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Daily News - Thursday, 20 September 2007

Fernandez in NY
President Leonel Fernandez is in New York City today. On his agenda is attending the opening of the Dominican Ministry of Industry & Commerce office in NY and meeting with Dominicans studying on government-sponsored university scholarships in NYC. Fernandez will also meet with representatives from the Global Democracy and Development Foundation at City College and will also make a presentation to the Dominican Youth Symphonic Orchestra at Manhattan City College.
President Fernandez was also scheduled to speak to an audience of investors and financial sector representatives on business and investment opportunities in the DR at the New York Yacht Club, 37 West 44th St (7:30-9:30pm), as part of the Russin, Vecchi & Heredia Bonetti law firm's Dominican Week activities.
On his NY agenda is a meeting on Friday, 21 September at Hunts Point Economic Development Corporation.
On Saturday 22 September, he will take part in an event highlighting the availability of bonds for housing in the DR for hundreds of New York-based Dominican families.
On Sunday, 23 September he is due to pitch the first ball at the New York Yankees vs. Blue Jays Toronto game at the Yankee Stadium. See the agenda of the President's trip at: http://www.dr1.com/forums/dominicans-abroad/...

Fernandez and constitutional reform
President Leonel Fernandez is once again pushing for constitutional reform saying that this would eliminate the deficiencies that have held back Dominican society. Fernandez made this statement during a panel discussion at the Center for Strategic and International Studies (CSIS) in Washington, D.C. Fernandez explains that a reform will take aspects that support social equality into consideration, as well as environmental protection and technological advancements. The President said that what motivates constitutional reform is the need to make democracy more efficient and added that important aspects like the presumption of innocence of an accused, which is currently not included in the Dominican constitution, should be considered. He also says that there is no clear definition of civil and political rights in the Constitution and it would be good to establish this legally.
Participating in the panel discussion were Flavio Dario Espinal, Ambassador of the Dominican Republic to the White House; Rosario Espinal, Professor of Sociology, Temple University; Jose Miguel Insulza, Secretary General of the OAS; and Claudio Grossman, Professor and Dean, Washington College of Law, American University. They discussed the processes of constitutional reform currently underway in the region, and further commented on the challenges and prospects for constitutional reform in the Dominican Republic. The discussion was followed by remarks by keynote speaker Leonel Fernandez, President of the Dominican Republic.

Temporary workers get insurance
A resolution passed by the National Social Security Council on 30 August, allows the Dominican Social Security Institute (IDSS) to continue giving services to workers who are part of any other ARS (private health insurance provider). According to the resolution it doesn't matter if the worker is in construction, agriculture, or works at the port. Even if the worker is only employed for two or three months they are entitled to coverage. Santiago Samora, of the National Dominican Workers Union (CNTD), explained that illegal workers are also covered under the insurance plan. He said that even if they don't have documents they are entitled to insurance because they are workers. Around 500,000 "mobile" workers will now be part of the ARS Salud Segura, which is part of Social Security.

