US embassy cable - 04SANTODOMINGO4784

UNCLAS SECTION 01 OF 04 SANTO DOMINGO 004784 
 
SIPDIS 
 
SENSITIVE 
 
STATE FOR WHA/CAR, WHA/EPSC, EB/OMA; 
NSC FOR SHANNON AND MADISON;LABOR FOR ILAB; USCINCSO ALSO 
FOR POLAD;TREASURY FOR OASIA-LAMONICA 
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, PREL, EFIN, DR 
SUBJECT: TRANSITION #14: LEONEL FERNANDEZ AT DOMINICAN 
INAUGURAL PROMISES AUSTERITY, ANTI-CORRUPTION AND SUPPORT 
FOR SOCIAL CONCERNS 
 
 
 1. (SBU) This is #14 in our series on the transition between 
the Mejia and Fernandez governments in the Dominican Republic. 
 
 
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Fernandez promises Austerity, Anti-Corruption and Support for 
Social Concerns 
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In an eloquent, emphatic inaugural speech on August 16, a day 
of national pageantry, Leonel Fernandez reassumed the 
Dominican presidency with emphasis on the gravity of the 
economic crisis, an admonition on the inevitability of 
sacrifice, and the need for austerity. He declared his 
intention to cut current expenditures of the goverment by 20 
percent. 
 
Following are other principal points in his August 16 
declaration. (Our comments are at the end of this text.) 
 
FISCAL MEASURES 
 
- - He emphasized his intention to cut current expenditure 
and to negotiate a revised IMF standby agreement. 
 
- - To deal with the burden of Central Bank (CB) medium-term 
debt issued to cover bank failures, the incoming 
administration has obtained promises from national and 
international investors to lend dollars to the Bank at 
international rates.  These dollars will be used to retire 
some of the 90 billion pesos in medium-term debt (USD 2 
billion), on which the Bank has been obliged to pay high 
nominal interest rates (35 to 55 percent, according to date 
and term of issuance) 
 
- - He stated that the terms on all existing CB debt 
instruments will be respected. 
 
- - Fernandez asserts that these measures will result in new 
investment and the return of flight capital, stimulating 
growth and increased employment. 
 
CORRUPTION 
 
- - Corruption is "morally and legally unacceptable" and the 
administration will take all appropriate measures to prevent 
and punish corruption, in keeping with the OAS Interamerican 
Convention against Corruption. 
 
- - The administration will not pursue political reprisals 
but will not provide "a clean slate and a new start" for 
anyone accused of corruption. 
 
- - "Let make clear once again: let no one try to whisper 
something to me in private that he is unwilling and unable to 
say to me in public." 
 
SOCIAL PROGRAMS 
 
- - UNDP statistics record that more than 1 million 
Dominicans have passed below the poverty line in recent years. 
 
- - The administration will initiate social action programs 
in health, nutrition, feeding, and education, with the help 
of civil society.  Emergency feeding programs will reach out 
to the poorest families, serving 25,000 families by January, 
2005 and eventually as many as 200,000.  An emergency program 
will aim to resupply hospitals with basic medicines. 
 
- - Special attention will be paid to subisidies and delivery 
of electricity and household cooking gas. 
- - Fernandez defended at length the concept of 
"capitalization" (privatization) initiated by his first 
administration, quoting a long paragraph from a recent report 
by the Special Commission on Energy summarizing advantages to 
date of privatization. 
 
- - Electricity blackouts occur because of high costs for 
fuel, electricity losses, non-payment by many users, and the 
inability to date of the government to pay promised 
subsidies.  Fernandez cited, point by point, the ten 
recommendations delivered recently by a national consensus 
dialogue (NOTE: sponsored by USAID).  He put numbers on key 
recommendations -- USD 50 million in short-term credit for 
fuel purchases and targeting the electricity subsidy to 
households consuming less that 200 kilowatt hours per month. 
 
- - In coming days the administration will take a number of 
measures to assure normal distribution of cooking gas across 
the country. 
 
INSTITUTIONS 
 
- - The country suffers serious institutional problems.  The 
dictatorship of Trujillo and the dominance of remarkable 
charismatic leaders Juan Bosch, Joaquin Balaguer, and Jose 
Francisco Pena Gomez shaped politics and restrained the 
unscrupulous and greedy.  A new generation now must take 
action against insecurity, trafficking in influence, 
clientelism, illicit enrichment, abuse of power, lack of 
respect and the general lack of seriousness. 
 
