Democracy at the Crossroads: Economic and Political Crisis in the Dominican Republic

Participants:
Emelio Betances, Gettysburg College
Lilian Bobea, FLACSO-Santo Domingo
Rosario Espinal, Temple University
Jonathan Hartlyn, University of North Carolina
Hans Hertell, U.S. Ambassador to the Dominican Republic
David Lewis, Manchester Trade Ltd.
Manuel Orozco, Inter-American Dialogue
Pedro Silverio, Pontificia Universidad Católica Madre y Maestra
Bernardo Vega, former Dominican Ambassador to the United States

On April 21, 2004 the Latin American Program held a conference on "Democracy at the Crossroads: Economic and Political Crisis in the Dominican Republic" to analyze economic and political trends and the context in which the upcoming elections will take place, and provide a forum to debate the nature of the crisis and the outlook for the future with leading experts on the Dominican Republic.

The morning panel looked at the economic crisis in the Dominican Republic. Pedro Silverio described the problems that led to the economic crisis including the dollarization process and the resulting currency devaluation, fiscal deficit, lack of foreign investment, and poor management of the economy at the macro level. Silverio argued that the crisis should be attributed more to poor domestic policy because external shocks were not present in last year's economic performance. Silverio also described the challenges associated with bringing the Dominican Republic out of economic crisis. These include: encouraging faith in democracy by incorporating social policy considerations into the framework of the financial crisis, resolving the banking crisis, subsidizing the electric system, reducing the government payroll (which is one of the highest in Latin America), implementing fiscal reform to make the tax system more flexible, creating an environment in which businesses can flourish and also that attracts investment, and maintaining a positive attitude about the future.

Manuel Orozco discussed the framework of the relationship between migration and development in the context of globalization and the nature of remittance flows in the Dominican Republic. The Dominican Republic is second in terms of remittance flows (in terms of income) in Latin America after El Salvador and it falls in seventh place worldwide. Therefore, when looking at the Dominican economy emigration must be taken into account in the income equation. Remittances impact the Dominican economy in several ways: they have a distributive effect (they are spread among different classes and also between urban and rural areas); they are also stable and growing over time; they come in a counter-cyclical cycle (increasing during times of recession); and they form part of the broader economic context.

David Lewis examined the trade situation in the Dominican Republic. He focused on four issues: the position of the Dominican Republic in the global economy, the hemispheric challenges, US-DR bilateral relations, and free trade agreements. Lewis said that the Dominican Republic has focused on the U.S. market because of high consumption levels in the United States. It is also pursuing the Free Trade Area of the Americas and CAFTA but he noted that these are in a period of review and could be set aside due to the upcoming US election. Lewis also argued that trade liberalization and expanding trade agreements would encourage political liberalization, just as in Mexico, by bringing new actors into the policy process. He added that the Dominican Republic should focus on transforming non-competitive sectors, establishing fiscal balances and forming predictable economic policies. There is also a need to have a long-term vision about the Dominican Republic's economic reinsertion, which takes into account the challenge of macroeconomic transformation that would bring more employment opportunities for Dominicans. However, the key challenge is to institutionalize and make permanent the economic reform of the country, and to consider the linkage between economics and politics.

The keynote address by US Ambassador to the Dominican Republic, Hans Hertell, highlighted links between the United States and the Dominican Republic and the strength of the bilateral relationship. Dominicans and Americans have a close relationship because many Dominicans reside in the United States and vice versa. The Dominican Republic was also one of the first countries to join the coalition of the willing and send troops to Iraq. While alien smuggling, drug trafficking, and illegal migration remain as challenges, both countries are working to sort out these issues. The ambassador also discussed the economic crisis while noting that he felt the term "crisis" was no longer an appropriate term to describe the state of the economy since two main problems are being resolved including the banking fraud crisis and the negotiations with the International Monetary Fund (IMF). The auditing of the banking system has been completed, banks are moving to correct inefficiencies and restructure management, and the government has taken an active role in monitoring this process. The IMF has approved a revised standby agreement and President Mejía has ensured compliance with the terms. With regard to the upcoming elections, Ambassador Hertell stated that the United States has no favorites and simply encourages free, fair and open elections. While he expressed confidence that these standards would be met, he said that because of the concerns of many Dominican citizens, the United States has provided assistance to the Organization of American States to enable them to send observers.

In the afternoon session, panelists discussed the challenges to democratic governance. Rosario Espinal focused on the role of political parties and civil society in the Dominican Repubic. The three main political parties, the PRD, the PLD, and the PRSC, capture the votes of most Dominicans (about 95 percent) and have provided stability for democracy and the political system in the Dominican Republic. Espinal noted that civil society played a very important role in Dominican politics including encouraging the transition to democracy and in making elections more transparent. She argued that despite the political stability in relation to other Latin American countries, the Dominican Republic still faces some destabilizing problems such as the failing economy, the recent fragility of the political parties and the retreat of civil society.

Jonathan Hartlyn focused his comments on the problems of electoral democracy in the Dominican Republic. While some progress has been made in terms of voter registration, transparency, and monitoring; several problems still exist. First, the Central Electoral Board combines three functions- administrative, regulatory and judicial- which creates conflict of interest issues. Second, autonomy and credibility are in jeopardy because of the way in which judges are named and because the terms of the judges are too short. Referring to President Mejia's decision to run for reelection, he said that while he does not oppose reforming the constitution to permit such a change, it is worrisome that the rules are being changed mid-stream.

Bernardo Vega discussed the relationship between the media and politics in the Dominican Republic. By the year 2000, all Dominican newspapers except one were owned by bank groups. With the bank failures of 2003, the government became manager of these assets and often uses them so serve political purposes. Devaluation has had an impact on all forms of media so that these businesses are no longer profitable and rely on government subsidies. Because of the current structure of the media in the Dominican Republic several problems have arisen: it is difficult for a newspaper owned by a bank to criticize another bank, businesses owned by people who own newspapers, major clients of banks, and the central bank or monetary policy. He stressed that legislation should be passed that bank owners can not also own media but noted that he is pessimistic that the system would change because the media is too important of an asset for the government to get out of the business.

Lilian Bobea described the institutionalization of state violence in the Dominican Republic arguing that police violence is not a product of one man's leadership, but rather a reflection of a subculture of extermination that persists in the absence of functioning criminal justice procedures. She states that state violence is used for both social cleansing and political control and is directed at specific social groups, especially the poor. The Dominican Republic also has one of the largest police forces in the region in terms of per capita percentages yet the police show serious deficiencies in preventing crime and protecting citizens. The structure of the police force is also highly centralized yet is functions autonomously from the Ministry of the Interior or Congress. She noted that police reform would not be easy but that important structural changes must take place in order to change the "institutional culture" of the police and that the reform of the security forces should be framed within larger concepts of democracy and citizen security so that the reforms would be aimed at the protection of civil guarantees, rights and he rule of law.

Emelio Betances' comments focused on the role of the Catholic Church in Dominican politics were based on interviews he conducted with various church officials. He said the Catholic Church plays a continuing role in mediation and is effective because it presents itself as a non-partisan actor. As an example, he mentioned the case of Guatemala, where the church was "instrumental" in the peace process. Betances talked about different types of mediations and the presence of a tripartite dialogue among labor forces, businessmen, and the government. In this dialogue the church is seen by many Dominicans as a "broker of agreement". The Church has also been able to promote democracy including some important reforms such as a follow-up commission to examine the actions of the electoral commission.