforcing the need to resist strong political and special 
interest pressure.  Goal: encourage political will and 
consensus on need to complete prosecution of Baninter and 
other fraud cases, so as to restore faith in judiciary and in 
administration of justice. (This continues into 2004.) 
 
- - Proposed.  USAID Washington identify USD 350,000 in 
resources to provide further assistance in 
institution-building and anti-corruption in context of the 
USD 3 billion in complex financial fraud.   Targeted 
assistance would strengthen capacity of authorities to deal 
with current and any future financial fraud cases.  (This 
assistance continues into 2004.) 
 
- - Proposed.  USAID identify USD 200,000 in additional 
resources for programs to strengthen regulatory entities like 
the Superintendents of Banks, Securities, and Insurance, all 
of which are directly linked to the banking sector.  Goal is 
to strengthen the GODR ability to fight corruption. (This 
continues into 2004.) 
 
- - Ongoing.  Exchange of information among Embassy Santo 
Domingo, Department of Homeland Security (Customs), Treasury, 
DEA, Justice and U.S. Attorney,s Office, Miami on Baninter 
fraud case, asset identification and recovery, and 
examination of sources of funds deposited in Baninter. (This 
continues into 2004.) 
 
- - Proposed.  Security/Fraud.  Department of Homeland 
Security examines feasibility of permanent posting of 
DHS/Customs attache in Santo Domingo. 
 
ELECTIONS 
 
- - Proposed.  Urge the GODR to make a formal invitation to 
the OAS to send election observers. 
 
- - Requested.  Identify appropriate USG funding for election 
observation missions by IFES, NDI so as to ensure clean 
elections.  This is needed to strengthen democracy and to 
raise confidence of the Dominican public in the electoral 
process.  (Note: USAID Santo Domingo has approximately USD 
75,000 programmed for these activities, but this is 
insufficient in fact of the NGOs' initial cost estimates of 
up to USD 400,000.) 
 
- - Requested.  Department (WHA/PPC, L/M) advise whether 
IFES, NDI can accept private funding and whether 
Embassy/Ambassador can solicit contributions.  Embassy survey 
possible sources of private funding for election observers. 
 
MILITARY 
 
- - Requested.  Determine availability of additional military 
assistance for GODR aimed at demonstrating advantages of 
close cooperation with U.S. military, including in Iraq, 
without making assistance a "quid pro quo" for Iraq service. 
Use funds to strengthen current cooperation against smuggling 
and illegal migration, to prepare Dominican military to 
undertake UN peacekeeping missions, to participate in 
intensified regional naval cooperation, and to manage the 
military more professionally. 
 
- - Requested.  Senior DOD official visits Santo Domingo. 
Topics:  1) stress to senior military the appropriate role 
for armed forces during presidential elections, 2) outline 
possibilities of opportunities to participate in peace 
keeping operations, 3) discuss additional military 
assistance, 4) deliver public address to academia or other 
institution on U.S. policy in Iraq and our goals for the 
Iraqi people. 
 
- - - - 
JANUARY 
- - - - 
 
- - Proposed.  Jan 12-13.  OAS Special Summit in Mexico.  Use 
opportunity for President Bush, Secretary Powell, Assistant 
Secretary Noriega to deliver message to President Mejia (if 
 
SIPDIS 
he attends, or at lower level, if not) on need for clean 
elections, continued compliance with IMF program, and need 
for progress in efforts to prevent trafficking in persons. 
 
- - Requested.  Technical Assistance: Aviation.  FAA follow 
up its examination of draft Aviation Security law with visit 
and technical assistance.  (Text submitted to FAA in August, 
2003; ref: Santo Domingo 6409 of November 6.) 
 
- - Tentatively scheduled.  Sr. USG Visit/Trade: USTR. 
Mid-January.  USTR Zoellick and team visit Santo Domingo for 
first round of FTA negotiations.  Public diplomacy 
programming includes opening ceremony with President Mejia; 
address by USTR to joint houses of Congress; on-the-record 
conversation with leading print journalists; extended 
television interview with leading broadcaster. 
 
