[House Hearing, 113 Congress]
[From the U.S. Government Publishing Office]
U.S.-DOMINICAN REPUBLIC RELATIONS:
BOLSTERING ECONOMIC GROWTH AND
ENERGY INDEPENDENCE
=======================================================================
HEARING
BEFORE THE
SUBCOMMITTEE ON
THE WESTERN HEMISPHERE
OF THE
COMMITTEE ON FOREIGN AFFAIRS
HOUSE OF REPRESENTATIVES
ONE HUNDRED THIRTEENTH CONGRESS
SECOND SESSION
__________
JULY 23, 2014
__________
Serial No. 113-183
__________
Printed for the use of the Committee on Foreign Affairs
Available via the World Wide Web: http://www.foreignaffairs.house.gov/
or
http://www.gpo.gov/fdsys/
______
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COMMITTEE ON FOREIGN AFFAIRS
EDWARD R. ROYCE, California, Chairman
CHRISTOPHER H. SMITH, New Jersey ELIOT L. ENGEL, New York
ILEANA ROS-LEHTINEN, Florida ENI F.H. FALEOMAVAEGA, American
DANA ROHRABACHER, California Samoa
STEVE CHABOT, Ohio BRAD SHERMAN, California
JOE WILSON, South Carolina GREGORY W. MEEKS, New York
MICHAEL T. McCAUL, Texas ALBIO SIRES, New Jersey
TED POE, Texas GERALD E. CONNOLLY, Virginia
MATT SALMON, Arizona THEODORE E. DEUTCH, Florida
TOM MARINO, Pennsylvania BRIAN HIGGINS, New York
JEFF DUNCAN, South Carolina KAREN BASS, California
ADAM KINZINGER, Illinois WILLIAM KEATING, Massachusetts
MO BROOKS, Alabama DAVID CICILLINE, Rhode Island
TOM COTTON, Arkansas ALAN GRAYSON, Florida
PAUL COOK, California JUAN VARGAS, California
GEORGE HOLDING, North Carolina BRADLEY S. SCHNEIDER, Illinois
RANDY K. WEBER SR., Texas JOSEPH P. KENNEDY III,
SCOTT PERRY, Pennsylvania Massachusetts
STEVE STOCKMAN, Texas AMI BERA, California
RON DeSANTIS, Florida ALAN S. LOWENTHAL, California
TREY RADEL, Florida--resigned 1/27/ GRACE MENG, New York
14 deg. LOIS FRANKEL, Florida
DOUG COLLINS, Georgia TULSI GABBARD, Hawaii
MARK MEADOWS, North Carolina JOAQUIN CASTRO, Texas
TED S. YOHO, Florida
LUKE MESSER, Indiana--resigned 5/
20/14 noon
SEAN DUFFY, Wisconsin--
added 5/29/14 noon
CURT CLAWSON, Florida
added 7/9/14 noon
Amy Porter, Chief of Staff Thomas Sheehy, Staff Director
Jason Steinbaum, Democratic Staff Director
------
Subcommittee on the Western Hemisphere
MATT SALMON, Arizona, Chairman
CHRISTOPHER H. SMITH, New Jersey ALBIO SIRES, New Jersey
ILEANA ROS-LEHTINEN, Florida GREGORY W. MEEKS, New York
MICHAEL T. McCAUL, Texas ENI F.H. FALEOMAVAEGA, American
JEFF DUNCAN, South Carolina Samoa
RON DeSANTIS, Florida THEODORE E. DEUTCH, Florida
TREY RADEL, Florida--resigned 1/27/ ALAN GRAYSON, Florida
14
SEAN DUFFY, Wisconsin--5/30/14 noon
C O N T E N T S
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Page
WITNESSES
Andres R. Gluski, Ph.D., president and chief executive officer,
The AES Corporation............................................ 7
Mr. Roberto Alvarez (former Ambassador of the Dominican Republic
on the Council of the Organization of American States)......... 21
Mr. Santiago A. Canton, executive director, RFK Partners for
Human Rights, Robert F. Kennedy Center for Justice and Human
Rights......................................................... 29
Flavio Dario Espinal, Ph.D., founder and president, Flavio Dario
Espinal & Asociados (former Ambassador of the Dominican
Republic to the United States)................................. 40
LETTERS, STATEMENTS, ETC., SUBMITTED FOR THE HEARING
Andres R. Gluski, Ph.D.: Prepared statement...................... 10
Mr. Roberto Alvarez: Prepared statement.......................... 23
Mr. Santiago A. Canton: Prepared statement....................... 31
Flavio Dario Espinal, Ph.D.: Prepared statement.................. 42
APPENDIX
Hearing notice................................................... 60
Hearing minutes.................................................. 61
U.S.-DOMINICAN REPUBLIC RELATIONS:
BOLSTERING ECONOMIC GROWTH AND
ENERGY INDEPENDENCE
----------
WEDNESDAY, JULY 23, 2014
House of Representatives,
Subcommittee on the Western Hemisphere,
Committee on Foreign Affairs,
Washington, DC.
The subcommittee met, pursuant to notice, at 2:55 p.m., in
room 2255 Rayburn House Office Building, Hon. Jeff Duncan
(acting chairman of the subcommittee) and Hon. Matt Salmon
(chairman of the subcommittee) presiding.
Mr. Duncan. A quorum being present, the subcommittee will
come to order. I will start by recognizing myself on behalf of
the chairman, Matt Salmon, and the ranking member, to present
our opening statements. Without objection, members of the
subcommittee can submit their opening remarks for the record. I
yield myself as much time as I may consume to present my
opening remarks.
So on behalf of Chairman Salmon:
``Good afternoon. Welcome to this timely hearing on
the relationship between the United States and the
Dominican Republic. I want to thank the ranking member
for joining me and convening this hearing, in which we
will look at the economic and energy opportunities the
U.S. Congress should consider as we move forward with
our priorities in the Western Hemisphere.
``Since the 1980s, we have been building a sound
economic relationship with the Dominican Republic.
Through the Free Trade Agreement in force since 2007,
we have improved our trade and investment partnership.
Since then, the Dominican Republic's economy has grown
and the United States has remained its largest trading
partner with trade totalling more than $11.5 billion in
2013. The Dominican Republic's commitment to free trade
is welcome, particularly during a time when several
regional leaders have systematically stifled economic
growth, expropriating private companies, while eroding
democratic values. I am hopeful that the government in
Santo Domingo will continue along this path while
addressing core human rights and labor issues that
affect many developing countries.
``The Dominican Republic has chosen the path to
prosperity by implementing principles of economic
freedom, entrepreneurialship, and free trade. However,
in order to complement these policies, the island
should consider increasing its percentage of
alternative energy sources to supply domestic demand,
which will gradually lower its energy prices.
Currently, the Dominican Republic is highly dependent
on Venezuelan oil to generate electricity, tying its
economic growth to the whims of Caracas. This
dependence not only affects the Dominican Republic's
long-term competitiveness as high energy costs deter
foreign and domestic investors, but it also has placed
the island in a vulnerable position dependent on one
source of energy.
``As we all know, companies factor in labor and
energy costs when deciding to invest, operate, and
create jobs in any given country. By diversifying its
energy matrix, the Dominican Republic can secure access
to energy at lower prices in order to maintain its
steady economic growth and promote international
competitiveness of its key industries.
``A big part of our decision to hold today's hearing
was to consider how the United States can assist the
Dominican Republic and other countries in the Caribbean
and Central America to mitigate their energy dependence
on Venezuela and to help spur regional economic growth.
As the largest economy in the Caribbean, the Dominican
Republic has the opportunity to develop its energy
independence, and potentially become a hub in the
region for liquified natural gas and compressed gas.
These are two low cost energy sources that can help
meet both the mid- and long-term solutions.
``The administration's decision to focus primarily on
renewable energy as a practical solution is an
expensive initiative. Feasibility studies have shown
that geothermal energy is still not viable on a large
scale. Moreover, due to their small size, Caribbean
islands face many challenges to attract and secure
private investment to develop a significant renewable
network to offset oil-generated energy. The key to
success is utilizing existing market trends.
``The Inter-American Bank of Development recently
conducted a feasibility study to consider the
introduction of natural gas in the 13 Caribbean
economies. Experts found that LNG is the cheapest way
to transport the gas and with the lowest cost of LNG
coming from the U.S. Gulf Coast. Clearly, this is the
trend that many resource-deprived countries are
considering as they diversify their power generation
and improve their energy security. Investing $30
million in a regasification and off-loading facility
sounds like a prudent investment as opposed to millions
of dollars in expensive solar ventures. I have
pressured the administration to simplify DOE's permit
process to streamline the exportation of U.S. natural
gas and will continue to do so.''
I might add my name to that as well.
``I am confident that as we add more natural gas to
the equation, countries like the Dominican Republic
will reap financial benefits allowing for greater
economic development. I want to thank our witnesses for
taking time to be here today. I look forward to a very
informative hearing.''
