Ambassador of the Dominican Republic Roberto B. Saladin-Selin Dominican Republicís Economy Growing but Still Struggling by Larry Luxner The Dominican Republic, home of merengue music, premium cigars and baseball great Sammy Sosa, can now boast of something even more impressive: the fastest-growing economy in the Western Hemisphere. Over the last decade, the Caribbean nationís gross domestic product has expanded by at least 6 percent annually, with economic growth exceeding 8 percent in some years. While all that wealth has yet to filter down to the poorest sectors of society, the average Dominican now enjoys a per-capita income of $2,200 ó double what it was 10 years ago. And thatís important to Roberto B. Saladin-Selin, the countryís ambassador to the United States. Saladin is both an economist and a lawyer by profession, and before being sent to Washington in October 1999, he was general manager and chief executive officer of Banco de Reservas, one of his countryís largest commercial banks. "We have a special relationship with the United States, not only because 65 percent of our trade is with the U.S. and Puerto Rico, but also because of the presence of 1.5 million Dominicans here," says Sala din last month during an interview at his elegant residence on Edgevale Terrace in Northwest Washington. A distinguished diplomat with a long record of government service, Saladin, 65, traces his origins to the Middle East. His fatherís family came from Egypt or Syriaóheís not exactly sureówhile his motherís family was Lebanese. Although itís not hard to find Dominicans of Arab descent, most of Saladinís countrymen are a mixture of Spanish, African and indigenous Taino Indian stock. And racially speaking, the majority of Dominicans are neither white nor black, but somewhere in between. And although the Dominican Republic is a relatively small country, because of enduring poverty there are more Dominicans in the United States relative to its total population of 8.4 million than any country in the world except El Salvador. Together, they send home $1.6 billion a year in remittancesóthe second-largest source of foreign exchange after tourism. "We did not have any civil war or situation like they had in Central America," Saladin says, "although we have been asking for special legislation to allow those Dominicans to legalize their status in the United States. Theyíre recognized here as being very hard-working people." The biggest concentrations of Dominicans can be found in New York with 800,000 and San Juan, Puerto Rico, with 200,000. An estimated 12,000 Dominicans live in the Washington area. Besides the embassy here, the Dominican Republic maintains consulates in Boston, Chicago, Jacksonville, Los Angeles, Mobile, Ala., Miami, New Orleans, New York and Philadelphia. There are also consulates in San Juan and Mayag¸ez, Puerto Rico. Few Americans know this, but the Dominican Republicóonly 90 minutes by air from Miamiówas the first country in the New World to be colonized by Europeans. Shortly after its discovery by Columbus in 1492, the original inhabitants, the Tainos, were decimated by the Spaniards. In 1697, the island of Hispaniola was divided in two, with the western third eventually becoming French-speaking Haiti and the eastern two-thirds eventually becoming the Spanish-speaking Dominican Republic, which declared its independence in 1844. Washingtonís interest in Dominican affairs began in 1905, when the United States established partial control of the Dominican economy to protect American and European creditors. In 1916, with increasing debts and internal disorder, U.S. Marines occupied the country and remained until 1924. Six years later, army commander Rafael Leonidas Trujillo Molina grabbed power and instituted one of the most ruthless dictatorships the Western Hemisphere has ever known. In the 1930s, Trujilloówho renamed the capital city, Santo Domingo, Ciudad Trujillo after himself and erected huge neon signs reading "God and Trujillo." Over his thirty year dictatorship he massacred tens of thousands of Haitians and committing massive abuses against his own people. Trujillo was finally assassinated in 1961, and power eventually ended up in the hands of center-right politician JoaquÌn Balaguer. Ambassador Saladin began his government career during the early days of Balaguer, one of two men to have dominated his countryís political life for most of the past 40 years (the other is leftist Juan Bosch). In 1965, the same year the United Statesóattempting to put down a brewing a civil waróagain occupied the Dominican Republic, Saladin was sent to Bonn as the Dominican commercial attachÈ to West Germany. From 1966 to 1969, he served in Paris as administrative