US embassy cable - 05SANTODOMINGO556

C O N F I D E N T I A L SECTION 01 OF 04 SANTO DOMINGO 000556 
 
SIPDIS 
 
STATE FOR WHA, WHA/CAR, WHA/EPSC, INL; 
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: DECL: 01/18/2015 
TAGS: PGOV, EFIN, BEXP, ENRG, PREL, DR 
SUBJECT: DOMINICAN PRESIDENT OUTLINES TO DAS SHAPIRO 
INTENTIONS ON HAITI, VENEZUELA, AND ECONOMIC PROGRAM 
 
Classified By: DAS Charles Shapiro.  Reason: 1.4 (b) and (d). 
 
1. (SBU)  Summary.  Dominican President Leonel Fernandez 
spoke at length with visiting Deputy Assistant Secretary 
Charles Shapiro on January 14 on Dominican concerns about 
Haiti, Haitian reconstruction, and cross-border security 
issues.  Fernandez and his administration will engage closely 
with the Haitian provisional government. DAS Shapiro 
emphasized U.S. interest in completing ratification of the 
free trade agreement with Central America and the Dominican 
Republic and USG appreciation for cooperation in law 
enforcement.   Fernandez is optimistic about Dominican 
economic prospects.  End summary. 
 
Foreign Minister: Dominicans are Engaging with Haiti 
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2.  (SBU) Before WHA Deputy Assistant Secretary Shapiro and 
the Ambassador called on Dominican President Fernandez on 
January 14, Foreign Minister Carlos Morales Troncoso met them 
privately for an overview of bilateral relations.  He 
mentioned the visits to the palace that day of UN Senior 
Representative of the Secretary General (SRSG) for Haiti Juan 
Gabriel Valdes and several newly accredited ambassadors (from 
Germany, Qatar and Russia).  Morales Troncoso and his Haitian 
counterpart will exchange visits in February and March, 
probably as a preliminary for a possible state visit by 
Fernandez to Port-au-Prince in May.  The Foreign Minister 
said that during his January 11 visit to the UN he had 
convened Dominican consuls general from Boston, Philadelphia 
and New York to emphasize to them the requirement to  adhere 
to proper diplomatic procedure. 
 
Venezuela - Chavez's "Obsolete" Politics 
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3.  (C) President Fernandez welcomed Shapiro for a 
conversation that lasted more than an hour.  Fernandez 
immediately raised Venezuela, commenting that Hugo Chavez is 
pursuing "obsolete" policies, such as  redistribution of land 
 - - with high symbolism for Venezuela -- but otherwise 
completely out of step with the times, especially in a 
country like Venezuela where agriculture is a minor portion 
of GDP.  Shapiro agreed, stressing that the United States has 
tried to establish a normal relationship with Venezuela but 
without success.  "Power is a fragile thing," commented 
Fernandez.  He pointed to the danger of the unexpected, such 
as the September 11 attacks or the devastating tsunami in 
Asia. 
 
U.S. Priorities 
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4. (C) Shapiro recapped his contacts in his 24-hour visit and 
mentioned that the previous night he had replied to Dominican 
interlocutors that the current U.S. priorities for the 
bilateral relationship are "CAFTA, CAFTA and CAFTA." 
Fernandez agreed but said that the general theme of security 
is equally vital.  Fernandez says he is trying to make the 
Dominican economy grow in synch with that of the U.S., with 
special emphasis on Puerto Rico, south Florida, New York, and 
the high-tech industries of central Florida.  Shapiro said 
this would be a good advice for Fernandez to give Chavez. 
Fernandez  said he had already shared his views with Chavez, 
but Chavez was not interested. 
 
