US embassy cable - 04SANTODOMINGO6472

C O N F I D E N T I A L SECTION 01 OF 05 SANTO DOMINGO 006472 
 
SIPDIS 
 
STATE FOR WHA/CAR, WHA/EPSC, WHA/USOAS, EB/TPP/BTA, 
EB/IFD/OMA, EAP/CM, EAP/TC; STATE PASS AIT/W; NSC FOR 
SHANNON, MADISON; LABOR FOR ILAB; 
USCINCSO ALSO FOR POLAD; TREASURY FOR OASIA-LCARTER 
STATE PASS USTR FOR VARGO, RYCKMAN, MALITO, CRONIN 
USDOC FOR 4322/ITA/MAC/WH/CARIBBEAN BASIN DIVISION 
USDOC FOR 3134/ITA/USFCS/RD/WH; DHS FOR CIS-CARLOS ITURREGUI 
 
E.O. 12958: DECL: 12/02/2009 
TAGS: PREL, ETRD, EINV, EPET, CH, TW, DR, XE 
SUBJECT: DOMINICAN POLITICS #10: SANTO DOMINGO, BETWEEN 
TAIPEI AND BEIJING 
 
REF: A. TAIPEI 3667 (NOTAL) 
 
     B. TAIPEI 3666 (NOTAL) 
     C. SANTO DOMINGO 6298 
     D. USDAO SANTO DOMINGO IIR 6 827 9970 05 231631Z 
        NOV 04 (NOTAL) 
     E. BRIDGETOWN 2684 (NOTAL) 
 
Classified By: DCM Lisa Kubiske for reason 1.4 (b) and (d). 
 
1. (U) This is #10 in our current series on politics in the 
Dominican Republic: 
 
Santo Domingo, Between Taipei and Beijing 
 
(C) Summary and comment:  Beijing's global campaign to 
isolate Taiwan has reached the Dominican Republic, the 
largest Caribbean island nation that maintains diplomatic 
relations with Taipei.  The Fernandez administration is 
clearly interested in the People's Republic of China as a way 
to expand his nation's economic opportunities and broaden its 
international relationships.  Fernandez has said he wants to 
"strengthen ties" with the PRC and talks of making a swing 
through ethnically Chinese Asia and South Korea next spring, 
and he has named a deputy director for a planned Dominican 
trade office in Beijing (in addition to the existing office 
in Hong Kong).  Privately, the Foreign Minister commented to 
the Ambassador November 18 that Dominican recognition of 
Beijing might be inevitable over the long term, but not right 
now.  Comment:  All of this activity comes in the context of 
a Dominican Republic in dire need of economic support, headed 
by a president who, in his first term, opened Dominican 
relations with Cuba.  We don't foresee Dominican recognition 
of Beijing in the near future, but cannot rule out the 
possibility sometime in the next few years.  End summary and 
comment. 
 
Renewed Expressions of Interest 
------------------------------- 
 
(SBU) Beijing's global campaign to gain international ground 
over Taiwan has reached the Dominican Republic, the largest 
Caribbean island nation that maintains diplomatic relations 
with Taipei.  Two commercial/investment technical delegations 
from the People,s Republic of China (PRC) visited in early 
November, a PRC music and dance troupe performed here 
November 27-30, and a Chinese athletic group is expected in 
December. 
 
(SBU) In addition, nine of the 32 Dominican senators were in 
China November 22-29 as guests of the PRC; the group included 
Senate President Andres Bautista (opposition PRD) and the 
only senator of the ruling PLD, Jose Tomas Perez.  Their 
itinerary included meetings and/or dinners with the PRC vice 
ministers of foreign affairs and trade, leaders of the 
National People's Assembly (NPA), subdirector Wang Yulin of 
the international department of the Central Committee of the 
Chinese Communist Party, and local officials in Beijing, 
Guaylin, Shenzhen, and Shanghai.  We understand that the 
group received VIP treatment with motorcade escorts and was 
accompanied throughout the 10-day visit by Vice Foreign 
Minister Ji Peiding.  Many PRC officials, including the NPA 
president, reportedly expressed their government's desire for 
diplomatic relations with Santo Domingo. 
 
