August 16, 2004

Fernandez returns to Dominican presidency

SANTO DOMINGO, Dominican Republic (AP) -- Leonel Fernandez was sworn in as the Dominican Republic's president Monday, returning to power after four years out of office to lead a nation struggling through its worst economic crisis in decades.

Fernandez, 50, took the oath of office in Congress before hundreds of people including a dozen national leaders.

Fernandez, who as president from 1996 to 2000 presided over relative stability, trounced outgoing President Hipolito Mejia in May 16 elections by promising a return to progress.

His new government inherits some $6 billion in foreign debt, worsening power outages and a desperation among the poor that is driving thousands to risk illegal voyages by boat to the wealthier U.S. territory of Puerto Rico.

U.S. authorities have intercepted more than 7,000 Dominican boat people in the last 10 months. Last week, authorities rescued 39 Dominicans who drifted for 10 days after their motorboat broke down on the way to Puerto Rico. Forty-seven others disappeared at sea -- many of them jumping overboard in desperation -- and eight died of dehydration after being rescued.

Fernandez will likely face unpopular decisions in trying to address 16 percent unemployment, 32 percent inflation and a Dominican peso that has lost half its value against the U.S. dollar in two years, doubling prices in the Caribbean nation of 8.8 million.

"This crisis will last at least two years and will be painful," said Miguel Ceara-Hatton, an economist with the U.N. Development Program in Santo Domingo.

Economists say a turnaround requires steep tax hikes and cuts in spending, meaning fewer social services, government jobs and subsidies for electricity and gas.

Fernandez's aides said he would present a blueprint for such changes in his inaugural address later Monday.

Fernandez stepped down in 2000 due to a single-term limit that was later rescinded. He left office amid a scandal involving $100 million allegedly embezzled from a government fund. He denied wrongdoing, but his successor Danilo Medina was easily defeated by Mejia in 2000.

Many Dominicans say they are frustrated with Mejia, who in defense said he faced a tourism lull after the attacks of September 11, 2001, and a 2003 bank scandal that cost the treasury $2.2 billion.

"I just hope Fernandez can bring a different attitude," said Juary Rodriguez, 32, a mechanic. "Mejia has given up."

For Fernandez, much rides on austerity measures including a $600 million loan agreement with the International Monetary Fund suspended in May until the state restrains inflation and stabilizes the peso.

The government needs the agreement to pay arrears to electricity providers and keep loan commitments.

Fernandez privatized electrical plants in the 1990s intending to lessen blackouts, but now worsening outages often keep the lights off for all but a few hours a day. Electric companies say the state, which controls distribution, owes them some $400 million.