Analysis: Mejía vs. Fernández in Dominican Republic election

by Sam Goble

Friday, May 7, 2004

WASHINGTON, USA: According to the Council On Hemispheric Affairs, President Hipolito Mejía, by luck or design, has avoided the kind of major corruption scandal that has plagued previous Dominican administrations, but his administration hasn’t been squeaky clean either.

Unlike former President Leonel Fernández, whose administration had a near 100 percent rating in its tolerance of corruption and a near zero in terms of improving living standards of the poor, Mejía’s social programs genuinely aided the fight against poverty.

The return of Fernández to the Presidential Palace would mean the same corrupt elite that was guilty of grossly plundering social funds and betrayal of pubic trust which was witnessed during his first presidency would, without question, be back in business.

While meekly subordinating the country’s foreign policy to Washington’s agenda, including joining the coalition of the “unwilling” and even sending troops to Iraq (who are now being withdrawn), President Mejía made some progress in establishing the nation’s international reputation by improving the nation’s human rights record and respecting and expanding its democratic institutions.

However, Mejía committed a serious act of misjudgment by deciding against investigating and bringing charges against Fernández and those in his administration who were alleged to be involved in the embezzlement of public and quasi-public funds.

Fernández and a number of officials in his PLD party should have been tried and sentenced, if found guilty, for their role in the Temporary and Minimal Employment Program (PEME) scandal.

Despite serious economic challenges and a hugely expanded foreign debt, Mejía has weathered the crash of his nation’s three largest banks and a global recession without curbing democratic rights.

In a region of the world where the fatal afflictions of corruption and elitism are institutionalized in the political process and practice in government offices, the Dominican Republic certainly is no exception.

On Sunday, May 16, voters on the island will choose their next president. The election is a match between choosing to regress by calling back a known group of tainted insiders who thrived during the former Fernández presidency – some of whom have been investigated and charged with very serious crimes – or to return to office a somewhat flawed figure in the person of incumbent President Hipolito Mejía.

Even so, Mejía makes for an incomparably more suitable candidate than former President Leonel Fernández, who is almost certain to deliver more of the same.

Fernández’s party, the Dominican Liberation Party (PLD), was voted out of office in 2000 in a remarkably free and fair election, by Dominican standards. At that time, voters were eager to express their mounting distaste over the corruption that permeated throughout the Fernández administration, which was fortunate enough to be in office during years of unprecedented economic growth and development.

In the 2000 election, in spite of relatively good times, Dominicans rejected the PLD candidate and replaced Fernández with Hipólito Mejía and his Dominican Revolutionary Party (PRD) in convincing fashion, giving the latter control of the executive branch, a majority in the upper house legislature, and near control of the lower house.

Throughout the 1990s and into 2001, tourism and manufacturing—principal assembly industries—sustained the economy’s impressive seven percent average annual growth. The expansion of the assembly sector was also buttressed by substantive remittances coming from overseas Dominicans mainly living in New York.

However, during the last two years, the hopeful signs exhibited early in Mejía’s administration gave way to an atmosphere of scandal as well as global recession. Remarkably, none of the corruption has of yet definitively implicated President Mejía.

One year ago, the international community witnessed the implosion of the Dominican Republic’s third largest private financial institution, Banco Internacional (better known as Baninter), due to colossal fraud engineered by the bank’s owners and administrators. The impact on the Dominican economy was devastating.

By January 2004 – seven months after the bank’s collapse – the peso’s exchange rate had fallen to 50-1 against the dollar and has yet to significantly recover. The economy looked like it would surrender all of the gains won during the 1990s, one of the most sustained economic surges in the history of Latin America.

To make matters worse, the IMF recently suspended a vital loan intended to help the Dominican Republic avert default in its scheduled foreign debt payment, citing reasons such as President Mejía’s purchases of two private energy distribution facilities which once were state-owned, as well as increased spending on major public programs that have served to bolster Mejía’s good reputation among the poor. The IMF eventually recanted on its threats and the loan was dispersed, but not before the peso slid even further against the dollar.

Despite a stagnant economy and a then existing constitutional provision prohibiting the president from seeking a second term, Mejía boldly sought re-election. He maneuvered his PRD party’s 29-3 absolute majority in the Senate and near-majority of 73 of 150 seats in the lower chamber in order to successfully amend the constitution in order to allow him to run for a second term.