Haiti 
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5. (C) The visit of UN SRSG Juan Gabriel Valdes that day had 
gone very well, Fernandez commented, "and we can work 
together.  We see several key points.  We all want a 
government in Haiti with legitimacy derived from elections, 
and the provisional government must organize things to 
fulfill that requirement." Disarmament and violence " of all 
sides" is important.  More than that, security must be 
re-established for all Haitians.  Reconstructing police and 
security forces would also help fight the growing narcotics 
traffic.  Fernandez sees the Mexican Federal Elections 
Institute as very capable and welcomes their offer of 
assistance to Haiti, and Morales Tronocoso emphasized the 
need to motivate Haitians to participate in the elections. 
Fernandez wants to examine the political situation more 
closely, eventually with a visit to Port au Prince, in order 
to know better any potential Haitian leadership.  "Disorder 
or collapse in Haiti directly affect us here," he said, 
citing health issues, including the malaria outbreak in 
eastern Dominican Republic that had led to cancellations of 
tourist charters from Canada and Europe. 
6.  (C) The President said he had read proposals from a 
Harvard professor who had worked with community groups in 
Haiti to fight HIV/AIDS; DAS Shapiro replied that the USAID 
program of $40 million dedicated to fight HIV/AIDS was 
obtaining good results from a similar approach, and he 
briefly reviewed other pledges of assistance.  Fernandez said 
that economic reconstruction for Haiti and cross-border 
security are the Dominicans' primary initial concerns. 
"People need jobs," Fernandez replied, and Foreign Minister 
Morales mentioned the prospect of Dominican investment in 
Haiti.  The Ambassador offered the example of Dominican 
garment producers "Grupo M," their cross-border contracting 
of garment assembly and their requests for better security. 
DAS Shapiro said that with MINUSTAH troops now totaling more 
than 6,000, the security situation had improved markedly 
since mid-December. 
 
Economic Development for Both Sides of Hispaniola 
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7. (C) "Our commercial strategy includes Haiti," Fernandez 
said.  The Dominican aim is to move domestic production into 
activities involving higher technology and greater 
value-added, while turning to Haiti for labor-intensive 
factory work.  "The Dominican Republic has gotten out of this 
rhythm recently, with the acceleration of technology." 
Fernandez foresees biotechnology and targeted agribusiness as 
promising prospects.  The administration is working in these 
areas with firms in Miami and Palm Beach, seeking to 
establish joint ventures.  Educational ventures with Florida 
International University and Miami-Dade Community College 
will help provide the emerging technologies needed for the 
Americas.  "All we need is to establish the first successful 
firm," Fernandez commented, "and then development in this 
area will get started." He hopes to attract young, 
U.S.-educated Dominicans back to the country to make this a 
reality.  A task force with New York is part of this vision. 
"In 10 years, through the multiplier of CAFTA, the Dominican 
Republic will be a growth leader for the region."  He is 
looking for USG help, he said, and particularly for U.S. 
officials to be present for meetings with the U.S. private 
sector, to motivate the process.  Outsourcing production of 
Spanish language computer programs to the Dominican Republic 
will be of mutual advantage. 
 
8. (SBU) Fernandez recalled his October visit to Miami, when 
his lunch with the private sector, initially expected to 
include 40 persons, had expanded to 400 attendees.  A recent 
offering of townhouses in La Romana at Altos de Chavon had 
been 40 percent sold immediately, he said, "many of them to 
some of the same persons who attended that lunch." 
 
9. (SBU) The President said that Dominican love of baseball 
offers opportunities for branding the country,s tourism 
offerings and for providing off-season baseball activities. 
The administration is looking to attract U.S. major league 
teams later in 2005 for games to be carried by sports network 
ESPN in the United States.  Theme parks and baseball clinics 
could reinforce this effort.  In similar fashion, the 
administration is seeking to establish a film festival in La 
Romana at Casa de Campo and Dominican promoters have already 
been in contact with George Hamilton, Al Pacino, Steven 
Spielberg and Barry Diller. 
 
Economic Prosperity and the Rule of Law 
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10. (C) "Effective law enforcement and cooperation are 
positive factors for investment," DAS Shapiro pointed out, 
briefly describing his positive impression of Attorney 
General Dominguez Brito and other legal professionals the 
Ambassador had hosted that day at lunch.  DAS Shapiro thanked 
Fernandez for the determination and clarity of the 
administration,s support for bilateral legal cooperation. 
 
