US embassy cable - 04SANTODOMINGO5425

UNCLAS SECTION 01 OF 02 SANTO DOMINGO 005425 
 
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: DOMINICAN POLITICS #3: FREE TRADE, PAID JOURNALISM 
AND BAD PRESS FOR THE UNITED STATES 
 
 
1.  Following is number 3 in our series on Dominican politics 
in 2004: 
 
Free Trade, Paid Journalism and Bad Press for the United 
States 
 
A small, powerful coterie of infuriated sugar barons 
continues to use influence and money in an effort to convince 
the Dominican public of the bad faith of Dominican 
negotiators, the U.S. government, and the Ambassador.  The 
results have been ugly.  In our previous message we outlined 
their strategy, with a particular mention of the series of 
costly full-page advertisements in all significant national 
newspapers.  Now that the sugar industry has muscled a 
protectionist tax on fructose-sweetened beverages into a tax 
bill celebrated with ads proclaiming "A CONFIRMATION OF 
PATRIOTISM," their proponents are orchestrating journalistic 
attacks on the Ambassador.  The effect -- and probably the 
aim -- is to raise nationalistic support for their 
"patriotic" stance against "pressures of the U.S. Embassy." 
 
Dominican journalists like drama and conflict, and they 
happily inflate passing comments into supposedly rigid 
pugilistic positions.  Alongside their stories of U.S. 
diplomatic "pressure" on Congress they have run lengthy 
accounts of comments by the sugar interests and by 
congressional representatives who have no understanding of 
the mechanisms or the stakes of this discussion.  Some 
congressmen have commented that a "mere $24 million" in 
potential sales to soft drink bottlers could not possibly 
threaten a bilateral trade relationship of $8 billion.  Some 
cite the case of Mexico,s tax on fructose beverages as proof 
(ignoring or unaware of the fact that Mexico had been in 
NAFTA for ten years before trying that gambit). Others hold 
that the trade agreement can certainly be renegotiated, since 
it hasn,t been ratified by either side.   These commentators 
say that no more than a "technical rectification" is 
required, similar to that asked and granted for 8 sensitive 
domestic products when the Dominican Republic belatedly 
realized the implications of having joined the WTO. 
 
The Ambassador has taken a non-confrontational but clear 
approach to the press throughout our efforts to convince the 
administration and the congressional leadership that the 
protectionist tax really, truly would sink the Dominican 
portion of the free trade agreement.   At times he has 
avoided public comment on sensitive talks. For example, on 
Monday of this week, September 27, after a two-hour session 
with Leonel Fernandez, congressional leaders, Danilo Medina, 
and Msgr. Agripino Nunez, the Ambassador left through the 
back door so as to avoid the eager press mob outside. 
 
But it,s not just the search for nave drama that has 
motivated reporters.  We are convinced that sugar interests 
are buying slanted coverage; and coinciding with the 
hand-back of the daily Listin Diario to the Baninter-tainted 
Baez family, that paper has taken a sharp anti-U.S. turn 
generally.  On September 24 Listin ran a piece titled 
"Washington doesn,t allow Leonel even 10% of what it 
tolerated with Hipolito" (not available in the on-line 
edition) and on September 28 its boldface headline was "Hans 
Hertell warns the Dominican Republic it,s exposing itself to 
drastic measures." That day its lead editorial "Out of 
Bounds" began, "Dominicans are hopingfor a relation of mutual 
respect with the United States, not a model based in the 
systematic, bare-faced and unilateral pressure and 
interference, across the board and everywhere, that appears 
to have prevailed recently"  (see our SIPRNET site) When the 
Embassy pointed out that the Ambassador had never used the 
phrase "drastic measures," on September 29 the paper 
retracted the headline (although below the fold) and printed 
a correct transcription of his remarks, surrounded by 
self-justifications by Senate President Bautista and 
sugar-friendly congressmen. 
 
On September 29 the Ambassador hosted editors of all major 
newspapers for lunch, as well as the leading television 
broadcast anchor team, continuing his series of press 
outreach encounters. In a lengthy, cordial discussion he 
stressed to them the advantages of the trade agreement and 
the very real possibility that the country would be excluded 
from the regional arrangement.  The Ambassador stressed that 
the United States interest lies principally in assuring a 
secure, prosperous Dominican Republic as a partner in the 
Caribbean.  He outlined his approaches to the executive and 
legislative branches, emphatically stressing that the United 
States has at no point exerted pressure or threatened 
sanctions.  Embassy provided WTO information about the Mexico 
tax case, including copies of Article III of the GATT, which 
enjoins members from using internal taxes and laws to 
restrain trade. 
 
At the lunch TV commentator Miguel Guerrero explained to 
colleagues the price advantages that the Dominican sugar and 
rice industry are currently reaping from their monopoly 
market.  He suggested that one approach to the fructose 
problem might be to rescind the tax while setting up 
licensing mechanisms for imports, to assure that the sugar 
interests might themselves handle corn syrup imports, at 
least for a time.  Guerrero used the term "solomonic 
decision," a term rapidly becoming a code for figuring out 
some way to placate the sugar interests while not sinking the 
trade agreement. 
 
The same evening at the opening of the Cibao regional fair in 
Santiago the Ambassador was scheduled once again lay out our 
consistent message on the benefits of free trade.  We expect 
this to be a friendly crowd.  The free zone companies that 
stand most to benefit will be in attendance; they have very 
belatedly begun to mobilize a public relations campaign, 
including their own full-page ads. 
 
The day is late but we hope that the stark danger of losing 
the trade agreement and the efforts of the free zone 
entrepreneurs will work against the sugar rush that has 
seized the press and through them much of the general public. 
 
2. (U) Drafted by Michael Meigs 
 
3.  This cable and others in our reporting series can be 
viewed on on SIPRNET site 
http://www.state.sgov.gov/p/wha/santodomingo< /a> along with 
extensive other material. 
 
HERTELL