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Diplomacy in Action

Dominican Republic (06/07/10)


June 7, 2010

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For the most current version of this Note, see Background Notes A-Z.

PROFILE

Geography
Area: 48,442 sq. km. (18,704 sq. mi.), about the size of Vermont and New Hampshire combined.
Cities: Capital--Santo Domingo (pop. 2.25 million). Other city--Santiago de los Caballeros (908,230).
Terrain: Mountainous.
Climate: Maritime tropical.

People
Nationality: Noun and adjective--Dominican(s).
Population (2009): 9.65 million.
Annual population growth rate (2009): 3.5%.
Ethnic groups: Mixed 73%, European 16%, African origin 11%.
Religion: Roman Catholic 95%.
Language: Spanish.
Education: Years compulsory--6. Attendance--70%. Literacy--84.7%.
Health: Infant mortality rate--19/1,000. Life expectancy--71 years for men, 73.1 years for women.
Work force: 60.2% services (tourism, transportation, communications, finances, others), 15.5% industry (manufacturing), 11.5% construction, 11.3% agriculture, 1.5% mining.

Government
Type: Representative democracy.
Independence: February 27, 1844. Restoration of independence, August 16, 1863.
Constitution: November 28, 1966 (amended July 25, 2002); 2010.
Branches: Executive--president (chief of state and head of government), vice president, cabinet. Legislative--bicameral Congress (Senate and House of Representatives). Judicial--Supreme Court of Justice.
Subdivisions: 31 provinces and the National District of Santo Domingo.
Political parties: Dominican Liberation Party (PLD), Dominican Revolutionary Party (PRD), Social Christian Reformist Party (PRSC), and several others.
Suffrage: Universal and compulsory, over 18 or married.

Economy (2009)
GDP: $45.6 billion.
Growth rate: 3.5%.
Per capita GDP (est.): $4,815.
Agriculture (7.7% of real GDP): Products--rice, poultry, sugar, banana, cocoa.
Non-manufacturing industry (4.4% of real GDP): Construction and mining.
Manufacturing industry (21.4% of real GDP): Beverages and tobacco, free trade zone (FTZ) textiles and wearing apparel, sugar, coke and refined petroleum products, grains.
Services (54.1% of real GDP): Communications, trade, tourism, real estate, transport and storage.
Trade: Exports--U.S. $5.463 billion (f.o.b.), including free trade zones: FTZ exports (textiles, electronic products, jewelry, tobacco, pharmaceuticals), cocoa, sugar, coffee, tobacco, minerals. Markets (2008)--U.S. (58.1%), Haiti, Western Europe. Imports--U.S. $12.283 billion (f.o.b.), including free trade zones: FTZ imports, fuels, miscellaneous consumer goods, automobiles and other lasting goods, food and foodstuffs. Suppliers (2008)--U.S. (39.2%), Venezuela, Mexico, Colombia.

PEOPLE
Slightly fewer than half of Dominicans live in rural areas; many are small landholders. Haitians form the largest foreign minority group. All religions are tolerated; the state religion is Roman Catholicism.

HISTORY
The island of Hispaniola, of which the Dominican Republic forms the eastern two-thirds and Haiti the remainder, was originally occupied by Tainos, an Arawak-speaking people. The Tainos welcomed Columbus in his first voyage in 1492, but subsequent colonizers were brutal, reducing the Taino population from about 1 million to about 500 in 50 years. To ensure adequate labor for plantations, the Spanish brought African slaves to the island beginning in 1503.

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 works closely with the United States on law enforcement and immigration and counter-terrorism matters. In 2006 elections, Fernández' PLD won 60% of seats in the House of Representatives and 22 of 32 Senate seats, as well as a plurality of mayoral seats. On May 16, 2008, President Fernández was reelected president with 53.8% of the vote. His new term runs until 2012. Congressional and municipal elections were held in May 2010.

GOVERNMENT AND POLITICAL CONDITIONS
The Dominican Republic is a representative democracy with national powers divided among independent executive, legislative, and judicial branches. The president appoints the cabinet, executes laws passed by the legislative branch, and is commander in chief of the armed forces. The president and vice president run for office on the same ticket and are elected by direct vote for 4-year terms. Legislative power is exercised by a bicameral Congress--the Senate (32 members) and the House of Representatives (178 members).

