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Daily News - Thursday, 19 March 2009

Fernandez: Growth with stability
In a speech on "Building the DR of tomorrow: vision and priorities for the next five years" at The Economist Conference yesterday, President Leonel Fernandez expressed his optimism that the DR would weather the financial storm. He blamed the DR's present economic troubles on the external economic crisis, but he stressed that his administration's goals are to maintain macro-economic stability and reduced inflation while stimulating growth.
He commented that The Economist analysts expect a negative one percent growth for the DR in 2009, but this compares to the Central Bank's 3% growth forecast. He says he is optimistic that growth will be higher. He attributes this to the relief in the lower price of petroleum (down US$2 billion from 2008), food products and some imported inputs, and to major projects under way or soon to be started.
At the conference, President Fernandez presented the panorama of how the world had gone from US$147 per barrel of fuel to US$34 this year. In the DR this meant that from inflation that had been forecast to end 2008 at 12%, the year had closed at 4.5%. "We went from a scenario of high inflation in 2008, to the current opposite concern - recession. It is something unheard of in international economic spheres. More than an economist, we need a psychiatrist to understand the abrupt changes that are taking place." Nevertheless, he stressed that the Dominican authorities are seeking to maintain stability while guaranteeing growth.
He says main projects that will get under way this year are the Coral Highway (La Romana-Punta Cana) with a US$300 million loan being secured with the Corporacion Andina. The Viadom road concessions and improvements project for the remodeling of the Duarte Highway, Santiago roundabout road, and the expansion of Navarrete to Puerto Plata to four lanes. This highway expansion should start in 45 days, he said.
He also spoke on the progress made on the start of the second line of the Metro and the train from Haina to Santiago. He expects the private sector to come up with US$4 billion for these projects.
Fernandez also said that growth would be spurred by several tourism projects that have been approved and should commence shortly.
"Our strategy is to overcome the crisis with our own internal dynamics," he said. He forecast that remittance, tourism and direct foreign investment flows would remain similar to 2008 levels.
On the question of exports, he said the decline in the cost of imported petroleum would offset the expected decline of US$900 million in exports.
He defended government spending, saying that percentage-wise his administration's spending was below that of other Latin American countries. He said the forecast for this year is a 1.7% fiscal deficit, compared to 3.7% in 2008.
President Fernandez nevertheless said that the DR needed to change its economic model in the medium and long-term. He said the country needed to diversify and back its productive sectors - industrial and agriculture, without abandoning the services sector. "How to be part of the global value chain by expanding, identifying and developing products with a greater value added to sell to international markets, generating greater wealth and guaranteeing long term sustainable development," he said. "It is clear the DR has to make the most of the trade agreements it has signed with Central America and the Caribbean, the USA and the European Union", stressed the President.
He made the point that the DR only exports to the USA and some to Europe. "We do not have a presence in Latin America," he said. "We have to tackle increasing our international commerce", he told his audience of businesspeople.
He said that his government is aware of the need to invest in education, and is focusing on higher education and technical training.
Fernandez said: "For the DR to fail, first the world has to fail. And the international effort that is being made is one so that the world will not fail and it makes me optimistic about the DR's future."
President Fernandez backed the implementation of the National Competitiveness Council's National Competitiveness Plan.
Fernandez is also optimistic that the country will be able to put the RD$70 billion in national pension funds to work.

What to expect from Trinidad Summit
President Leonel Fernandez spoke of several issues on the minds of Latin American statesmen as they prepare to meet with US President Barack Obama in Trinidad this coming 17-19 April for the Fifth Summit of the Americas. "Obama has not yet had 100 days in government, and thus there is nothing definite about his policies with Latin America. There are positives signs on one hand, and indicators that raise concern on another," said Fernandez. He mentioned dismantling of the Guantanamo jail as positive, the lack of action following the referendum in Venezuela that allows President Chavez to run again, and the lack of intervention in El Salvador after the election of a leftist candidate.
On the negative side, he mentioned the impediment on Mexican truck drivers transporting goods to the US. This was responded with protectionist policies by Mexico. "There should be dialogue," he said.
Fernandez said that the topic of the moment is security, drug trafficking, which he described as "alarming" in the case of Mexico. He said that the intensification of the war in the Middle East had left this region to its own devices, and as a result drug dealing has soared. He said that although Plan Colombia has succeeded, drug dealers moved to Mexico and the Caribbean. "There could be changes in the US government anti-narcotics policies, and we hope for increased cooperation," he said. He expects migration, trade, foreign investment and drug trafficking to be the common agenda of the summit.
Earlier, Eduardo Gamarra, director of the Latin America and Caribbean Center at Florida International University, also spoke on the upcoming summit. He told the audience not to expect much from the meeting between President Obama with Latin American statesmen in Trinidad & Tobago in April. "What is most important is that Obama is going to Trinidad to listen and learn," he said. He also said it is important to note that this is the first Summit of the Americas where a large delegation from the US Congress will be participating with an important agenda. And while he does not expect major announcements of joint projects, he would not be surprised if a FTA were signed with Panama this year and with Colombia next year, despite what was said in the presidential campaign. He said the topic of security would be a key one for the summit.

