US embassy cable - 05SANTODOMINGO2576

C O N F I D E N T I A L SECTION 01 OF 03 SANTO DOMINGO 002576 
 
SIPDIS 
 
NSC FOR SHANNON; DEPT FOR S/S, WHA, WHA/CAR, EB, 
EB/TPP/BTA/EWH; TREASURY FOR DO:N LEE, R TOLOUI, L CARTER; 
SECDEF FOR OSD; SOUTHCOM ALSO FOR POLAD 
 
E.O. 12958: DECL: 05/05/2015 
TAGS: PREL, OVIP, ETRD, DR 
SUBJECT: POLICY POINTS; WASHINGTON VISIT OF DOMINICAN 
PRESIDENT LEONEL FERNANDEZ, MAY 11-12 
 
 
Classified By: Ambassador Hans H. Hertell.  Reason: 1.4 (b) and (d) 
 
1. (C)  Dominican President Leonel Fernandez travels May 
11-12 to Washington for the first time since his August 2004 
inauguration. The USG and regional focus of the event is the 
CAFTA free trade agreement now under consideration in the 
U.S. Congress.  For Fernandez, however,  the visit is much 
more: it is a validation of his status as the democratically 
elected leader of the Dominican Republic.  Fernandez has told 
the Ambassador repeatedly that he could not afford to go to 
Washington without calling on President Bush; if he were not 
received by the U.S. President on his first visit, Dominican 
commentators and politicians would construe any Washington 
visit as a personal snub and a failure of his administration. 
Following is background and a suggested approach for several 
topics that could be discussed during the trip, depending on 
the final Fernandez schedule.  They include CAFTA, 
corruption, support for the Coalition, and the need for a 
national security strategy. 
 
ECONOMIC BACKGROUND 
 
2.  (C)  Fernandez and his party have articulated a 
market-friendly, socially conscious approach to domestic 
politics.  Fernandez is an eloquent advocate for 
international cooperation and multilateralism.  In the nine 
months to date of his administration his economic team has 
successfully put the country back into a standby agreement 
with the International Monetary Fund and adhered to agreed 
targets.  They openly favor the CAFTA free trade agreement 
and in December secured the repeal of a CAFTA-unfriendly 
protectionist tax.  The CAFTA is under consideration in the 
Dominican Senate; powerful domestic business interests, 
especially from the sugar industry, are seeking significant 
fiscal concessions as a price for non-opposition to the 
agreement.  At the same time, the Dominican letter of 
agreement with the IMF specifies that the government will put 
forward proposals for fundamental tax reform this year to 
offset significant revenue losses that will occur pursuant 
CAFTA and WTO commitments to ending many levies on imported 
goods.  Dominican legislators would prefer to wait until 
after the mid-2006 congressional elections to consider fiscal 
reform. 
 
ACTIVE ENGAGEMENT IN CAFTA RATIFICATION 
- - - - - - - - - - - - - - - - 
 
3.  (C) President Fernandez is eloquent in public 
pronouncements about globalization and free trade, and he has 
endorsed CAFTA in general terms. He has not engaged 
legislators or business interests personally on the subject 
or sought to broker a practical agreement that would end the 
debate about ratification. His passivity is of great concern, 
for influential business interests assert that lawmakers must 
grant them extensive tax concession BEFORE ratifying CAFTA. 
The Dominican Senate is controlled by the opposition PRD. 
Congressional elections for all seats in both houses are 
scheduled for May 2006. 
 
CAFTA APPROACH: 
 
- - The Dominican people and legislature need their President 
to engage actively in the CAFTA ratification process. 
 
- -  You have spoken eloquently about globalization and free 
trade.  With your 57 percent mandate in the presidential 
election, you have the moral authority to pursue passage of 
CAFTA. 
 
- - The obligations of CAFTA require a major tax reform, a 
fact your government acknowledged in negotiations with the 
IMF.  You personally and your team need to engage now to 
articulate these reforms and pursue them. 
 
CORRUPTION 
- - - - - 
 
4.  (C)  Fernandez says he is deeply concerned by levels of 
corruption in the country.  The Dominican public and press 
are discussing the corruption revealed over the last two 
years, including, most prominently, the "Baninter" bank fraud 
and related embezzlements at Bancredito and Banco Mercantil 
that collectively cost 20 percent of GDP in 2003; narcotics 
trafficking and payoffs; government procurement scandals 
affecting the previous administration and both of Fernandez's 
administrations. Fernandez has appointed men of integrity to 
key law enforcement positions. USAID is providing him help to 
mount an anti-corruption/ethics in government mechanism and 
campaign.  On May 2, responding to the urgings of the U.S. 
ambassador, President Fernandez he belatedly and without 
comment relieved his intelligence chief and two other senior 
officers known to be corrupt.  The government is preparing 
several pieces of legislation to assure greater transparency 
and to prevent opporunities for corruption. 
 
CORRUPTION APPROACH: 
 
- - We greatly admire your Attorney General Francisco 
Dominguez Brito and several other key law enforcement 
officials in your administration. 
 
- - The USG will continue to support you in your stand 
against corruption. 
 
- - CAFTA and new Dominican legislation will provide stronger 
safeguards. 
 
- - The public must see your government act strongly and 
impartially against those suspected of fraud and corruption. 
 
 
SUPPORT FOR IRAQ 
- - - - - - - - 
 
5. (C) Fernandez did not criticize his predecessor's dispatch 
of a 300-soldier batallion to Iraq and never commented 
publicly on Operation Iraqi Freedom.  The Dominican Armed 
Forces Minister, acting on his understanding that he has 
authorization from the President, is in the process of 
selecting a limited number of Dominican staff officers, 
perhaps 15-20, for duty with the U.S. Central Command and in 
the Iraq area of operations.  The Dominican government has 
not formally notified the United States of this decision and 
it has not been publicized.  Selection and testing is under 
way; first deployments could occur in June. 
 
APPROACH ON IRAQ SUPPORT: 
 
- -  I understand that you have given your Armed Forces 
Minister authorization to select a number of staff officers 
to support the coalition efforts to protect and rebuild Iraq. 
 
 
- -  The Iraqi people and authorities will appreciate this 
support.  So do we. 
 
- -  We appreciate the quality of Dominican military 
professionals; this will further qualify those officers to 
participate in multilateral operations with the UN or the 
Organization of American States. 
 
 
NATIONAL SECURITY STRATEGY 
- - - - - - - - - - - - - 
 
6. (C).  President Fernandez has expressed great interest in 
drawing up a national security strategy. Senior military 
officers have not begun this work in earnest, devoting their 
attention instead to a "White Paper" on the military instead, 
 and have not been receptive to Fernandez's military advisor. 
 The U.S. Embassy's Military Advisory and Assistance Group 
can assist in drawing up a national strategy. 
 
SECURITY STRATEGY APPROACH: 
 
- -  The President bears the responsibility for defining the 
National Security Strategy of a nation, giving guidelines to 
the government and armed forces. 
 
- -  I encourage you to take a direct interest in this work, 
to constitute a working group headed by your personal 
representatives with a mandate from you, and to insist on a 
concerted effort. 
 
- -  A clear vision of security threats, requirements, and 
resources is vital to assuming your responsibilities toward 
your own population and toward the community of nations. 
 
HERTELL