secretary of the Dominican delegation to UNESCO, finally returning home to help establish the Dominican Export Promotion Center in 1971. Saladinís resumÈ also includes stints as the Dominican Republicís minister of finance (1986-87), governor of the central bank (1987-89) and president of the countryís monetary board. Saladin and his wife, Bertha Nin, have six children, of which one, 25 year-old Roberto Alejandro, still lives at home. The diplomat, who says heís not a member of any political party, is an avid photographer. "We have a beautiful country, and our society is one of the most open in the world," Saladin says as he guides a tour of his residence. "But we are a poor country. Our main challenges are, first, to remedy the energy situation, and the government is doing everything it can to face this challenge. Secondly, we must increase expenditures in the education and health sectors, and third, we have to improve the distribution of income among the population. Economic growth should trickle down to the poorest sectors of society. This is one of the key goals of the present government." While Balaguer is no longer president, at age 96 he still exerts a great deal of influence in Dominican politics, despite being completely blind. His archrival, Bosch, is 92 and senile, and is rarely heard from. Attention is now focused on President HipÛlito MejÌa, who since taking office last August has made it his mission to improve the quality of life for poor Dominicans, while at the same time preserving the incentives that have made the Dominican Republic such a favorite among foreign investors. "We have also accomplished lots of economic reforms in the past few years," says Saladin. "We now have a Supreme Court whose judges are appointed by the Council of the Magistrate, in a totally transparent way. Before, the judges were appointed by the Senate. This is a very important issue for foreign investors, who consider an independent judicial system to be crucial. Besides that, we have a new foreign investment law, a new industrial property law and a new copyright law." The United States is by far the Dominican Republicís main trading partner. Interestingly, bilateral U.S.-Dominican trade exceeds U.S. commerce with India, South Africa or Sweden. It currently ranks as the fifth-largest export market in the Western Hemisphere for U.S. goods, and the Dominican Republic ships more to the United States than Argentina, Chile or Peru. In addition, the Dominican Republic ranks number four in worldwide exports of apparel to the United Statesósurpassed only by China, Hong Kong and Mexico. But what really has boosted the Dominican economy is the rise of the "maquila," or industrial park. While many Latin American countries including Mexico, Honduras, El Salvador and Guatemala have maquilas, the Dominicans have turned the concept into a major economic success. These days, nearly 500 U.S. and other companies ó attracted by wages as low as $5 a day ó employ 200,000 workers, mostly women, in 43 industrial parks across the country. Together, they account for more than $1 billion in foreign-exchange earnings. At present, the overwhelming majority of Dominican free-zone exports consist not of high-value electronic components but low-tech apparel and textiles. That is slowly changing as Mexicoówhere wages are even lowerósiphons off apparel jobs from the Dominicans. Thatís why the Dominicans lobbied so hard to win passage last year of the Caribbean Basin Trade Partnership Act (CBTPA), an extension of the Caribbean Basin Initiative (CBI), which was first passed in 1984. "Itís very important for us to fulfill all our requirements in order to continue to be eligible under the CBI and the CBTPA, which gives us the same trade benefits as Mexico in apparel exports," says Saladin. The Dominican Republic is also known for its traditional agricultural exports. Its U.S. sugar quota (17.9 percent of the total) is the highest of any country in the world, and Saladin says his countryís cigar exportsówhich brought in $250 million last yearó are the highest in Latin America. Dominican cigars are now considered just as good, if not better, than Cuban cigars, and are certainly easier to buy in the United States, an obvious consequence of the U.S. trade embargo against Cuba. Another area where Washingtonís anti-Cuba policy has helped the Dominican Republic is tourism. Americans, who are generally forbidden by their own government from traveling to Cuba, are finding the Dominican Republicówith its music, beaches and laid-back attitudeóto be a delightful tourist destination. European tourists, however, consider the Dominican Republic a far better travel value than Cuba, where accommodations, food