I will now recognize the ranking member, Mr. Sires, for his
opening remarks.
Mr. Sires. Thank you, Mr. Chairman. Good afternoon. And
thank you to our witnesses for being here today. This hearing
comes at a time when the United States is confronting an
increasing number of foreign policy challenges in the Middle
East, Eastern Europe, and in particular, within its own
hemisphere in Central America. But while Congress debates
measures to address thousands of unaccompanied child migrants
detained along the southern border, the extreme poverty and
violence that continues to fuel this migration pattern in the
region remains. Without a doubt, this humanitarian crisis will
require a dedicated, shared responsibility and regional
response. However, the United States cannot simply put out one
fire to be caught off guard when other issues flare up
elsewhere.
As the tension focuses on Central America, the U.S. must be
vigilant of any unintended consequences or spillover effects
into our neighboring Caribbean region. It is with that in mind
that we are conducting this hearing and the relationship
between the United States and the Dominican Republic, one of
our closest political allies and partners in terms of trade and
security in the Caribbean.
More recently, the United States' and the Dominican
Republic's relationship has been centered on security
cooperation, governance, and human rights issues, especially as
they relate to Haiti. The current President of the Dominican
Republic, Danilo Medina, holds congressional majority and those
reports have indicated that the current party's electoral
dominance is a consequence of fractured opposition. And it has
nonetheless raised concerns of its effect on the country's
governance and judicial independence. For its part, the United
States is one of the largest bilateral donors to the Dominican
Republic. The Dominican Republic has received at least $32
million through the Caribbean Basis Security Initiative for
which Congress appropriated $327 million since 2010.
However, in 2013, the administration designated the
Dominican Republic as one of the four major drug-transit
countries in the Caribbean. According to estimates, the
majority of the roughly 6 percent of U.S. and Euro-bound
cocaine that transits Hispaniola passes through the Dominican
Republic. Moreover, a U.S. State Department report asserts that
corruption and impunity remains endemic which adversely affects
the anti-drug efforts.
In terms of trade, the United States is the Dominican
Republic's main trading partner with two-way trade totalling
more than $11 billion in 2013. Trade and investment flows have
expanded since the Dominican Republic's Central American Free
Trade Agreement with the U.S., which entered in March 2007.
Today, the Dominican exports to the U.S. are shifting from
apparel to technology-intensive goods making. The Dominican
Republic is a leader in manufacturing and foreign direct
investments, on par with Costa Rica. These highlights, however,
have recently been scarred by a troublesome report issued by
the U.S. Department of Labor, alleging that the Dominican
Republic has violated CAFTA-Dominican Republic labor rules by
allowing various labor abuses, including forced and child labor
in the country's sugar cane fields. With respect to human
rights, the U.S. State Department has cited various human
rights problems in the Dominican Republic including violence
against women, abuse by police, and principally the
discrimination against Haitian migrants and their descendants.
In September 2013, the Constitutional Court of the
Dominican Republic issued a controversial ruling that may have
rendered as stateless an estimated 200,000 Dominican-born
persons, mostly of Haitian descent. The ruling was met with
concern by the international community, including the U.S.
State Department and Members of Congress. In response, in May
2014, President Medina ushered a naturalization law that
included an expedited path to citizenship. And in June 2014,
began to implement a plan to regularize those persons affected
by the ruling.
While observers, including the Government of Haiti, and the
U.N. High Commissioners of Refugees have welcomed these
measures as positive steps; others within the international
community feel more needs to be done to properly address the
ruling's implications.
Finally, in terms of energy, the Dominican Republic's
Government received some $600 million in subsidized oil through
Petrocaribe in 2013. Like other countries that receive support
through Venezuela's Petrocaribe program, the Dominican Republic
is vulnerable to excessive political influence by Venezuela.
This dynamic became evident at the OAS during the height of the
Venezuelan protest.
In conclusion, the United States should continue to work
closely with such a close ally as the Dominican Republic to
strengthen ties and overcome these issues. And I look forward
to the hearing and the panelists. Thank you.
Mr. Duncan. I thank the ranking member. Pursuant to
Committee Rule 7, the members of the subcommittee will be
permitted to submit written statements to be included in the
official hearing record. Without objection, the hearing record
will remain open for 7 days to allow statements, questions,
extraneous materials for the record subject to the length
limitation in the rules.
So now I would like to introduce the distinguished panel.
We are going to strike the previous comment. If members
have opening statements, I will recognize Mr. DeSantis. He
doesn't have one. Mr. Meeks, you are recognized for 5 minutes.
Mr. Meeks. Thank you, Mr. Chairman. I wanted to enter an
opening statement because I am a strong supporter of the United
States and the Dominican Republic relationship. And that is why
I am pleased to have this hearing today. As I often lament, the
United States doesn't pay enough attention to what is happening
in our region of the world, that being the Western Hemisphere.
And the Caribbean is a prime example of this. Caribbean nations
like the Dominican Republic are important partners of the
United States and deserve our attention. And it is for that
reason I would like to thank Chairman Salmon and Ranking Member
Sires for convening this hearing today.
I know that the economic success of the Dominican Republic
is linked to the economic well-being of the United States. That
is why I continue to wholeheartedly endorse and support the
CAFTA-DR agreement, as well as other means of supporting DR's
advancement. And when it comes to doing business in the DR and
examining regional issues, I know we have the experts that are
sitting here before us, especially I will give a shout out to
Andres from the AES who has an important perspective that I
would love and am waiting to hear when he testifies.
In addition to the economic relationship, I am a strong
believer in the importance of cultural ties between our two
countries, and I have many Dominican-American constituents that
live in New York and especially those that live in my district
and what they contribute to our country is invaluable. It makes
our country a better place.
Likewise, I represent many Haitian Americans and I was
truly impressed by the Dominican Republic's commitment to
humanitarian assistance and disaster relief in the wake of
Haiti's tragic 2010 earthquake. In fact, the Dominican Republic
was the very first country to offer assistance. And I was
pleased to learn that trade talks took place at a recent
bilateral discussion between Haiti and the DR and I hope this
dialogue will continue.
I would be disingenuous, however, not to mention the
Dominican Republic's September 2013 ruling by the
Constitutional Tribunal. That ruling renders an estimated
200,000 Dominican-born persons, mostly of Haitian descent,
vulnerable to statelessness. Legislation passed and response to
the ruling is a step in the right direction, but I am concerned
that it does not do enough to address the full scope of the
issue. For example, it is concerning to me that someone born in
the Dominican Republic to a family that has long since settled
there can find him or herself classified as a foreigner, even
with the new law that establishes a legalization process. So I
hope our witnesses can shed some light on the developing
circumstances.
Again, let me say thank you to Chairman Salmon and Ranking
Member Sires for holding this hearing and I am grateful we have
witnesses that I am looking forward to hear from individuals
like Mr. Canton from RFK Center for Justice and Human Rights
here today to shed more light on this particular situation. I
look forward to learning more about how we can engage the
Dominican Republic to resolve this human rights situation so
that we can remain focused and that is what I really ultimately
want to do, get back to, what we were talking about before this
issue, we need to remain focused on the many successes that our
great two countries have shared throughout a long friendship,
and ultimately deal with this issue. Let us get back to that
because I think that is what is important for us and that is
what is important for the Dominican Republic and that is what
is important for the region. I yield back.
Mr. Duncan. Mr. Kennedy.
Mr. Kennedy. Thank you, Mr. Chairman. Many thanks to you,
Chairman Salmon and obviously the ranking member, as well, for
holding this important hearing. The policy and discussion I
think will be elicited from your testimony is extremely
important. I am here though because of some deeply personal
ties to the Dominican Republic. So first to our witness, Mr.
Canton, thank you very much for being here from the RFK Center
for Justice and Human Rights, I am a big fan of what you do.
And to the witnesses from the Dominican Republic, Mr.
Ambassador, Mr. Ambassador, it is wonderful to see you both
again. I, as you know, spent about 2\1/2\ years living in the
Dominican Republic as a [speaking foreign language], Peace
Corps volunteer and actually lived right next to a number of
bateyes in the sugar cane plants between Santiago and Porto
Plata, so a number of the issues that have been touched on so
far in the testimony by my colleagues here is something that is
deeply personal to me. I am grateful for the cooperation that
your government has shown in working with our office and the
office of other members of the House of Representatives, as we
try to understand a bit more about some of these issues, as the
issues referenced in the Supreme Tribunal. Also, the importance
of economics and developing trade and business economic
intelligence ties between the United States and the Dominican
Republic.
You have an extraordinary country, one of the warmest and
most generous people I have ever met anywhere in my life. They
accepted me as family, a bit paler, not that many red heads in
the Dominican Republic, although I did come across one, but I
will always look on the country very fondly and I look forward
to the testimony today, even though I can't stay for all of it.