The Dominican Republic has a multi-party political system which until 2010 held national elections every 2 years (alternating between presidential elections and congressional/municipal elections). The 2010 constitution adjusts the terms of the 2010 elections on a one-time basis to 6 years, so that beginning in 2016 the presidential, congressional, and municipal elections will be held simultaneously every 4 years in years evenly 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
President--Leonel Fernández Reyna
Foreign Minister--Carlos Morales Troncoso
Ambassador to the United States--Roberto Saladín
Ambassador to the United Nations--Federico Alberto Cuello Camilo
Ambassador to the Organization of American States--Virgilio Alcántara

The Dominican Republic maintains an embassy in the United States at 1715 22d Street NW, Washington, DC 20008 (tel. 202-332-6280).

DEFENSE
Congress authorizes a combined military force of 44,000 active duty personnel. Actual active duty strength is approximately 32,000. However, approximately 50% of those are used for non-military activities such as security providers for government-owned non-military facilities, highway toll stations, prisons, forestry work, state enterprises, and private businesses. The commander in chief of the military is the president. The principal missions are to defend the nation and protect the territorial integrity of the country. The army, larger than the other services combined with approximately 20,000 active duty personnel, consists of six infantry brigades, a combat support brigade, and a combat service support brigade. The air force operates two main bases, one in the southern region near Santo Domingo and one in the northern region near Puerto Plata. The navy operates two major naval bases, one in Santo Domingo and one in Las Calderas on the southwestern coast, and maintains 12 operational vessels. In the Caribbean, only Cuba has a larger military force.

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

Recent Events
After a decade of little to no growth in the 1980s, the Dominican Government initiated a program of economic reform in the early 1990s, adopting sound macroeconomic policies and opening the country to foreign investment. The economy grew at an average rate of 7.6% annually from 1996 to 2000. Growth faltered in the early 2000s as several of the Dominican Republic’s main trading partners suffered recessions, reducing demand for manufactured goods. The economy contracted in 2003 (-0.3%) in the wake of a domestic banking crisis. The Mejía administration negotiated an IMF standby agreement in August 2003, though failed to comply with fiscal targets. The Fernández administration signed the agreement in January 2005, after securing required tax legislation. Fernández successfully renegotiated official bilateral debt with Paris Club member governments, commercial bank debt with London Club members, and sovereign debt with a consortium of lenders. Growth recovered, averaging 7.8% from 2004 to 2007. The standby agreement concluded in January 2008 with fiscal and financial targets largely met but reform in the electricity sector and financial markets unrealized.

The global economic crisis, and in particular the U.S. recession, started to impact the Dominican economy in 2008. Remittances, exports, and tourism fell, and continued to fall throughout 2009, driving down government revenue. In October 2009, seeking to shore up dwindling revenues and improve its ability to secure more favorable rates with private lenders, the Fernández administration negotiated a new 28-month, U.S. $1.7 billion standby agreement with the IMF. Among other goals, the agreement aims to address the unrealized reform from the previous agreement by addressing electricity sector inefficiencies and improving fiscal management.

Trade
The Dominican Republic's most important trading partner is the United States. Other markets include Haiti, Western Europe, and China. The country exports goods manufactured in free trade zones (FTZs), such as textiles, electronic products, jewelry, tobacco, and pharmaceuticals, as well as cocoa, sugar, coffee, and tobacco. Aside from inputs into FTZs, it imports fuels, miscellaneous consumer goods, automobiles and other lasting goods, and food 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. U.S. direct investment in the Dominican Republic is primarily in the manufacturing sector. Remittances were close to $3 billion in 2008.

FTZs accounted for an estimated U.S. $3.784 billion in Dominican exports for 2009 (69.3% of total exports). However, FTZ exports are roughly 20% lower than they were at their peak in 2000, whereas overall exports are down 4.8% since 2000. The textiles sector--which constituted 53.6% of FTZ exports in 2000--has increasingly played a smaller role in the FTZ sector. It experienced an estimated 19.5% drop since 2008 (and a 63.3% drop since 2000) 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. In 2009, the largest category of FTZ exports was the aggregate of non-traditional FTZ exports (26.1%) followed by textiles (24.8%) and electric products (13.1%).