(SBU) This visit follows a recent trip to the PRC by 
Dominican Ambassador to the United States Hugo Guilliani 
Cury, seeking Chinese investment in export-oriented factories 
in the Dominican Republic.  Dominican senators had also been 
guests of Taipei authorities in mid-2004 and caused a brief 
stir when a Taipei legislator reported speculation by PRD 
Senator Ramon Albuquerque that the incoming administration 
might want to recognize the PRC. 
 
Pressure for Recognition 
------------------------ 
 
(C) During a call by the Ambassador on President Fernandez 
November 9, one of the PRC delegations was waiting in the 
anteroom to meet with Fernandez.  The group was led by Huai 
Zhongmin, president of the Association of Foreign Exchanges 
of Dalian municipality, and accompanied by PRC commercial 
representative in Santo Domingo Cai Weiquan.  Long-time 
Dominican leftist Miguel Mejia, recently named as a minister 
without portfolio, arranged the meeting and accompanied the 
visitors.  A former MFA official in charge of Caribbean 
affairs, Mejia has regularly served as a behind-the-scenes 
facilitator for Dominican contacts with the PRC, Cuba, and 
Venezuela.  He is said to have contacts with North Korea and 
to have traveled there as well. 
 
(C)  Taipei's ambassador to the Dominican Republic Feng 
Chi-tai (John) told poloff that Huai in his meeting with 
Fernandez had "crudely" and explicitly conditioned the 
proposed investments on the Dominican Government's 
recognizing the PRC.  Fernandez, resenting the pressure, 
abruptly terminated the meeting, according to Feng. 
 
(C) The MFA official in charge of Asian affairs told us that 
the Chinese delegation, in a separate meeting with Foreign 
Minister Carlos Morales Troncoso, had proposed establishment 
of diplomatic relations.  Foreign Minister Carlos Morales 
Troncoso subsequently commented to the Ambassador that 
recognition of China might be inevitable over the long term, 
but not now.  China is a reality, Morales said, and the 
Dominicans have probably benefited Taipei more than Taipei 
has benefited them. 
 
Proposed Investment in Technology and Tourism 
--------------------------------------------- 
 
(C) Morales told the Ambassador that the PRC provincial 
officials were interested in investment in technology.  A 
Chinese firm was bidding on a "turnkey investment" in Higuey 
in the eastern Dominican Republic that would involve bringing 
in almost 300 Chinese laborers and technicians.  An under 
secretary of tourism informed us that PRC investors were 
 
SIPDIS 
looking at tourism investments in the country, reportedly "if 
the Dominican Republic recognizes Beijing."  As we have 
already reported (Ref C), the three most likely bidders for a 
50 percent interest in the new Caucedo container port are two 
mainland Chinese companies and one Hong Kong firm. 
 
(U) Chinese commercial representative Cai Weiquan has been 
busy and visible.  He told the media that the recent 
delegation offered technical assistance on "ocean areas," 
environment and natural resources, education, health, and 
other matters, and he suggested creating a mixed commission 
to oversee these efforts.  The technical delegation is 
reported to have met with the Dominican ministers of 
environment, industry and commerce, and sports.  According to 
some reports, the group also mentioned a possible Chinese 
purchase of Dominican bonds or Paris Club debt.  Taipei's 
Ambassador Feng told poloff that a second PRC technical 
delegation, from Chongqing city (Szechuan province), had been 
in Santo Domingo shortly before the group from Dalian. 
 
Presidential Trip to Asia 
------------------------- 
 
(C)  President Fernandez, in a lunch with media executives 
November 25, said he planned to travel to Asia next spring: 
PRC, Hong Kong, Taiwan, Singapore, Malaysia, and South Korea. 
 He wanted to strengthen ties, he said.  He understood that 
Taiwan would be unhappy about this, but that the PRC was 
offering Taiwan a "one country, two systems" model in which 
Taiwan could keep its own systems.  He thought many in Taiwan 
could accept such an arrangement. 
 
Taiwan Not Idle, but Pessimistic 
-------------------------------- 
 
(U)  Not coincidentially, investors from Taiwan led by 
Minister without Portfolio Lin Yi-fu (economic adviser to the 
prime minister) arrived November 21 for a one-day visit to 
inaugurate a technology-related project and explore others. 
Taipei's Ambassador Feng said that the visit was organized 
hastily in response to the PRC initiatives, came 
"unprepared," and would be unlikely to generate much 
investment.  Feng's view:  Taipei can only encourage 
investors to engage; Beijing can order them to do so. 
 