So thank you very much and I thank you for your flexibility,
Mr. Chairman.
Mr. Duncan. I thank the gentlemen for their statements and
now we will just introduce the witnesses and thank you, guys,
once again for being here. It is interesting running a
subcommittee. I have a way that I run my subcommittee on
another committee and the way Chairman Salmon has it, so I
appreciate the gentlemen wanting to have introductory
statements.
Our first witness today is Mr. Gluski. He is president and
chief executive officer of AES Corporation, a Fortune 200
company providing electricity and related infrastructure
services in 20 countries around the globe. Prior to being named
CEO, Mr. Gluski was president of AES Latin America and has also
served as the desk economist for Colombia at the International
Monetary Fund and the Director General of the Public Finance of
Venezuela. Mr. Gluski received a B.A. from Wake Forest
University, Deamon Deacons, and holds an M.A. and Ph.D. in
economics from the University of Virginia, specializing in
international trade and finance.
Our second witness today is Dr. Roberto Alvarez. Mr.
Alvarez served as an Ambassador of the Dominican Republic to
the Organization of American States between 2005 and 2008. Mr.
Alvarez received a master's degree in International Relations
from the Johns Hopkins School of Advanced International
Studies. He also holds a J.D. (Juris Doctorate) degree from the
Universidad Autonoma de Santo Domingo.
The next witness is Mr. Canton. Mr. Canton is the executive
director of RFK Partners for Human Rights at the Robert F.
Kennedy Center for Justice and Human Rights. Mr. Canton is also
an adjutant professor at Georgetown University Law Center. He
holds a law degree from the University of Buenos Aires and a
master's degree in international law from Washington College of
Law of American Universities.
The last witness, Dr. Flavio Dario Espinal, Dr. Espinal
served as Ambassador of the Dominican Republic to the United
States from '04 to 2009. Before that, he served as Ambassador
of the Dominican Republic to the Organization of American
States. He holds an M.A. (master's degree) in political science
from Essex University and a doctorate in government from the
University of Virginia.
Before I recognize you to provide your testimony, I am
going to explain the lighting system in front of you there.
Each of you will have 5 minutes to present your oral statement.
When you begin, the light will turn green. When you have 1
minute left, the light will turn yellow. And when your time is
expired the light will turn red. I ask that you conclude your
testimony once the red light comes on.
After our witnesses testify, all members will have 5
minutes to ask questions, and I urge my colleagues to stick to
the 5-minute rule to ensure that all members get the
opportunity to ask questions. A small subcommittee hearing, I
think we will probably be okay with that today. I will allow a
little bit of leniency and leeway, but we will try to keep it
on time. And I apologize for the heat in here. Again, it is not
my subcommittee room. We will blame Mr. Salmon on that. So Mr.
Gluski, you are recognized for 5 minutes.
STATEMENT OF ANDRES R. GLUSKI, PH.D., PRESIDENT AND CHIEF
EXECUTIVE OFFICER, THE AES CORPORATION
Mr. Gluski. My name is Andres Gluski. I am the President
and Chief Executive Officer of the AES Corporation. It is a
Fortune 200 company based here in Arlington, Virginia. AES
provides affordable and sustainable energy in 20 countries
around the globe, utilizing a broad range of technologies and
fuel sources. We have businesses in nine countries in Latin
America, as well as Puerto Rico.
Since 1997, AES has invested more than $850 million in the
Dominican energy sector. Today, we are the largest U.S.
investor in the country. AES owns two gas-fired power plants
and an LNG import terminal and co-owns a third thermal power
plant together with the government. Our total generation
capacity is 850 megawatts, which represents 23 percent of the
installed capacity in the country. But we supply 40 percent of
the electricity, due to the greater efficiency of our plants.
Additionally, through the AES Dominicana Foundation, we
have implemented sustainable community programs in the areas of
education and the environment. Since 2007, more than 75,000
people in the Dominican Republic have benefitted from these
programs.
The island of Hispaniola, which the Dominican Republic
shares with Haiti, does not have significant sources of
indigenous fuel. Until 2003, the country relied solely on
petroleum fuels such as heavy oil, gasoline, and diesel for
thermal generation. In 2003, our LNG regasification terminal,
AES Andres began commercial operations. In conjunction with the
regasification terminal, AES also built a new 319 megawatt
combined cycle natural gas fired power plant and converted its
existing 236 megawatt diesel fired DPP plant to natural gas.
These plants are now two of the lowest cost plants in the
country.
Recently, AES began the process of closing the cycle of DPP
to increase its output by another 114 megawatts without using
any additional fuel. The impact of introducing natural gas into
the Dominican Republic's power sector over the past decade is
truly impressive. In 2000, 90 percent of the country's
installed capacity was oil based. By 2013, oil-based capacity
had decreased to 39 percent and natural gas represented 31
percent. This dramatic shift translates into savings of more
than $\1/2\ billion per year for the Dominican Republic if
compared to importing petroleum products to generate
electricity. These savings are largely passed on to the end
consumer as lower electricity prices.
Fortunately, there is still opportunities for further
gains, both in the Dominican Republic and the rest of the
Caribbean. In the Dominican Republic, adding a second LNG
storage tank to our Andres facility could fuel an additional
1,000 megawatts of natural gas generation, and allow for the
re-export of natural gas to neighboring countries.
As stated in the independent Castalia Strategic Advisors
Study prepared for the Inter-American Development Bank, states,
``the Dominican Republic may be the best option for a physical
hub in the Caribbean, because it is centrally located and
because AES Dominicana already has LNG facilities and
operations in place.''
By expanding AES' current LNG facility in the Dominican
Republic, the country could become the center of a hub and
spoke system where by LNG would be imported from the United
States in large, efficient tankers and then re-exported in
smaller volumes as LNG or compressed natural gas to other
Caribbean islands. The results in the Caribbean could be
similar to those seen in the Dominican Republic with other
islands benefitting from secure and stable energy supplies and
lower electricity prices for end consumers.
Additionally, as discussed in the Atlantic Council's
recently published report, ``Uncertain Energy, the Caribbean's
Gamble with Venezuela,'' the future of Venezuela's Petrocaribe
agreements which provide low cost, long-term financing for
petroleum imports from that country, is increasingly uncertain.
The financial assistance at Petrocaribe provided countries in
the Caribbean and Central America last year amounted to almost
$2 billion, including $470 million for the Dominican Republic,
$370 million for Jamaica, and $220 million for Haiti.
Providing these countries with natural gas from an
efficient hub in the Dominican Republic could mitigate the
risks of continued dependence on Petrocaribe. The expansion of
our existing Andres LNG facility in the Dominican Republic
provides the fastest and least costly way to increase the
availability of natural gas in the Caribbean. A larger facility
would benefit other energy sector players in that country
besides AES by allowing them access to the terminal and storage
capacity, as well as providing opportunities for trans-shipment
providers to supply other countries in the region.
AES looks forward to continuing to support the Dominican
Republic and welcomes the opportunity to provide similar
benefits to consumers throughout the Caribbean, alongside
multi-lateral entities such as the Inter-American Development
Bank and the IFC, U.S. agencies such as OPEC and USAID, as well
as regional and local partners.
I want to thank you all very much for the opportunity to
testify today, and I would also like to invite you and other
members of the subcommittee to visit our facilities in the
Dominican Republic. Thank you very much.
[The prepared statement of Mr. Gluski follows:]
----------
Mr. Salmon [presiding]. Thank you very much.
Mr. Alvarez.
STATEMENT OF MR. ROBERTO ALVAREZ (FORMER AMBASSADOR OF THE
DOMINICAN REPUBLIC ON THE COUNCIL OF THE ORGANIZATION OF
AMERICAN STATES)
Mr. Alvarez. Thank you, Chairman Salmon, Ranking Member
Sires, and members of the subcommittee. Thank you very much for
the opportunity to testify and share my views with you today.
I should disclose from the outset that a week ago I
declared my support for a Dominican opposition politician, Luis
Abinader, who was the vice Presidential candidate in the 2012
election.
There are many reasons why the relationship is important,
and in my statement you will find a list of those reasons. But
let me just highlight very quickly some of them. The Dominican
Republic is the U.S.'s 38th world-wide export market, number
one in the Caribbean. The Dominican Republic is the source of
the fourth largest Latino population in the United States, over
1.5 million. It is the sixth country of origin in the world of
nationals acquiring U.S. citizenship in the last decade from
2004 to 2013. The fourth country in the world whose citizens
received U.S. permanent residences between 1990 and 1999, and
the fifth between 2000 and 2013. These are just some
highlights, quick highlights.
