Dominican Republic - Tips

Dominican Republic - Tips

Bureau of Western Hemisphere Affairs
May 2007

Background Note: Dominican Republic

Tourists sunbathing near Santo Domingo in the Dominican Republic, November
24, 2002. [© AP Images] Flag of Dominican Republic is a centered white cross
that extends to the edges divides the flag into four rectangles - the top
ones are blue (hoist side) and red, and the bottom ones are red (hoist side)
and blue; a small coat of arms featuring a shield supported by an olive
branch (left) and a palm branch (right) is at the center of the cross; above
the shield a blue ribbon displays the motto, DIOS, PATRIA, LIBERTAD (God,
Fatherland, Liberty), and below the shield, REPUBLICA DOMINICANA appears on a
red ribbon.

PROFILE

OFFICIAL NAME:
Dominican Republic

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.

Map of Dominican Republic, 2007. People
Nationality: Noun and adjective--Dominican(s).
Population (2005): 9.033 million.
Annual growth rate (2005): 1.8%.
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: 28.3/1,000. Life expectancy--70.2 years for
men, 73.3 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.
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 (2005)
GDP: $29.33 billion.
Growth rate: 9.3%; (2006 est.: 11%).
Per capita GDP: $3,247.
Non-fuel minerals (1.4% of GDP): Nickel, gold, silver.
Agriculture (11% of GDP): Products--sugarcane, coffee, cocoa, bananas,
tobacco, rice, plantains, beef.
Industry (25% of GDP): Types--sugar refining, pharmaceuticals, cement, light
manufacturing, construction.
Services, including tourism and transportation: 62% of GDP.
Trade: Exports ($6.146 billion (FOB), including processing zones: textiles,
sugar, coffee, ferronickel, cacao, tobacco, meats and medical supplies.
Markets--U.S. (75%), Canada, Western Europe, South Korea. Imports--$9.876
billion: food stuffs, petroleum, industrial raw materials, capital goods.
Suppliers--U.S. (48%), Japan, Germany, Venezuela, Mexico, Colombia.

PEOPLE
About 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 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 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 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
President--Leonel Fernández Reyna
Foreign Minister--Carlos Morales Troncoso
Ambassador to the United States--Flavio Dario Espinal Jacobo
Ambassador to the United Nations--Erasmo Lara Peña
Ambassador to the Organization of American States--Roberto Alvarez

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
After a decade of little to no growth in the 1980s, the Dominican Republic's
economy boomed in the 1990s, expanding at an average rate of 7.7% per year
from 1996 to 2000. Tourism (the leading foreign exchange earner),
telecommunications, and free-trade-zone manufacturing are the most important
sectors, although agriculture is still a major part of the economy. The
Dominican Republic owed much of its success to the adoption of sound
macroeconomic policies in the early 1990s and greater opening to foreign
investment. Growth turned negative in 2003 (-0.4%) due to the effects of
government handling of major bank frauds and to lower U.S. demand for
Dominican manufacturers. The Mejía administration negotiated an IMF standby
agreement in August 2003 but was unable to comply with fiscal targets. The
Fernández administration obtained required tax legislation and IMF board
approval for the standby in January 2005. The Dominican peso fell to an
unprecedented low in exchange markets in 2003-2004 but strengthened
dramatically following the election and inauguration of Leonel Fernández.
Since late 2004 it has traded at a rate considered to be overvalued on a
purchasing power parity basis. Inflation fell sharply in late 2004 and was
estimated at 9% for that calendar year. The Fernández administration
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. It met fiscal and financial targets of the
standby agreement but fell short of goals for reforms in the electricity
sector and financial markets. Central Bank statistics indicate 9.3% growth
for 2005 with 7.44% inflation. The Central Bank estimates that economic
growth for 2006 will surpass 11%, with inflation of about 5%.

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
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 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.&

Dominican Republic - Tips