Government signs for US$130M
The PRD political party is accusing President Leonel Fernandez of signing promissory notes for US$130 million, without Congressional authorization and in violation of the Constitution. PRD President Ramon Alburquerque and Secretary General Orlando Jorge Mera said that Fernandez took on the foreign debt behind the Dominican public's back. The PRD claims that on 12 May 2006 President Fernandez gave Felix Bautista, director of the Office of Engineers and Supervisors of State Works (OISOE), the authority to sign for the debt that would be borrowed with a foreign commercial bank for use in works carried out by his office. "The 19 promissory notes of the Dominican government are for US$6,842,105 each, or US$130 million in favor of The Sun Land Corporation RD and the HSBC Bank USA," said the politicians.
The PRD says that the money was for projects that were represented by Bautista's office and the Sun Land Corporation. As reported in Diario Libre, the debt would be used for the construction of works for the UASD university and other public works deemed priority by the OISOE office.
In the press conference, the PRD reminded the press that the Sun Land Corporation was the same company that was the intermediary for a US$132 million loan that was intended to provide equipment for the National Police, but was rejected by Congress because of the scandals surrounding that deal when it was ascertained that several items were significantly overvalued.
The PRD is claiming that no one knows what has been done with the funds and says that not even the IMF knew about the loan. The PRD is claiming that the PLD's unwillingness to sign a new IMF agreement is because of their plans to take out more loans.
Hoy newspaper reports today that a letter from The Sun Land Corporation RD, S.A. addressed to Treasury Minister Vicente Bengoa Albizu, states, that "regarding your request for an explanation about the copy of notification of the pending debt with HSBC, Panama, we hereby make it known that the disbursement carried out by this bank was to our company and thus the Dominican government has not contracted a financial commitment with this bank and the payments of the quotas have been carried out by our company."
On their website, Sun Land states that it works with Florida Export Finance Corporation and US Export-Import Bank. The company describes itself as providing financing, project management and development expertise for infrastructure development.

Coal plants would kill banana exports
The DR could lose its organic banana market if the government goes ahead and installs coal-fired power generators near the Port of Manzanillo, which is close to major banana plantations. Banana exports valued at US$54.26 million a year are at risk. Senator Radhames Pena (PLD-Valverde) warned that European importers have already notified that the dust would contaminate the bananas. "Representatives of the companies that buy organic bananas say that if the generators and coal deposits are installed, they would immediately suspend the purchase of bananas," said Pena, who is also president of the Senate budget commission. He said that the northwestern region exports on average US$2 million in bananas, or about 300 container freights. As reported in Diario Libre, there are 160,000 tareas of banana plantations, of which 60% is in small farms, 30% medium-sized farms and 10% large farms, providing an estimated 16,000 jobs. The DR is one of the largest exporters of organic bananas in the world, with Europe purchasing about 85% of the exports, estimated at more than 160,000 tons a year. The governmental CDEEE has contracted the installation of the coal-fired power generators.

Studying renewable energies
Latin American energy and security policy expert Johanna Mendelson-Forman is in the DR to promote the expanding use of renewable energies. The DR is one of four countries (the others are Haiti, St. Kitts-Nevis and El Salvador) participating in the U.S.-Brazil Biofuels Partnership outreach program. Her visit is sponsored by the Inter-American Development Bank, the Organization of American States and the United Nations Development Fund. Mendelson has advocated for a Hispaniola project on bioenergy, saying that it could create significant benefits for peace and security, and lay the foundation for greater cross-border cooperation with Haiti. Mendelson is a senior associate of the Center for Strategic and International Studies in Washington, DC.
Under the partnership, the world's two largest ethanol producers are committed to helping less-developed countries in the Western Hemisphere to promote production of biofuels from local crops, and reduce their dependency on fuel oils. The partnership also intends to advance the research in and development of more efficient biofuel technologies and to work toward a greater convergence of biofuel standards around the world.
For starters, the partnership is funding feasibility studies to determine which types of sugarcane and other plants, such as castor bean and jatropha shrubs, are best suited to local conditions and examine other factors such as soil quality, environmental impact and the potential for rural development.
The partnership was based on findings in a report, "A Blueprint for Green Energy in the Americas" prepared for the Inter-American Development Bank.
See www.iadb.org/biofuels/ and http://lugar.senate.gov/energy/hearings/pdf/060622/Forman_Testimony.pdf

Trade with Russia on the rise
Dominican Ambassador Jorge Luis Perez Alvarado says that Dominican exports to Russia are increasing. Dominicans are selling more cacao liquor, jams, cigars, rums, salamis, sausages, and a variety of products from free trade zones like pants, shirts, hats, shoes, sneakers, baby overalls, polo shirts. The ambassador explained that there is also the interest from Dominican importers in Russian vodka, metal bars, steel, automatically pressed rigid cartons, electric cables and other products. Perez said there are talks about airline services aimed at increasing the flow of tourists from Russia to the DR. Perez says that Russian investors are interested in the areas of construction, mining, petroleum and natural gas, transport, civil aviation, banking, hotels and restaurants, water works and energy distribution.

