| Daily News - Friday, 19 November 2004 |
President Leonel Fernandez is traveling to Costa Rica today to join the XIV Iberian-American Summit Conference of Presidents and Heads of State. He is scheduled to return on Sunday, 21 November. First Lady Margarita Cedeno, Foreign Minister Carlos Morales Troncoso, the Presidential press secretary and the head of the Reserve Bank of the Dominican Republic will form part of the official entourage on the trip, during which Fernandez is expected to sign a financial agreement with the Central American Bank for Economic Integration (BIEC). This trip is a continuation of the aggressive strategy of integration Fernandez has followed since his inauguration. He will also meet with the director of the FAO, the United Nations organization that deals with food and agriculture, and with Colombia's President Alvaro Uribe Velez as well as the head of the Spanish government, Jose Rodriguez Zapatero.
The Ministry of Public Health rejected a proposal made by the Dominican Medical College (CMD) that sought to give the doctors a 50% pay raise in January 2005, and another 50% pay raise in January 2006, rather then the 30% offered by the government. The immediate reaction of the CMD was to call a 72-hour strike at the 173 public hospitals belonging to the Public Health and Social Security network. Next Tuesday, Wednesday and Thursday will see the doctors on strike, attending only emergency cases and those that are very, very ill. The strike will also include public protests and picketing at the different medical facilities. These decisions were announced after a two-hour meeting between CMD president Waldo Ariel Suero and Public Health Minister Sabino Baez that included representatives from the IDSS (the Dominican Institute for Social Security) as well as the CMD. Suero told the press after the meeting that his group was "very sad that the minister did not keep his word, and because of this we have to go on strike." Suero said that his people presented three different budgets that would provide the doctors with their 100% pay increase. The original proposal from the CMD was for a 100% wage increase to be split up over the years 2005 and 2006. The government's counteroffer came in the form of a 30% raise that is to be awarded to the entire government workforce. Curiously, the meeting was originally called not to discuss the 100% pay increase, but rather to hear a proposal from Dr Fulgencio Severino, a security consultant. Severino's proposal put forth the idea of a 50% pay increase, which would include the government's 30%, and a subsequent 20% increase during 2005. Minister Baez said that his hands were tied, however, as the technicians from the National Planning Office had advised him that there was no money for a further 20% wage increase for the doctors. The minister even had the head of ONAPLAN (National Planning Office), Guarocuya Feliz, explain the situation to the CMD delegates. The minister said that he was always open to further negotiations with the CMD. As the meeting ended, the CMD president told the press that it had been a failure and announced the 72-hour strike for next week.
The government of the Dominican Republic announced yesterday that a delegation had left for Washington, DC in order to negotiate the remaining details of the new IMF program, as reports Beat Siegenthaler of Commerzbank in a release today. Members of the delegation are Technical Secretary of the Presidency Temistocles Montas, Finance Minister Vicente Bengoa and Governor of the Central Bank Hector Valdez Albizu.
Siegenthaler notes that Technical Secretary of the Presidency Temistocles Montas stated that a letter of intent should be agreed upon within a week and that it would be based on a balanced budget for 2005 (excluding quasi-fiscal balance).
On the other hand, he reports that Finance Minister Bengoa also said last night that the government will clear all external debt arrears, paying a total sum of $296 million before January 2005. He noted that wiping out all arrear balances was part of the forthcoming agreement with the IMF.
According to Siegenthaler, DR bonds have rallied over the last few weeks with the expectation of a market-friendly restructuring to be announced once the IMF agreement has been restored. The Domrep 9 1/2% $2006 is trading on a record high of 95 today – up from 87.5 on 18 October – while the 9.04% $2013 stands at 85.0 today, up from 81 a month ago.
Commenting on bond investment strategy, Siegenthaler writes that Commerzbank is retaining its overweight recommendation based on the imminence of a finalized IMF accord and subsequent market-friendly restructuring. He adds that, despite the recent rally, they believe there will be a further upside to bond prices once the debt exchange has been implemented successfully.
Charles Rangel, the Democratic representative from Brooklyn, NY, better known as Charlie to his friends, told the press that President George W Bush was employing pressure tactics that he would not use against other important commercial partners. Rangel was referring to the possible exclusion of the Dominican Republic from the Free Trade Agreement between Central America, the United States and the Dominican Republic that is currently awaiting ratification. Rangel's comments appear in Hoy and the entire situation is also reported in El Caribe, where US Trade Representative Robert Zoellick is portrayed as having started the moves to remove the DR from the DR-CAFTA. Rangel's comments came on the heels of a letter from Zoellick to Senator Charles Grassley, informing him that the US was negotiating a free trade accord with Guatemala, El Salvador, Honduras and Costa Rica, with no mention made of the Dominican Republic.