- - The executive and Congress must reconquer the respect of 
the people.  "If the current crisis has served for anything, 
it is to utterly expose the bankruptcy of a system manifestly 
incompetent, injust, and corrupt.  Let us change it together. 
 Let us shake the tree of Dominican democracy and shake out 
the rotten fruit." 
 
MODERNITY, PROGRESS AND THE DIGITAL ERA 
 
- - Fernandez quoted from Alvin and Heidi Toffler's essay, 
"Creation of a New Civilization," concerning a "third wave" 
of change and the arrival of a digital age.  He asserted the 
need to improve access to modern education for all Dominican 
children, including particularly to computers. 
 
- - He endorsed the concept of "community colleges" similar 
to those in the United States as a means of vocational 
education. 
 
- - Fernandez advocated modifications to the Dominican 
Constitution to establish economic, social and cultural 
rights. 
 
- - He wants to pass legislation on social participation, 
criminal procedure and guarantees of due process.  He wants 
to continue programs of reform to improve the central 
government, the judiciary, and the prison system; he wants to 
"professionalize" the executive offices involved in 
administration of justice. 
 
INTERNATIONAL FOREIGN RELATIONS 
 
- - Fernandez will pursue policies favoring peace and 
international security, reinforcing multilateral mechanisms 
in conformity with the UN and with the Organization of 
American States.  He expects to strengthen and diversify 
bilateral relations across the world, "with special attention 
to our neighbor, Haiti." 
GOVERNMENT OF UNITY 
 
- - He proposes a "government of national unity" including a 
new Economic and Social Council with representation from 
business, labor, civil society and churches to provide 
direction to regional and provincial development authorities. 
Fernandez concluded by invoking the guidance of God and 
asserting that a "new spirit has taken hold in our people -- 
a spirit of optimism, faith, confiance and determination." 
He called out a new PLD slogan, "All of us forward together!" 
("E'palante que vamos!" -- a variation on the popular PLD 
campaign merengue tune directed against the Mejia 
administration, "They're on their way out!" -- "E pa' fuera 
que van!"). 
 
Atmospherics 
 
August 16 inaugural events were festive and formal, with 
almost all those attending formal events dressed according to 
tradition in white suits.  Newly elected President of the 
Senate Andres Bautista opened the morning ceremony with a 
stiff but earnest speech promising legislative cooperation 
with the new administration in the national interest, quoting 
John F. Kennedy's inaugural call, "Ask not what your country 
can do for you but rather what you can do for your country." 
 
President Mejia was correct and cordial throughout the 
ceremony. He shook hands with Fernandez at the opening and 
congratulated him afterward, with a smile and a pat on the 
back -- despite stinging language in the speech that some 
might interpret as a reproach to Mejia. 
 
Fernandez's clarity, his admonition of the need for 
sacrifice, and his apparent mastery of the economic and 
institutional brief were sufficient to reinforce the sky-high 
expectations of Dominicans that a new day is ahead.  Most 
commentators strongly praised his speech and his messages. 
PRD-associated economist Jaime Aristy Escuder pointed out 
tartly that Fernandez had resorted to some rhetoric with 
questionable math and selective history in order to make his 
points about the seriousness of the situation, but Aristy 
nevertheless found the general approach to be sound. 
 
Fernandez was eloquent, assured, and reassuring, rarely 
looking at his notes and delivering his citations from 
memory.  He reached both the educated and the unschooled, 
using concepts, text and images in a bravado performance. 
And in the afternoon, just before the military parade, he and 
his attracive First Lady, attorney Margareta Cedeno, swept 
majestically the length of the seafront Malecon in downtown 
Santo Domingo, greeting the enthusiastic crowds from the back 
of a Cadillac convertible that dated back to the mid-1950's 
-- a reminder, perhaps, that the thinking man was smart 
enough to touch on the memories of the dictator who built the 
country. 
 
That was day one.  And now it's "all of us forward together" 
as we figure out how Fernandez and his team are going to deal 
with those big issues. 
 
2. Drafted by Michael Meigs 
 
3. This report, the full text in Spanish of the inaugural 
address, and other reports in our transition and elections 
series are available on our classified SIPRNET site 
http://www.state.sgov.gov/p/wha/santodomingo/   along with 
extensive other material. 
HERTELL