The Supreme Court of Justice rendered its decision on the 5% tax on exports and the 10% surcharge on imports, as introduced by Presidential decrees 727-03 and 139-03 in response to the recent economic difficulties, declaring them both unconstitutional. The controversial taxes were met with active resistance from the business community, who took the matter to court in August. In the case of the 5% tax on exports, the 16 judges ruled that such a surcharge could only be imposed and enforced by Congress and through legislation, and that its introduction by decree violated the first clause of Article 37 of the Dominican Constitution. The 10% surcharge on imports was defined as a tax and therefore required to go through all proper legislative process. Any breach of the legislative process contravenes Article 46 of the Constitution. The judges came to the conclusion that the President had no "legal capacity to impose new taxes or modify existing ones," and therefore ruled both taxes null and void. The decision is welcomed by an editorial in El Caribe, which calls it a bolster to the country's judicial stability, and that it sets important precedents for the future. "The law and the Constitution must always be followed, above and beyond all opportunistic conveniences," says the editorialist.
The government and the International Monetary Fund (IMF) have made the first revision to the stand-by agreement as a result of the repossession of Spanish private electricity company Union Fenosa by the Dominican state. The IMF asks that the government study the terms of the deal between the Dominican electricity board (CDEEE) and Union Fenosa in detail and that they offer concrete guarantees on the long-term fiscal and financial sustainability of the power sector. Some reports cited by Diario Libre indicate that this may mean a month's delay in the signing of the IMF agreement, and amounts to a renegotiation of the deal. Diario Libre also reports that the IMF has given the government 15 days to provide the specifics on where they will get the additional funds to cover the annual payments of US$48 million over 12 years to the Spanish company. The Central Bank (CB) announced yesterday that President Hipolito Mejia has appointed a committee to follow up the issue, composed of the Finance Minister, the Technical Secretary to the President's office, the director of the CDEEE, and representatives of the IMF, Inter-American Development Bank and the World Bank. According to a statement by the CB, the committee aims to have the information ready in a matter of days. They also deny that the departure of the IMF mission had any negative connotations, saying "missions enter and leave the country in the course of their work." Hoy newspaper explains that the government resumes the control over 100 electricity substations, 44 offices nationwide. At the time of the takeover, Edesur and Edenorte had a payroll of 1,700 employees and a portfolio of 750,000 clients. PLD Presidential candidate Leonel Fernandez expressed his concern at the situation. "If the government was planning a deal with Union Fenosa, it should have been within the framework of the IMF agreement," said the former President, in whose assessment of the IMF delegates' departure and the possible postponement of the lending bodies' disbursements could only cause the dollar to rise further, with serious consequences for the economy. The papers note that the peso has fallen against the dollar for the second day running, to an approximate rate of RD$34 to US$1.
The Itabo, Haina and Puerto Plata electricity generating companies are taking legal steps to oppose the government's takeover of Union Fenosa. They warn that if all the shares are transferred into government hands as part of the deal, it will seriously undermine the EDEs' economic stability. It should be noted that the distribution companies' debt of US$100 million owed to the generation companies has not been mentioned in the deal with Union Fenosa, leaving them to conclude that these unpaid sums will not be honored. The generating companies have issued a legal writ demanding that any corporate official signing the transfer agreement between Union Fenosa and the government should become personally liable for the amounts owed.
An opinion piece by Fabio R. Herrera Minino in Hoy newspaper calls the government and the power generation and distribution companies "bad guys", who seek to better their own interests without any consideration of the public suffering caused by their "business that is poorly run and even more poorly supervised." The official explanation for the epic power cuts over the last week was chalked up to technical faults (false) and fuel shortages due to non-payment (true), proving that the public is at the complete mercy of these negotiating parties and a government "greedy for re-election." There were many beneficiaries of the privatization of the power sector, but the Dominican public was not among them, continues Herrera. The return of the companies to state control is a retrograde step aimed at furthering President Hipolito Mejia's electoral ambitions, he argues. The only hope, concludes Herrera, would be for the IMF to have the courage to suspend the loans that everybody knows are destined for political ends. Raul Perez Pena, writing in the Listin Diario, comments on the "privatization fiasco" and reminds readers of the false promises made by both the current government and its predecessor that the power cuts would fade into history.