In Rangel's opinion, the Bush administration is trying to force the DR to cave in on the 25% tax to be assessed on imported HFCS (corn syrup) and in the future possibly to be used locally in the production of soft drinks. The HFCS would enter the DR duty-free, but the soft drink or any other product with the syrup as an ingredient would be taxed 25%.
"This was not the just and moral method that a world leader should employ with a friendly country," said Rangel. He added that if the US has a problem with the tax on soft drinks made with HFCS, they should not exclude the DR from the Free Trade Agreement, but should rather "take the case to the World Trade Organization, just as they did in a similar case with Mexico." Rangel recalled how in that instance "they did not reject the NAFTA treaty – they took the case to the WTO."
Among Zoellick's strategies to drive the DR to capitulate has been the issue of the treaty's text to the Central American countries that does not include any of the provisos that were added for the Dominican Republic.
Following this move, Zoellick asked the International Commerce Commission to study the impact of free trade with the Central American countries on the American economy, thereby demonstrating that the US will go forward with the CAFTA without the DR. Grassley, the head of the powerful Senate Finance Committee, and Bill Thomas, the head of the House Ways and Means Committee, said that they were in agreement with Zoellick's methods and were prepared to proceed with a CAFTA vote next year.
Zoellick did leave a door open for the Dominican Republic, and in his letter he says, "We will continue to work with the Dominican Republic on the issue of the corn syrup in such a way as to permit this government to join the Central American partners and (the US) in a regional agreement."
El Caribe reports that both President Fernandez and Senate leader Andres Bautista received letters from Grassley on the subject. The US rejected an offer made by President Fernandez that would have reduced the Dominican sugar quota in exchange for keeping the syrup tax intact.
In a note that is closely related to the preceding story, Senate leader Andres Bautista met yesterday with United States Ambassador Hans Hertell, after which he immediately called the Senate to a special session this Saturday. The agenda will include a piece of legislation that would eliminate the 25% tax on soft drinks made with HFCS from the United States. Upon hearing this news, La Romana's Senator Enrique Seijas told the press that the way in which Ambassador Hertell talked with Senator Bautista is another example of the US meddling in the internal affairs of the Dominican Republic. Seijas called the interference "highly irritating and showing a lack of respect." According to Seijas, the legislation should be dealt with later on, and not so "impetuously." The La Romana legislator suggested that the Dominican Senate emulate the Mexico's congress that levied a 20% tax on soft drinks using corn syrup in defiance of the US's complaints. Inside the DR Senate, the head of the special commission that is studying the proposals from the President told the Senate members last week that his commission would approve the legislation. The Free Trade Agreement has been strongly supported by the industrial free trade zones that have a quarter of a million workers, and the syrup surcharge has been hotly rejected by the sugar interests in the DR. As reported in Hoy, the legislation submitted by President Fernandez has also divided the opinions of the PLD and the PRD players.
Senators from Elias Pina and Pedernales complained that funds from the European Community that have been channelled through the Cotonou Accords do not reach the frontier provinces for which they were destined. Instead, say the senators, the monies go to more developed provinces like La Romana and Santiago. The legislators did say that they appreciated the good intentions of Onofre Rojas, the new head of the National Office for European Development Funds (ONFED). According to the two, while it is all well and good that the ONFED handles the funds, there should be more action and less bureaucracy involved. The spokesmen from the frontier provinces, considered among the poorest regions of the Dominican Republic, said that they have long been hearing how these funds would be used to assist their provinces, but all they receive are the "crumbs," as all the money is spent on trips and consulting and the deeds done are very few. The two senators even said that the ONFED personnel tell lies to the people in Europe and are mostly "drones" who do little of anything. Talking over lunch at the Corripio Communications Group, the senators told reporters that there was as much as 40 million euros available at a rate of just 7% interest, with a grace period of up to two years, and that these funds could potentially be used for mining, forestry or tourism. Senator Dagoberto Rodriguez from Independincia province allowed that micro-improvements had been made in the poorest areas of his province.
The frontier region is composed of the provinces of Pedernales, Independencia, Elias Pina, Bahorouco, Valverde, Santiago Rodriguez, Montecristi, and Dajabon. In 1975, the European Union decided to direct funds to a group of African, Pacific and Caribbean nations (ACP) through the Lome Convention. These funds were handled in the Dominican Republic by the National Office for Lome IV. Later on, this funding became part of the Cotonou Accords.