Clientelism - the enemy of development
Speaking at The Economist Business Roundtable in the DR at the Santo Domingo Hilton yesterday, Eduardo Gamarra, director of the Latin America and Caribbean Center at Florida International University, warned Latin American countries to take note that clientelism in Venezuela is what led to the current authoritarian regime. "We still have time to build a more responsible capitalism, but we need more democratic political parties," he said at the conference that focused on how the DR and Latin America are responding to the international financial crisis.
Gamarra said that security has become a leading matter of concern in Latin America. "It is not a time for demagoguery, it is a time for creativity and responsible government policies".
Gamarra also says the biggest challenge in Latin America is one of perception, and how countries are going to react to the crisis.
Ian Vasquez of the Cato Institute, who also was a panelist at the conference, challenged the notion that open markets had failed. He said the debate was not over, adding that what there has been is deficient government institutions in Latin America. "The size of the informal sector says that people are rejecting what is formal," he said. He favors the building of states where the rule of law prevails, such as the United States and Europe were able to create as their institutions evolved and strengthened.
He said that Latin America has 25 years of economic opening, and that reducing tariffs and privatizing companies is an easy task. "But to change a country's institutions takes time and is infinitely more complex," he said.
He commented that in Latin America only Chile could be described as a state with a rule of law. "And it is the most economically open country," he said. He said that developed countries became so by strengthening their institutions. "They first found ways of limiting government power," he said.
Vasquez says it is not clear how the crisis will affect Latin American countries and how countries will react. He said that some countries have responded by opening their markets further, like the case of Peru seeking a trade agreement with China. He forecasts, though, that all countries that maintain a populist model are going to have serious problems. He mentioned Argentina as one where policies are unsustainable. For Venezuela he forecast more centralization and loss of citizen freedoms.

Private borrowing way down
Economist Hector Guiliani Cury says that individuals and businesses are borrowing less due to the relatively high interest rates that continue to prevail, as reported in Hoy. He said that bank credit to the private sector declined by RD$9.8 billion from December 2008 to 6 March 2009, by RD$8.6 billion from December 2008 to 26 February 2009, and RD$6.2 billion from 30 Jan 2008 to December this year. He said that in the 12 days from 2 February to 6 March 2009, bank credit declined by RD$1.3 billion.
He said that the decline in borrowing reflects the drastic contraction of the economy as a result of the reduction in consumer spending and private investment. He attributed this to the Central Bank's restrictive monetary policies. "It is evident that the small decline in bank interest rates, registered to date, has not been enough to prevent the decline in borrowing, and much less to increase it," said Guiliani Cury. He said that the authorities wanted to stimulate demand and reactivate the economy, but in order to do so they need to significantly increase money in circulation and reduce the rate on deposits to the minimum so that banks, finding themselves with excess liquidity, would then reduce the interest rates and consumers may resort to credit for their purchases.
Guiliani Cury says that a successful monetary policy is measured by an increase in borrowing, not by a reduction in interest rates. He said that of the RD$7.5 billion the Central Bank released from bank reserve restrictions, the banks have only lent out RD$700 million. Guiliani Cury called for a reduction in the bank reserve levels and a ban on the Central Bank placing certificates of deposit during the duration of the economic contraction.