In the wake of this virtual coup, Mejía’s party rivals, Vice President Ortiz Bosch, Tourism Minister Rafael Subervi Bonilla, and former PRD party president Emmanuel Esquea, pulled their support from Mejía after he announced his intention to seek re-election. They claim that Mejía had manipulated the primary elections in order to purge 475,000 votes from the party’s membership list. This action has caused a simmering schism within the PRD party.

Nonetheless, Mejía’s run in the party’s primary went relatively unchallenged, as he received 95 percent of the vote. However, ironically enough, the same constitutional amendment that made Mejía’s re-election bid possible also created an opportunity for one of the country’s most controversial figures, former president Leonel Fernández, to attempt a comeback.

It was Mejía’s own reluctance to prosecute Fernández and other accused PLD officials after he was inaugurated that has permitted Fernández and his associates to survive politically and avoid the consequences of their administration’s blatant misuse of government funds while he was President.

If Mejía desired to effectively challenge his predecessor’s purported legacy of embezzlement and deception, he should have begun by establishing a precedent whereby malfeasant officials would be held accountable for any crimes they committed while in office. Instead, Mejía lost an opportunity to demonstrate real conviction in his fight against the corrupt traditions of his nation, and in so doing, neglected his duty to the Dominican people and democratic principles as well as damaged his future political prospects.

At best, Mejía may have been acting out of respect for the presidential office, which Fernández had held; or at worst, he may have flinched in the face of possible reprisals by Fernández’ powerful allies in both the public and private sectors. No matter what Mejía’s motivations may have been, it is he who inadvertently has provided the means for Fernández’ political resurgence.

Although he left office in 2000 amid major allegations of bribery and corruption, Fernández and his PLD party are running against Mejía to retake the presidency. A very wealthy and small establishment of corrupt, privileged elites is now guiding the Fernández campaign in hopes of rekindling the status quo in existence prior to the Mejía administration.

According to last month’s Schoen and Berland poll, Fernández led with 65 percent of the popular vote, while Mejía trailed far behind with a paltry 13 percent. However, in the political vacuum that now exists in the country, even the polls are suspect and both candidates popularity lacks depth or real conviction.

More recent polls reveal that Mejía has stormed back to within 5-10 percent of Fernández. There have been claims that Fernández’ cronies may have even tainted the polls so as to favor the PLD candidate. Previous polls have always found Fernández and his party to be leading comfortably before elections were held, even when they eventually lost.

Following in the footsteps of his party’s predecessors, primarily General Rafael Trujillo and Joaquín Balaguer, in 1996 Fernández edged into office with a bare minimum of the vote, unquestionably stealing the victory from the PRD’s most distinguished leader, the late Francisco Peña Gomez. As soon as the Fernández administration had been inaugurated, accusations began to be made of public funds being siphoned off.

Fernández’ 1996 election occurred in the midst of an economic boom that ran from 1993 to 2000, occasioned by an upsurge in productivity and exports. This came as a welcome relief to Dominicans after a devastating period of acute poverty precipitated by a free-trade blow to the all important local sugar industry in the 1980s.

However, most specialists attribute the Dominican Republic’s extraordinary economic growth in the 1990s not so much to the Fernández administration’s purported skills, but to the expansion of the U.S. economy, the Dominican Republic’s primary consumer. The prosperity, with its resulting enhanced revenue flows, served to veil the magnitude of the Fernández administration’s non-stop purloining of public funds, up until its heir was defeated in the election of 2000.

With the economic slowdown which began in 2000, Dominicans slowly began to discover the full scale of the Temporary and Minimal Employment Program, (PEME) scandal. In one of the most grandiose abuses of public trust in Dominican history, millions of dollars in public funds were diverted from targeted low income families to the private accounts of Fernández’ confederates.

Many former officials in his administration were arrested in connection with corruption charges including embezzlement, contract kickbacks, and outrageously large pensions for retiring officials. The Corruption Prevention Department alleges that PEME did not account for how funds were being raised or dispersed, and how it was looted of over $100 million. There was also mounting evidence of fraud involving the construction of public projects and the privatization of the two major formerly state-owned electricity distribution facilities.

As a result of its flagrant exploitation of public resources, the venality of the PLD eventually helped bring on its ruinous defeat in 2000, despite blatant attempts to intimidate opposing candidates and their supporters, buy voters’ registration cards, and cheat on vote counts. Fernández and the PLD lost because the Dominican people had enough of him and were eager for reform.