Agents from the Provincial Office of Price Control spread out in Santiago, checking the prices of the most popular items in the local supermarkets. The first step of the renewed effort to protect consumers will be a survey to establish a baseline of prices for later comparison. Eighteen men and women worked Santiago's major retailers, as well as the smaller supermarkets located in other areas of the city. As a result of the efforts of both the national and provincial offices, the price of poultry is now reported to be near RD$25 per pound, down from a previous high of over RD$35. Some price increases were noted, such as those on sugar and beans, both cases being easily explained as the result of the end of the cane harvest and last September's hurricanes. While there is plenty of flour to make bread, the propane gas used to bake it has risen in price. The bakers, however, are maintaining the price of the individual-sized loaves at RD$3.00 per unit. Francis Mancebo, the national head of the Office of Price Control, also pointed out another reality in Dominican commerce: There is no change. Even if bread were lowered to RD$2.60, there is no way to give the consumer 40 cents change. In his opinion, the only solution would be to increase the amount of bread purchased for the RD$3.00 price.
The president of the Supreme Court has suspended Judge Francisco Inoa Bisono, the presiding judge in a murder case that involved a police sergeant and a Dominican who resides in New York. The youth accused of the cold-blooded murder of National Police Sergeant Santiago Fortuna Sanchez near a popular bar in Santiago de los Caballeros 17 days ago was placed under "house arrest" by Judge Bisono, a lenient punishment in view of the crime. Until a disciplinary review of his alleged failings as a judge is completed, Inoa Bisono is suspended without pay. He told reporters that he acted according to the new Penal Code, and the only course of action is to appeal his findings. Jefry Alejandro Bencosme Pena parked his car near Daiqui Loco on Juan Pablo Duarte Avenue, got out and proceeded to urinate in public. The police sergeant called his attention to his very improper behaviour and, without further ado, the young man pulled out a gun and shot the policeman in the chest twice. After the judge's ruling, Bencosme Pena was able to board a Jet Blue flight to New York, in spite of an order to the contrary that was placed by Santiago District Attorney Raul Martinez.
The major news story today is the jailing of so many of the PRD's top brass, as well as a former Armed Forces minister, for their part in the Plan Renove fiasco. El Caribe dedicates three pages to the story, and all the major papers carry headlines alluding to the arrests. An audit carried out by the Accounting Office had turned up a series of highly irregular activities in the handling of the vehicles imported under the Plan Renove, a scheme that was ostensibly designed to renew the public transportation fleet in Santo Domingo and most of the rest of the country by waiving import taxes on vehicles and offering attractive financing in pesos. The audit showed, however, that the vehicles were often distributed to family members and friends of Plan Renove's board of directors, which oversaw a US$158-million line of credit. According to the report, Milciades Amaro Guzman, a member of the Renove board and of the Terrabus Transport Federation, received 49 buses. Antonio Marte Familia, from Aetra Bus, accepted 32 buses. Diogenes de la Cruz Castillo of Fenatrado received six trucks, and so it continues, with some of the vehicles never even paid for. The list of people who received vehicles from cars to buses and trucks included Juan Hubieres, Freddy William Mendez and Alfredo "Cambita" Paulinario. The audit also uncovered a recommendation from Renove board member Amadeo Lorenzo that bestowed vehicles to 26 people with absolutely no relation to the various transportation companies or syndicates. The audit furthermore detected a shortfall in payments from the different syndicates, such as Fenetrado, Conatra and the Union of Bus Owners.
Even during Mejia's administration there was a series of audits that pointed to impropriety. One such review, conducted by the former controller general, Federico Lalane Jose, in January of 2004 and reported in DR1 News, unearthed a slew of weaknesses within Plan Renove's accounting.
The PRD called a meeting last night at the home of former Tourism Minister Rafael Subervi to review the legal process against the former Mejia government officers. In attendance were former President Hipolito Mejia, Rafael Subervi, former President Salvador Jorge Blanco, former Vice-President Milagros Ortiz Bosch, former Culture Minister Tony Raful, former Agriculture Minister Eligio Jaquez, Senator Hernani Salazar, Senate leader Andres Bautista, Chamber of Deputies head Alfredo Pacheco and former director of Customs Vicente Sanchez Baret. While Sanchez Baret said that a board of PRD lawyers would defend the PRD men accused in connection with Plan Renove, he nevertheless stated that he is not against letting justice take its course nor the application of the law.
Former President Hipolito Mejia said it was all "part of the show."
Among the prominent figures who were led off to jail was Ramon Emilio Jimenez, the former minister of the Armed Forces, who was sent to the military prison. Also in custody is Diogenes Castillo, the former director of OMSA (Metropolitan Bus Service Authority), who had been accused of irregularities by syndicate leader Juan Hubieres in 2001. Pedro Franco Badia, a leading figure of the PRD, was the head of Plan Renove and is accused of distributing 312 vehicles without the proper authority. The list is long and includes Johnny Morales, one of Mejia's closest collaborators and the partner of Sam Goodson in Hyundai American Corporation, the main supplier of vehicles for the plan. For a full list of names, please see: http://www.hoy.com.do/app/article.aspx?id=29166
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