| Daily News - Monday, 22 November 2004 |
The Senate suspended its Friday session when the minimum quorum of 17 senators was not met. The Senate session had been called to study the US's opposition of the recently-ratified tax on corn syrup imports that would go into effect several years from now. As reported in the Listin Diario, only 12 senators turned up on Friday, while another 18 were discussing the bill in a city hotel. The corn syrup surcharge was the only topic on the agenda.
The senators had intended to gather to discuss the bill after US Trade Representative Robert Zoellick wrote to US Senate Finance Committee Chairman Charles Grassley, who represents the interests of US corn farmers, that steps were being taken to move forward, if necessary, with a regional free-trade agreement that includes the United States and our five Central American partners, but not the Dominican Republic."
The Dominican Senate will not meet again until a group of its members who are currently in China have returned at the end of the month.
After the Senate approved the 25% tax on beverages containing high-fructose corn syrup as part of the tax reform, President Leonel Fernandez sent a bill to Congress that would eliminate the contentious surcharge.
The Wall Street Journal's Mary Anastasia O'Grady writes today to explain big business interests versus consumer interests, the underlying factors behind the DR-CAFTA impasse over the corn syrup tax. Given the status quo, O'Grady explains that individual and industrial consumers in the US and the DR pay a very high price due to the protected markets of both countries.
In a commentary titled "Sugar Daddy Decadence," she writes that, at the heart of the DR's decision to renege on what was signed by including the contentious surcharge on high-fructose corn syrup (HFCS) imports, is "a battle between the concentrated power of US sugar barons and the broader, diffused interests of consumers." She comments the issues at stake go beyond the CAFTA, while mentioning that getting the FTA through the US Congress without the DR will be "enormously difficult."
The writer continues: "Indeed, the outcome could foreshadow whether narrow US agriculture interests like Big Sugar can ever be brought to heel, or whether they will continue to undermine US geopolitical and economic interests in free trade."
The FTA is of importance to US trade, as she points out that trade analysis have indicated that US exports could almost double in several categories.
O'Grady explains that sugar exports represent a minuscule, almost symbolic opening for the sugar market. The real problem is that "for coddled US producers whose fortunes depend on a protected market, it is apparently cause for alarm." She explains, "Sources close to the matter say that DR sugar growers, worried that CAFTA's opening of the DR market to HFCS would damage them, lobbied the DR congress for the tax." She points out that among the notable US sugar producers are Florida sugar barons Alfonso and Pepe Fanjul, who also happen to be prominent DR sugar growers and owners of that country's largest sugar mill.
O'Grady emphasizes that "for an interest like the Fanjul family, the HFCS tax would be a win-win. If the tax survives, its DR sugar interests are protected from HFCS competition. If the tax takes the DR out of CAFTA, and that translates into a lack of support in the US Congress for ratifying the deal, US markets will remain protected from imports."
Mentioning the extraordinary price supports and protectionism that has bolstered a sugar lobby that is known for being a generous political backer, O'Grady says:
"The efforts in the Dominican Republic are just a small part of a nationwide campaign by US sugar producers to defeat CAFTA simply because they do not want to change their antiquated program that rewards them with a price for sugar that is three times the world market price."
O'Grady writes that the sugar lobby's ploy to strangle a promising new market for millions of Latins and Americans ought to scandalize Washington, which pays lip service to the downtrodden on a daily basis.
Moreover, the WSJ reporter alerts that US Democratic Congressman Charles Rangel "seems to be taking the side of the rich sugar barons, arguing that Mr. Zoellick is trying to strong-arm the DR. Considering the costs that the poor pay when markets are protected, Mr. Rangel seems to have left his populism somewhere in the cloakroom," she concludes.
The National Competitiveness Council will step up efforts to strengthen industry clusters as part of a strategy to bolster local competitiveness, as reported in Hoy newspaper. A "cluster" is the term for the geographical concentrations of interconnected companies, specialized suppliers, service providers and associated institutions in a particular field.
In an interview with Hoy's economic reporters, industrial advisor Antonio Isa Conde, executive director Andres Vanderhorst, small business advisor Claudio Adams, advisor Elka Scheker, and private sector representative Jaime Moreno spoke on the importance of enhancing the local ability to compete. The group highlighted the successful cases of the tourism cluster in Bayahibe, which achieved Blue Flag status for its beach, as well as mango and vegetable clusters based in Dominican farm areas.
Vanderhorst believes that the DR has a lot of work to do, as in the past few years it has declined from 50th place among 80 countries, to 80th place among 102 countries in the international competitiveness ranking conducted by the World Economic Forum. The index rates countries on governmental performance, the technological standing of the government, the state of the economy and the business climate. Vanderhorst said that it is imperative that the country climb up in the rankings if it is to attract foreign investment. Isa Conde says that the council is identifying measures to be taken, many of which are administrative. He pointed out that the country has been competitive previously, but only because of our low-cost workforce and the natural resources we have at our disposal.