Now this is again in my statement. In terms of economic, I
want to address economic growth from the vantage point of
inequality in the country. In a January 2014 report, the World
Bank determined that ``despite strong growth over the past
decade, large inequities persist in the Dominican society and
are declining more slowly than expected. GDP per capita rose
almost 50 percent from 2000 to 2011, yet many of the country's
10 million people missed out on the benefits. Chronic poverty,
in which people endure long spells of being poor remains high.
Of greater concern, almost one third of the population is poor
despite having the skills and assets to generate higher
income.''
I find, however, that the most troubling part of the report
is the following: ``The Dominican Republic also has low
economic mobility, with less then 2 percent of its people
climbing to a higher income group during the decade. This
compares to 41 percent for the rest of Latin America and the
Caribbean during the same period.''
When people feel that there is no way out of poverty, that
there is no way out of a certain level of station in life, when
social inequality abounds and when there are 680,000 youths who
neither work nor study, you have a very combustible and
explosive situation.
Now in terms of trade, I want to highlight and this is not
in my statement. I truly believe in free trade. I believe in
the DR-CAFTA, but promotes the entry, the secure and free entry
of trades in goods and services, promotes foreign investment,
yet I want to point out something that is glossed over. In
terms of trade, the DR-CAFTA was signed in 2005. It came into
force with the Dominican Republic in March 2007, yet DR-U.S.
trade balance until 2005 was close to even. However, beginning
in 2006, but accelerating in 2007, the terms of trade on the
CAFTA-DR have shifted exclusively in favor of the United
States. There are many factors for this, the end of the
Multifiber Agreement and so on, but anyway.
Now there are difficult conditions that are being faced by
the local industry, and next year, another 15 percent of
industrial goods will be liberalized and the tariffs will be
lifted. And the local industry is going to be facing a very
difficult situation, a potential loss of jobs and so on. But to
give you an example, in 2013, U.S. exported in comparison to
2006, the exports from the U.S. went up by 33 percent. During
that same period, Dominican exports to the United States went
down by 6 percent. So this is just something to keep in mind
where the Dominican Republic is, not yet as competitive as we
should be at a point in time when more trade is being
liberalized.
And I am not even going to have time to go into the TPP,
but there is an exchange of letters. There are certain concerns
about certain liberalization of fabrics and yarns that maybe
some TPP countries may be receiving that could negatively
affect our industries. There is an issue of MINUSTAH. I think
you should hold a hearing. The burden on the Dominican Republic
is going to be considerable when MINUSTAH leaves, which the
draw down has already started.
And finally, in politics, it is in my statement. The
issues, the main issues in the Dominican Republic now are the
2016 elections, is leveling the playing field so that the
institutions that are in charge, the Electoral Commission, the
Electoral Court are credible. There is a certain loss of
credibility from opposition sectors on their independence, and
this is an issue that could have tremendous importance because
they are going to be about 4,500 candidacies elected in the
2016 elections, the first time that all Presidential,
congressional, and municipal elections will be held together.
Thank you very much.
[The prepared statement of Mr. Alvarez follows:]
----------
Mr. Salmon. Thank you, Mr. Alvarez. Mr. Canton.
STATEMENT OF MR. SANTIAGO A. CANTON, EXECUTIVE DIRECTOR, RFK
PARTNERS FOR HUMAN RIGHTS, ROBERT F. KENNEDY CENTER FOR JUSTICE
AND HUMAN RIGHTS
Mr. Canton. Chairman Salmon, Ranking Member Sires, members
of the subcommittee. Thank you very much for this opportunity.
Let me start by saying that the human rights based approach to
development leads to better and more sustainable outcomes.
There is growing recognition among governments, institutions,
and the private sector that human rights regulations and social
exclusion have a negative impact on economic development.
I wish to focus my comments, therefore today, on some of
the underlying challenges that must be taken into account by
governments and the private sector alike in order to ensure
that investment and economic growth benefit those who are most
in need in the Dominican Republic.
The Dominican Republic, like most countries, has several
human rights issues that require urgent attention including,
but not limited to, high levels of police brutality,
restrictions to freedom of expression, violence against women
and children, sexual exploitation, and trafficking in persons.
Because of time constraints, I would like to concentrate
today the remainder of my time on one of the most pressing
human rights issues taking place in the Dominican Republic
today, the arbitrary stripping of hundreds of thousands of
Dominican nationals of their citizenship. As a result of a
decision, as Congressman Sires said, by the Dominican
Constitutional Court last September, individuals who were once
citizens are today considered foreigners. The decision applies
retroactively to 1929. This means that in some families, up to
four generations of Dominican citizens are now forced to report
to the government as foreigners. For your reference, had the
U.S. Supreme Court handed down a decision like the one in the
Dominican Republic, millions of U.S. citizens born in this
country since the Great Depression, children, grandchildren and
even great-grandchildren would have been retroactively stripped
of their citizenship and converted into immigrants.
As a result of that Constitutional Court's decision, these
Dominican citizens who were born in the Dominican Republic, had
been recognized as citizens, and have lived their whole lives
as such, were suddenly prevented from engaging in economic
activities such as working in the formal sector or opening a
bank account. Many of these Dominicans have also been prevented
from attending university, which of course drastically limits
their economic opportunities. On our most recent visit to the
Dominican Republic, the RFK Center spoke to young adults who
had been at the top of their high school classes and due to the
retroactive deprivation of their nationality, they were
ineligible for college or formal-sector jobs. Thousands of
Dominicans are now in similar positions.
I must note that there has been a great confusion around
this issue, as it has been intentionally been framed as an
immigration debate instead of what it really is: The denial of
the rights of Dominican citizens. This is not an immigration
issue.
The Dominican Government has passed the Naturalization Law
billed as a humanitarian solution to the citizenship crisis.
While the Naturalization Law provided a practical fix for
Juliana Deguis Pierre, the subject person of the Constitutional
Court decision, and roughly 24,000 others in a similar
position, it failed to recognize the nationality of hundreds of
thousands of additional Dominican citizens. These citizens are
now supposed to self report as foreigners alongside actual
undocumented people, immigrants.
The citizenship crisis in the Dominican Republic has
already started to affect its economic and trade relationships
with neighboring countries. In particular, with the Caribbean
community, CARICOM, which is the sub-regional organization for
economic integration and trade and to which the Dominican
Republic has tried to become a member for years. As a result of
the citizenship crisis, CARICOM has suspended consideration of
Dominican membership in the community, has threatened trade
sanctions and has repeatedly expressed concerned about the
discriminatory policies in the Dominican Republic.
Just this month, the CARICOM heads of government reiterated
that it would not be business as usual in the community's
relationship with the Dominican Republic until the government
recognizes the citizenship rights of all those affected by the
ruling. As a political theorist once said, ``The right to
nationality is so fundamental that it can be described as the
right to have rights.'' Thank you very much, Mr. Chairman.
[The prepared statement of Mr. Canton follows:]
----------
Mr. Salmon. Thank you, Mr. Canton. The Chair recognizes Dr.
Espinal.
STATEMENT OF FLAVIO DARIO ESPINAL, PH.D., FOUNDER AND
PRESIDENT, FLAVIO DARIO ESPINAL & ASOCIADOS (FORMER AMBASSADOR
OF THE DOMINICAN REPUBLIC TO THE UNITED STATES)
Mr. Espinal. Thank you very much, Mr. Chairman, Ranking
Member Sires, and distinguished members of the subcommittee.
Thank you for your interest in the Dominican Republic, and
thank you for inviting me. It is a great honor and distinction
to be here in this institution that I analyzed so much since I
was a student at the University of Virginia, Jefferson's
university.
I would like to touch on a number of issues that have been
raised during the hearing, and I think I can provide some
perspective on the situation in the Dominican Republic. One
first point is that the Dominican Republic is a country with
political stability. In over 40 years in the Dominican
Republic, there has not been a coup d'etat, a breakdown in the
political order. There has been civilian governments,
democratically-elected governments and the three major parties
have held office and power has been transferred peacefully.
Of course, there are institutional challenges. There are
problems and issues as in any other country, undeveloped
countries need to face, but I think that is a major achievement
taking into account the history of political upheaval and the
dictatorial and authoritarian governments during the 19 century
and great part of the 20th century.
From economic perspectives, some of my colleagues here have
raised, have touched on the vibrant character of the Dominican
economy. It has had a typically average growth during the
last--since 1991 until 2012 of 5.8 percent. The Dominican
economy is a diverse economy. It has different sources of
growth, and has been able to face the challenges of economic
crisis internationally. Since it is a vibrant economy, a
growing economy, the largest economy in the Caribbean and in
Central America, it has provided the market for the U.S.
especially in the context of DR-CAFTA.
I worked very closely with Congressman Meeks during the
process of implementation while I was here and I have fond
memories of that time. I think it has been a great opportunity
for the U.S. to export to the Dominican Republic and for us it
is a challenge to increase competitiveness, but also it has
created the opportunity for more investment and institutional
support in the country to better the institutional practices in
my country.
