President Leonel Fernandez Reyna emphasizes bold moves and international commercial vision

SANTO DOMINGO, Dominican Republic – It was nearly 10 p.m. on a Tuesday night when President Leonel Fernandez Reyna arrived at his office in the Presidential Palace. He had just left a marathon session with his economic advisors. For him, it was “another normal 16-hour day.”
“No one said this was going to be easy,” he stated. “A lot has been done, but there is much more to do,” he said, knowing all too well just how much has happened in the Dominican Republic since he regained the presidency 32 months ago.

As he took the oath in 2004 for this second non-consecutive term as president, Fernandez inherited a country on the verge of bankruptcy; an unemployment rate that had spiked from over 13 percent to 19.5 percent in less than six months, uncontrollable inflation, a collapsed banking system and a Dominican peso that held no value against the dollar.

Analysts from both the World Economic Forum and the International Monetary Fund agree that the economic crisis that began in the fall of 2003 was largely due to extravagant spending by the administration of former President Hipolito Mejia, coupled with highly unregulated banking practices that left the country with greater debt than it had in reserves.

“The situation was dire,” Fernandez said, “but I’ve always believed that opportunities can arise from chaos. We had to roll up our sleeves and do two very important things: re-invent ourselves as an economy and give the Dominican people a glimmer of hope with aggressive reforms, especially in the banking sector, in order to get people back to work and jumpstart the economy.” Fernandez is a soft-spoken academic who was literally brought back from retirement by the people—he was reelected with 58 percent of the vote—to spearhead the Dominican recovery.

At 53 years of age, Fernandez is still one of the youngest heads of state in Latin America, but at home, he is already a three-decade veteran of the cutthroat world of Dominican politics.

He first burst into the political scene in the Dominican Republic in 1973 as a law student from Santo Domingo’s Autonomous University, emerging as a protege of former Dominican president Juan Bosch, a former political prisoner during the dictatorship of Rafael Trujillo. Bosch, a respected author and philosopher, was forming a new political movement that would eventually splinter away from the Dominican Revolutionary Party (PRD)—one of the two major parties in the Dominican Republic of the 1970s – to become what today is known as the Dominican Liberation Party, better known for its Spanish acronym, PLD.

In his formative years, Fernandez was an outspoken young leader in the PLD, sometimes taking very vocal positions on issues regarding social justice and equal opportunity for the poor. He championed more government spending for public education and today is still trying to establish a model for universal health care. His doctoral thesis, “The Crime of Public Opinion,” published in 1978, is a scathing critique of how political leaders influenced public opinion with half-truths in order to obtain votes.

In 1985 he became a full member of the PLD’s Political Committee and served as party’s Secretary for International Relations, using that as a platform for his “theory of internationalism.”
He rose through the ranks, becoming the party’s vice presidential candidate on the 1994 ticket with Bosch. However, a constitutional crisis, caused largely by international monitors crying foul at the election of the Social Christian Reformist Party’s Joaquin Balaguer, voided the election.
Upon gaining the presidency in 1996, Fernandez set out to, “change our philosophy. We needed to move away from the traditional isolationism into which we had trapped ourselves.”

Fernandez spent much of his first term opening lines of communication with regional and world powers. He became active in the Caribbean community, spoke before the United Nations and began conversations in Washington, specifically with the U.S. Trade Representative, to involve the Dominican Republic in the development of the Free Trade Zone of the Americas, which led to the organization known today as DR-CAFTA.

He also entered into bilateral trade talks with the governments of Costa Rica, Guatemala and Panama. He struck agreements with Puerto Rico, one of the Dominican Republic’s key trade partners.
Constitutionally prohibited from seeking re-election in 2000, Fernandez stepped down with much of his work incomplete. With the opposition winning handily in the elections, his many initiatives to develop viable trade and manufacturing channels went largely unheeded. By 2003, the country’s economy was in critical condition; by early 2004, it had fallen into a coma.

“The first thing we needed to do was to recruit the best economic team out there to come up with aggressive reforms that would literally stop the bleeding and get the banking system back on its feet,” Fernandez explained. “We had to build the right foundation if we were going to put forth reforms for monetary stability.”

“We were forced into emergency austerity,” he said, “so we had to come up with sound fiscal policies, where services were continued, but with deep cuts so that we could get our finances together. It was a question of macroeconomics. We had to clean house before we could seek help.”

Fernandez sought out the help of the IMF in order to stabilize inflation. With a stand-by agreement that brought an immediate injection, and with the banking reforms quickly put forward, the downward spiral was stopped. The Dominican peso has held steady against the dollar for the last 24 months, unemployment was controlled and an injection of foreign investment, especially in the tourism sector, has helped bring back expansion to the economy and GDP at a rate of 9.3 percent in 2005 and 11.3 percent in 2006.

“We then set out to let the world know that the Dominican Republic was a sound investment. We showed through action that our past problems no longer existed and that we were working toward making the Dominican Republic a more competitive place. I believe it has worked,” asserted Fernandez, who has personally visited Taiwan, India, China, Japan, and other countries to market and promote investment in the Dominican Republic.

“Much had to be done just right and I believe we succeeded,” he said. “Now we have to keep going forward with the tools and the knowledge we have gained. But all in all, I think we’re on the right track.”