The original clusters programs were financed by a US$10-million cooperative grant from the USAID organization. Vanderhost said that the CNC has received new financing equal to RD$13 million designated to improving the competitiveness of the local private sector. Those industries that will receive support are agriculture, manufacturing, small- and medium-sized businesses and the handicraft industry.
The organizations striving to enhance competitiveness in the DR are the Fundacion Global Democracia y Desarrollo and the Association of Industries of the Dominican Republic (AIRD).
A Listin Diario article informs today that the Dominican Republic imports US$13 of goods from Central America, a country with which it has a free trade agreement, for every US$1 of goods exported. The newspaper highlights this trade deficit as an example of the lack of competitiveness of goods produced in the DR. Local competitiveness suffers because of red tape at the time of export, the lack of a national brand, high energy costs, high shipping costs and little aggressiveness from Dominican exporters.
David Osborne, the guru of "reinventing government," will speak at the Salon La Mancha of the Barcelo Lina Hotel on Monday, 22 November at 7pm. Admission is free of charge. As part of his lecture, Osborne will describe five of the most powerful strategies developed by government reinventors around the world, along with the tools necessary to implement them. The event is designed for anyone interested in improving the performance of public organizations and to give them hands-on guidance about how to make it happen. Fundacion Global Democracia y Desarrollo, the think-tank center founded by President Leonel Fernandez, has opened the invitation to anyone with interest in the subject.
Ironically, Osborne proposes many measures, such as cutting taxes, that contradict the initial strategies and measures implemented by the Fernandez administration.
The National Police, in conjunction with the Ministry of Environment and the District Attorney's office, will begin an initiative today to reduce and control unnecessary noise. General Simon Diaz, the NP's spokesman, made the announcement and said they would be visiting city stores and entertainment centers and would be monitoring vehicles that circulate with loudspeakers. He said that vehicles without properly working mufflers, including motorcycles, would be detained. He said they would first visit areas where residents have already made complaints regarding the noise levels. Furthermore, he said they would also alert businesses that they cannot set up tables and chairs on city streets or sidewalks if they hamper the flow of traffic. He invited city and neighborhood groups to join in the effort. Those affected by excessive noise pollution can call 911 to present their complaints.
Verizon, the Central Electoral Board and the state-run postal service say that as of 2005, every person over 18 with a cedula (local identification card) in the DR will receive an email account, regardless of whether they have a computer or not. As reported in El Caribe, there will be no charge for accounts using up to 10 megabytes. Thereafter a fee will be charged for any space. The email addresses will be assigned as such: cedulanumber@imposdom.com.do
The new director of the postal service, Leonora Zacarias Metz, hopes to restore reliability to the service. She said that in July of this year, 155,930 letters were sent to different countries, and 67,254 were received. The volume of mail has decreased, she said, by the 25 private companies that offer courier services to the better-paying clients and provide a more reliable service. She said that Inposdom has 215 offices nationwide, including 22 in the city of Santo Domingo, a fact that makes it perhaps the government institution with the most visible presence in the country. Mail sent abroad is classified in Miami.
The Cerveceria Nacional Dominicana announced a RD$5 reduction in the price of the 22-oz bottle of Presidente beer. Presidente's brand of beer will now cost RD$30 per12-oz bottle and RD$45 per 22-oz bottle. The company also announced reductions in the prices of their other brands: Bohemia, Ambar, Miller and Heineken beers, Malta Morena and Lowenbrau malts, and Smirnoff Ice.
Judge Victor Martinez ordered the release of 10 of the 12 men accused of the RD$1-billion fraud against the state and other irregularities in connection with Plan Renove. Attorney General Francisco Dominguez Brito filed the charges against those behind the governmental transport plan, including six cabinet ministers from ex-President Hipolito Mejia's administration.
Pedro Franco Badia and Ramon Emilio Jimenez and Gervacio de la Rosa were released without bail, but ordered to visit the Department of Prevention of Corruption (Depreco) on the last day of the month as a department requirement.
The judge ordered Siquio Ng de la Rosa, Diogenes Castillo, Milciades Amaro Guzman, Francisco Perez Castillo, Casimiro Antonio Marte and Fabio Ruiz to post a RD$1-million bail (RD$17,000 cost), and Angel Rondon a RD$5-million bail (RD$60,000 cost). Sam Goodson, a US citizen resident, is also included in the case, but is abroad.
Domiciliary arrest was ordered for Juan Julio (Johnny) Morales from 20 November to 19 February 2005.
District Attorney Jose Manuel Hernandez Peguero described the court's decision as "complacent."
Judge Martinez said that the prosecutors could decide to ask him to step down from the case by reason of his known active political affiliation. He admitted that he had been mayor in San Jose de Ocoa, winning on the PRD party ticket.
