Vice-President Milagros Ortiz Bosch, currently standing in as President while Hipolito Mejia is abroad, emitted a presidential decree to exonerate the duties owed for the 25,000 school desks being held in the Port of Haina. This marks the 37th time Ortiz Bosch has held the title of "acting" President. The desks had been imported for public schools, but customs was holding them back, demanding import taxes and other charges. El Caribe newspaper editorial says that the exoneration of school furniture should be the norm, not the exception. When asked about her job and the possibility of a woman occupying the Presidency for a full term, Ortiz Bosch said that President Mejia is a boss, but she would be a statesperson. Ortiz Bosch took a leave of absence from her job as Minister of Education to actively campaign for the PRD presidential candidacy in the 2004 May election.
President Mejia met with Spanish head of government Jose Maria Aznar, where he signed an agreement to ease the exchange of judicial information in civil and commercial cases, and another to allow the husbands, wives and children of diplomatic personnel to hold jobs in the local labor market. Another agreement dealing with double taxation is also at the "understanding" stage. Aznar commented that the migratory agreement was working "stupendously". Yesterday, the Dominican government announced an accord for the transfer of the use of the erstwhile governmental Telecommunications building on Isabel la Catolica Street in the Colonial City to the government of Spain. The building will reportedly be employed as the base for a Spanish center to promote Iberian culture throughout the Caribbean and Latin America.
During a press conference on the occasion of President Hipolito Mejia's visit to Spain, the Spanish head of government said he "would have preferred for things to have worked out differently with Union Fenosa" in the Dominican Republic. Aznar did not, however, go into further detail. Speaking in the presence of President Mejia, Aznar told the Spanish press: "What is important now is that the commitments that have been reached be respected and met." Referring to the comment, Hoy newspaper's page-two commentator points out that on the contrary, the DR offers extensive guarantees for foreign investment. "What happens, nevertheless, is that the so-called investors are treated gingerly, not even to be touched with the petal of a flower," he writes. The commentator adds that in the name of supposed judicial security or adherence to the law, the most villainous contracts can be signed, apt to throw any state into disarray. He recalls the cases of Hydro-Quebec, Smith & Enron, Rosario, Falconbridge, American Can and many more that have been very costly to Dominican taxpayers while lacking in business ethics.
Mario Mendez, the economic editor for Hoy newspaper, wants to know how the government will pay for the Union Fenosa deal. He says that the total payments amount to US$697 million over a 12-year period, adding US$58.1 million more to the debts that the Dominican government has contracted with the Spanish company. The debt payment is to be guaranteed by the accounts of the better-paying clients of Edenorte and Edesur, which account for 115% of the debt. When asked about what this means for the distributors, now to be operated by the government, Jose Luis Moreno San Juan said that these accounts add up to 45% of the total income of the distributors. According to Moreno San Juan, the income of both the distributors is about US$130 million a month and that of this sum, almost US$60 million will be needed to pay the debt incurred with Union Fenosa.
The Young Entrepreneurs Association (ANJE) released a statement carried in Hoy that says the buyback of the Union Fenosa shares must be done legally. The contract is due to be signed 30 September. According to ANJE, the deal violates the Law for the Reform of Public Enterprises (Law 141-97), as it returns full ownership and operation of the power distributors Edenorte and Edesur to the government. Law 141-97 establishes an obligatory co-ownership of the businesses and operations, making the participation of private investors mandatory. ANJE says that it is all well and good that an agreement has been reached, but it must abide the law and produce plausible benefits for the country. ANJE also wants the findings of the recent external audit to be made public and the personnel responsible for the problems to be identified. Finally, they want to know why a direct sale to another outside group was not carried out, which would have prevented the need for the costly financing.
Hoy newspaper's editorialist says that while it should not come as a surprise that a foreign company in financial difficulty should decide to sell its properties or shares, everyone should take note of the government's haste to purchase these dropped assets under present conditions: in its last year of government, with a re-election race on at full force and weakened public finances. The writer says that when the past government chose to capitalize the electric service, this should have been the beginning of the end of the power calamities that have inundated the country. With surprise, today we have more generation capacity than is demanded, more efficient plants, but the operational structure is not in harmony. The writer says that deficiencies in distribution or failures of circuits can be traced back to a lack of generation due to lack of money to pay for fuel because the distributors are not paying the generators, or because users are not paying the distributors. The newspaper also points out that the present government is selling the idea that it believes in the solution of the buyback of the Union Fenosa shares in Edenorte and Edesur. "The country would like to believe, although it is having a hard time doing so, that such a complex problem as those that periodically affect the power market could have such an easy and swift solution such as that which the government has pulled from its sleeve." The writer asks whether this is a solution or a very costly panacea.
El Caribe's reporter Mercedes Gonzalez questions the need for a US$500-million credit line from Mexico and Venezuela in order for the state to lower the electricity rates. Former state utility manager, Radhames Segura, a member of the PLD opposition party, was interviewed by the reporter. According to Segura, the two distributors invoice RD$1.5 billion a month, but monthly cash flow is RD$1.1 billion, generating a RD$400-million shortfall. To this sum, the government must add the RD$140 million they must pay UF every month. Segura says that the government does not have the capacity to make these payments and that the deal for a US$500-million line of credit would allow the government to pay for the energy at a rate of just RD$0.03 a kilowatt, passing the high cost of power generation for the future. Presidential elections are slated for May 2004.