Nevertheless, even in defeat, Fernández could prosper. This was a period when he made frequent trips to Washington, invited by right wing think tanks, where he participated as a learned pundit. But there was another side to Fernández. Evidence presented by Juan Taveras Hernandez, a writer for the Dominican newspaper El Nacional, suggests that even as Fernández was losing the 2000 election, he was crafting a plan by which to parse millions of dollars from cash-rich state entities into a supposedly benign fund called The Global Foundation, Democracy and Development.

Through this process, he was able to defalcate about $5 million from the Ministry of Higher Education, Science and technology. He then allegedly proceeded to amass $9.5 million more from various other government institutions. Most notable was his lively involvement with the infamous Baninter scandal.

Fernández’ partisans have been accused by the Chairman of the Public Electric Company, Cesár Sanchez, of having had unexplained millions in the now defunct Baninter bank (Fernández responded by suing Sanchez for slander). In fact, receipts and documents discovered by Hernandez trace multiple accounts linked to Fernández that added up to well over $50 million between 2001 and 2003, the year Baninter finally collapsed.

Historically, allegations of bribery are not surprising to those familiar with Dominican politics, especially when Leonel Fernández is involved. What is disappointing are allegations of similar if much smaller lootings by top officials in the Mejía government. Mejía was elected on a platform of anti-corruption and increased spending on education, welfare, food, and low income housing. But the core of his campaign was based upon his unquestionable integrity.

If it can be established that his integrity was also compromised, it will undermine the main strength of Mejía’s campaign platform and in the next few days could bring on the defeat that he would in that case deserve. There is also the foolish act of self indulgence wherein Mejía accepted two SUV’s given by Baninter executives as gifts, only to quickly return them in order to avoid the appearance of impropriety.

Once elected, Mejía promised an era of substantive democracy and high accountability. He was then almost immediately confronted with the task of dealing with the legacy of an all-pervasive corruption in the state bureaucracy engineered by a string of previous Dominican officials who served the Fernández administration and its predecessors, a deep economic downturn, and a country burdened with a history of human rights abuses.

Mejía declared upon taking office that he would “govern in a glass house” and insisted that money would be spent where it was most needed. However, recent accusations brought on by the upcoming election beg the question of whether Mejía’s administration has been built of glass or perhaps entirely of mirrors.

Most of the accusations against the current president stem from the arrest of media mogul Baez Figueroa, who has been indicted on charges related to the Baninter scandal. Baez Figueroa contends through his attorneys that Agricultural Minister Eligio Jaquez, Treasurer Pastora Mendez, and the Director of the Pro Comunidad, Ana Maria Acevedo, pressured him and other bank administrators into making illegal payments to Mejía allies.

Figueroa’s holdings have been seized, including his numerous media properties. The Inter-American Press claims that some of these outlets are now being used to promote pro-Mejía political goals.

Both Fernández and Mejía have found it politically convenient to appease the United States’ desires on most issues, even if in some cases it is not necessarily in the country’s best interest. During the Fernández administration, the U.S.-led international lending agencies fed Fernández a carrot in the form of loans and aid but stored the stick by shamefully overlooking his corrupt governance as long as he facilitated the speedy neo-liberalization of the Dominican economy.

Fernández subsequently oversaw many private sector-oriented changes by lowering trade barriers to selected imports as well as privatizing many state owned industries (including the scandalous selling of the two major electricity distribution facilities to foreign companies, which eventually had to be re-purchased at great cost; unfortunately, this transaction failed to improve the quality of electric service to Dominicans).

Mejía was initially critical of the costs of such rapid privatization and voiced his opposition during his 2000 election campaign. However, when he came into office he soon revealed the same tendencies when he formed a controversial duty-free zone between the Dominican Republic and Haíti, the deal was backed by one of the Dominican Republic’s richest men for the express purpose of attracting foreign shoe and textile manufacturers.

Just last month he signed a free trade pact with the United States, agreeing to lower trade barriers in such areas as feed grains, rice, beef, pork, poultry, horticultural products and processed consumer-ready products, which could very well precipitate a financial blow to some Dominican farmers as cheap U.S. subsidized produce like rice floods the market.

Controversy still surrounds Mejía’s permission for Haitian rebels to train as well as gather under U.S. guidance in preparation for Aristide’s recent ouster. In light of how the U.S. deals with those governments it doesn’t favor, one can begin to understand each of the Dominican candidates’ reluctance to disagree with U.S. officials.

