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Cablegate: Santo Domingo Economic-Political Roundup, October

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RUEHWN/AMEMBASSY BRIDGETOWN PRIORITY 2105
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RUEAIIA/CIA WASHINGTON DC PRIORITY
RHEFDIA/DIA WASHDC PRIORITY
RUEATRS/DEPT OF TREASURY WASHDC PRIORITY
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SIPDIS

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SIPDIS

STATE FOR WHA/CAR C WARD AND E JAFFEE

E.O. 12958: N/A
TAGS: PGOV ECON ENRG KJUS VE DR
SUBJECT: SANTO DOMINGO ECONOMIC-POLITICAL ROUNDUP, OCTOBER
5, 2007


(U) In this edition of the Roundup:

1. President Fernandez's UNGA Speech
2. Allegation that Opposition Working Against Security
Council Bid
3. The Future of the IMF Stand-By Agreement
4. Minister of Finance Visits Venezuela Seeking Increase in
PetroCaribe Quota
5. Technological Upgrade in Land Titles, Land Use Planning

1. (SBU) President Fernandez's UNGA Speech

In his September 27 speech to the UN General Assembly,
President Fernandez expressed concern over the worldwide rise
in prices of petroleum and foodstuffs, saying, "We are facing
a very dangerous situation, one which could result in our
peoples facing widespread famine and a collapse into extreme
poverty." Continuing his discussion of economic issues,
Fernandez took a swipe at his domestic opposition, the PRD
party, noting that from 2000 to 2004 (i.e. during a PRD
administration), "the national currency suffered a
devaluation of 100 percent." Fernandez also called for
reform of the UN's "Cold War" structure, stating that,
"Dominicans do not understand why, in the 21st century, the
President of the World Bank must always be an American and
the Managing Director of the IMF a European." (Note: We view
Fernandez's rhetoric as directed at the developing countries
which hold the most votes in the UN General Assembly. UNGA
members will soon choose between the Dominican Republic and
Costa Rica for a nonpermanent seat on the Security Council.
End note.)

2. (SBU) Allegation that Opposition Working Against Security
Council Bid

The newspaper "Diario (at) Diario" reported on October 4 that
the opposition PRD party was working to defeat the
Government's candidacy for a UN Security Council seat.
According to the allegations, the PRD, a member of the
Socialist International (SI), encouraged governments headed
by other SI member parties to vote for Costa Rica. The PRD's
motivation, the report alleges, was to deny President
Fernandez and his PLD party a prestigious victory prior to
the 2008 presidential election. (Note: These allegations
appeared in a small newspaper and the story has not been
confirmed. We report it because, if true, it would be
troubling that a Dominican political party would attempt to
block the achievement of an important national UN candidacy.)

3. (SBU) The Future of the IMF Stand-By Agreement

The IMF Stand-By Agreement with the Dominican Republic is
scheduled to end on January 31, 2008. The GODR has not yet
indicated whether it will seek to negotiate a new Agreement.
However, several government officials, including the Finance
Minister Vincente Bengoa, have commented in the press that
the DR does not need another IMF accord. On the other hand,
private sector organizations such as the Chamber of Commerce
of Santiago have spoken out in favor of a renewed Agreement.
Those pressing for a new IMF Agreement argue that it is the
only way to reign in government spending in the lead up to
the Presidential elections scheduled to be held in May 2008.
The local IMF Representative, Eric Offerdal, told visiting
U.S. Treasury officers that while some government officials
have privately expressed their support for a new Agreement,
they do not believe it is politically feasible to negotiate
an accord before the election. President Fernandez will make
the final decision. Offerdal said the IMF would continue to
offer technical assistance and policy advice to the GODR even
if a new Agreement is not signed. He added that he does not
expect the government to completely go off track in its
spending in the lead up to the election. However, he does
expect a dip in revenue collection and an increase in
spending similar to what was seen in advance of the 2006
congressional elections.

4.(U) Minister of Finance Visits Venezuela Seeking Increase
in PetroCaribe Quota

The Minister of Finance, Vicente Bengoa, traveled to
Venezuela on October 2 to request an increase in the
Dominican Republic's oil quota under the PetroCaribe
agreement. Upon his return from Venezuela, Bengoa stated
that the DR had restored its originally agreed to maximum
quota of 50,000 barrels per day, which is roughly 30 percent
of the country's daily consumption of oil, up from the 30,000
barrels per day it has been importing. The decision to
request the increase was motivated by the increasing price of
oil and the nation's complete dependence on imported supplies
not only for transportation purposes but also for the
majority of its electric power generation. In an important
change to the DR's PetroCaribe agreement, the reestablished
quota will include fuel-oil and diesel as well as oil
imports. Bengoa's trip comes on the heals of President
Fernandez's remarks at the UN General Assembly at which he
stated that the rise in international oil prices threatens
the Dominican Republic's prospects for development. In a
move that should diversify some of the country's reliance on
imported oil, the U.S. energy company AES Dominicana
announced plans on October 4 to build a pipeline from its
natural gas power plant outside of Santo Domingo to the
Electric Company of San Pedro de Macoris in the southeastern
part of the country. This project will convert an older,
expensive and inefficient oil-fired power plant, which was
financed by the World Bank, to natural gas and is anticipated
to reduce costs and pollution emissions once completed in
approximately 9 to 12 months.

5. (U) Technological Upgrade in Land Titles, Land Use Planning

The Supreme Court recently announced a massive upgrade to
processing of land titles using French-designed GPS
technology and fixed repeater stations. This technology
allows a single worker carrying a portable GPS unit to record
the exact delineation of plots, which is then automatically
transmitted to a central government database operated by the
judiciary's Office for Real Property. In combination with
Inter-American Development Bank-funded efforts to convert
existing paper titles into publicly accessible electronic
documents, this upgrade should speed legitimate purchases of
land, increase governmental transparency, and assist in
quieting title in cases of controversy. This technology, if
properly implemented, shows great promise for the first
serious indigenous attempts to engage in urban planning.
Military applications are also evident. (Note: In announcing
the role-out of this initiative, Supreme Court President
Subero Isa chose to repeatedly stress the "foreign
imposition" of a land title system that supplanted the
previously existing community property regime in the
Dominican Republic. While the Haitian "invaders" certainly
got their due during a lengthy examination of 19th Century
jurisprudence, U.S. interest in "protecting big sugar
interests" was repeatedly highlighted by Subero Isa as a
negative consequence of repeated military interventions in
the 20th Century during the course of the over two-hour
event.)

(U) This report and additional information can be found on
Embassy Santo Domingo's SIPRNET site,
http://www.state.sgov.gov/p/wha/santodomingo/
GOUGHNOUR

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