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Dominican Republic (05/07)For the most current version of this Note, see Background Notes A-Z.
PROFILE OFFICIAL NAME: Geography People Government Economy (2005) 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 had 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. Since 1996, the Dominican electoral process has been seen as generally free and fair. 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, Hipólito 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 (CAFTA-DR) with the United States and five Central American countries in August 2004, in the last weeks of the Mejía administration. During the Mejía administration, the government sponsored and obtained anti-trafficking and anti-money-laundering legislation, sent troops to Iraq for Operation Iraqi Freedom, and ratified the Article 98 agreement it had signed in 2002. Mejía faced mounting domestic problems as a deteriorating economy--caused in large part by the government’s measures to deal with 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, and Mejía ran for re-election. On May 16, 2004, Leonel Fernández was elected president, defeating Mejía 57.11% to 33.65%. Eduardo Estrella of the PRSC received 8.65% of the vote. Fernández took office on August 16, 2004, 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 has worked closely with the United States on law enforcement and immigration and counter-terrorism matters. On May 16, 2006, President Fernández’s PLD won a majority of seats in the upper and lower houses of Congress as well as a plurality of mayoral seats, marking a major shift in power among the main political parties. Several candidates have begun campaigning for the 2008 presidential elections. On March 25, 2007, President Fernández announced his intention to run. GOVERNMENT AND POLITICAL CONDITIONS The Dominican Republic has a multi-party political system with national elections every 2 years (alternating between presidential elections and congressional/municipal elections). Presidential elections are held in years evenly divisible by four. Congressional and municipal elections are held in even numbered years not divisible by four. International observers have found that presidential and congressional elections since 1996 have been generally free and fair. Elections are supervised by a Central Elections Board (JCE) of 9 members chosen for a four-year term by the newly elected Senate. JCE decisions on electoral matters are final. 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 non-voting position. The Supreme Court has sole authority over managing the court system and in hearing actions against the president, designated members of his cabinet, and members of Congress when the legislature is in session. 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. Mayors and municipal councils to administer the 124 municipal districts and the National District (Santo Domingo) are elected at the same time as congressional representatives. 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 have organized a Specialized Airport Security Corps (CESA) and a Specialized Port Security Corps (CESEP) to meet international security needs in these areas. The Secretary of the Armed Forces has also announced plans to form a specialized border corps (CESEF). Additionally, the armed forces provide 75% of personnel to the National Investigations Directorate (DNI) and the Counter-Drug Directorate (DNCD). The Dominican National Police force contains 32,000 agents. The police are not part of the Dominican armed forces, but share some overlapping security functions. Sixty-three percent of the force serve in areas outside traditional police functions, similar to the situation of their military counterparts. ECONOMY The Dominican Republic’s most important trading partner is the United States (75% of export revenues). Other markets include Canada, Western Europe, and Japan. The country exports free-trade-zone manufactured products (garments, medical devices, etc.), nickel, sugar, coffee, cacao, and tobacco. It imports petroleum, industrial raw materials, capital goods, and foodstuffs. On September 5, 2005, the Dominican Congress ratified a Free Trade Agreement with the U.S. and five Central American countries, known as CAFTA-DR. The CAFTA-DR agreement entered into force for the Dominican Republic on March 1, 2007. The stock of U.S. foreign direct investment (FDI) in Dominican Republic in 2005 was U.S. $758 million, down from U.S. $1.1 billion in 2004, much of it directed to the tourism sector, to free trade zones, and to the telecommunications sector. Remittances were close to $2.5 billion in 2005. An important aspect of the Dominican economy is the Free Trade Zone industry (FTZ), which made up U.S. $4.75 billion in Dominican exports for 2005 (77% of total exports). In 2006, however, reports show that the FTZs lost 41,000 jobs and suffered a 5% decrease in total exports. The textiles sector experienced an approximate 17% drop in exports due in part to the appreciation of the Dominican peso against the dollar, Asian competition following expiration of the quotas of the Multi-Fiber Arrangement, and a government-mandated increase in salaries, which should have occurred in 2005 but was postponed to January 2006. Lost Dominican business was captured by firms in Central America and China. The tobacco, jewelry, medical, and pharmaceutical sectors in the FTZs all reported increases for 2006, which somewhat offset textile and garment losses. Industry experts from the FTZs expect that entry into force of the CAFTA-DR agreement will promote substantial growth in the FTZ sector for 2007. An ongoing concern in the Dominican Republic is the inability of participants in the electricity sector to establish financial viability for the system. Three regional electricity distribution systems were privatized in 1998 via sale of 50% of shares to foreign operators; the Mejía administration repurchased all foreign-owned shares in two of these systems in late 2003. The third, serving the eastern provinces, is operated by U.S. concerns and is 50% U.S.-owned. The World Bank records that electricity distribution losses for 2005 totaled about 38.2%, a rate of losses exceeded in only three other countries. Industry experts estimate distribution losses for 2006 will surpass 40%, primarily due to low collection rates, theft, and corruption. At the close of 2006, the government had exceeded its budget for electricity subsidies, spending close to U.S. $650 million. The government plans to continue providing subsidies. Congress plans to pass a law in early 2007 that criminalizes the act of stealing electricity. The electricity sector is a highly politicized sector and with 2008 presidential election campaigning already in motion, the prospect of further effective reforms of the electricity sector is poor. Debts in the sector, including government debt, amount to more than U.S. $500 million. Some generating companies are undercapitalized and at times unable to purchase adequate fuel supplies. FOREIGN RELATIONS There is a sizeable Haitian migrant community in the Dominican Republic, many of whom lack residence permits and citizenship documentation. The Dominican Republic belongs to the United Nations 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 is a member of the OAS and of 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 the extradition of fugitives and measures to hinder illegal migration. The United States supports the Fernández administration's efforts to improve Dominican competitiveness, to attract foreign private investment, to fight corruption, and to modernize the tax system. Bilateral trade is important to both countries. U.S. firms, mostly manufacturers of apparel, footwear, and light electronics, account for much of the foreign private investment in the Dominican Republic. Exports from the United States, including those from Puerto Rico and the U.S. Virgin Islands, to the Dominican Republic in 2005 totaled $4.7 billion, up 8% from the previous year. The Dominican Republic exported $4.6 billion to the United States in 2005, equaling some 75% of its export revenues. U.S. goods exports in 2006 (January-September) were $5.2 billion, up 17.8% from the previous year. Corresponding U.S. imports (January-September) from the Dominican Republic were $4.5 billion, up 16.3%. The Dominican Republic is currently the 35th largest export market for U.S. goods. 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 business disputes from previous administrations. The Embassy counsels U.S. firms through its Country Commercial Guide and informally via meetings with business persons planning to invest or already investing in the Dominican Republic. This is a challenging business environment for U.S. firms, especially for medium to smaller sized businesses. 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 the corner of Calle César Nicolas Penson and Calle Leopoldo Navarro, Gazcué District, 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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