US embassy cable - 05SANTODOMINGO1146

UNCLAS SECTION 01 OF 02 SANTO DOMINGO 001146 
 
SIPDIS 
 
SENSITIVE 
 
STATE FOR WHA, WHA/CAR, WHA/EPSC, WHA/USOAS, EB/TPP/BTA, 
EB/IFD/OMA; NSC FOR SHANNON AND 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: N/A 
TAGS: PGOV, EFIN, ETRD, PREL, DR 
SUBJECT: DOMINICAN POLITICS #13: PRESIDENT FERNANDEZ AND 
HIS NATIONAL DAY SPEECH 
 
1. (SBU) This is #13 in our current series on politics in the 
Dominican Republic: 
 
Leonel Fernandez and the February 27 National Day Speech 
- - - - - - - - - -  - - - - - - - - - - - 
 
Leonel Fernandez was addressing the nation live, on national 
television on a Sunday morning amid pageantry at the newly 
redecorated Senate chamber.   The speech lasted one hour and 
8 minutes.  He received polite applause 14 times but the only 
enthusiastic, standing ovation came toward the end when he 
vowed to take measures to fight crime. 
 
We have been told that Leonel Fernandez writes his own 
speeches, and this text bears that out. 
 
He demonstrated his familiar fluent erudition, discoursing 
for almost half of the speech on "economic indicators" (the 
quotes around the term appear in the text).  He quoted twice 
from the bond market newsletter of Bear Stearns, twice from 
U.S. professor Jeremy Rifkin on the "digital divide" and once 
from Keynes on the difficulty of overcoming "old ideas." 
 
The central message was unmistakably aimed at the capital 
markets, investors and the sophisticated private sector -- so 
much so that Fernandez half apologized for it:  "I realize 
that these are very complicated technical terms, difficult 
for most people to understand, but since they are so vital 
for the proper conduct of our economy, the Dominican people 
need to listen to them and to understand the immense effort 
underway in the government to overcome our national problems." 
 
One very clear point in that regard: Fernandez and his team 
are determined to keep monetary policy tight so as to 
maintain the Dominican peso at its current overvalued 
exchange rate. Fernandez simply denied that the peso is too 
expensive: "Although some see the problem of manufacturing as 
a loss of competitiveness due to peso appreciation, the truth 
is that the phenomenon is much more complex.  For this 
administration, there is no dilemma of choosing between 
competitiveness and an equilibrium rate of exchange.  Both 
are dynamic concepts."     That leaves no prospect of 
exchange rate relief for the country,s two leading sectors - 
- apparel manufacturing for export and tourism. 
 
His endorsement of the "free trade agreement with the United 
States" was a bloodless one offered in the context of a 
discussion of the mechanisms of adjustment to the pressures 
of globalization. 
 
He said not a word about foreign affairs- -) about Haiti, 
for example, or about international narcotics trafficking. 
There was no mention of the Dominican military. 
 
Though he spoke about making government work better, he did 
not speak about corruption (in contrast to his inaugural 
address, when he maintained that there would be "no clean 
slates" for those who engaged in corruption).  Only in his 
list of measures for improving the police force was there a 
passing reference, in the promise of an effective Internal 
Affairs Division to investigate police malfeasance. 
 
Fernandez did not discuss domestic politics and in fact did 
not link the financial and economic crisis with any 
individual or group.  The ability of his administration and 
party to govern is a concern of many. In the days immediately 
before the speech, the opposition-dominated Senate had 
suspended all action on special session legislation required 
for the IMF agreement.  As a price for agreeing to resume, 
the senators demanded successfully that the administration 
reverse politically connected firings of government 
employees.  In the opening address of the National Day 
session Senate President Andres Bautista reproached the 
administration directly on that issue. 
 
Fernandez,s most vivid images came from the opening 
portrayal of the Dominican Republic as a dangerously ill 
patient, just released from the emergency room but still in 
guarded condition - - and recovering, thanks to the 
"tourniquet" applied by the administration to its nearly 
lifeless body. 
 
Those images stood in strong contrast to his peroration in 
favor of the Metro project, a huge and potentially costly 
undertaking prepared in obscurity over the past six months. 
Fernandez acknowledged that the debate was still underway 
("and I value all opinions") and proposed a comparison to 
FDR,s New Deal and to France,s decision to construct the 
Eiffel Tower.  It was a weak argument.  Neither is apt for 
the deliberately underestimated, technically questionable 
project.  Dominican engineer Hamlet Hermann offered El Caribe 
a better comparison the next day: Balaguer,s Columbus 
Lighthouse, the huge, useless and costly white elephant built 
in 1992.  Dominicans remember that project well; Hermann 
didn,t need to mention the mismanagement, malfeasance and 
corruption involved with that project. 
 
 
2. (U) Drafted by Michael Meigs. 
 
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. 
MARSHALL