Sup-prime a la Dominicana?
Financial analyst Alejandro Fernandez warns anyone taking on a Dominican mortgage that at any given time mortgage rates could go from the present low of 11% to 18%, in a contribution to Clave newspaper today. He said that if this happens, mortgage payments could increase by 43%. He encourages borrowers to bear this in mind. This would not be the first time that interest rates soar. In 1986-87 interest rates were at 12%, but by 1989 they had quadrupled, causing many to lose their investments in real estate.
Fernandez makes the warning in the context of the extraordinary boom in mortgages in the DR. He criticizes the fact that a government development bank is offering an innovative product to young borrowers. It is being offered for a variable rate of 10.95%, and is available to homebuyers under 30 years old, with a generous financing span whereby borrowers only pay interest on the first part of the loan. Fernandez comments that this smells like the sub-prime mortgages being offered in the US.
He also warns that when market conditions change, consumers could lose their homes if they are not be able to afford the new much higher payment levels.
Fernandez says there have been 30 months of sustained triple digit growth in mortgage lending. Bank mortgages in the first six months of 2007 alone are up by 47%. He mentions that a Central Bank preliminary report points to a 79.4% increase. Meanwhile, commercial loans are only up 7%.
"The perverse and distorting incentives need to be revised," he warns. "The illusion of the present interest rates will not be able to be sustained over time. Consumers need to educate themselves and ponder their decisions. This to avoid tears of a possible hell," he predicts.

CESFRONT to the border
The Specialized Frontier Security Corps (CESFRONT) with a 500-strong contingent will be dispatched to the border next Tuesday. The group has been training for two years and will be equipped with arms, technological equipment, motorcycles and planes that will be used for surveillance. Diario Libre writes that soldiers will receive salaries and expenses. Minister of the Armed Forces Ramon Aquino Garcia explained that the soldiers will guard against people and goods smuggling, and increase security for residents in the region.

Traffickers winning the drug war
Though Dominican officials have increased their surveillance around Dominican territory in the fight against the illegal narcotics trade, drug traffickers have also increased their attempts to introduce drugs into the country, and seem to be succeeding. In the last thirteen months the DR has been bombarded by an increase in drugs from South America. Officials have seized more than eight tons and arrested 17,133 people during this period. South American cartels are using the DR as a drug hub, or stopover point for drugs on their way to Europe or the US. Diario Libre quotes a story that came out in the Colombian newspaper El Dia, which explains that minutes after the drugs are packaged in Colombia they are in the air on their way to Venezuela where they are then be transported to the DR. According to the National Drug Control Department (DNCD) the eastern and southern coasts of the DR are the most vulnerable. But the DR is not alone in its troubles with the drug trade. Most marijuana, according to Diario Libre, is entering from Haiti, and of the 17,133 arrested 245 were from Haiti, the most from any country. US citizens were next on the list with 39, Dutch with 37, Colombians with 21, Spanish with 20 and Puerto Ricans with 14. Officials have seized RD$3,928,079 and US$520,762 in cash at national level and in the National District RD$1,325,525, US$463,210, EU900,110, RD$869,299 in cash, 30,000 Venezuelan Bolivares and 240,000 Colombian Pesos.
During his stopover in Washington, D.C. as part of a 13-day US tour, President Leonel Fernandez met at the Department of State with Deputy Secretary of State John Negroponte and expressed his concern of the consequences in the DR of the increase in drug trafficking.