Depreco director Octavio Lister said that the important thing is that the judge has confirmed there were sufficient incriminating elements to sustain legal prosecution.
The case revolves around a US$159-million loan taken on by the Mejia government to finance the acquisition of 5,648 vehicles, purportedly to improve public transportation in the DR. The program was criticized for irregularities from day one, however. In January of last year, even the Mejia administration's controller general, Federico Lalane, released findings of an audit that found a long list of irregularities, including the allocation of vehicles to family members and friends of Plan Renove's board of directors of the program and affiliates, the import of trucks and forklifts that had nothing to do with public transportation and irregularities in the method of purchase. A more recent audit was carried out by the Chamber of Accounts, whose members were appointed by the Mejia administration.
The Attorney General's office has resubmitted the findings from Lalane's audit, and that of the Chamber of Accounts, and also included new evidence of wrongdoing in its presentation of the case to the judiciary. New accusations say that board directors and people related to them held on to payments made by the beneficiaries for their monthly fees, keeping them for their own gain. There is even a signed authorization dated 17 July 2003, whereby the board authorized the unions to retain 4% of the 13% annual financing charge on the vehicles.
Interestingly, there has been no arrest order for Juan Hubieres, the director of one of the larger transport unions to benefit by Plan Renove, Fenatrano, and now fellow beneficiary, Conatra's Antonio Marte has called for his detainment also. Meanwhile, Hubieres says that the government should include TV producer Freddy Aguasvivas in the case for his close relations to Sam Goodson and Johnny Morales, two of those heavily implicated in the scam. Fabio Ruiz told the press that the government should investigate who it was who bought the first OMSA buses during the 1996-2000 Fernandez administration for US$83,000 apiece, a price that, according to him, was exaggerated by US$23,000.
Upon filing the accusations in the legal system last week, Attorney General Dominguez Brito said, "This country cannot sustain a fraud of RD$1 billion." The Que se dice column in Hoy commented on Saturday that, while it is true that the country cannot withstand such swindle, neither can it take another mascarade disguised as a fight against corruption.
Orlando Gil, the Listin Diario's political commentator, speculated on Saturday that the decision to proceed with the Renove corruption case on Friday coincided with the ambassadorial members of the Dublin Group's meetings with President Leonel Fernandez on Tuesday and Foreign Minister Carlos Morales Troncoso on Thursday. These ambassadors have stated that international aid is of no use if it ends up in private pockets or in the pockets of government officials.
Transport union entrepreneur Ramon Perez Figuereo said that businessman Johnny Morales benefited from a US$90-million purchase order for transport equipment that was granted without a legal tender and without his ever having been a dealer or concessionaire of vehicles. Morales is presently under domiciliary arrest for his involvement in the Plan Renove case.
Perez said that Morales also benefited from a purchase order for the 432 blue buses purchased by the municipality of Santo Domingo under the administration of the PRD's Johnny Ventura, another 1,500 under the Plan Renove and 300 for the Oficina Metropolitana de Autobuses. Also involved was an order for 252 trucks, 10 forklifts and 125 buses used during the Pan Am Games. Perez Figueroa said that in order to transact the purchase, Morales created the Hyundai American Corporation in association with Sam Goodson of the United States. This enterprise, however, caused a clash with Hyundai's authorized dealers in the Dominican Republic, Magna Motors. Perez Figueroa was interviewed on a Channel 11 TV program produced by Hector Herrera Cabral.
Perez Figuereo said that the first time the US$150-million loan for Plan Renove was pushed through Congress, an agreement was made between government officials and businesspeople, and he referred to the existence of documented proof that lobbyists paid a sum of US$1 million to Congress.
Perez believes that Juan Hubieres and the former director of the Oficina Tecnica del Transporte Terrestre, Antonio Reynoso, should also be included in the Plan Renove investigation.
The Dominican Republic's team finished in third place at the 14th Pan American Taekwondo Championships held over the past weekend in Santo Domingo, thereby earning three gold medals. Gina Maria Ruiz won the third gold on Sunday in the 72-kilo event, defeating Mexican Maria de Jesus Mata. Ruiz had won a gold in the 2003 Pan American Games held in Santo Domingo.
On Saturday, Nancy Urraca took the gold in the 67-kilo category by defeating Heydi Juarez of Guatemala, a triple Pan American champion and the fourth-place winner at the Athens Olympics.
Luis Benitez defeated Mexican Erick Osorio Nunez to win gold on Friday in the 67-kilo men's division. Benitez is a former gold medalist in the Pan Am Games in 2003 held in Santo Domingo.
The DR improved its results since the 13th Taekwondo Championship event held in Ecuador, where only two silver and two bronze medals returned to the DR. During the Santo Domingo Pan Am Games, Dominican athletes won three gold, two silver and two bronze.
Mexico was the overall winner with 79 points, followed by the US with 74 points and the DR with 68. Some 27 countries participated.
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