President Hipolito Mejia turned his attention away from electoral matters yesterday, to instead engage in discussions with the US ambassador and business leaders on the possible impact of the ongoing Haitian crisis. The meeting, which included the participation of investors from the BHD banking group, also dealt with internal economic matters. The crisis in Haiti, however, represents a threat to social and economic stability, not only within that country but for the Dominican Republic as well, according to the business representatives at the meeting. Mejia also took a meeting with US Ambassador Hans Hertell at the Presidential Palace, during which the Haitian crisis figured prominently. Hertell conceded that the situation in Haiti was cause for concern and that his staff were following it closely, but he refused to comment on claims that he had discussed the possibility of setting up refugee camps on Dominican soil with President Mejia, who also declined to comment on the issues discussed during the meeting. Scott McClellan, spokesman for the Bush administration, has said the US will deport any refugee that reaches Florida coasts.
Foreign Minister Frank Guerrero Prats has reiterated his stance on the Dominican Republic's capacity to receive refugees fleeing the violence in neighboring Haiti. He said that the government is advocating a peaceful settlement to Haiti's internal problems: "The DR is in favor of any peaceful solution through harmonious dialogue for our sister republic, Haiti, to emerge from the current confusion towards peace and normalcy." The Foreign Relations Ministry is closely monitoring the situation, said Guerrero Prats, in coordination with the armed forces in charge of the border zone. According to reports, 1,200 more soldiers are being sent to police the border in the wake of the recent unrest. The DR had not yet received any applications for asylum from Haitian officials or civilians, he added. There are no reports to indicate that any Dominicans residents in Haiti have being affected by the problems there, according to the minister.
Hoy's main editorial says that recent images in the media of the rebel leaders raise some questions. The press has carried photos of the rebels celebrating their victories "over what is, for better or for worse, an elected government," with cigars, rum and grins of delight. The political leadership of the insurgent forces, however, has not shown its face or come forward with any program. "What can it offer the Haitian people? Could it be the return of a Duvalierist-style regime?" These are the questions the international community, the inter-American bodies and the "friends of Haiti" should be asking themselves. The writer concludes by saying, "Let us hope that the answers are more auspicious than what those photographs are hinting at."
Listin Diario's main editorial says that all Dominicans can do at this time is pray to God that the situation in Haiti improves, as we are in no condition to do anything more for our neighbors to the west.
Writing in El Caribe, Max Puig looks at it from another point of view. The perception that the rebel leaders, described as "thugs" by the US administration, entered Haiti from the Dominican Republic, where they were supposedly under surveillance, is bad for the DR's image. The Dominican authorities have given repeated assurances that the frontier is impervious and completely under control. Despite all this, it appears from the President's latest statements that the border is in fact vulnerable and the country is full of conspirators, which prevents the DR from complying with its international commitments. "By tacitly serving the interests of the opposition forces, the DR has done itself a disservice and adversely affected the good relations that should exist between the two nations that share the island of Hispaniola."
The newspapers are reporting on those people leaving Haiti via the Dominican Republic. These are not the refugees crossing the border on foot that have caused debate in recent days, but rather well-heeled air passengers, many of them expatriate workers in Haiti, who are leaving the country due to the escalating violence. Santo Domingo's Herrera airport has been receiving many of these arrivals, including wealthy Haitians who have decided to move their families to the DR until the situation stabilizes. Others include foreigners who are using the DR as a stepping stone en route back to their countries of origin. The capital's hotels have reported an increase in occupancy due to this particular influx, and many Haitian families traveled to Las Americas International Airport to board connecting flights to US, Canadian and European destinations. Many countries, most notably the United States, have evacuated their nationals from the troubled country, and have sent in a contingency of 52 Marines to protect their embassy in the Haitian capital of Port au Prince. All incoming flights from Haiti have hailed from Port au Prince, since the nation's second city, Cap Haitien, was occupied by rebel forces over the weekend. Reports from the frontier town of Dajabon indicate that the trading activities between Haitians and Dominicans were allowed to continue with relative normality yesterday.