Bilateral relations, bilateral trade has been over $11
billion in the year 2013. We are concerned, Mr. Chairman, and
distinguished members of a possible provision in the TPP
regarding a farm provision that could affect the interests, the
economic interests of the apparel industry in the Dominican
Republic, in Central America and also in the United States. So
it is an issue that I would like to bring to your attention.
Of course, there is also a relationship in terms of
tourism, remittances, investment and cooperation between the
U.S. Government and the Dominican Government.
With regard to the decision of the Constitutional Court, I
would like to say that of course as it happens in the U.S., the
Dominican Government, and the Dominican society as a whole, had
to obey the decision of the Constitutional Court. In fact, the
Constitution says that the decisions of the Constitutional
Court is binding to all state organizations, state
institutions, and all citizens. However, the Government and the
Congress have acted appropriately and have provided the legal
framework that has responded to the three main issues that are
derived and are part of the whole problem regarding that
population that is in the Dominican Republic. On the one hand,
it has created a naturalization plan, and already in less than
2 months, close to 100,000 people have lined up to submit their
requests to become a regular resident in the Dominican
Republic.
Secondly, the law has provided the evaluation of all the
documents that people who the Court consider that they were not
Dominicans. However, the legislation has passed that has
validated all the documents, so they remain as Dominicans, full
Dominicans with full rights. And the third group, people who
were born and can prove they were born in the Dominican
Republic, and they have a pathway to naturalization through a
process of regularization and naturalization of becoming
Dominican citizens within a framework of 2 years. So it is my
belief that even though the Constitutional Court decision
created this situation that was conflicted, very controversial,
both internally and abroad, I am confident that the legal
framework that has been created is appropriate, is effective
and it has been created, guided by principles of human dignity,
equality, and equality before the law; also with the sense of
equilibrium and political responsibility given the difficulty,
political difficulty, that the government was facing as a
result of the decision. So I believe there has been an
effective and appropriate response on the part of the Congress
and the President. And the great issue now is how to move
forward with the cooperation of partners and the implementation
of these laws by the institutions that are responsible to
implement such laws. Thank you very much.
[The prepared statement of Mr. Espinal follows:]
----------
Mr. Salmon. Thank you very much, Dr. Espinal. I will now
yield myself 5 minutes for questions of the panel.
Mr. Gluski, other than the option of large scale financial
assistance, what are some of the measures that you would
recommend the U.S. Congress should consider to ensure a
constructive role for the United States as we increase
assistance to the Dominican Republic to restructure its energy
sector? Do you believe that the U.S. can play a role as a fuel
supplier, as a technical advisor on implementing alternative
fuel sources and ways to improve energy delivery systems or as
a policy advisor in the complicated areas of legal and
regulatory policy to promote competition? What measures to help
meet short to medium term solution can we look at?
Mr. Gluski. Thank you, Chairman Salmon. I think there are
many roles the U.S. Government can play. First, the U.S. is the
natural supplier of LNG to the Dominican Republic. Now the
thing is, it is a smaller market than some of the markets in
Asia, so we have to make sure, I think, that we facilitate
those export approvals for the liquifiers on the Gulf to make
sure that they get to this market. Now that is the cheapest way
to get the LNG there is from the U.S.
We are bringing LNG at U.S. prices, but from Trinidad. We
signed a 20-year agreement based on Henry Hub since we are a
U.S. company. Now, I think there are several roles in terms of
one is through the multi-laterals like the Inter-American
Development Bank is now helping the Dominican Republic
restructure the energy sector. And what is very important
there, is there is a tremendous amount of energy losses. In
other words, about 30 percent of the energy that is consumed is
not paid for. And so that means that the government must
subsidize this in their budget every year, and that is where
Petrocaribe comes in to help subsidize the $1 billion
shortfall.
So part of it I think, is they do need investments in
transmission and other sectors to get the energy, let us say
efficiently around the country. I think in terms of the project
such as ours, ours was done completely by the free market. We
did not get any sort of official loans. However, I think that
loans that, for example, support from OPEC, Ex-Im, those things
are important, so quite frankly you buy American. If you can
get JEXIM, you will buy Japanese. So I just put that in mind
for a U.S. company such as us.
I would also mention that since we talked about the
Caribbean, and not just the Dominican Republic, we can bring in
gas to the Dominican Republic from the U.S. as a free trade
agreement country. But if you re-export it to some of the other
places like Haiti or Jamaica, what would be the arrangement for
that? So facilitating the re-export would also help.
And I would say that finally that if we are thinking about
Petrocaribe and it has political influence as has been
mentioned by some members in the region, if that were to say
end tomorrow because quite frankly the Venezuelan consumption
is going up, their production is not. You would need some way
to step in to help facilitate the transition. You can't
suddenly take $2 billion of financing out of the Governments of
the Caribbean and Central America without proposing an
alternative. And I would suggest that the appropriate vehicle
for that would be the IMF or the World Bank rather than the
U.S. Government, but certainly the United States can support
those.
Mr. Salmon. Thank you. Dr. Espinal, are the energy
challenges in the Dominican Republic the result of external
factors or internal considerations? For example, are the
inefficiencies a result of a lack of political will to change
an inherently dysfunctional system or is the DR, and by
extension most of the island nations of the Caribbean, at a
fundamental disadvantage because of geography and demographics,
or is it some of both?
Mr. Espinal. I think it is a mix of things. We had a system
for many, many decades that was controlled by the government.
Then there was kind of messy privatization without a legal
framework that could set the rules and the regulatory agencies
that could administer the system. Eventually, there was a law
in the second half of the '90s that transferred the state-owned
properties in the energy sector in the electricity sector
particularly to the private sector. There has been positive and
negative aspects in the process. I think that legal reform
allows investments to just AES investment in the Dominican
Republic the leader in natural gas and producing low-cost
energy in the Dominican Republic and I congratulate them for
that. But we have a sector that relies so much on fusel oil,
and we need to transform that to relying more on cheaper and
cleaner source of energy.
Of course, there is a need to do more in terms of reforming
the distribution and commercialization system. There is a
portion of the population that does not pay their bills, for
one reason or another. Sometimes they are very poor and they
are not reached by the companies that provide the electricity,
so there is a gap between what the energy producers produce and
what they end up collecting. And then how is that whole field
by the government subsidizing close to $1.2 billion for the
Dominican Government which is a heavy burden for the finances
of the Dominican Republic.
In sum, I think we have to move more in terms of some legal
reform, some political will, of course, and also more
investment from the private sector and I am seeing positive
movement like the AES recent investment.
Mr. Salmon. Thank you. One last question, Mr. Alvarez, the
Dominican Republic and other Caribbean nations represent some
of the United States' most vulnerable neighbors due to their
dependence on Petrocaribe. In your opinion, does the United
States have a strategic or even a moral responsibility to the
region to help these countries exit the program? And do you
believe it is most likely to step in if the U.S. does not in
the event that Caracas decides to modify the financing terms?
Mr. Alvarez. Well, it is a welcome interest, Mr. Chairman.
Unfortunately, it comes a little bit late, and by that, what I
mean is that now you have the Dominican Republic has
accumulated a debt of $4 billion with Venezuela, but more
importantly, it has gotten used to, over time, to this easy
money. And what that means is that as Mr. Gluski said, this has
been used to cover the deficits, for example, paying the
deficit that also Ambassador Espinal alluded to, $1.2 billion
to $1.4 billion every year in subsidizing the electric sector
because it does not, I think, have the political will, has not
had the political will to step up and start charging that 30
percent of society that does not pay for electricity.
So yes, it is welcome. I think the conjecture at the moment
is that the United States is now reaching a point where it is
going to--I think it is 2035, reach energy independence, so
this is the time to start looking at ways quickly of how the
countries such as the Dominican Republic can be weaned off this
dependency.
Mr. Salmon. Thank you very much. Mr. Sires.
Mr. Sires. Thank you, Mr. Chairman. Dr. Espinal, I listened
to your comments. Sort of interesting, 40 years of stability,
40 years of democratic elections. Why now deal with the Haitian
issue if you have had such stability and if you have had such
democratic elections, why now? Why deal with this issue now? I
have been to the Dominican. I have been to Jimani. I was there
after the big floods of Jimani. I helped build schools there. I
provided supplies there. So the area doesn't seem like you
can't tell the difference which is Haiti and which is Dominican
Republic. But why now, after so many years, do we have to deal
with this? And the courts that dealt with this, was this court
instituted by Leonel or was it a court over the Supreme Court?
Who made these decisions? Mr. Canton, you can answer that, too.
Mr. Espinal. Thank you. Thank you for your question. The
reason why I mentioned the Dominican Republic has had political
stability because this is a major achievement, sometimes not
well appreciated in some parts of our region when you compare
with other countries close to ours. I think it is significant,
these 40 years, 45 years of stability, civilian government,
elections, transfer peacefully of power and so on and so forth.