Environment seeks to protect manatees
Five manatees, a protected and highly endangered marine mammal, have been found dead over the past six months in waters off Samana in the north of the Dominican Republic, according to a report from the Ministry of the Environment. The Ministry seeks to raise public awareness about protecting these docile animals.
This information is contained in a report after Tuesday's discovery of another dead manatee, an inhabitant of tropical rivers, in the Colorao River mangroves near Sanchez in Samana province.
The police have detained one person in connection with the death of the 2.5 meter adult female that was found wrapped in an illegal fishing net, with trauma and cuts caused by the dragnet and tied in a rope.
Ministry experts believe that the mammal was trapped alive and taken to the spot where she was found, possibly four or five days ago. The female was found in an advanced state of decomposition after local fishermen complained to the local environmental authorities.
This is the second female manatee that has been found in Sanchez area in less than a week, according to a Ministry press release. The use of illegal dragnets by some fishermen in Sanchez and Sabana de la Mar is the principal cause of death of these marine mammals. Over the last two months, inspectors and specialists from the Ministry of the Environment and Natural Resources have seized more than 100 illegal nets and outboard motors that were being used in this "destructive and criminal" type of fishing.

Water concerns
The DR has a 2,378 cubic meter per capita demand for water per year, which classifies it as a country with high water consumption. But water supply does not meet the demand, and there are ongoing water-related tensions.
This statement is contained in a joint declaration by the Ministry of the Environment and the state organizations that deal with water (Indrhi and Inapa, for example) to celebrate World Water Day on 22 March. The institutions warn that the country has relatively low water availability and a culture of high consumption and poor use, with losses in the order of 50% of the production of the supply systems of potable water that reflect an efficiency of irrigation of just 25%.
The document emphasizes that the country has approximately 12 billion cubic meters of water that represent 49% of the usable water, so the water shortage index is very low, and this "could produce a limiting factor for national development, if the proper measures are not taken to face up to the situation."
The institutions said that despite the fact that water occupies three quarters of the earth's surface, thousands of its inhabitants suffer shortages and even die of thirst, because 97.5% of the water is saltwater, leaving just 2.5% of fresh water. "Despite this reality, the per capita consumption of potable water in the country is high, surpassing in some urban locations 500 liters per person on a daily basis, when international standards specify a rational consumption of 200 to 250 liters per person per day," according to the document. Executives from the institutions responsible for preserving the nation's fresh water attended the ceremony.

Army docs fill in for strikers
The first day of the two-day strike called by public hospital doctors and other health service unions as part of their bid for a 40% pay increase was completely successful. The Public Health and Dominican Social Security Institute (IDSS) doctors and other professionals on strike turned up early to their workplaces, but they did not go to their offices, instead staying in the front of the hospitals where they were seen early in the day. Others, such as those at the Francisco Moscoso Puello Hospital, marched around the hospital trying to get patients and passers-by to support their cause, but not the authorities, which maintain that conditions do not allow for a salary increase. According to Diario Libre, in the face of this reality, public hospitals managers followed orders from the Minister of Public Health, Bautista Rojas Gomez, and provided consultations for patients who went to the health facilities, along with doctors from the armed forces who worked in the hospitals and due to their status as military personnel are prohibited from taking part in strikes. "Income in the country fell in January and February, so talking about wage increases is a fantasy," reiterated the minister. With this attitude and without any specific proposals for the sector, Rojas Gomez says wage increases can only be pegged to productivity, location and on-duty services.
Waldo Ariel Suero told reporters that this time the doctors and other support personnel are united. The Dominican Medical Association (CMD) president took advantage of the strike to denounce the shortages that affect their work at public hospitals, ranging from lacking medicines to surgery gowns.
The Health Minister reported that thousands of consultations and surgeries were carried out in the public hospitals, which shows that the population heeded the call by the authorities to go to the health centers for medical care. Rojas Gomez said that the logistics put in place have worked and promised that they would remain for the duration of the strike.

PC conditions second phase
The executive director of civilian watchdog group "Participacion Ciudadana" - Citizen Participation or PC - said yesterday that the second phase of the Summit for National Unity in the Face of the World Economic Crisis would not be successful unless the government complies with the agreements reached during the first phase. Javier Cabreja said that the government has not fulfilled the recommendations of the first phase of the Summit nor has it said which proposals it would start with. Some 440 proposals were considered to have been agreed upon.
The PC spokesperson said that with many of its practices and actions, the government sends signals that are contrary to the results of the Summit. He pointed out that the state should be austere in its spending in the midst of the international financial crisis. Cabreja said that that the seminar participants had insisted that the government should prioritize its spending, especially on health and education, and this has not happened. He pointed out that the Fernandez administration only justifies its employees' supernumerary payrolls. The PC executive director said that the government is not sending the right signals needed to meet the proposals.