Both Hoy newspaper, which broke the story over the weekend, and Diario Libre are giving further attention to a deal brokered in Samana, whereby 500,000 square meters of land have been leased as part of a concession for a period of 50 years to a previously unknown company registered in Panama with Dominican businessman Roberto Prats as principal. It seems that the government pulled the rug out from under an agreement with another company, in favor of Jampi Investments, although the contract would enable Jampi Investments to transfer the concession to a third party, according to the Diario Libre.
Ana Mitila Lora writes in her Listin Diario column "Mochila al hombro" that this is not the first time in Dominican history that the Samana peninsula has been up for grabs. In the 19th century a series of Dominican Presidents, from Buenaventura Baez to Ulises Heureaux, tried to lease the territory to the US Navy, which opted for Guantanamo Bay in Cuba instead. More recently, the late President Joaquin Balaguer tried to do something similar with Saona Island. "Although not on the same scale, now it is this government's turn," writes Lora.
El Caribe reports that the fiscal authorities have collected only 77% of their target income, despite new measures introduced last January. The US$10 increase in the departure tax, the 2% levy on imports and the 5% surcharge on exports were projected to generate RD$490 million for the month of January 2004, but have only succeeded in raising RD$380 million. The article makes the observation that this shortfall should cause some concern for the tax authorities, as January is typically one of the best months for government revenue, due to the fact that much of the December payments are made in January. The attempt to boost fiscal income through increased taxation is part of the government's efforts to comply with the International Monetary Fund agreement.
The latest report from Bear Stearns suggests that the case for restructuring the Dominican Republic's sovereign debt is very weak. The international investment and banking firm believes that the costs (reputational, legal and financial) will be high in relation to the need as measured by the financing gaps. For example, the balance of payments gap, as identified by the IMF for 2004, is US$300 million. This compares to roughly US$8.5 billion in expected exports of goods and services this year, and between US$1.3 and US$2.4 billion in capital flight. The best way to close the balance of payments gap, according to BS analyst Franco Uccelli, is to take measures to increase confidence in the peso, rather than provoke a debt default. On the fiscal side, the central government is expected to run a surplus this year under the provisions of the IMF program. The fiscal weakness in the public sector stems from the quasi-fiscal deficit of the Central Bank (nearly 4% of GDP). The most effective way to deal with the fiscal gap, says Bear Stearns, is to restructure the Central Bank CDs into longer-term instruments. Nevertheless, continues the report, it is prudent to consider debt-restructuring scenarios, given all the current noise about Paris Club comparability of treatment. The report considers variations on three possible restructuring scenarios, which it calls the (Paris Club) NPV equivalence solution, the US$300-million solution and the balanced budget solution. To call any of these "solutions," however, is a gross misnomer in view of the costs of default, but they all represent moderate debt arrangements "that are consistent with our assessment of the DR's ability to pay." The conclusion of Bear Stearns' analysis is that DR global bonds ('06s and '13s) are currently undervalued, but they abstract from issues such as "deal risk" - the legal battles that could make a restructuring acrimonious - political risk and the risk that the DR falls out of compliance with the IMF program in the near term, all of which could negatively affect bond prices. The analysis implicitly assumes that the "restructuring process" is more akin to Uruguay's (2003) than Argentina's (2001-) or Ecuador's (1999-2000).
For full details of the report, see http://dr1.com/news/2004/Bear_Stearns.pdf.