The Customs Department reports that its collections increased 7% in September, reaching RD$2.1 billion, or RD$112 million more than in August. Tax collections from January to September of this year amounted to RD$16.2 billion, up from RD$14.8 billion for the same period last year. In 2002, imports were taxed at an approximate exchange of RD$16 to US$1, while this year's calculations are made at an approximate rate of US$32 to US$1, thus the level of imports is considerably less.
Hoy newspaper's economic section reports that the reserves of the Central Bank have plummeted lower than they've been in recent years. The newspaper attributes these low levels to the capital flight that resulted from the lack of confidence in the government evident in the country today. The net reserves were down to US$152.7 million as of 19 September from US$188.6 million in August 2003, US$376 million in December 2002, and US$962.3 million in December 2001. The newspaper points out that the decline in the international reserves is despite the government having received an initial US$120-million disbursement from the IMF and having made a second placement of US$600 million in sovereign bonds this year. It is also despite the substantial improvement in hard-currency generation sectors, such as free zone manufacturing and tourism sectors, from a deficit of US$481.6 million in the first half of 2002 to a surplus of US$464.3 million in the same period this year, according to the Central Bank.
Eduardo Sanchez Ortiz, the judge presiding over the Baninter fraud case, has been cleared of accusations of irregularities in the performance of his duties over the last two years. The Supreme Court has been looking into his actions since last year, following several lawyers' offices' accusations that Sanchez Ortiz had committed disciplinary irregularities and suspect maneuvers, mishandled monies and used his influence inappropriately. The Court found no evidence of these accusations, however, and announced quite the opposite: that Sanchez Ortiz had been found to have carried out his work to the letter of the law.
Dominican justice is not blind and does not apply the law consistently, says a wide survey of civil society organizations reported in El Caribe. The areas of greatest concern are corruption, inequality, lack of prevention, the police force and the penal system, according to the poll conducted by the Citizenship and Justice project (Proyecto Justicia y Ciudadania), headed by civil society organization Participacion Ciudadana and the Foundation for Institutionalism and Justice (FINJUS), under the auspices of the Program for the Reform and Modernization of the State and funding from the European Union. The survey examined opinions at all levels, from national non-governmental organizations to grassroots community groups, concluding that "justice is perceived as an intervention in a crime, not as a state of equity in the exercise of the law or the fulfillment of duties."
Adriano Miguel Tejada writes the back-page commentary in this morning's Diario Libre, saying that this month legislative action will travel eastward to the upmarket resorts of Casa de Campo and Punta Cana. The senators are packing their sun-screen lotion for a weekend of discussions at Casa de Campo on the subject of the changes to the upper chamber, while deputies and the association of legislators' spouses will be setting up camp in a Bavaro hotel complex, where they will discuss the psychological and social effects of having a politician in the family. Tejada comments that while these events were planned some time ago, it is not the most propitious moment to be wasting public money on such frivolities, while the rest of the country suffers from earthquakes and power cuts. To reach the writer, contact atejada@tricom.net
Diario Libre carries a preview of its sister publication Rumbo's study on the effects of the current economic crisis on the media. The peso devaluation and reduced advertising spending have affected all quarters without exception, according to the study. Advertising revenues have fallen sharply in all the daily newspapers, except for Diario Libre and banks, especially the defunct Baninter, had previously been the leading spenders for promotional space and publicity. The currency devaluation has meant an increase in operational costs, as imported materials now cost more. The free newspapers are faring well, however, and Hoy and El Caribe especially have been able to capitalize on the crisis at the offices of their competitor, the government-intervened Listin Diario. With increased costs and reduced advertising inflow, wider circulation is a double-edged sword, as it would mean further financial losses for the press. Television news channels like CDN and RNN are also going through a tricky period, as they struggle for their small share of the viewing market, amidst advertising revenues that are also lagging.