- - Proposed.  Border Security.  Department of Homeland 
Security proposes stationing in Santo Domingo of permanent 
DHS/Customs attache. 
 
- - Tentative.  Sr. USG Visit/Energy.  (TBD) Energy Secretary 
Abrahams visits Santo Domingo.  Topics:  1) need for good 
regulation and governance in energy sector, 2) role of 
private sector in energy production, 3) energy and the 
environment.  Public diplomacy programming includes luncheon 
address on energy and economic development, on-the-record 
conversation with leading journalists. 
 
- - Tentative.  Elections.  Initial working visit of election 
monitors (IFES, NDI, etc.), assuming funding was found. 
 
- - Planned.  Elections.  In coordination with other donor 
country embassies, Embassy will ask GODR Central Election 
Board to permit expanded and organized diplomatic observation 
of preparations leading up to elections and of election 
procedures on voting days.  Subsequently present detailed 
proposal to Election Board. 
 
- -  Planned.  Elections.  Two Embassy-organized workshops 
for local journalists on how to report on elections and on 
the role of the press in the elections process. 
 
- -  Planned.  Elections.  Initiate regular meetings with the 
Election Board to follow development and to stress the 
importance of clean electoral process.  (Continues through 
elections) 
 
- - - - - 
FEBRUARY 
- - - - - 
 
- - Proposed.  Sr. USG Visit/Institution building. 
(Possibility for Assistant Secretary Noriega).  Topics:  1) 
Importance of democratic process, particularly of free, fair 
and clean presidential election in May, 2) Anti-corruption, 
including 2003 draft treaty, 3) Banking fraud, including U.S. 
support for investigations, 4) Human rights, especially 
trafficking in persons.  Public diplomacy programming would 
include speech to prestigious institution and on-the-record 
conversation with leading journalists. 
 
- - Tentative.  Feb. 9-13 (tentative) FTA negotiations in San 
Juan. 
 
- - Proposed.  Public Diplomacy.  Speeches by Ambassador or 
USG visitor.  Topics:  1) importance of further initiatives 
against trafficking in persons and need for stronger 
enforcement; 2) importance of free, fair and transparent 
electoral process.  (Embassy officers will pursue these 
themes in other public appearances -- ongoing.) 
 
** Feb. 27, Dominican Congress reconvenes.** 
 
- - - - 
MARCH 
- - - - 
 
 
- - Planned.  Elections.  Work with Department's Office of 
Congressional Affairs (H) to keep U.S. Congress informed on 
progress of electoral campaign in Dominican Republic. 
 
- - Planned.  Elections.  U.S. speaker or event to highlight 
civic responsibility to vote and need for public 
participation in monitoring elections. 
 
-- Proposed.  Trafficking in Persons.  U.S. Visitor 
emphasizes need for immediate prosecution action against 
senior official involved in trafficking of persons. 
 
- - Tentative.  March 8-12:  FTA negotiations in Washington. 
 
- - Proposed.  Urge World Bank to refine program of lending 
for energy sector restructuring. 
 
- - - - 
APRIL 
- - - - 
 
- - Proposed.  Elections. U.S. speaker event on use and abuse 
of polls, polling methodology. 
 
- - Planned.  Elections.  Training of diplomatic observers by 
USAID-supported pro-democracy NGO. 
 
- - Planned.  Initiation of organized diplomatic observation 
process, to continue through both rounds of elections. 
 
- - - 
MAY 
- - - 
 
- - May 16:  First round of presidential elections in 
Dominican Republic.  International observers support local 
observers in monitoring election. 
 
- - - 
June 
- - - 
 
- - Note: June 30 is provisional date of any second round of 
presidential elections in Dominican Republic. 
(End text) 
HERTELL