Things get dicey at AILA
Diario Libre is reporting an alleged plot to kill AILA security chief Colonel Juan Francisco Tejada Genao and Major Joran Baez Fernandez. The twist is that a high-ranking official of the Marine Corps has been arrested in connection with the assassination plot. Major General Valentin Jaquez Lopez, director of Armed Forces intelligence, has confirmed the plot and says that the official will be tried as a civilian. Listin Diario is reporting that other military officials, both active and retired, are also being investigated for their involvement in the case and writes that three ex-members of the Specialized Airport Security Corps (CESA), who had been fired because of bad conduct, are also being investigated in relation to the plot. Listin Diario also writes that the supposed targets of the plot had detected various drug shipments at the airport in recent weeks, linking the plot to the drug trade. The persons hired to kill Colonel Tejada were to be paid RD$650,000 for the crime.

Drivers could cause gas shortages
The Autonomous Petroleum Drivers Union (SACTPA) is threatening to go on strike next Thursday if gasoline distributors don't increase their salaries. The union wants RD$35,000 a month wages for drivers with one to three years of service; RD$40,000 for four years of experience; RD$45,000 for four to six years experience; RD$50,000 for eight years experience and RD$55,000 for 10 years experience. Union head Clemente Morillo says that Esso, Texaco, Shell and Isla have a monopoly on fuel distribution and says they don't want to enter into a wage increase dialogue. Morillo called on Industry and Commerce Minister Melanio Perez and Labor Minister Jose Ramon Fadul to urge the distributors to begin discussions.

Hotel Montana and politics
Diario Libre reports the government violated Law 141-97 when awarding the lease of the Jarabacoa Hotel Montana, to Pareatis, S.A. Law 141-97 establishes that the Commission for the Reform of Public Enterprise (CREP) is the entity in charge of leasing or capitalizing state hotels grouped under Corphotel, a division of the Ministry of Tourism. The law also establishes that a tender needed to be held in order to lease the property.
Recently, the Ministry of Tourism and the new Corphotel director, Freddy Majluta announced the leasing of the hotel to show business promoter Felix Cabrera Castillo of Pareatis. Diario Libre mentions that a tender was not held. The 35-year lease establishes that the company would pay US$2,000 a month for the mountain property, with a 10-year grace period, so that the company may recuperate its proposed RD$300 million investment during the period. The renovations funded by the state at the hotel are advanced. The contract establishes that Pareatis would invest RD$25.7 million to complete the remodeling by early next year. The contract establishes that the company would make a RD$300 million investment in the hotel through 2010. Press reports indicate that the government has already advanced the renovations 80%.
Diario Libre reports that the contract enables Pareatis to lease sections of the hotel to third parties, and authorizes the exemption of all taxes on operations and construction.
Trajano Santana, of the PRI political party, founded by a brother of Freddy Majluta, said that the lease was awarded to Felix Cabrera in payment of a political debt, as reported in Diario Libre. Reportedly, Cabrera paid at his expense for live entertainment for Fernandez's campaign. Santana mentions that the contract is in violation of Law 340-06 on public contracting.
The newspaper reports that Felix Cabrera is the organizer of the United Palace show on 22 September in NY and another on 23 September in Boston for President Fernandez's electoral campaign among expatriate voters in those cities.

Selimans leave PRSC
The PRSC political party lost long-standing member Eduardo Estrella after he claimed irregularities in the primaries. Now word is out that Juan Luis Seliman, PRSC Secretary of International Relations, and long time PRSC member has announced that he, and his wife Sergia Elena, Organization Secretary, will be leaving the party. They say these are disappointed in the direction the party has been taking.

Reckless driving injures two
Reckless driving by a bus driver has led to two UASD students being sent to the Dario Contreras Hospital with serious injuries. Listin Diario writes that Johanny Garcia was taken to intensive care with a pelvic fracture and a leg fracture. Awilda Cuevas was also taken to the hospital with injuries to her clavicle and head. UASD authorities took driver Jeronimo Alfonso de los Santo Reyes to the police.
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