US embassy cable - 04SANTODOMINGO6498

UNCLAS SECTION 01 OF 04 SANTO DOMINGO 006498 
 
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-LCARTER 
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, EFIN, DR 
SUBJECT: DOMINICAN POLITICS #11: FERNANDEZ'S SPEECH ON HIS 
FIRST 100 DAYS 
 
 
1. (SBU) Following is number 11 in our series on 2004 
Dominican politics. 
 
Fernandez's Speech on his First 100 Days 
- - - - - - - - - - - - - - 
 
First announced for the 100th day of his administration, 
November 25, President Leonel Fernandez's speech was 
postponed until Monday night, November 29, at 8 p.m.  The 
President recorded it at a studio at Congress in late 
afternoon but the broadcast on all TV channels and radio was 
delayed until 9, then until 10, and finally actually went on 
the air after 11 p.m., cutting off other local broadcasts. 
This greatly annoyed some baseball fans, who were biting 
their nails over the outcome in extra innings of a game 
between leading teams Licey and Aguilas. The delay also 
greatly reduced the audience; the President spoke near 
midnight instead of in prime time.  It transpired that the 
long delay was due to insertion into the tape of graphs, 
charts, and graphics of the newspaper comments cited by the 
President. 
 
It was probably just as well that the audience was small. 
Although Fernandez clearly enjoyed delivering the speech, it 
would have been nearly incomprehensible for the average 
Dominican.  The first quarter of the 19-page address dealt 
with international finances and economics, and Fernandez 
loaded it down with statistics and jargon ("achieving an 
inverted yield curve. . . .").  This was not a stump speech 
-- there was a single line that stood out as quotable, and 
that was his emphatic promise of using a "tough hand against 
crime."  He appeared to be talking to the small world of 
thirty-something international financial analysts that he 
mentioned in passing in his August 16 inaugural speech, with 
perhaps an offering as well to any academics who were 
seriously trying to score his party's progress in achieving 
the goals announced in its campaign platform.  One theme 
conspicuously absent was that of international trade and the 
difficulties facing his bill to repeal the protectionist tax 
standing as an obstacle to Dominican participation in the 
free trade agreement with the United States and the Central 
American countries (CAFTA). 
 
Our precis of the speech follows.  The full text in Spanish 
is posted on the Santo Domingo SIPRNET site. 
- - - 
 
President Fernandez,s Speech on His First 100 Days in Office 
November 29, 2004 
 
President Fernandez reviewed the errors of the previous 
government, going into great detail of the failure to pay 
international debts, the electricity crisis and its effects 
on the population, the devaluation and instability of the 
peso, and rampant inflation. 
 
Fernandez said that there has been great change in the last 
three months. He credits the collaboration of different 
sectors such as the National Congress, business, the Catholic 
church, civil society, public opinion leaders, and 
functionaries and employees of the government with achieving 
numerous goals in the first 100 days of his administration. 
 
The bulk of his speech focused on the economic situation of 
the Dominican Republic. He stated that the economy had 
greatly improved since he took office on August 16. Fernandez 
emphasized his point by quoting a Miami Herald article that 
said the "economy of the Dominican Republic is showing signs 
of improvement since Leonel Fernandez assumed the 
presidency." He went on to list the many achievements of his 
administration: 
 
Economy 
- - The confidence of economic agents has been recouped 
causing a spectacular fall in the price of the dollar from 
$42.21 to $29.63 or 12.58RD meaning that the value of the 
peso against the dollar has increased 30% 
 
- - The goal of the current administration is to stabilize 
the peso at a rate that will preserve the DR external 
competitiveness while allowing the poor to afford basic 
necessities 
 
- - Currency stabilization will be achieved through a prudent 
monetary and fiscal policy. The austerity programs that the 
government has initiated will guarantee the macroeconomic 
stability that has been achieved in the last 100 days over 
the remainder of the Fernandez administration 
 
- - The administration has adopted a comprehensive strategy 
to resolve the quasi fiscal deficit of the Central Bank which 
includes inverting the yield curve of the debt while applying 
new long term methods of creating positive yield. 
 
- - The administration has reduced the interest rate by half 
of the Central Bank certificates, from 59.61% to 24.46% 
 
- - In September a deflation of 1.13% occurred. The Central 
Bank reports that inflation for the month of November is 
expected to be )0.68%. 
 