El Caribe newspaper today highlights that a long list of major public works has nothing but front-page headlines to show for it. The newspaper mentions that President Hipolito Mejia participated in the much-publicized, ground-breaking ceremonies for the US$5-billion megaport in Manzanillo in the Northwest that never happened and the renovations at the San Pedro de Macoris port that was quickly abandoned. The list of pipe dream works also includes he start of the Duarte-San Francisco de Macoris US$112-million highway expansion that also fizzled; the ground-opening to start works of the much-needed expansion and repair of the Navarrete-Puerto Plata highway; the Maximo Gomez Avenue expansion; the Santo Domingo-Samana highway concession; or the San Cristobal-Bani highway concession which the Mejia government preferred over a negotiated multilateral organization loan for the expansion.
Diario Libre reports today that the former legal advisor to the Central Bank, Jorge Luis Polanco, resigned his post on 12 January only to announce on 30 January that he would participate as part of the defense bar for those accused by the Central Bank of fraud and embezzlement in the cases of the Baninter and Bancredito collapsed banking operations. The newspaper points out that Polanco was a key participant in preparing the case against the Bancredito bankers. The newspaper says that the Central Bank has paid US$1.6 million to the lawyers pleading the case against the bankers for the Bancredito case alone.
Vice President and former pre-Presidential candidate Milagros Ortiz Bosch has spoken about the internal divisions within the ruling PRD party. She said that the PRD was not promoting the political integration of all the party's factions, now that the President's supporters have control of the party presidency and the Presidential candidacy. She felt the 18 January party convention, at which former party president Hatuey Decamps was ousted and President Mejia's nomination for the Presidency was validated, was destructive and went against the PRD's historical traditions. She said that the lack of democracy in the party went so deep that it prevented the government from working in tandem with the PRD. As a member of that party, she did not exclude herself from these criticisms, but did however say she had done all she could to fight for the party's unity over the last year. She also claims to have drawn President Hipolito Mejia's attention to the situation in Argentina, where an electoral model similar to the "Ley de Lemas" (controversial, now-defunct proposal to reform electoral law in order to allow each party to field up to five candidates) had created more political divisions within the ruling party but had allowed the country to emerge from an economic crisis far worse than that being experienced by the DR. The Vice President and Minister of Education said that the country's attention was diverted from more important matters during the two months dominated by the contentious surrounding the Ley de Lemas.
She said that the President now faced "a huge challenge" to confront. Milagros Ortiz Bosch was one of the top contenders for the party's Presidential nomination, but was out-maneuvered, as were Rafael Subervi Bonilla and the other Presidential hopefuls, by President Mejia and his unstoppable electoral ambitions. Ortiz Bosch was speaking on TV Channel 11's "El Dia" program, and said she would reveal her future political plans later this week.
Responding to what he called a "smear campaign" by elements in the two main parties, PRSC Presidential candidate Eduardo Estrella denied that he was being manipulated by President Hipolito Mejia and his re-election campaign machine, the PPH. These statements follow suggestions that it was Mejia who encouraged him to seek a meeting with his rival Jacinto Peynado, an idea that was reportedly rebuffed by the disgruntled former pre-Presidential hopeful, who is still undergoing medical treatment in the US. "Eduardo Estrella does not take orders from anyone, I am a very independent person with my own policies and credentials, what happens is that the tree that bears the fruit is the one that gets stones thrown at it," he said during a phone call to the "Hoy Mismo" show yesterday. The former Santiago senator said furthermore that the smear campaign against him included allegations that he was being groomed as Mejia's running mate in the coming elections, that he was receiving economic support and that his wife and the President's were related. He refuted all these claims, saying they only served to harm the President and the opposition PLD.
For his part, Peynado's disillusionment with the situation is reflected by the quote in Diario Libre's "Vaya Perla" slot: "In these elections we will have to choose between the bad and the less bad."
A recent Penn Schoen poll showed Estrella in second place in voters' hearts with 16% support, behind Leonel Fernandez with 65% and President Hipolito Mejia in third place with 13%. Last year, President Mejia took credit for Estrella winning his candidacy, when he admitted that PPH members supported Estrella over his rival, Jacinto Peynado.
The presidential election in the DR is scheduled for 16 May 2004.
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