That is internally.
Now we have a neighbor that has its challenges. You take
Haiti from 1991, when the coup d'etat against President
Aristide took place and the military came to power, since
practically beginning of the '90s up until now, Haiti has been
in a very unstable situation with some periods of certain
instability. Sometimes the possibility of having an effective
communication, and sustained dialogue with the Haitian
authority have been very difficult.
Now we see for a variety of reasons we have a functioning
government in Haiti with the good will to work with the
Dominican Government. We also have a government that was ready
to do that and I think that has created good atmosphere to move
forward and address issues of commerce, security, cooperation,
and so on and so forth.
Mr. Sires. But this is 40 years, now you are talking the
last few years. I just don't see the rush to all of a sudden
deal with a problem that you have had and you have enjoyed,
quite frankly, cheap labor from the Haitian community over so
many years. To me, and even politically that doesn't make
sense. You have an election coming in 2016. I mean I just don't
see it.
Mr. Espinal. Well, sometimes one thing is not necessarily
connected to the other. We feel very strong and very proud of
having achieved this politically. Of course, with all the
challenges and problems that you can mention and others can
mention, but that is a major achievement.
We also have been obtaining important gains in areas such
as protection of the environment for instance, and other areas
as well. In Haiti, unfortunately, they have been involved in
like a revolving door of a crisis to crisis, political
instability, international presence through MINUSTAH, by the
way, I agree with what Roberto Alvarez, my colleague and
friend, mentioned. We are very concerned about the end of
MINUSTAH and the support of international communities to Haiti,
because that could create problems in Haiti which is not good
for Haiti and not good for us either. So in that regard, we
created--back in 1996, we created a commission to dialogue with
Haiti and it was practically impossible to sit down for a day
or two to talk about a constitutional accord. It was the
creation----
Mr. Sires. I am running out of time, so I don't mean to
interrupt you, but I would like Mr. Canton, if he would shed
some light into this?
Mr. Canton. May I distinguish between two different things?
One thing is the issue of Haitian immigration to the Dominican
Republic. There is a history of that. I am not going to be the
first one to say that there has been a pattern of
discrimination against Haitian citizens in the Dominican
Republic. And that is one issue. That was somewhat resolved in
2010 with the constitutional reform that clarifies, for good,
the situation of Haitians that are born in the Dominican
Republic. That has been resolved.
Now in addition to that, there is the issue of Dominican
citizens, not Haitians, Dominican citizens that have been
stripped of their nationality. That is a different issue. I
don't want to--there is an attempt to refer to this issue as an
immigration issue. It is not an immigration issue. The
immigration issue has been resolved, 2010. It is done. The
other problem is not an immigration issue. It is a
nationalization issue. They have stripped the nationality of
more than 200,000 people. And in that category of 200,000, you
have different groups. The first group, 24,000, approximately
24,000 have some sort of document for the government is saying
and the nationalization plan is saying you are Dominican, you
are going to be fine. Just line up, and we are going to give
you the citizenship.
Unfortunately, I hope, only for practical reasons, it
hasn't worked yet, but they are--according to the law and
according to the constitutional accord, they are Dominican
citizens. However, there is another group, all the rest, more
than 200,000 people still that have to line up and they may get
the citizenship. And there is no difference in these two
groups. You can have one person that has a birth certificate
and the brother or sister did not get it for whatever reason,
and the one with birth certificate is going to be Dominican
citizen. The one without the birth certificate is not. So there
is again in this issue a clear pattern of discrimination
against Dominican citizens. And it would have been very easy
for the Government of the Dominican Republic when approving
this law to apply the same criteria to everybody, not just to
that group of 24,000.
Mr. Sires. Do you have any idea why now?
Mr. Canton. There is a history of discrimination against
Haitian citizens in the Dominican Republic.
Mr. Sires. My time is up. I thank you for the extra time,
Mr. Chairman.
Mr. Duncan. I thank the chairman, thank the gentlemen,
interesting topic for me because I am very focused on energy
and energy issues for the United States, so hearing the
perspective of Dominican Republic with regard to energy is
fascinating. Natural gas is the way to go. When I am looking at
a barrel of oil equivalent, it is about 6,000 cubic feet of
gas. Gas is sold at a million BTUs, so a BTU is about a 1,020
BTUs per cubic foot. That is 6 million BTUs per barrel of oil
equivalent. Six million times the price of gas now is about $28
for a million BTU right now, based on the market. A barrel of
oil is trading at $103, so you get gas, not LNG. I understand
LNG, you got to factor in, liquefying, transportation costs, I
get all that. Just what the open market is at 465 million BTU
today versus $103 a barrel, so $28 versus $103. Natural gas is
the way to go, and we have got a abundance of it here in this
country. So why not expedite the LNG terminals in this country,
and help our friends in the Caribbean states and nations with
their energy needs? It just makes sense to me to help Americans
and American companies make money selling LNG and help our
friends in the region.
So let me ask you this, Mr. Gluski. The focus on energy in
the region's off-and-on power generation and the cost of
electricity to the consumer, but the reality is that in many of
the countries the majority of the imported fuel goes to
transportation, bunker, and aviation fuel requirements. So what
can governments in the private sector do to increase fuel
efficiency or alternative fuel use in transportation? And I
would like you to just talk about LNG aspects as well.
Mr. Gluski. Thank you, Congressman Duncan. Actually, in the
Dominican Republic, we are selling compressed natural gas to 50
businesses outside of the energy sector. So we actually built a
compressed natural gas facility and it is being used in
transportation. So you are absolutely right, that it would make
a lot of sense, especially like big trucks and people who have
buses, etcetera, to change those over to natural gas. And that
can be done.
Now I think that what is important is that the investments
in the regasification facilities are expensive, and quite
frankly, a lot of the islands in the Caribbean are too small
for it. So that is the thing to realize that it is not a
question of bringing it in, but then somebody has to make the
investments of having those facilities. So that is why our
concept would be to make it a hub from the Dominican Republic,
which would also give them more energy security by having more
stocks of fuel.
The other thing that to facilitate the building of the
liquification facilities in the U.S. what you require is a
long-term contract. For example, we signed up to a 20-year
contract with Trinidad to bring gas to the Dominican Republic.
There is also the credit worthiness of the off takers and that
is why support from the multi-laterals can help to make those
longer term agreements possible and you will need somebody to
aggregate it to get the minimum volumes necessary to build such
a facility.
Mr. Duncan. I understand that. Is there a way to--you
mentioned agreements with other island nations and I think
about Puerto Rico and I see the former Governor Fortuno is here
and I am glad he is with us today, former congressman as well.
I assume that there is an opportunity for all the island
nations to really come together in some sort of pipelines that
might be possible and shared transportation costs, offloading X
percentage at each nation, some sort of trade agreements like.
Is that being talked about?
Mr. Gluski. Well, Puerto Rico also has an LNG facility
which they have had difficulty expanding. So actually, if you
made a hub in the Dominican Republic, you could bring ships
into Puerto Rico. Now what I think makes sense is, again, I
think a multi-lateral could help aggregate the demand to make
it efficient, especially for the smaller islands or something
like Haiti. Quite frankly, we are supplying now about 2 percent
of Haiti's energy needs through shipping compressed natural gas
from the Dominican Republic. But there are very few credit
worthy offtakers in Haiti, and that is where they need support.
So I think it could be a win-win to have a policy here.
Mr. Duncan. Can you shift enough volume in CNG to make it
feasible. I mean LNG is the way to ship gas if you are going to
ship large volumes, but is CNG feasible?
Mr. Gluski. CNG is feasible, for example or to take it for
example to Haiti, you are not going to build in the short term
an LNG regasification. So you ship it by truck to Haiti if you
had a credit-worthy offtaker.
The other thing that you could do is, quite frankly, gas by
wire is to produce the electricity in the Dominican Republic
and just build a transmission line to Haiti. And the same
problem, you would need USAID or one of the multilaterals to
guarantee payment to get that energy there.
After the earthquake, we sent crews over to Haiti to help
restore electricity there, and I can tell you there is just so
much to be done in Haiti and they could have such enormous
social benefits from bringing electricity to that country, but
it is not going to happen without support from the
multilaterals and I think the U.S. could play a role there.
Mr. Duncan. I understand. I have talked many times in the
Foreign Affairs Committee about electrification and what that
does to raise the standard of living and lifestyles of so many
people around the world, from being able to keep food fresh, to
be able to teach your children after dark with electricity and
to cook without charcoal and all the other health things that
comes from that. I am out of time, but I am hoping we are going
to have another around of questioning and I yield back.
Mr. Salmon. We will. We will have another round. Mr. Meeks.
