The Miami Herald
May 4, 2001

Dominican leader fights a sour economy, blame

 Hipólito Mejía says he inherited problems.


 SANTO DOMINGO, Dominican Republic -- While campaigning for president, Hipólito Mejía promised Dominicans that, if elected, he would put a human face on the country's economic growth. But eight months later, facing one of the most dramatic economic downturns in Latin America, Dominicans say he forgot to tell them whether that face would be happy or sad.

 Indeed, Dominicans are glum these days because they're paying higher taxes on gasoline, more for electricity and food, and salaries remain frozen. They are concerned that their economy, which has gone through half a decade of spectacular growth, is deflating.

 ``It's been half a year since there hasn't been much life for anyone here,'' said Félix Lorenzo, a courier who says he now makes half the number of trips he used to make in his dilapidated blue Toyota Corolla.

 During the first quarter of last year, the economy grew at a rate of 7.8 percent, near the top for all of Latin America. In the first quarter of this year, however, the economy barely grew.

 Faced with declining revenues, Mejía's government has increased taxes to make up the difference. The immediate result was largely negative:

   Beer and cigarette sales went down 13 percent.

   Interest rates went up to nearly 40 percent.

   Inflation is near 20 percent, according to some estimates.

 Some Dominicans even have a name for Mejía's economic team -- El Escuadrón de la Muerte -- or Death Squad.

 ``It's a dramatic situation we're living in here,'' explained Leonel Fernández, the former president who guided the country during the boom years and now heads the Global Democracy and Development Foundation, a think tank. ``People are disoriented.''

 But Mejía, in a recent interview with The Herald, said he inherited a share of his problems from the Fernández administration, including high debt and corruption.

 ``I didn't know the situation was going to be as difficult as I found it,'' Mejía said. The price of fuel -- a sore subject for most Dominicans -- is due to both higher taxes and higher costs from refiners.

 ``I don't have any control of the price of gasoline,'' Mejía complained. ``What can I do about it? Who can control the price of fuel. It's only those who produce oil who can control the price of fuel.''

 Because 80 percent of the Dominican Republic's trade is done with the United States, Mejía said, the slowdown in the U.S. economy has dragged down smaller partners like his country. That means fewer orders in the free-trade zones. Dominicans, who normally send more than half a billion dollars home from the United States, are sending less, which makes things worse.

 A recent survey by a local, respected polling organization shows that 59 percent of Dominicans do not agree with the direction in which the Mejía administration is leading the nation, though Mejía's personal image remains good.

 Business activity has slowed dramatically in the past few months, and many Dominicans are blaming rolling blackouts that can last up to 14 hours for the problem. Police and demonstrators recently clashed in Salcedo, a province some 80 miles north of here, as they have done in the past two weeks. Two people have died and several activists have been arrested.

 Some businesses, unable to cope with high electricity bills and taxes, have been forced to close. About 7,000 jobs have been lost in the free-trade zone, and several large public works projects have been halted.

 As president, Mejía gets most of the blame. As a candidate, he had a name for his brand of economics -- ``boroneo'', a reference to the trickling-down of crumbs from the haves to the have-nots. So far, most Dominicans don't seem to be impressed.

 ``The past eight months have been a failure,'' said Amin Canaan Goméz, president of the Dominican Airline Association, and a member of the same party as the
 president. ``We're suffering quietly. We are disappointed in the government.''

 The archbishop of Santo Domingo, Cardinal Nicolás de Jesús López Rodríguez, had sharp words for the government in his Sunday sermon two weeks ago. The
 archbishop said he has noticed signs of great dissatisfaction and great poverty and that those with economic power do not understand the country's problems. Catholic parishioners scolded the president's economic team when it came their turn to speak out during the traditional sermon.

 ``The government has not taken off,'' said Father José Luis of San Carlos. ``There is no initiative that may improve or change things. There is a president with good
 intentions but few realizations. It is as if he's working alone.''

 At the same time, many Dominicans are edgy about Haiti, which shares the island of Hispaniola with them. They privately say they don't trust Haitian President
 Jean-Bertrand Aristide, who they believe could order Haitians to cross the border to go look for jobs in a sort of economic invasion by poor workers.

 Mejía said he wants to help Haitians stay home. Instead of the Dominican Republic paying off its debt, Mejía wants industrialized countries to take the money his country owes financial institutions and invest it in factories on the border. Mejía said the Dominican government is readying programs for the free zones, highways, irrigation systems and reforestation it would like to carry out with the funds.

 On the larger economic problems, he insisted that ``things are going to get better.''

 Party members loyal to Mejía, such as businessman Nasir Attalah, agree. ``We're going to get out it,'' he said.

 Mejía's measures of tax reform, lower tariff and an increase in sales taxes were needed, said economist Frederic Emam-Zadé. But he wonders about the timing.

 ``These things had to be done,'' said Emam-Zadé, an economist with the democracy and development foundation. ``The fundamentals haven't changed.''

                                    © 2001