Fernández isn’t lacking media support. He also is able to manipulate his powerful ties to the press through a strategic hub of his own media moguls who dominate an important sector of Dominican Republic newspapers, radio and television stations. The anti-Mejía media constantly have heaped blame for the country’s current economic doldrums on Mejía and his policies.

These accusations are mainly unfounded, as most of the president’s decisions have been compelled by the austere measures decreed by the International Monetary Fund (IMF) Stand-by-Agreement. His major dispute with the powerful lending agency stems from his costly purchase of two previously state-owned electricity distribution stations sold by Fernández to foreign interests in a suspect deal that brought millions into the Fernández’ camp.

While the IMF told Mejía to use his IMF credit lines with caution, he was pressured by outraged Dominicans who demanded action over the rising price of electricity and frequent power outages. Mejía repurchased both stations at a relatively high price; his intention was to try to lower the cost while improving inefficiency and ‘the output’. But the acquisitions failed to do either, further frustrating both Dominican public opinion and the IMF.

In the wake of Baninter’s collapse, two more major Dominican banks also declared bankruptcy. The government had fully insured the deposits of all citizens, even those of off-shore accounts, at a price of $5 billion. This bailout mostly benefited a small minority of privileged elite who receive three-fourths of the dispersed government compensatory payments.

This increased the national debt to $7.6 billion, a colossal sum for such a small country, hence further enraging the populace against Mejía. Currently, the Dominican Republic has secured $2.2 billion in loans from various sources over a five-year period to stabilize its finances.

Fernández’ confidantes have been traveling to this country and elsewhere, whispering about a possible crisis in governance if Mejía is re-elected. They cite human rights abuses involving police brutality, as well as possible violations of democratic processes. In reality, the human rights situation has improved significantly relative to what it was before Mejía took power.

Mejía’s party has yet to tamper with electoral processes, whereas Leonel Fernández’ PLD was a world class operator in attempting to do this in recent balloting. Because of this history of abuse, 160 accredited observers sponsored by the National Council for Private Business (CONEP), will oversee the coming election along with other observers.

The flare of the economic boom during the Fernández administration blinded many, but not all, to the human rights abuses that were occurring under Fernández’ presidency, most notably affecting Haítians. All of Mejía’s predecessors have egregiously discriminated against Haítians, beginning with General Trajillo’s murder of thousands of them along the border between the two countries, who share the island of Hispañola.

Dominican rulers made it almost a psychological requirement for Dominicans to strive to be less like their neighbors and more like North Americans. Fernández allowed these discriminatory laws to thrive during his watch, while Mejía has worked with now ousted Haítian President Aristide to rectify the racist anti-Haítian legislation planted decades ago by Trujillo.

There is some concern regarding how the Dominican electoral process is being conducted. Such concern, while somewhat warranted, should not be focused on Mejía. It certainly is true that Mejía attempted to legally force a change in his favor through the controversial Ley de Lamas, which would have allowed any party to come up with as many as five candidates for a presidential election.

The most popular candidate from this list would be able to collect all of the votes across the board for the party’s victorious candidate, even if they were earmarked for others on the list. The PRD dominates the legislature, yet refused to pass it. However politically charged this attempt may have been, Mejía used democratic procedures to attempt the change, and respected the legislature’s stand when it refused to cave in.

Mejía has yet to show that he is prepared to unlawfully mar a democratic election or institution. On the other hand, Leonel Fernández and his PLD party have previously demonstrated that they are prepared to go some lengths to see to it that opposing votes are not always cast or counted.

Economically, most of Mejía’s decisions have been made under the austere shadow of those measures demanded by the IMF Stand-by-Agreement. One would be greatly underestimating the gravity of the country’s current financial obligations to say that the decisions made by the president (outside of corruption) could readily affect the pain caused by the Dominican Republic’s prescribed economic rescue mission. At this point, his responsibility for the wellbeing of the Dominican people could well be almost taken out of Mejía’s hands.

President Mejía has weathered a difficult time in recent Dominican history, but at the price of voter alienation and menacingly low poll ratings. Remarkably, his own personal reputation has remained relatively intact in spite of the fact that the Baninter debacle has implicated several members of his administration and in the business community who are close to him.

It must be acknowledged that his credibility with the international community has been a major factor in securing foreign aid and loans in times of economic hardship, as well as some foreign investments. On the other hand, if Fernández were to be re-elected, Mejía’s somewhat reduced credibility would be replaced by the graft and corruption that seems to be synonymous with the Fernández administration.

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