Voter Anger Spreads in Dominican Republic’s Miracle Economy

(Bloomberg) -- Baking under the Caribbean sun and hemmed in between the banks of the polluted Isabela and Ozama rivers, the impoverished neighborhood of Capotillo in the Dominican Republic’s capital, Santo Domingo, is a face of this nation outsiders rarely see.

Here and in other neighborhoods like it, the long-ruling Dominican Liberation Party, or PLD, is struggling to retain support ahead of elections next year.

“The economy grows, but it doesn’t flow down to us,” says 68-year-old Luis Tomas Solano, who works with the Fundacion Escoba, a community organization that works to pick up garbage and fumigate against mosquitoes. “There is no drainage system, water arrives every three days, and the lights goes out for 24 hours at a time.”

The PLD, has, with the exception of four years in the early 2000s, held the presidency since 1996. The Dominican Republic has had the highest growth in the Americas after Panama over the last decade, led by tourism and construction.

In poor districts like Capotillo, however, the government’s successes can be harder to see. Some 40% of the population still lives in poverty, according to the World Food Programme.

Combined with a recent feud within the PLD between current President Danilo Medina and former President Leonel Fernandez, this disconnect has helped erode support for the party.

‘Dangerous Pass’

Prelimary results showed Fernandez losing the Oct. 6 primary by a razor-thin margin to Medina’s chosen successor, former Minister of Public Works Gonzalo Castillo. Fernandez is alleging fraud and is demanding a review of the balloting overseen by international observers.

“Things have come to a very dangerous pass now,” says Minou Tavarez Mirabal, who served in the Dominican congress from 2002 to 2014 and was a longtime member of the PLD, subsequently resigning from the party. She has since helped form a new party, the Alliance for Democracy.

Tavarez Mirabal said that the country’s despotic political tradition and fragile democratic institutions have combined to become “an authoritarian power project” by the ruling party.

Medina’s proposal to change the constitution to allow him to seek a third term set off alarm bells in a country that only emerged from dictatorship in the 1970s, even though he eventually relented.

The PLD’s control of congress, the judiciary and the presidency has bred a sense of impunity and allowed graft to flourish, the party’s critics say.

Some of the hundreds of millions of dollars paid out in bribes by Brazilian construction firm Odebrecht ended up in the Dominican Republic. Seven current and former officials have been charged for alleged malfeasance in connection with the company’s operations in the country.

Deep Divide

The Medina government has refused requests that an independent commission investigate alleged kickbacks over a Odebrecht-built coal plant southwest of the capital.

“There is a great institutional crisis,” said Miguel Ceara-Hatton, an economist at the Center for Economic and Social Studies at Santo Domingo’s Pontifical Catholic University, who is affiliated with the opposition Modern Revolutionary Party. “The justice system is controlled by the government. The Supreme Court is made up of recognized militants of the official party. And the case of Odebrecht and the prosecutor’s action showed a willingness to protect members of the current government.”

The PLD has strongly pushed back against allegations of corruption.

“The government has been taking action since 2012, when the president took office,” Minister of Finance Donald Guerrero Ortiz said in an interview, citing a series of measures that criminalize corruption and tax fraud. Long before the Odebrecht scandal, “the government was already taking steps to increase transparency levels and improve the processes of purchase and contracting by the state,” he said.

In 2017 and 2018, tens of thousands of demonstrators took to the streets to protest against corruption in the so-called Green March movement. Some saw a possible reordering of the nation’s political map in the offing.

The PLD saw that, too, and last year, managed to pass a law placing a series of restrictions on political competition in the country. The law is being challenged in the courts.

‘And Getting Better’

It is not hard to find supporters of the government in the nation’s business sector.

“The Dominican Republic is an out-performer in the region,,” said Jan Ortiz, the treasurer with the Bank of Nova Scotia’s local unit. “The last 15 years have been really good for the economy in general. The opportunities we see here are good and getting better.”

Despite that, the minimum wage for workers in one of the nation’s more than 700 free-trade zones -- areas where goods can be assembled and packaged and exported without being subject to customs duties -- is 10,000 pesos per month, a little under $200, and the wage divide is felt sharply in neighborhoods like Capotillo.

“In order to buy a television set, our families have to stop eating,” Solano says. “There is no worker in this neighborhood who says, ‘look, I went on vacation,’ because the salary is barely enough to cover a quarter of what the family expenses are. We have a population that spends another day in misery, in destitution.”

©2019 Bloomberg L.P.

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