and service are generally inferior. "We are the largest tourist destination in the Caribbean, with 52,000 hotel rooms, and we receive 2.2 million tourists a year. That includes 500,000 Germans alone," says Saladin, noting that tourism will generate an estimated $2.4 billion in revenues this year. "A lot of U.S. tourists know Casa de Campo in La Romana or Punta Cana, but we also want to present a positive cultural image, based on the role we played during colonial times," he says. "Santo Domingo, for example, has a lot of tourist attractions for people who wish to see the first city in the New World, the first cathedral, the first hospital and the first university." The Dominican Republic has also benefited indirectly by the ongoing phase-out of federal tax incentives for nearby Puerto Rico. Although experts acknowledge that it will be years before certain industries, such biotechnology, can be lured to the country, low-wage manufacturers are already flocking to Santo Domingo. With the abolition of U.S. tax incentives for Puerto Rico, companies have less of an incentive to keep factories on that island, where the federal minimum wage law applies, and more of a reason to move those plants to the Dominican Republic. "Weíre trying to increase the flow of investment coming from the U.S. and to create a climate of confidence and stability in the Dominican Republic to attract that investment," says Saladin. "As an example of that confidence U.S. investors have in our country, AES is now investing $330 million in a new power plant that will use natural gas to generate electricity. And CSX is leading a $200 million joint venture to build a trans-shipment terminal at Punta Caicedo, near Santo Domingo." In addition, the Dominican Republic has signed separate free-trade agreements with Central America and the Caribbean Community (Caricom), a 15-nation trade bloc, in an effort to boost commerce with the countryís neighbors throughout the region. And MejÌa is on record as supporting a Free Trade Area of the Americas by 2005. Yet despite the massive foreign investment in everything from factories to five-star hotels, conditions havenít improved for large numbers of Dominicans, some of whom risk their lives to travel illegally to Puerto Rico in rickety little wooden boats called yolas. "Some people are just seeking job opportunities. Many of them are tied to the agriculture sector, which is not very modern, and people have begun to abandon their farms," says Saladin. "One of our highest priorities is to support financing and technical assistance to farmers, in order to be self-sufficient in the production of food for ourselves, and for export to other Caribbean islands." Another problem is the Dominican Republicís growing notoriety as a transit point for cocaine on its way from Colombia to the United States. "The Dominican Republic is cooperating fully with the [Drug Enforcement Agency], the Department of Justice and the Coast Guard to fight drug-smuggling and money laundering. We are geographically situated between the producers and the consumers, but our government has a commitment and is fully cooperating with the United States." Pointing out that his government has extradited 26 criminals to the United States on drug-related charges, Saladin says: "We will not allow the Dominican Republic to be converted into a refuge for people who violate the laws of the United States." At the same time, he adds, "We would like to see undocumented Dominicans living in the U.S. legalized, in order to reunite those families who after the Immigration Act of 1996 were forced to live separately." Finally, thereís the enduring problem of Haiti ó the poorest and perhaps the most politically unstable country in the Western Hemisphere, says Saladin. Dominicans have long been suspicious of their Haitian neighbors ever since Haiti occupied the entire island of Hispaniola in the early 19th century. But lately, relations have begun improving, and the MejÌa government is trying to encourage border free zones and joint ventures between the two countriesí private sectors. But Saladin says more needs to be done in this regard. "Around 800,000 Haitians are living in the [Dominican Republic] and earning an income. Those who arrive without documents are sent back to Haiti. Those who come with passports and visas are accepted," Saladin says. He adds that "the Dominican Republic cannot deal alone with the poverty in Haiti. President MejÌa has asked for the support of the international community in this regard." Larry Luxner, a contributing writer for The Washington Diplomat, has visited the Dominican Republic 12 times in the past 15 years. He can be reached via e-mail at larry@luxner.com.