(SBU) Feng said the PRC has "targeted" the Dominican Republic 
to increase trade, investment, and assistance, part of an 
effort to obtain recognition.  He said that Dominicans are 
exploiting the opportunity to extract maximum benefit from 
both China and Taipei.  He shared his views on the margins of 
the dedication of a computer and English language training 
center in Santiago set up by PLD Senator Perez, entirely 
equipped with machines donated by Taiwan. 
 
(C) Taipei's ambassador sketched his beleaguered situation. 
Despite substantial Taiwan assistance here (approximately USD 
70-80 million over the past 5-6 years), Feng sees his 
influence gradually slipping.  But he seemed certain that 
diplomatic relations would survive for the time being.  Prior 
to the August 16 inauguration of President Fernandez, he had 
told Feng that the Dominican Republic would continue to 
recognize Taiwan while expanding economic relations with the 
PRC. 
(C) Feng has had other frustrations as well.  In July 
President Mejia inaugurated a new regional hospital in the 
southwestern city of Azua; Taiwan financed USD 15 million of 
the USD 19 million cost.  But lacking essential equipment and 
staff to be provided by the government, the facility stands 
empty. 
 
(C) Feng's doubts about his position here are compounded by 
what he sees as Taiwan's deteriorating relations with the 
United States and divisive domestic politics.  (Note:  A 
member of the Nationalist Party, Feng spent seven years in 
Washington early in his career.  End note.)  He was critical 
of his government's acquisitions of expensive military 
equipment from the United States for defense against China at 
a time of escalating economic exchange and migration across 
the Taiwan Strait. 
 
Big-Ticket Investments 
---------------------- 
 
(C) The assistance, investment, and trade offered by the PRC 
to the Dominican Republic far outstrip Taiwan's resources, 
Feng acknowledged.  He said Caracas and Beijing have proposed 
exploration for offshore oil in Dominican waters, using 
Venezuelan capital and Chinese technical know-how. 
 
(C) China Minmetal's proposed USD 5 billion purchase of the 
Canadian Falconbridge mining enterprise could affect the 
situation here, according to Feng.  Our mining sector 
contacts say that Falconbridge operations in the Dominican 
Republic have not been visited by any Chinese.  Feng asserts 
that once the Canadian corporation is sold, the Dominicans 
will supply the PRC with iron and nickel, since the Chinese 
firm will have 87% of the shares of the Dominican affiliate. 
This "brilliant move" will also enable Beijing to leverage 
its investment clout into political and diplomatic influence 
in Santo Domingo, he fears. 
 
Trade with the PRC 
------------------ 
 
(U) PRC exports to the Dominican Republic amount to some USD 
150 million annually and are more likely to grow than 
Dominican exports to China.  The efforts of the PRC 
commercial office here since its establishment in 1994 have 
paid off in a trade surplus of more than USD 100 million. 
 
(C) The memorandum that established commercial relations 
provided for Dominican trade offices in Beijing and Hong 
Kong.  The Dominicans converted their consulate in Hong Kong 
to a commercial office after the former crown colony's 
integration into the PRC, postponing plans for Beijing. 
According to MFA Under Secretary for Consular Affairs Rosario 
Graciano, President Fernandez has just named Roger Casado 
Alcantara as deputy director of an office in Beijing -- but 
has not yet named a director, provided a budget, or trained a 
staff. 
Investment and Aid from Taiwan 
------------------------------ 
 
(SBU) According to the press, current Taiwan investment here 
exceeds USD 100 million in more than 70 firms, which directly 
provide 3500 jobs.  The Taiwan firms are active in free-zone 
administration and industries including paper, textiles, 
acrylics, plastics, aluminum products, printing, 
horticulture, photography, computing, and food processing. 
Taipei is also reportedly assisting small business 
development.  In August, the Dominican Confederation of Small 
and Medium Enterprise (CODOPYME) signed a cooperation 
agreement with the Association of Small and Medium Enterprise 
of the Republic of China, the Textile Federation of Taiwan, 
and the Federation of Industries of Taiwan. 
 
2. (U) Drafted by Bainbridge Cowell. 
 
3. (U) This piece and others in our series can be consulted 
on our classified SIPRNET site 
http://www.state.sgov.gov/p/wha/santodomingo/  along with 
extensive other material. 
HERTELL