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Dominican Republic (03/05)For the most current version of this Note, see Background Notes A-Z.
PROFILE OFFICIAL NAME: Geography People Government Economy (2003) PEOPLE HISTORY In the next century, French settlers occupied the western end of the island, which Spain ceded to France in 1697, and which, in 1804, became the Republic of Haiti. The Haitians conquered the whole island in 1822 and held it until 1844, when forces led by Juan Pablo Duarte, the hero of Dominican independence, drove them out and established the Dominican Republic as an independent state. In 1861, the Dominicans voluntarily returned to the Spanish Empire; in 1865, independence was restored. Economic difficulties, the threat of European intervention, and ongoing internal disorders led to a U.S. occupation in 1916 and the establishment of a military government in the Dominican Republic. The occupation ended in 1924, with a democratically elected Dominican Government. In 1930, Rafael L. Trujillo, a prominent army commander, established absolute political control. Trujillo promoted economic development--from which he and his supporters benefited--and severe repression of domestic human rights. Mismanagement and corruption resulted in major economic problems. In August 1960, the Organization of American States (OAS) imposed diplomatic sanctions against the Dominican Republic as a result of Trujillo's complicity in an attempt to assassinate President Romulo Betancourt of Venezuela. These sanctions remained in force after Trujillo's death by assassination in May 1961. In November 1961, the Trujillo family was forced into exile. In January 1962, a council of state that included moderate opposition elements with legislative and executive powers was formed. OAS sanctions were lifted January 4, and, after the resignation of President Joaquin Balaguer on January 16, the council under President Rafael E. Bonnelly headed the Dominican government. In 1963, Juan Bosch was inaugurated President. Bosch was overthrown in a military coup in September 1963. Another military coup, on April 24, 1965, led to violence between military elements favoring the return to government by Bosch and those who proposed a military junta committed to early general elections. On April 28, U.S. military forces landed to protect U.S. citizens and to evacuate U.S. and other foreign nationals. Additional U.S. forces subsequently established order. In June 1966, President Balaguer, leader of the Reformist Party (now called the Social Christian Reformist Party--PRSC), was elected and then re-elected to office in May 1970 and May 1974, both times after the major opposition parties withdrew late in the campaign. In the May 1978 election, Balaguer was defeated in his bid for a fourth successive term by Antonio Guzman of the Dominican Revolutionary Party (PRD). Guzman's inauguration on August 16 marked the country's first peaceful transfer of power from one freely elected president to another. The PRD's presidential candidate, Salvador Jorge Blanco, won the 1982 elections, and the PRD gained a majority in both houses of Congress. In an attempt to cure the ailing economy, the Jorge administration began to implement economic adjustment and recovery policies, including an austerity program in cooperation with the International Monetary Fund (IMF). In April 1984, rising prices of basic foodstuffs and uncertainty about austerity measures led to riots. Balaguer was returned to the presidency with electoral victories in 1986 and 1990. Upon taking office in 1986, Balaguer tried to reactivate the economy through a public works construction program. Nonetheless, by 1988 the country slid into a 2-year economic depression, characterized by high inflation and currency devaluation. Economic difficulties, coupled with problems in the delivery of basic services--e.g., electricity, water, transportation--generated popular discontent that resulted in frequent protests, occasionally violent, including a paralyzing nationwide strike in June 1989. In 1990, Balaguer instituted a second set of economic reforms. After concluding an IMF agreement, balancing the budget, and curtailing inflation, the Dominican Republic experienced a period of economic growth marked by moderate inflation, a balance in external accounts, and a steadily increasing GDP that lasted through 2000. The voting process in 1986 and 1990 was generally seen as fair, but allegations of electoral board fraud tainted both victories. The elections of 1994 were again marred by charges of fraud. Following a compromise calling for constitutional and electoral reform, President Balaguer assumed office for an abbreviated term and Congress amended the Constitution to bar presidential succession. In June 1996, Leonel Fernández Reyna of the Dominican Liberation Party (PLD) was elected to a 4-year term as president. Fernández's political agenda was one of economic and judicial reform. He helped enhance Dominican participation in hemispheric affairs, such as the OAS and the follow up to the Miami Summit. On May 16, 2000, Hipolito Mejía, the PRD candidate, was elected president in another free and fair election, soundly defeating PLD candidate Danilo Medina and Former President Balaguer. Mejía championed the cause of free trade and Central American and Caribbean economic integration. The Dominican Republic signed a free trade agreement with the United States and five Central American countries (DR-CAFTA) in August 2004. During this administration, the government enacted anti-trafficking and anti-money-laundering legislation, sent troops to Iraq in support of the fight against terrorism, and ratified the Article 98 agreement it had signed in 2002. Mejía faced mounting domestic problems as a deteriorating economy--caused in part by massive bank fraud--and constant power shortages plagued the latter part of his administration. During the Mejía administration, the Constitution was amended to permit an incumbent president to seek a second successive term. On May 16, 2004, Leonel Fernández was elected president in a free and fair election, defeating Mejía 57.11% to 33.65%. Eduardo Estrella of the PRSC received 8.65% of the vote. Fernández took office on August 16, promising in his inaugural speech to promote fiscal austerity, to fight corruption and to support social concerns. Fernández said the Dominican