Constitution reform starts Tuesday
The presidents of the Senate, Reinaldo Pared Perez and of the Chamber of Deputies, Julio Cesar Valentin still differ over the question as to whether either or both chambers will be able to legally hold regular legislative sessions when the Constitutional Revisory Assembly is in session starting next Tuesday. Valentin told reporters covering Congress that he was opposed to the legislative chamber holding separate working session during the reform process. Both Pared Perez and Charlie Mariotti (PLD-Monte Plata) have stated that they believe that the Constitution does not prohibit the Senate and the Chamber of Deputies from going about their usual legislative duties during the breaks of the Revisory Assembly. In fact, both senators have warned, in separate statements, that the country could be affected if some legislative proposals are left aside until the reform process is complete.
One conclusion from yesterday's meeting between the two chamber leaders was that the assembly would definitely start on Tuesday with the recognition of the rules and regulations for the sessions, and more importantly, the debates.
In expressing his disapproval about double duty by the legislators, Valentin asked whether the members would be able to handle the workloads of both the Constitutional Reform and routine legislative procedures. He pointed out that the work schedule for the assembly still needed to be worked out as to just when the assembly would go into session and at what times. The constitutional sessions will be televised.

Four proposals die in Congress
Four legislative proposals aimed at modifying several articles of the Penal Process Code have lapsed in the National Congress. This was proven in the offices of the secretaries of the Senate and the Chamber of Deputies. The proposals were presented at the end of 2006 by the Executive Branch and deputies Pelegrin Castillo Seman, Julio Cesar Valentin, Jose Ricardo Taveras, Santiago Vilorio Lizardo and Jose Luis Gonzalez Sanchez. The bills included modifications aimed at increasing penalties for persons who are not properly identified or who are found to be carrying more than one identification and voter registration card (a "cedula"). The list of expired legislation also deals with flight risks, people who have difficulties in obtaining bail, and people who committed several crimes and have a police record. The first proposal was presented by Pelegrin Castillo and was sent to the Justice Commission after being debated in the chamber. President Leonel Fernandez sent the second proposal to Congress in June 2007 and the third was written by Deputy Jose Ricardo Taveras Blanco in September 2007. Last September, Deputy Santiago Vilorio Lizardo presented another project but it too ran out of time.

Council members revoke wage increase
National District City Council president Winnie Terrero said yesterday that they are willing to revoke the measure that rounded up their salaries to RD$150,000 per month. This announcement follows the public outcry caused by the news of the pay increase. President Leonel Fernandez has condemned the measure, which was also rejected by the three main political parties. The last to do so was the Dominican Liberation Party (PLD), warning its party leaders on Tuesday that if they did not revoke the wage increase, penalties would be applied. "I, as president of the City Council, and member of the PLD accept the Political Committee's decision, in the sense that anything that appears to be a wage increase shall be rejected," Terrero told Diario Libre.

Transport strike in the east
Transporters in the eastern region protested today by not taking on passengers. Only buses transferring passengers to and from Punta Cana International Airport operated as usual, as reported in Listin Diario. While the strike caused major inconveniences for those who work in the area, protests have been peaceful. The unions seek to put pressure on the government to speed up works to improve the highway linking Higuey to Punta Cana resorts. They also demand the resumption of construction works on the Tourist Boulevard, the repair of the highway from La Romana International Airport to Bayahibe and Casa de Campo, and repairs to the Miches-El Seibo, Sabana de la Mar-Hato Mayor-San Pedro-La Romana highways.