In an attempt to mend the split in the ruling party, the PRD's internal reconciliation committee, headed by former President Salvador Jorge Blanco, will host a meeting between the seven pre-candidates opposed to President Hipolito Mejia's re-election and the PPH, the internal PRD campaign promoting the President's re-election. Enmanuel Esquea Guerrero, Hatuey De Camps, Milagros Ortiz Bosch, Rafael Subervi Bonilla, Jose Rafael Abinader, Rafael Flores Estrella and Ramon Alburquerque expressed their willingness to attend a meeting with the PPH, while adhering to their plans to hold a plebiscite of party members on the question of the right to Presidential re-election on October 12. The pre-candidates will campaign to promote the plebiscite nationwide as of this Sunday. For his part, Eligio Jaquez of the PPH declared that maintaining party unity was the central priority.
Speaking at an international press conference yesterday, Venezuelan President Hugo Chavez expressed hope that the dispute between his country and the Dominican Republic would be soon resolved. The Venezuelan authorities suspended oil sales to the Dominican Republic last month, following claims that the Venezuelan opposition was planning a coup against Chavez from Dominican soil. Chavez maintained yesterday that he had evidence of this alleged plot, but said: "I hope everything is clarified soon. My aim is that our historic and deep-rooted diplomatic relations are returned to normal soon." Earlier this week, Dominican Foreign Minister Frank Guerrero Prats and his Venezuelan counterpart Roy Chaderton met in New York to discuss the rift.
The institute for co-operative development and credit and the Korean Dominican Fishery company are embarking on a US$35-million project aimed at training Dominican fishers. The yield would then be sold at a favorable price at government-subsidized INESPRE outlets and to the hotel sector. The project will include increasing the Sans Souci-based fishing fleet from two to ten vessels by mid-2004, technical training for Dominican fishers, and the replenishment of the fish population in Dominican coastal waters. K J Lee of KDF said that this was an initial phase of a planned program of investments in the Dominican Republic.
Ambassador Adam Blackwell says Canadian companies could contribute to the restructuring of the Dominican power system. He recommends the formulation of a master plan for the development of the sector, reports Hoy newspaper. Blackwell says that before taking any further steps, the Dominican government needs to submit a diagnosis of the energy sector and then develop a plan for strategic advances. He said Canada did the same after the blackouts caused by Quebec's ice storm five years ago and that a reliable power service charging reasonable rates is essential for economic growth to continue.
The religious, business and academic communities of Santiago gathered there yesterday to deliver a tribute and bid a fond farewell to 77-year-old Flavio Dario Espinal, who died of liver cancer yesterday. To his credit, Espinal lived a quiet life, while making a big difference with his example and efforts. During the government of President Antonio Guzman, Espinal was attorney general, honoring what a public servant should be with his work for the country. He was a legal counselor and the founder of the PUCMM and its law school. He was also an exceptionally industrious banker, creating perhaps the most solid banking institution in the country, the Asociacion Cibao de Ahorros y Prestamos. Santiago's Archbishop Ramon de la Rosa, and PUCMM's rector, Monsignor Agripino Nunez, had words of high praise for the deceased, as did other parish leaders of Santiago, representatives of the Asociacion Cibao and his grandchildren, who together encouraged others to follow in his footsteps at the wake held at the Santiago cemetery. He is survived by his wife, Nuris and three children who have followed in his footsteps. His son, Flavio Dario Espinal, is a former Dominican ambassador before the Organization of American States, and today dean of the Legal School of the PUCMM branch in Santo Domingo. His daughter is a professor of political sociology at the Temple University in New Jersey, and his eldest son is a specialist in agriculture, former deputy minister of agriculture and now officer in a regional agriculture organization.
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