Mr. Meeks. Thank you, Mr. Chairman, interesting hearing
thus far, and I am glad we are going to have another round. I
want to make sure I understand where we are headed and I
understand the futuristic piece that we may be looking at in
dealing with LNG. But right now as I look at the DR and the
entire Caribbean I just want to get your opinion. One of the
concerns I have and given the fact that Venezuela has been
utilizing giving oil at such rates, prices to try to help the
economy, had Venezuela failed, what would then happen to those
countries like the DR and those countries in the Caribbean?
Mr. Gluski. That is a great question and one since we serve
those markets, we pay a lot of attention to them. I think that
what is most likely to happen is that not so overnight, but you
could have a withdrawal from certain countries. And probably,
you would have the politically more friendly countries be the
last ones. Of the countries, the Dominican Republic is in the
best shape, I would say because the economy is relatively
healthy and as well, they are paying for it in kind. There are
actually barter agreements where they send beans to Venezuela
in exchange for oil, etcetera, but you know, this is something
that is quite frankly not economically efficient. Even if
Venezuela started to withdraw, certainly countries would be cut
off first.
And there the question would be some countries are more
vulnerable than others. And again, I think the Dominican
Republic is probably the least vulnerable of them, but you have
Jamaica, you have other countries. That is where I think in the
short-term, some sort of thought process should go in now, say
IMF or somebody would come in to subsidize because you can buy
the fuel. Actually, the whole Caribbean buys more fuel from the
U.S. than it does from Venezuela. The difference is that
Venezuela subsidizes half of it, half of what they export. They
will give you a long-term loan of 3 percent. And that is what
it is. So it is basically a way of financing, but there is no
problem with getting the fuel. So if you had a form of
financing, the effects would not be so great. And I think that
would be a way of U.S. showing leadership to friendly nations
in the area with which we have close cultural and personal
ties. And I think----
Mr. Meeks. Let me ask this quickly, because you mentioned
IMF and maybe a way of financing. I know that previously we
were talking about the IMF. What I received from a number of
the countries previously was that the conditionalities that
come with an IMF loan, as well the cost for servicing the debt,
is tremendously expensive. Would IMF have to work something
else out in regards to changing some of their conditions?
Mr. Gluski. Again, what I suggest here is not a typical
structural adjustment loan where you come in and you have a lot
of conditionality. It would have to be a short-term--something
that could react relatively quickly, because those loans also
take 6 months sometimes to negotiate. So you need a facility
that could step in and say look, we will provide financing
until you get your house in order to alleviate the shock of
this process. I leave that to the IMF to negotiate. But you are
right, the IMF loans do come with conditionality. The problem
is IMF usually comes in after a crisis has happened, so it is a
lot more fun to run up a debt and then have to pay it. So the
IMF comes in when they have a problem and says okay, to get
your house back in order, you have to tighten your belt.
Mr. Meeks. Mr. Alvarez, let me jump to you because I have
concern being a strong supporter of DR-CAFTA and you talked
about how it is not benefitting a lot of the individuals in the
Dominican Republic, at least the balance of trade is all in the
United States' favor as opposed to being balanced and helping.
Does that have anything to do with the current state of the
economy you think and/or capacity building of a need to have
greater capacity building so that individuals in the DR can
better benefit from the agreement?
Mr. Alvarez. It is all of the above. I mentioned the end of
the Multifiber Agreement in the beginning of 2005, that had a
terrible impact on the free zones of the DR. Many went
bankrupt. As you look at the figures, you see how the exports
to the United States dropped significantly. So that is one
factor.
But in terms internally, the competitiveness of Dominican
industries is lacking and lagging. And that is one of the areas
and there are many factors for that, energy being one of them,
a very important one, but certainly not the only one. Skills of
the workers, infrastructure in general.
Mr. Meeks. What can we do to help?
Mr. Alvarez. You have to innovate. I think one of the
things the United States has been to some degree looking--has
been reacting too slowly. You need new innovative ways of
looking and we are talking about, as you yourself said, looking
at the close geographical islands that are friendly or
countries that are extremely friendly that have trade
agreements that look favorably to the United States and that
don't receive the type of attention that should be receiving.
So a host of--in my statement, I have a number of issues that I
recommend that you can take a look at so I don't take too much
of your time.
Mr. Meeks. I just have one more question based on this.
Because of the preferences that Haiti has, could the DR take
some advantage there and they can work closely together on some
of that and that would help both with exports to the United
States and help stabilize the economy?
Mr. Alvarez. Absolutely. That is absolutely fundamental.
Right now we have under the HRO, Haiti Recovery Act, which
covers--you have binational industries. You have, for example,
a group in the Dominican Republic that straddles the border,
with Haitian labor, and it is a model that can be used. And
that is particularly important because the name of the game in
Haiti now is jobs. Jobs, jobs, jobs. In 2009, a study done by
Paul Collier of Oxford University for the Secretary-General of
the U.N., said that between 2009 and this year, 2014, close to
1 million youths in Haiti were going to enter the labor market.
Where are they going to work?
The largest job creator so far in Haiti has been this South
Korean free zone that has been in the north part. I think that
ultimately, in 10 or 15 years they are going to create 20,000
jobs. So this is one of the issues in the Dominican Republic
and they are talking exclusively on the issue of migration, and
going back to the issue of the withdrawal of MINUSTAH. This is
one of the issues that is creating a lot of anxiety in the
Dominican Republic and rightly so, I think, but where are they
going to go? Over to the Dominican Republic, and as I mentioned
before, have 680,000 unemployed youths today.
So no wonder that the last barometer of the Americas 2012
in looking at the rank of countries of people wanting to leave
their countries to go live and work elsewhere, Haiti was number
one, 58 percent, and the Dominican Republic was fourth, 31
percent. Put that together.
Mr. Salmon. Thank you, we are probably going to get buzzed
for a vote in not a very long period of time and so maybe we
can just each ask one more question if that is all right while
the panel members still have a little bit of time.
Dr. Espinal, my question is for you. As you probably know,
the FDA is reviewing rules that will put new regulations on
imported cigars. Could you comment on what kind of impact these
new FDA rules would have on the Dominican economy?
Mr. Espinal. Well, it concerns directly to me, because the
place where cigars is made is my home town of Santiago. Those
are where the best cigars in the world come from.
I think it is part of a challenge. I think we have a
thriving center of exporting the cigars. We are the largest
exporter of hand-made cigars, premium cigars in the world and
it generates jobs and bolsters our culture and also the
industry. So we are watching closely and we hope our interests
are taken into account realizing that the recent economy, in
Honduras and Nicaragua and other countries, are relying on that
industry to generate jobs, to generate hard income to the
country and economic activity and trade and so on and so forth
that if it is hurt, then we are going to be hurt economically.
Mr. Salmon. What I am hearing you say is that depending on
how the rules come out, it could have a real dramatic effect?
Mr. Espinal. Definitely, you are absolutely right.
Mr. Salmon. Thank you. Mr. Sires.
Mr. Sires. Thank you, Mr. Chairman. You know I have been
dealing with Dominican Republic for many years. I love the
Dominican Republic. I love its people. I have a great number of
Dominicans in my district. But I have some concerns. I am
concerned about the direction which the Dominican Republic is
headed. This issue of Haitians, I think, is a bad sign. The
issue of supposedly creating a court above the Supreme Court, I
am concerned about.
I don't know exactly where the relationship between Haiti
and the Dominican Republic is today. But one of the times I was
in the Dominican Republic, there was talk about creating a
wall. I hope that is dead, to build a wall between the
Dominican Republic and Haiti. I hope that is a dead issue.
I am quite frankly concerned, as we crack down on the drug
dealers and the contraband in Central America, that now they
are going to come over and increase its activity in the
Dominican Republic. We already have got 6 percent. Already,
there is a 6-percent of shipments to America and to Europe. So
I am concerned. I just hope that in the next couple of years we
are able to work together and deal with some of these issues. I
will look forward to working with anybody that comes to my
office to deal with this issue. This issue of taking the
citizenship away from some of the people that were born on the
island I think is a bad sign. It is a bad sign.
Mr. Espinal. May I comment?
Mr. Sires. Sure.
Mr. Espinal. If I put the Constitutional Court in context
of how it came about, there is a commission of 13
constitutional experts that were appointed by then President
Fernandez to draft the constitution that then was submitted to
the National Assembly. I was a member of that commission. I was
pro bono. I was not paid or anything like that and I was part
of that committee. There was conflicting views about what to do
with regard to having or not having a Constitutional Court.
Myself, I was against it.
What happened? The influence of European law, you know, in
Europe they have Constitutional Courts. In the U.S., you have
the Supreme Court. In the European tradition, they have a
traditional Supreme Court, but also they have a Constitutional
Court, it is so-called Hans Kelsen model. In Latin America, we
are adopting that model increasingly. And the Dominican
Republic is in that trend. And the majority of the Commission,
and the majority of the National Assembly, adopted the European
law. There was nothing political about that. It was just a
model of dealing with the Constitution and constitutional
issue.
