The Washington Diplomat / July 2001
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 nation's Gross Domestic Product has expanded by at least 6% annually, with economic growth exceeding 8% 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 -- double what it was 10 years ago.
And that's important to Roberto B. Saladin-Selin, the country's 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 CEO of Banco de Reservas, one of his country's largest commercial banks.
"We have a special relationship with the United States, not only because 65% of our trade is with the U.S. and Puerto Rico, but also because of the presence of 1.5 million Dominicans here," Saladin told us last month during an interview at his elegant residence on Edgevale Terrace N.W.
A distinguished diplomat with a long record of government service, Saladin, 65, traces his origins to the Middle East; his father's family came from Egypt or Syria -- he's not exactly sure -- while his mother's family was Lebanese.
While it's not hard to find Dominicans of Arab descent, most of Saladin's countrymen are a mixture of Spanish, African and indigenous Taino Indian stock. And racially speaking, the majority of dominicanos are neither white or black, but somewhere in between.
And although the D.R. 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 remittances -- the second-largest source of foreign exchange after tourism.
"We did not have any civil war or situation like they had in Central America," Saladin explained, "although we have been asking for special legislation to allow those Dominicans to legalize their status in the United States. They're recognized here as being very hard-working people."
The biggest concentrations of Dominicans can be found in New York (800,000) and San Juan, Puerto Rico (200,000). An estimated 12,000 dominicanos 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 Mayagüez, Puerto Rico.
Few Americans know this, but the Dominican Republic -- only 90 minutes by air from Miami -- was 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.
Washington's 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, Trujillo -- who renamed the capital city, Santo Domingo, after himself -- massacred hundreds of thousands of Haitians, while 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 Joaquín Balaguer.
Ambassador Saladin began his government career during the early days of Balaguer, one of two men to have dominated his country's political life for most of the past 40 years (the other is leftist Juan Bosch).
In 1965, the same year the United States -- attempting to put down a brewing a civil war -- again occupied the Dominican Republic, Saladin was sent to Bonn as the Dominican commercial attaché 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.
Saladin's resume also includes stints as the Dominican Republic's minister of finance (1986-87), governor of the Central Bank (1987-89) and president of the country's 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 he's not a member of any political party, is an avid photographer who -- when he's not spending time with his wife Bertha Nin de Saladin -- enjoys taking pictures with his Canon EOS Rebel. Nearly all the walls of his residence are decorated with framed photographs of colorful boats on windswept Dominican beaches; Saladin recently had some of his work exhibited at the Organization of American States headquarters in Washington.
"We have a beautiful country, and our society is one of the most open in the world," Saladin said as he guided The Washington Diplomat on 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 arch-rival, Bosch, is 92 and senile, and is rarely heard from. Attention is now focused on President Hipólito Mejía, 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," said Saladin. "We now have a Supreme Court whose judges are appointed by the Council of the Magistrate, in a totally transparent way. Before, they 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 Republic's 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 ships more to the United States than Argentina, Chile or Peru.
In addition, the Dominican Republic ranks No. 4 in worldwide exports of apparel to the United States -- surpassed 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 -- attracted by wages as low as $5 a day -- employ 200,000 workers, mostly women, in 43 industrial parks across the country. Together, they account for over $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. But that's slowly changing as Mexico -- where wages are even lower -- siphons off apparel jobs from the Dominicans.
That's why the Dominicans lobbied to hard to win passage last year of the Caribbean ABasin Trade Partnership Act (CBTPA), an extension of the Caribbean Basin Initiative (CBI), which was first passed in 1984.
"It's 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% of the total) is the highest of any country in the world, and Saladin says his country's cigar exports -- which brought in $250 million last year -- 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 Washington's 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 Republic -- with its music, beaches and laid-back attitude -- to be a delightful tourist destination; European tourists, meanwhile, consider the D.R. a far better travel value than Cuba, where accommodations, food and service is 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," said 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 explained. "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 benefitted indirectly by the ongoing phaseout of federal tax incentives for nearby Puerto Rico. While experts acknowledge that it'll be years before certain industries like 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 D.R.
"We're 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," said 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 transshipment 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 country's neighbors throughout the region. And Mejía 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 haven't 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," said 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 Republic's 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 DEA, 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 of1996 were forced to live separately."
Finally, says Saladin, there's the enduring problem of Haiti -- the poorest and perhaps the most politically unstable country in the Western Hemisphere. 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 Mejía government is trying to encourage border free zones and joint ventures between the two countries' private sectors.
But Saladin says more needs to be done.
"Around 800,000 Haitians are living in the D.R. 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 Mejía has asked for the support of the international community in this regard."