Following yesterday's DR1 report that certain quarters are advocating the removal of the government's subsidy on liquid propane gas. Reports in this morning's papers are quoting Presidential Office Secretary Sergio Grullon (who is also the President's brother-in-law) as saying that the President is thinking on those lines as well. A Presidential decree is expected imminently, which will state that only consumers of 500 gallons or less will be eligible for government subsidies. Larger-scale consumers, such as hotels and luxury apartment complexes, will have to pay the full price. Grullon explained that this measure was aimed at targeting the government's assistance to poorer consumers, as opposed to the big companies, whom he felt were the main beneficiaries of the current LPG subsidy policy. Some sources are indicating that a similar measure is in the pipeline for electricity subsidies. At the start of its term, the Mejia government instated focalized subsidies that were later abandoned when much-publicized corruption took hold of the program, coordinated by the Ministry of Industry of Commerce.
The Dominican Republic will adopt measures aimed at standardizing cell-phone charges, in conjunction with European and Latin American countries. This, along with other measures, was agreed at this week's meeting between telecommunications regulators from Latin America and Europe, held in Santo Domingo and hosted by INDOTEL (Dominican telecommunications institute). The meeting concluded that development of telecommunications was essential for the social progress and economic growth of developing nations. Orlando Jorge Mera, who heads INDOTEL, was elected president of REGULATEL, the Latin American telecommunications regulatory body.
The military compound housing the Dominican army's reconstruction contingent in Diwaniya, south of the Iraqi capital Baghdad, suffered a mortar attack early Thursday morning, although no injuries have been reported. The news that five mortars had been fired at the base reached the Dominican Republic yesterday morning, as family members anxiously awaited phone calls from their loved ones serving in the distant Middle Eastern country. Sources from the Dominican military told the media that mortars were used in preference to the more deadly car-bombs because the extensive fortifications made it impossible for a would-be suicide car-bomber to penetrate the base. Colonel Camacho Ubiera, who is in charge of the Dominican battalion in Iraq, said he doubted the attackers were from the immediate vicinity of Diwaniya "because the Plus Ultra Brigade has been welcomed by the local population, who, in any case, are the first to suffer from such attacks." Armed Forces Minister Jose Miguel Soto Jimenez said that President Hipolito Mejia was in favour of the troops' swift return to the DR once their mission is completed, possibly before February 2004. Diario Libre's main commentary expresses relief that the Dominican soldiers - who until now have been lucky - were unharmed. This latest incident will cause some to redouble their efforts to have the troops brought home, but the editorialist points out that a soldier's work by nature implies certain risks. "Mejia decided to send troops to Iraq in a gesture of solidarity with the United States, our main trading partner, home to hundreds of thousands of Dominicans. This solidarity should not come to a halt, no matter how dangerous the mission," says the Diario Libre writer. On the other hand, the previous Minister of Foreign Relations resigned from that post after opposing the Dominican Republic's support of the war in Iraq.
The tax authorities are asking that all foreign currency generators present a full report of their transactions for the last 11 months. The DGII (internal revenue department) has given five days for companies that handle foreign currency, including exporters, free trade zones, hotels and tourist businesses, to declare all their dollar operations, as well as the banking and currency exchange sector. This order comes on the heels of the Banking Superintendence's decree that currency exchange houses and remittance agents present all details of their foreign currency transactions on a daily basis. This measure is part of the government's efforts to drive down the dollar-peso exchange rate, which yesterday stood at RD$39.50. The taxation authorities are stipulating that when the exchange houses make their reports, they should include the personal information and identification connected to any transaction equivalent to or exceeding the sum of US$10,000. The Banking Superintendence says this is a simple attempt to make operations more transparent.
Businessman Celso Marranzini Perez doubts the government's attempts to force down the dollar-peso rate will have any lasting effects. "I don't believe in pressure tactics, because they have never worked in any economy. I wish the dollar would go down to RD$30 to US$1," said Marranzini. Carlos Guillermo Leon, president of the newly renamed Banco Leon (formerly Bancredito), said that speculation would exist for as long as there was economic uncertainty. Restoring confidence was the key, according to Leon, who also expressed doubts about the sustainability of such a sharp overnight drop in the exchange rate. "If it were so easy to reduce the dollar rate, it would have been done long ago, along with a reduction of inflation. All this appears to be is a way of creating the right conditions for the signing of the agreement with the International Monetary Fund and to set the scene for the necessary fiscal reform." Leon said the reduction must continue, preferably at a more gradual pace, so as not to disrupt the currency exchange market. Banking Superintendent Julio Cross says that speculation has artificially overvalued the dollar, and that its real value is between RD$28 and RD$32. He expressed confidence that the downward trend would continue and called on the public not to engage in any activities that jeopardize this trend. Listin Diario's main editorial attacks what it describes as the "savage capitalism" of a completely unregulated exchange market, arguing that such freedom only benefits a few at the expense of the vast majority. The writer slams "malicious speculators" in the foreign currency market who have no regard for the social well-being of the nation, currently suffering unaffordable price rises of all essential consumer items as a result of the peso devaluation. The government has the right to defend itself, just as the country has against this, says the writer in defence of the government's recent attempts to control the exchange market and lower the dollar-peso exchange rate.