Secondly, and then the Constitution says for the first time
that the rulings of the Constitutional Court are binding. So we
have to obey what it says and the lower courts, the normal
courts have to obey the precedence of the Constitutional Court.
It is in that context that the Constitutional Court ruled on
the nationality or citizenship question. It interpreted the
Constitution in a given way. We may agree or disagree with
that, but that was the interpretation. And as you know, the
Supreme Court of the United States has made decisions over the
years beginning with Plessy vs. Ferguson and ending in whatever
you want to name it and people have difficulties or differences
with the decision, but you obey what the Supreme Court decision
says. And we have to obey what the Constitutional Court decides
and the government has obeyed.
What is important here and I will close my remarks, my
comments here is that there has been a political and
legislative response to problems and situations that were
created as a result of the decision by the Constitutional
Court. My belief, my honest belief, is that that response,
legal response is effective, is the appropriate one, and is
politically viable in the present circumstances.
Mr. Sires. Thank you, Dr. Espinal. And by the way, I am
sure the cigars, a lot of those seeds came from Cuba.
Mr. Salmon. Mr. Duncan.
Mr. Duncan. Thank you, Mr. Chairman. I was sitting here
listening to Mr. Alvarez talk about jobs, jobs, jobs. I think
about the tie-in there. I came to Congress to focus on three
things, jobs, energy, and our Founding Fathers. Jobs, putting
Americans to work, putting Dominicans who are putting Haitians
to work, jobs. Unleashing that innovative and entrepreneurial
spirit and nothing exemplifies that spirit more than the energy
sector. Energy is a segue to job creation whether it is running
new electrical transmission lines in Haiti or whether it is
providing that power through power generation in the Dominican.
So jobs, energy, and our Founding Fathers focuses limited
government, free markets, individual liberties, self-
governance, and all those things that we support. If you take
jobs, energy, and our Founding Fathers, that creates an
acronym, JEFF, and my name being Jeff, I am all about that. I
am all about that.
Mr. Salmon. You should do a commercial like that.
Mr. Duncan. It is campaign season, right, I think. But it
is something I am passionate about. As I mentioned earlier in
my opening comments, energy is a passion, but I understand the
connection. We are putting Americans to work through our energy
sector, whether it is in the gas fields off the coast of
Louisiana and Texas or whether it is in the Eagle Ford or
Barnett Shale or whether it is in Marcellus or whether it is up
in North Dakota with the Bakken. People, Americans are being
put to work. They are being put to work building tank cars to
transfer the oil from the Bakken by rail on rail cars.
There is tremendous opportunity in the energy sector, and
those tentacles run far and wide. And so I see that as an
opportunity in the Dominican Republic. I see that as an
opportunity in Haiti. I see it as an opportunity in all the
Caribbean nations, and I see America sitting here with the
expertise to help make it happen.
So I hope those relationships will continue to be forged
and will be strengthened, because we understand the concern
about Venezuela. We share that concern and so can America play
a part in lessening that dependence on Venezuela, lessening
that dependence on government that is oppressive and we see it
happening in the Ukraine and Eastern Europe and Western
European with their reliance on Russian gas and that pipeline
can be shut off, that spigot can be shut off. Venezuela can do
the same thing to the Caribbean. I get that. And that is why
America is sitting here as a friend, and an ally, to the
Caribbean nations with the ability to export LNG, and abundance
gas and oil, to help you meet your energy needs and bring that
expertise to the island nations to help you meet your
infrastructure needs and help you become efficient and put
Dominicans and Haitians and Puerto Ricans, all of them to work.
Creating those jobs that Mr. Alvarez talked about. So jobs,
energy and our Founding Fathers on our side--the same equation
works there as well. And with that, I yield back.
Mr. Salmon. Mr. Meeks.
Mr. Meeks. Thank you. Dr. Espinal, let me just ask and
first I want to subscribe to what the ranking member had
indicated. First, sometimes I was thinking maybe it is just us
and the United States would have concern about the tribunal
ruling, but then I saw also that CARICOM said that the recent
legislation ``is far from satisfactory and did not go far
enough in addressing the grave human rights effects of the
ruling on nationality as it restored the nationality only to a
limited number of persons affected by, but left an overwhelming
majority stateless.'' So it is even other countries in the
region that are also concerned.
Two quick things. One, just from your viewpoint is there
anything that you think that we can work on together? It is an
issue. It is not going to go away. It is an issue, they had the
U.N. talking about it with the reference to statelessness. So
it is not going to go away. And the DR is too important a
partner and friend for us to let--we need to focus on other
things.
So I was wondering if there was anything that you think
that we can do collectively to begin to fix the thorn that we
currently have in our relationship, and apparently a thorn in
the relationship with other countries in the Caribbean also.
And lastly, whether or not because of the tribunal, has that
caused any difficulty with the bilateral relations between the
Dominican Republic and Haiti, because I know those were good
conversations that were going on and whether or not the
tribunal ruling has caused any conflict there?
Mr. Espinal. Thank you, Mr. Congressman, for the question.
I am not going to minimize how controversial the Court's
decision, the Tribunal's decision was. And I can see there will
be people who may disagree with the legal response that the
Dominican Government, together with the legislation, have
presented in response to the problems created by the Court, by
the decision. However, there are others who have said that the
response was the correct one.
Vice President Joe Biden was in the Dominican Republic and
expressed it. The Secretary General of the U.N. was recently in
the Dominican Republic and said it. The president of the
European Council was just 2 days ago, yesterday in the
Dominican Republic, and said they were very pleased how the
government responded. So these are very important people that
have looked into the matter and have received advice, and they
have said that they are pleased with the response. So I think
we are accompanied as a country, as a country we are
accompanied by very good people saying that this is the right
way to go.
As far as cooperation is concerned for your part, I am
going to mention one. One of the problems that we are having,
for instance, we have one category of people is those
typically, exclusively migrants. Santiago Canton has referred
to migrants only. Sorry, migrants and other categories, but
migrants only, one of the problems they are facing is that they
line up to get the naturalization, close to 100,000 people, and
perhaps only 10 percent have documents from their own country
from Haiti. They don't have a document that can say who they
are. And the Haitian Government is charging them whereas our
Government is not charging them one penny for doing the
process, not even back taxes or any fees. So it is important to
help Haiti get the resources to help their citizens to get
documents so they can get naturalized very quickly. That is
very important.
And your last question was?
Mr. Meeks. The relationship, bilateral relationship with
Haiti.
Mr. Espinal. Bilateral relationship with Haiti. Very, very
important question. Last year, the Haitian Government has taken
some decisions regarding trade relations and has unilaterally
imposed sanctions against the exports of certain products from
the Dominican Republic. That has created some strain in the
relationship.
But what I see very positive, very, very positive is this
dialogue between the authorities of the Dominican Republic and
Haiti, including yesterday, between the President of Haiti and
President of the Dominican Republic. We are looking at each
other, face to face, saying let us work together, the problems
that we have in terms of trade, in terms of security, in terms
of other matters and come up with solutions that can be
practical and effective.
One of the issues was the trade issue. That was a concern
of the Dominican Republic and I am very optimistic that these
trade sanctions on the part of Haiti will be eliminated and
trade will increase in both countries. But I could say and I
close my remarks and my comments here, I say that there is a
very positive atmosphere, very positive atmosphere between the
high authorities of both countries. And you have your friends
in both countries and you can ask and you will find out that
what I am saying now is exactly the truth. There is a momentum
that needs to be reinforced, that needs to be helped, that
needs to be supported. This is a sign to support that process.
And this is a sign to help the Dominican Government to move
forward with the solution that I repeat is rooted, I think, I
believe, as a Dominican citizen, it is rooted in values that is
effective legally and is politically responsible because it is
the viable, political solution in the present circumstances.
Mr. Meeks. Let me just conclude with this statement because
I agree with Vice President Biden. I think what Vice President
Biden said was that it was a step in the right direction, not
that it was all good or that it resolved the problem. So you
made a step in the right direction, but I believe that there
are other steps that need to take place to make sure that we
resolve this issue.
Mr. Salmon. Thank you very much, gentlemen. You have been
really more than generous with your time. I hope you understand
from our comments and questions that we consider our bilateral
relationship with the Dominican Republic to be one of great,
great importance. Also, the Dominican Republic has really been
a great example for other countries in the region in so many
areas. And as we move forward, we just want to make the
relationship better economically and in every other aspect. But
I think that on the energy issues, some of the things that you
brought up, Mr. Gluski, about maybe looking into some of the
options on short-term financing and utilizing OPEC or the Ex-Im
Bank or other entities to try to facilitate, I think those are
great, productive recommendations. I want to thank the members
on the panel for a great hearing. So thank you very much and
with that, this hearing is adjourned.
[Whereupon, at 4:20 p.m., the subcommittee was adjourned.]
A P P E N D I X
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