President Hipolito Mejia told Spanish reporters that the 300 Dominican troops in Iraq are there because of a United Nations resolution and that he would not increase their numbers. Press commentators in Santo Domingo, however, questioned which UN resolution Mejia was referring to. The Dominican troops are part of the Plus Ultra force under the command of the Spanish military, which is handling the troops from the DR as well as those from Nicaragua, El Salvador and Honduras. The soldiers have been assigned to security patrols and reconstruction work. Mejia told the reporters that the 300 troops was his final quota. "As soon as they finish their service, I will bring them home, but I have no intention of increasing their numbers," said Mejia. Minister of Armed Forces Jose Miguel Soto Jimenez recently had said the troops stationed in Iraq would be replaced by new soldiers after six months. Press reports have indicated that Soto Jimenez would travel to Iraq to motivate the troops.
Florida Governor Jeb Bush, in Santo Domingo with a mission of Florida businessmen, to attend the opening of Expo USA 2003 warned that any country that increases taxes, regulations and obstacles to the private sector runs the risk that businessmen may pick up their investments and go where they are not being penalized, as reported in Hoy newspaper. He highlighted that taxes have been reduced in Florida.
Although separated by the Atlantic, Florida Governor Jeb Bush, National Council of Business president Elena Viyella and Jose Luis (Pepin) Corripio all defended the Dominican Republic as a good place to invest money. US President George W. Bush's younger brother said that even though there are no risk-free guarantees, the economic policies of the DR reflect a determination to improve, which has in turn attracted millions of dollars in investments. The younger Bush brother said that the United States is doing what it can to establish duty-free commercial relations with those countries it recognizes as being important. Meanwhile, in Madrid, Spain, a meeting of the Spanish Confederation of Business Organizations was held, at which both Elena Viyella and Jose Luis Corripio spoke out in favor of investments in the DR. They pointed out that in spite of the occasional situations that might appear calamitous, such as the Baninter fiasco or the Edes situation, these do not affect the investment climate in the DR. Corripio pointed out that Spanish investment in the DR dates back more than a century, and told of how he arrived there with eight cents in his pocket, but today he and his family have made their fortunes investing in different areas of the economy. The head of the Business Group of Spain, Jose Maria Cuevas, pointed out that the overall investment of Spanish businesses in the DR surpasses the US$3-billion mark.
Economist Pedro Silverio, writing for El Caribe, identifies four factors that he says have played havoc in the exchange markets recently. Highlighting that currency markets are subject to both objective and subjective criteria, Silverio says that the government has not been able to take advantage of the breaks the signing of the IMF accords should have afforded the market. He says that as the closure of the IMF arrangement approached, the exchange rate fell to less than RD$27 to US$1, but has since regained the former levels in the range of RD$30 to US$1. The first factor to consider, says the economist, is the government's treatment of the conflict with the power distributors. The second was the cancellation of the auction of the US$25 million in CDs by the Central Bank. The third was the Senate's approval of a bill that would restrict free convertibility of hard currency, and the final factor was the declaration by the army's chief of staff that he was in favor of presidential re-election - a violation of the basic code of the Armed Forces.
El Caribe newspaper reports that free zone apparel exports to the United States are up 4.2% in the first half of the year, compared to the same period last year. Apparel sales were US$1.04 billion, compared to US$995 million last year.
Attorney General Victor Cespedes Martinez ordered the release of Baninter vice-president, Vivian Lubrano de Castillo, who was being detained as one of those accused by the government of embezzlement and asset laundering. After initially keeping time at the Palacio de Ciudad Nueva jail, she requested and was allowed to be hospitalized, although still under arrest. Lubrano was returned to the Palacio de Ciudad Nueva jail after several weeks in the Centro de Otorrinolaringologia. When she was transferred next to the Najayo jail, along with former bank president, Ramon Baez Figueroa and his cousin, fellow bank officer, Marcos Cocco Baez, she suffered new ailments and was taken to the Plaza de la Salud and from there to the Centro de Medicina Avanzada under the care of Dr. Abel Gonzalez. The Attorney General ruling now remands her to house arrest.
El Caribe newspaper reports domestic violence cases are up 44% over last year. The Department for the Protection of Boys, Girls and Teenagers of the Attorney General Office says that at this rate by year's end they could have received 20,000 cases of child abuse and domestic violence. Elisa Sanchez told El Caribe that her office only records the cases brought to her department's attention. Sanchez said that a revision of the governmental follow up procedures is necessary, as well as integral strategies and solutions, instead of the present slow judicial procedures. She estimated that for every mistreated woman, there are three to five abused children.
High school students interested in studying abroad are invited to attend the College Fair in the Carol Morgan School (CMS) Library on Thursday, 18 September from 7 to 8:30pm, and on Friday, 19 September from 9 to 11am. The event is an opportunity to learn about university-level study in the US directly from university admissions representatives. The Council of International Schools (CIS) College Tour is bringing 29 American colleges and universities to the CMS campus for the information sessions. For further details, contact Laura River (Tel. 809 947-1035) at CMS. The event is free and open to the public.
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