The National Business Council (CONEP) is repeating its call for the government to reduce public spending in order to tackle the current monetary crisis. In a working document prepared for CONEP by the economic consultancy firm Ecocaribe, and as presented at the Third Business Convention held at Santo Domingo's Hotel Jaragua which concludes today, they argue that the government must recognize that the country is in an exceptional situation and that spending cannot continue as it has in the past. The document also recommends the government shed any necessary assets and obtain external financing in order to pay the Central Bank's debts. It accepts that new taxes may be inevitable, mentioning that some are already in effect, although "not always in adherence to the legal regulations," it says, going on to call for fiscal reform. CONEP president Elena Viyella de Paliza said: "The problems will not be resolved through new taxes." The document also urges moderation on the part of the government in its borrowing strategies. According to economist Eduardo Garcia Michel, the country's external debt could top US$6 billion this year. Ecocaribe and CONEP maintain that the events of the last year in the banking sector must never be repeated. "The Dominican Republic has learned a painful lesson in that it was not rigorous enough in its application of financial sector regulations and controls, it allowed the banking sector to relax its rules, and lastly, it applied an accommodative monetary policy." The solutions it recommends are strict fiscal policy and an independent banking authority with coherent policies and well-defined objectives. Ecocaribe suggests that any income tax, value-added tax or other levies should be linked to international standards and not be exported. The document also points out that the opening up of the Dominican economy has not been sufficiently planned and that governments have not given enough priority to the process of the DR's reinsertion into the global economy, citing the lack of policies to support competition and macro-economic management, which has served as a disincentive to the export sector. All those present agreed, however, that an agreement with the International Monetary Fund is necessary. El Caribe's main editorial hails the CONEP/Ecocaribe document as the first long-term plan for the nation's development, with its in-depth analysis of all the factors that have led to the current situation, as well as proposals for policies and solutions aimed at extricating the nation from the crisis. This is something that, according to the writer, has never been done before in this country, where plans do not tend to last beyond any one government's lifespan. CONEP is the country's largest business association.
Economist Eduardo Tejera, also speaking at the business convention at the Hotel Jaragua, called on the Central Bank to publish the details of the high-interest savings certificate holders. According to Tejera, only 57 certificate holders account for RD$47-billion worth of the total RD$63-billion issue. Revealing this information could be done without releasing names, he said, but the sums of money held by each of these investors should be made public. In addition, Tejera suggested that the CB reduce the interest rates from 36% to 12%, which would reduce the state's financial burden by RS$13 billion.
Federico Cuello, former DR ambassador to the World Trade Organization (WTO), writes today in the editorial pages of El Caribe newspaper on the questionable coherence in government policies. To garner more revenues, he explains, the government increased taxes on imports. With imports notably more expensive, Dominicans began buying less foreign goods, and government revenues on imports declined US$795 million this year. To compensate for the government's distancing itself from Latin American and Caribbean trade negotiations with the United States, the DR signed a joint statement with Brazil on 18 November that commits the country to uphold Brazil's position before the FTAA and WTO negotiations. Cuello, nevertheless, mentions that Dominican Ambassador to the US Hugo Guiliani insists that the country must "enter the empire" and endorses commitments aligned with US mandates and which would differ from those reached if the commitment signed with Brazil is to be upheld. Cuello emphasizes that the phrase "to enter the empire" translates into reaching the FTAA on the terms that are in the best interest of the US. "Those interests, which are entirely legitimate, should not prevail over those Dominican diplomats should defend," he says. Furthermore, Cuello feels these negotiations should inherently imply a willingness to fulfill what is agreed upon. He said there has not been coherence in what was negotiated with Central America, for example, where import taxes have been placed on the trade between the countries after agreeing to lift all duties. Cuello reproaches the fact that the country has not paid the small amounts due for legal advisory services to the WTO, leaving the country without the needed technical assistance for a dignified defense. "We lack credible economic policies. We do not defend the national interest. We do not have a state of law. Is that coherent?" he criticizes.
The judge in the Baninter fraud case, Eduardo Sanchez Ortiz, has adjourned the hearing on the bail petition for the three main suspects, former Baninter president Ramon Baez Figueroa, and vice-presidents Marcos Baez Cocco and Vivian Lubrano de Castillo. The hearing will resume on Tuesday 9 December. Lawyers for the accused are growing increasingly impatient with what they describe as "biased" decisions by the case judge, according to this morning's newspapers. They plan to file a formal complaint against him with the Supreme Court. "The judge is totally biased in favor of the government," said Marino "Vincho" Castillo, who heads the Baninter legal defense team.
Membership to the ruling PRD party does not guarantee immunity to official surveillance, if Enmanuel Esquea Guerrero, Milagros Ortiz Bosch, Ramon Alburquerque and Henry Mejia's experiences are anything to go by. They are complaining that their phones have been tapped, according to Diario Libre, whose editors have also reportedly been victims of this type of intervention. Another protestor is former ambassador Miguel Mejia, who accused President Hipolito Mejia of ordering his phone be wired. Miguel Mejia served as Caribbean relations ambassador to the Foreign Ministry under former President Leonel Fernandez (PLD, 1996-2000) and is accusing the government of recording his conversations with Venezuelan and Dominican officials, in relation to the recent diplomatic dispute between the two countries. According to the law, this sort of surveillance can only be authorized when there is suspicion that drug trafficking or other serious criminal activity is taking place, something which Miguel Mejia says is clearly not the case in any of the above interventions.
The national emergencies committee (CNE) is warning that tropical storm Odette could provoke heavy rainfall, strong winds and turbulent seas in the vicinity of the Dominican Republic over the next 24 to 36 hours. The emergency services are on red alert, according to CNE president Radhames Lora Salcedo. Most vulnerable are the already waterlogged areas of the north and northwest, which are still feeling the effects of the extensive flooding of a couple of weeks ago. The CNE has been carrying out disaster prevention work in the most vulnerable areas, which include riverbanks, gullies and exposed areas, persuading people to leave their homes before the danger hits. Odette is the 15th storm since the start of this year's Atlantic hurricane season, and is unusual for having formed in December, after the close date of the official hurricane season, 30 November. For updates, see http://www.dr1.com/forums
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