11. (C) Fernandez cited the current Paulino Castillo cocaine 
case, in which the Attorney General had just endorsed the 
U.S. request for extradition.  "This traffic and the 
organizations behind it have been developing over the last 
decade; I talked during the campaign and before about this 
issue, to the surprise of many of my university friends." 
Fernandez spoke with concern of narco success in buying 
support from naive poor populations.  He cited the funeral 
the previous week of an assassinated Santo Domingo drug 
dealer, in which most of the neighborhood had turned out, 
carrying the coffin draped with the Dominican flag through 
the public streets.  "Yes, that is a major challenge to us - 
- but do not question our determination to address it, no 
matter who turns out to be involved..  Anyone complicit with 
narcotics trafficking will be prosecuted." 
 
Choice of an OAS Secretary General 
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12. (C) The Ambassador asked about the visit earlier in the 
week of Francisco Flores, candidate for OAS Secretary 
general.  "We support Flores, in principle," Fernandez 
replied, "and our position is that there should be a 
consensus candidate from Central America."   Fernandez said 
Dominican support for Flores is related to the free trade 
agreement; the Dominican Republic sees itself as part of 
Central America.  The fact that the Central Americans have 
not reached that consensus gives the Flores candidacy a 
certain fragility, and Flores has lost momentum.  Insulza of 
Chile is appearing increasingly vigorous as an alternative to 
Flores.  Fernandez commented that he does not see the 
candidacy of Derbez of Mexico as realistic, but rather as a 
tactic convenient for domestic Mexican politics, in other 
words, a way to ensure Derbez does not run for President. 
Fernandez does not foresee a Caribbean candidate, because the 
Caribbeans are aiming at a Deputy Secretary General position 
eventually. 
 
13. (C) Fernandez inquired about prospects for changes at the 
Department of State with the confirmation of 
Secretary-designate Condoleeza Rice.  DAS Shapiro pointed to 
 
SIPDIS 
the designation of USTR Amb Zoellick as an indication that 
the President is determined to press the international trade 
agenda.  "You can expect the administration to bring CAFTA 
into being," he said - - to which Foreign Minister Morales, a 
veteran of the sugar sector, replied, "Which will cause some 
economic damage here."   Fernandez reminded DAS Shapiro that 
the Dominican Congress is dominated by the opposition and 
said that ratification by the Dominican Senate is no sure 
thing.  The DCM told the President that Commerce Minister 
Javier Garcia had made an eloquent extemporary presentation 
during DAS Shapiro,s arrival dinner, vividly describing the 
inevitability of globalization and the opportunities that 
CAFTA would bring. 
 
14.  (SBU) The Dominican economy has recovered faster than 
expected, Fernandez noted, turning around so quickly that it 
posted 2 percent growth for 2004 instead of contracting; he 
expects that growth in 2005 could approach 4 percent. 
Inflation for 2004 was nearer to 25 percent than the expected 
42 percent, and in December prices had fallen, 
month-on-month.  The peso has appreciated. 
 
15.  (C) The electricity sector is a continuing concern, he 
commented.  He added that he is still interested in bringing 
in coal-fired plants currently available in Texas, as a way 
of increasing competition and strengthening the 
administration,s hand in negotiations with existing 
generating firms.  The administration is interested in 
renewable sources of energy, including wind and solar power; 
Foreign Minister Morales added to that list of potential 
sources the production of energy from burning biomass from 
the sugar sector. 
 
16. (C) Fernandez briefly described the energy agreement with 
Venezuela and affirmed, in response to Shapiro,s question, 
that there had been "no political price to pay." Venezuelans 
were offering to invest in refinery capacity and other 
initiatives, such as Chavez,s idea of a regional petroleum 
firm ("Petrocaribe").  Fernandez expressed interest in 
exploring EXIMBANK financing for U.S. exports of fuel, 
particularly cooking gas. 
 
17.  (SBU) After mentioning that day,s accreditation 
ceremonies for new ambassadors, Fernandez noted that Qatar 
previously had relations in the hemisphere only with Havana 
and Caracas. 
 
18.  (U)  This message was cleared by Deputy Assistant 
Secretary Shapiro. 
 
SIPDIS 
 
19. (U) This piece and other reporting from Embassy Santo 
Domingo can be consulted at our SIPRNET site 
http://www.state.sgov.gov/p/wha/santodomingo< /a> 
along with extensive other material. 
 
 
HERTELL