Tonight the former president of the Dominican Republic, Leonel Fernandez, will address the nation for the first time since he stepped down as president in May. It is likely to be a one-way broadcast without questions. Which is a pity, because on the evidence of recent days a lot of Dominicans are itching to ask him a few things.
At the weekend thousands of protesters took to the streets in Santo Domingo and the second city, Santiago de los Caballeros, in protest against the government led by Fernandez’s successor, Danilo Medina. Most of the international media reported that the protests were against a raft of tax reforms, including an increase in sales tax from 16% to 18%. Such a cursory explanation immediately tweaked my sceptical antennae. It seemed incredible that people would go out into the streets, especially against the gun-toting Dominican police department, just because DVDs had gone up by a few dollars. I detected a heavier change in the atmosphere, something reflected in the number of people who had changed their Twitter avatars to the Dominican flag superimposed by a black ribbon. There had to be more to it.
In the last few days I’ve received a string of emails from ordinary Dominicans setting out how they expect the reforms to affect them. Getting a completely accurate picture is difficult because the tax bill was passed through the Congress in less than 20 minutes without a debate – an extraordinary way to handle such a major piece of legislation. The Dominican Traders Federation says sales could plunge by as much as 25% in the first half of 2013 as people tighten their belts. When the reforms are considered in detail, it’s easy to see where their pessimism comes from.
In truth, the 2% increase in sales tax is the tip of the iceberg – though in a country where the average monthly wage is equivalent to around US$450 it will be sorely felt. The recent depreciation in the currency has seen the basic price of goods rise, compounding the rise in prices. A new lower VAT rate of between 8% and 16% is being introduced for everyday staples such as sugar and coffee. Telecoms taxes are rising too, pushing phone and internet bills up by 10% in a country whose online connectivity is one of its greatest assets. Supporters of the reforms point to the fact that expensive electricity subsidies are being cut, but here, too, much of the cost is being passed on to the consumer. Savings, motor cars and even Christmas bonuses are all being subjected to extra levies. Perhaps the most galling measure is a proposed tax amnesty for previous defaulters whose debts cannot be traced – effectively admitting that the system has been leaking like a sieve for years, while expecting honest citizens to plug the holes.
Fernandez’s intervention, which is being broadcast on no fewer than six television channels as well as radio networks, reflects how seriously the government is taking the public outcry. Medina’s package of reforms has angered the middle classes, who see their incomes and their savings being crushed by a government that is not prepared to curtail its own excesses. Medina blames the rising budget deficit for forcing his hand; Fernandez is likely to blame the financial situation he inherited when he took office in 2004, a year after the Baninter bank collapsed under the weight of fraud and corruption. Yet before his fall from grace Baninter’s owner, Baez Figueroa, was a pivotal business leader and media owner whose lavish wedding ceremony was witnessed by none other than Leonel Fernandez. Baez eventually went to prison, but several other senior figures either escaped punishment or received light sentences. One former executive was personally pardoned by Fernandez after being released from a five-year jail sentence on health grounds.
Fernandez himself has been under scrutiny in recent weeks over his own role in building up a $187 billion deficit by the time he left office. But on the day of his broadcast, the attorney general announced that there was no case to answer on the questions of corruption and mismanagement. His television appearance is widely seen as a way of deflecting attention from Medina’s troubles as well as an attempt to justify the accumulation of debt at a time when Fernandez was being lauded by the international community for puting the country’s finances back on track.
But there are several thousand Dominicans who are not in a forgiving mood. Some of those who contacted me this week were resigned to the fact that the budget deficit needs to be paid off and raising taxes is the only way. “It’s true, we will have less money, mainly those of us in the middle class, but is there another way?” asked one. But the prevailing mood is anger. “The Dominican middle class is mad as hell and they’re not going to take it any more,” is how one person summed up the situation. Another noted that “several reforms have been made and several new taxes have been passed and we complained but accepted. None have met such resistance. The reason? We have had it.” Many people said they had voted for Medina in May on the basis that he had promised not to raise taxes. In mobilizing the middle classes against him so emphatically, the President may have passed the point of no return. The question is what happens next.
This week an academic report warned that democracy in the Dominican Republic could collapse within 15 years. Looking at the last 15 years of corruption, cronyism and financial turmoil it is hard not to see it as fragile. There is still hope that the country can find a democratic way out of the crisis. Revolutions, even in the best of causes, are ugly, brutal, bloody affairs, as the Arab Spring has shown. But the last week should act as a warning that the patience of the Dominican people is rapidly running out.