Drug dealers worked in public
Revelations of complicity between the police and members of the National Department of Drug Control (DNCD) with the heads of the main drug gangs in Puerto Plata enabled the dealers to operate in public places, according to a report from a commission that investigated 31 cops in Puerto Plata who were arrested but later controversially released by a Puerto Plata judge. The document indicates that the drug points were visited by a large number of people, as if it were a drug-consumption "tolerance zone" as exists in some European countries. As part of the investigations that resulted from complaints about the growth of drug trafficking in Puerto Plata, Angel Rafael Almanzar Fernandez, said to be a well-known drug distributor in the region, told investigators that in order to establish a drug distribution point in Puerto Plata one had to "make a down payment' to members of the police investigation units and the DNCD, as well as establishing a weekly sum to be paid to each institution. The amount was in accordance to the volume sold at each point. Almanzar said he could prove that members of the police who were stationed in the region were directly linked to Franklin Hidalgo Batista (Franklin el Gallero), known to be the leader of the Gang of 42, which controls several distribution points for narcotics in the towns of Sosua, Maranatha, Charamicos, La Union and Montellano in Puerto Plata and Espaillat provinces. The report said that they had evidence that the members of the Gang of 40 and the Gang of 42 had major differences over drug distribution points. The Gang of 40 is led by Miguel Ozoria, and the late Julio Cesar Garcia was a member. Because the confrontations between the police and the drug dealers "got everyone in trouble", both groups reached an agreement allegedly so that "everyone could make a living from the drug business," according to the report.
See: www.elcaribecdn.com.do/index.php?option=com_content&view=...

Quirino's nephew arrested as he left jail
A strong contingent from the National Police was on hand yesterday morning to arrest accused drug trafficker Quirino Ernesto Paulino Castillo's nephew as he left Najayo Prison under a release order from a San Cristobal Court of Instruction judge. Raffy Castillo, 30, was violently bundled into an SUV by police agents in the prison parking lot. Castillo was in preventive custody accused of the death of a Spanish businessman killed in mid-2008. Because of this case, the Supreme Court (SC) ordered an investigation into magistrate Regina Carvajal Viscaino who had ordered Raffy Castillo's release from custody. The police arrived early in the morning, led by Colonel Genaro Suero Jimenez and officers from the Santo Domingo investigative departments, and took up spots along the front of the prison to wait for Castillo to be released. The troops were accompanied by Appeals Court prosecutor for the jurisdiction, Jesus Fernandez Velez and District Attorney Faustino Culinario. Police officials did not explain in detail their motive for arresting Castillo, whose mother fainted and had to be helped by lawyers and relatives who were on the scene. According to reports, the accused was transferred to the Palace of Justice in Ciudad Nueva in the National District to answer to charges for other acts he allegedly committed. His lawyers, Joaquin Belisario and Ruddy Polanco, complained that their client had been kidnapped by the police, since they presented no documents in support of his re-arrest.

Paya weapon ballistics tests negative
Ballistic tests on the barrel of the assault rifle that was supposedly used to kill six foreigners in the community of Paya in Peravia province were negative, according to Diario Libre. This complicates the case that has been described as the most important settling of accounts that has occurred in the country in the last 50 years. Sailors being held in Najayo prison say that they were offered US$200,000 to keep quiet about the mafia chiefs who acted in the killing of the seven Colombians, but they refused.
At the same time, it is rumored that the sole survivor of the massacre, Nicaraguan Orin Clinton Gomez Halford left the country some time ago.
A report presented to Attorney General Radhames Jimenez that is due for release soon, may well complicate the case even further. Now, it seems that the relatives of Frederick Medina Abud, a former National Police major involved in the killing released a letter supposedly written by the sole survivor of the massacre, and apparently exonerates the former policeman. The handwritten letter, said to be "full of spelling mistakes", was supposedly sent to Medina Abud last 19 February by Nicaraguan Orin Clinton Gomez Halford. According to the letter, Gomez Halford said that he had mistakenly identified Medina Abud as one of the participants in the massacre because he was in a convalescent state.
Medina Abud has been held in the public jail at Najayo since last September after being remanded in protective custody for 18 months. Together with Medina Abud, seven members of the Navy and six civilians are in jail; the former are accused of committing the crime and the latter for planning it.

Green alert issued by COE
The Center of Emergency Operations (COE) has issued a Green Alert for the residents of the provinces of Barahona, Independencia and Bahoruco, due to heavy rains caused by airflows from the southeast and pre-frontal conditions over the Windward Passage. The COE recommends that residents of these three provinces who live near creeks, rivers and streams should be on the lookout for flash flooding. The bulletin, issued late Wednesday, also says that people who live on mountainsides should take precautions against landslides. The National Meteorological Office (ONAMET) says in its bulletin that the weather will be influenced by a combination of wind flows from the southeast that carry a lot of humidity. Onamet is forecasting rains over much of the country due to a frontal system over the Windward Passage that is moving slowly eastwards. The heaviest rains are expected to fall in the northwest, the southwest, the west and the central mountains.
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