- - The noticeable control of prices has caused international 
organization to revise their inflation estimates for 2004 
from 45% to 33% 
 
- - The Dominican Merchants Federation (FDC) reported that 
more than 2500 products have dropped in price including rice, 
beans, chicken, beef, pork, cod fish, plantain, eggs, bread, 
yucca, local yams, oil, and powdered milk 
 
- - The fall in prices translates to an increase in real 
salary, with the same amount of money a consumer can now buy 
more goods 
 
- -The government has initiated a new program &Eating is 
Fundamentalt8 (Comer es Primero) which will help families in 
extreme poverty by giving them a monthly allowance of   550 
pesos (USD 18.50)  worth of food. Recipients must agree to 
various conditions, such as ensuring that children attend 
school. Social Services (Gabinete Social), overseen by 
Vice-President Albuquerque has initiated a census of the 
country, to be carried out by private contractors, which will 
identify the 200,000 poorest families which will participate 
in the program. 
 
- -The reserves of the Central Bank have increased from a 
deficit of US$13.1 million to a surplus of US$176 million, 
allowing the country to live up to its short term 
international financial responsibilities. 
 
- - The Gross Domestic Product will have grown by 1.8% by the 
end of the year, in contrast to the IMF,s initial estimate 
of a 1% loss. This increase is due to the 3.6% growth that 
the country experienced in the last 100 days. 
 
- -The government will work to sustain the economic recovery 
and to create a new agreement with the IMF. To reach an 
agreement the government has initiated tax reforms beginning 
October 1 which include  the increase in the rate of VAT 
(ITBIS) from 12% to 16%, an increase in a luxury tax 
affecting alcohol and tobacco, inflation adjustments on the 
tax on gasoline, and reassessment the beneficiaries of gas 
and electricity subsidies 
- -   The government will also take on the following goals as 
part of an IMF agreement 
- - reform public financial institutions to improve the 
design and application of fiscal policies 
- - strengthen the Central Bank and the Superintendent of 
Banks with the goal of improving the application of monetary 
policy and the financial system 
- -improve the efficiency of the electric sector and assure 
its financial viability 
 
- - The government has entered into negotiations with the 
Paris Club with the goal of confirming the agreement started 
in April of 2004 to reprogram US$193 million of debt payment. 
 
- - New investments have been started in the tourism 
industry, the free trade zones, and in new infrastructure 
projects. 
 
- -The government has resolved the problem of liquid gas 
(cooking gas) supply shortage. The subsidy program for 
cooking gas has gained transparency and been limited in its 
scope resulting in a savings of RD$600 million for the 
government. 
 
Agriculture 
 
- - The government is concentrating on three areas of the 
farming and livestock sector: strengthening national 
production by increasing the selection to consumers while 
raising the quality and lowering the price of goods, 
rehabilitation of farming and livestock after hurricane 
Jeanne, and carrying out construction projects to repair 
damaged road and bridges. 
 
Health 
 
- - In an effort to rebuild the ailing health care sector, 
the government has purchased ambulances, repaired electrical 
generators, and created a program of inter-institutional 
technical assistance. 
 
Environment 
 
-- During the first 100 days the government planted 1,700,000 
trees, started to formulate policies regarding protected land 
and biodiversity with technical assistance from Germany. The 
Secretary of the Environment has ordered that the rock-ash be 
 
SIPDIS 
removed from the country 
 
Education 
 
- - New projects for renovating the country,s education 
system have been initiated which include technology centers 
in primary and secondary schools, a financing program for 
teachers to buy computers, development of a national 
education software, a program to train teachers in 
information technology, the creation of an education website 
and the development of a national bilingual education system 
encompassing pre-Kindergarten through high school. 
 
- - 4,400,000 text books have been distributed to elementary 
students, 50,000 backpacks with school supplies have been 
distributed to poor students, 20,000 desks have been 
distributed to schools around the country 
 
President Fernandez said  he recognizes that there are still 
many challenges ahead including strengthening legal 
institutions, fighting corruption, creating mechanism by 
which the law of civil service and administrative career can 
be applied to avoid the anarchy that occurs every four years 
when the entire government changes, and rehabilitating the 
diplomatic school. He concluded by saying that the two 
greatest threats to the future of the Dominican Republic were 
the electricity crisis and crime. He stated that the 
government has paid 3 billion pesos to address the collapse 
of the electric sector and that a strategy to resolve the 
problem is being developed in conjunction with the World 
Bank.  He made strong statements about his tough position on 
violence ("a tough hand against crime"), drug trafficking, 
and organized crime, although he gave no concrete examples of 
how this position would be enforced. 
 
2.  (U) Drafted by Michael Meigs, Tawnie McNeil. 
 
3. (U)  This piece and others in our series can be consulted 
at our SIPRNET site 
http://www.state.sgov.gov/p/wha/santodomingo/  
along with extensive other material. 
 
 
 
HERTELL