Electricity
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 Fernández administration purchased the third distributor, which serves the eastern provinces, in June 2009. In 2010, the current head of the state electricity company called for the re-privatization of the electricity distributors. The World Bank records that electricity distribution losses for 2009 totaled about 40%, a rate of losses exceeded in only two other countries. Due to low collection rates, theft, infrastructure problems, and corruption, distribution losses remain high. Subsidies to the electricity sector exceeded U.S. $1 billion in 2008. Congress passed a law in 2007 that criminalized the act of stealing electricity; it entered into force in February 2009. The 2009 IMF standby specifically targets six areas of improvement for the electricity sector. Debts in the sector, including government debt, amount to close to U.S. $500 million. Some generating companies are undercapitalized and at times unable to purchase adequate fuel supplies.

FOREIGN RELATIONS
The Dominican Republic has a close relationship with the United States and with the other states of the inter-American system. It has accredited diplomatic missions in most Western Hemisphere countries and in principal European capitals. Newly elected president of Haiti René Préval made a working visit to Santo Domingo in March 2006, reciprocating Leonel Fernández's call on the Interim Government of Haiti in December 2005. The Dominican Government has regularly appealed for international support for its island neighbor.

There is a sizeable Haitian migrant community in the Dominican Republic, many of whom lack residence permits and citizenship documentation. The Dominican Republic is a founding member of the United Nations and participates in 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
The U.S. has a strong interest in a democratic, stable, and economically healthy Dominican Republic. The country's standing as the largest Caribbean economy, second-largest country in terms of population and land mass, with large bilateral trade with the United States, and its proximity to the United States and other smaller Caribbean nations make the Dominican Republic an important partner in hemispheric affairs. The Embassy estimates that 100,000 U.S. citizens live in the Dominican Republic; many are dual nationals. An important element of the relationship between the two countries is the fact that more than 1 million individuals of Dominican origin reside in the United States, most of them in the metropolitan Northeast and some in Florida.

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, as well as U.S. energy companies, account for much of the foreign private investment in the Dominican Republic.

U.S. goods exports to the Dominican Republic in 2008 were U.S. $6.6 billion, up 8.4% from 2007, 23.3% from 2006 (pre-CAFTA-DR), and 136% from 1994 (the year prior to the Uruguay Round). The Dominican Republic was the United States' 33rd-largest goods export market in 2008. The Dominican Republic's exports to the U.S. in 2008 were U.S. $4 billion, a 5.6% decrease from 2007 but up 29% over the previous 14 years. 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 a range of ongoing commercial and investment disputes.

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 improving access of underserved populations to quality health care and combating HIV/AIDS and tuberculosis (TB); promoting economic growth through policy reform, support for CAFTA-DR implementation, and technical assistance to small producers and tourism groups; environmental protection and policy reform initiatives; improved access to quality primary, public education and assistance to at-risk youth; a model rural electrification program; and improving participation in democratic processes, while strengthening the judiciary and combating corruption across all sectors.

Principal U.S. Officials
Ambassador--vacant
Deputy Chief of Mission--Christopher Lambert
USAID Mission Director--Richard Goughnour
Consul General--Michael Schimmel
Economic and Political Counselor--Alexander Margulies
Public Affairs Adviser--Gary Ketih
Commercial Counselor (DOC/FCS)--Robert Jones
Defense Attaché--Lt. Col. Fred Fagan (U.S. Marine Corps)

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
U.S. Department of Commerce
International Trade Administration
Trade Information Center
14th and Constitution Avenue, NW
Washington, DC 20230
Tel: 1-800-USA-TRADE
Internet: http://trade.gov/

Caribbean/Latin American Action
1818 N. Street, NW, Suite 310
Washington, DC 20036
Tel: (202) 466-7464
Fax: (202) 822-0075

American Chamber of Commerce in the Dominican Republic
Torre Empresarial, 6to.
Piso, Ave. Sarasota No. 25,
Santo Domingo, Dominican Republic
Tel: (809) 381-0777
Fax: (809) 381-0303
E-mail: amcham@codetel.net.do
 



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