Republic would support policies favoring international peace and security through multilateral mechanisms in conformity with the United Nations and the OAS. The Fernández administration is expected to work closely with the United States on law enforcement and immigration and counter-terrorism matters. GOVERNMENT AND POLITICAL CONDITIONS Presidential elections are held in years evenly divisible by four. Congressional and municipal elections are held in even numbered years not divisible by four. Under the constitutional reforms negotiated after the 1994 elections, the 16-member Supreme Court of Justice is appointed by a National Judicial Council, which is comprised of the President, the leaders of both houses of Congress, the President of the Supreme Court, and an opposition, or non-governing party member (one other Supreme Court Justice acts as secretary of the Council, a nonvoting position.) The Court has sole jurisdiction over actions against the president, designated members of his cabinet, and members of Congress. The Supreme Court hears appeals from lower courts and chooses members of lower courts. Each of the 31 provinces is headed by a presidentially appointed governor. Elected mayors and municipal councils administer the National District (Santo Domingo) and the 124 municipal districts. The Dominican Republic has a multi-party political system with national elections every 2 years (alternating between congressional and presidential). Following the allegations of irregularities in 1994, international observers have generally agreed that presidential and congressional elections since 1996 have been free and fair. Principal Government Officials The Dominican Republic maintains an embassy in the United States at 1715 22d Street NW, Washington, DC 20008 (tel. 202-332-6280). DEFENSE The armed forces participate fully in counter-narcotics efforts. They also are active in efforts to control contraband and illegal immigration from Haiti to the Dominican Republic and from the Dominican Republic to the United States. ECONOMY The Dominican Republic’s most important trading partner is the U.S. (87% of export revenues); other markets include Canada, Western Europe, and Japan. The country exports free-trade-zone manufactured products (garments, footwear, etc.), nickel, sugar, coffee, cacao, and tobacco, and it imports foodstuffs, petroleum, industrial raw materials, and capital goods. On August 5, 2004, the Dominican Republic signed a Free Trade Agreement with the U.S. and five Central American countries to integrate into the U.S.-Central American Free Trade Agreement. Foreign Direct Investment (FDI) was $309 million in 2003 and will be about $100 million in 2004, much of it directed at the tourism sector, free trade zones and telecommunication sector. Remittances were more than $2 billion in 2003. As of this writing, there are three areas that require the government’s immediate attention: the fiscal imbalances, dealing with the rise in Central Bank debt, and widespread intermittent electricity blackouts. A strong fiscal effort is required to get the country’s IMF program back on track and to restart multilateral support. The government’s decision in 2003 to guarantee 100% of deposits in failed banks tripled national debt, from about 18% of GDP to more than 50%. Most of the new debt was at high interest rates for terms of a year or less. Capital flight was significant in 2003; there is some indication that the inauguration of a new government may reverse this trend. High oil prices and the fall of the peso exchange rate over 2003 exacerbated the difficulties in the electricity sector. FOREIGN RELATIONS There is a sizeable Haitian migrant community in the Dominican Republic. The Dominican Republic belongs to the UN and many of its specialized and related agencies, including the World Bank, International Labor Organization, International Atomic Energy Agency, and International Civil Aviation Organization. It also is a member of the OAS, and the Inter-American Development Bank. U.S.-DOMINICAN REPUBLIC RELATIONS U.S. relations with the Dominican Republic are excellent, and the U.S. has been an outspoken supporter of that country's democratic and economic development. The Dominican Government has been supportive of many U.S. initiatives in the United Nations and related agencies. The two governments cooperate in the fight against the traffic in illegal substances. The Dominican Republic has worked closely with U.S. law enforcement officials on issues such as extraditions of fugitives, reducing illegal migration, and the return of stolen cars to the United States. The United States supports the current administration's efforts to improve Dominican competitiveness, increase foreign private investment, fight corruption, and modernize the tax system. Bilateral trade is important to both countries, and U.S. firms--mostly manufacturers of apparel, footwear, and light electronics--account for much of the foreign private investment in the Dominican Republic. U.S. exports to the Dominican Republic in 2003 totaled $4.2 billion. The Dominican Republic exported $4.4 million to the U.S. in 2003, equaling some 87% of its export revenues. The U.S. embassy works closely with U.S. business firms and Dominican trade groups, both of which can take advantage of the new opportunities in this growing market. At the same time the embassy is working with the Dominican government to resolve outstanding business disputes from previous administrations. The embassy counsels U.S. firms through its written Country Commercial Guide and informally via meetings with business persons planning to invest or already investing in the Dominican Republic. It is a challenging business environment for U.S. firms, although agile exporters and investors can profit doing business in the Dominican Republic. The U.S. Agency for International Development (USAID) mission is focused on four areas: availability of health care, increasing economic opportunity, improving participation in democratic processes, and environmentally sound energy production. Principal U.S. Officials The U.S. Embassy is located at Calle César Nicolas Penson and Calle Leopoldo Navarro, Santo Domingo (tel. 809-221-2171). Other Contact Information Caribbean/Latin American Action American Chamber of Commerce in the Dominican Republic |
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