[House Hearing, 113 Congress]
[From the U.S. Government Publishing Office]



 
                   U.S.-DOMINICAN REPUBLIC RELATIONS:
                     BOLSTERING ECONOMIC GROWTH AND
                          ENERGY INDEPENDENCE

=======================================================================


                                HEARING

                               BEFORE THE

                            SUBCOMMITTEE ON

                         THE WESTERN HEMISPHERE

                                 OF THE

                      COMMITTEE ON FOREIGN AFFAIRS

                        HOUSE OF REPRESENTATIVES

                    ONE HUNDRED THIRTEENTH CONGRESS

                             SECOND SESSION

                               __________

                             JULY 23, 2014

                               __________

                           Serial No. 113-183

                               __________

        Printed for the use of the Committee on Foreign Affairs


Available via the World Wide Web: http://www.foreignaffairs.house.gov/ 
                                  or 
                       http://www.gpo.gov/fdsys/

                                 ______




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                      COMMITTEE ON FOREIGN AFFAIRS

                 EDWARD R. ROYCE, California, Chairman
CHRISTOPHER H. SMITH, New Jersey     ELIOT L. ENGEL, New York
ILEANA ROS-LEHTINEN, Florida         ENI F.H. FALEOMAVAEGA, American 
DANA ROHRABACHER, California             Samoa
STEVE CHABOT, Ohio                   BRAD SHERMAN, California
JOE WILSON, South Carolina           GREGORY W. MEEKS, New York
MICHAEL T. McCAUL, Texas             ALBIO SIRES, New Jersey
TED POE, Texas                       GERALD E. CONNOLLY, Virginia
MATT SALMON, Arizona                 THEODORE E. DEUTCH, Florida
TOM MARINO, Pennsylvania             BRIAN HIGGINS, New York
JEFF DUNCAN, South Carolina          KAREN BASS, California
ADAM KINZINGER, Illinois             WILLIAM KEATING, Massachusetts
MO BROOKS, Alabama                   DAVID CICILLINE, Rhode Island
TOM COTTON, Arkansas                 ALAN GRAYSON, Florida
PAUL COOK, California                JUAN VARGAS, California
GEORGE HOLDING, North Carolina       BRADLEY S. SCHNEIDER, Illinois
RANDY K. WEBER SR., Texas            JOSEPH P. KENNEDY III, 
SCOTT PERRY, Pennsylvania                Massachusetts
STEVE STOCKMAN, Texas                AMI BERA, California
RON DeSANTIS, Florida       ALAN S. LOWENTHAL, California
TREY RADEL, Florida--resigned 1/27/  GRACE MENG, New York
    14 deg.                          LOIS FRANKEL, Florida
DOUG COLLINS, Georgia                TULSI GABBARD, Hawaii
MARK MEADOWS, North Carolina         JOAQUIN CASTRO, Texas
TED S. YOHO, Florida
LUKE MESSER, Indiana--resigned 5/
    20/14 noon 
SEAN DUFFY, Wisconsin--
    added 5/29/14 noon 
CURT CLAWSON, Florida 
    added 7/9/14 noon 

     Amy Porter, Chief of Staff      Thomas Sheehy, Staff Director

               Jason Steinbaum, Democratic Staff Director
                                 ------                                

                 Subcommittee on the Western Hemisphere

                     MATT SALMON, Arizona, Chairman
CHRISTOPHER H. SMITH, New Jersey     ALBIO SIRES, New Jersey
ILEANA ROS-LEHTINEN, Florida         GREGORY W. MEEKS, New York
MICHAEL T. McCAUL, Texas             ENI F.H. FALEOMAVAEGA, American 
JEFF DUNCAN, South Carolina              Samoa
RON DeSANTIS, Florida                 THEODORE E. DEUTCH, Florida
TREY RADEL, Florida--resigned 1/27/  ALAN GRAYSON, Florida
14
 SEAN DUFFY, Wisconsin--5/30/14 noon 


                            C O N T E N T S

                              ----------                              
                                                                   Page

                               WITNESSES

Andres R. Gluski, Ph.D., president and chief executive officer, 
  The AES Corporation............................................     7
Mr. Roberto Alvarez (former Ambassador of the Dominican Republic 
  on the Council of the Organization of American States).........    21
Mr. Santiago A. Canton, executive director, RFK Partners for 
  Human Rights, Robert F. Kennedy Center for Justice and Human 
  Rights.........................................................    29
Flavio Dario Espinal, Ph.D., founder and president, Flavio Dario 
  Espinal & Asociados (former Ambassador of the Dominican 
  Republic to the United States).................................    40

          LETTERS, STATEMENTS, ETC., SUBMITTED FOR THE HEARING

Andres R. Gluski, Ph.D.: Prepared statement......................    10
Mr. Roberto Alvarez: Prepared statement..........................    23
Mr. Santiago A. Canton: Prepared statement.......................    31
Flavio Dario Espinal, Ph.D.: Prepared statement..................    42

                                APPENDIX

Hearing notice...................................................    60
Hearing minutes..................................................    61

                   U.S.-DOMINICAN REPUBLIC RELATIONS:


                     BOLSTERING ECONOMIC GROWTH AND


                          ENERGY INDEPENDENCE

                              ----------                              


                        WEDNESDAY, JULY 23, 2014

                       House of Representatives,

                Subcommittee on the Western Hemisphere,

                     Committee on Foreign Affairs,

                            Washington, DC.

    The subcommittee met, pursuant to notice, at 2:55 p.m., in 
room 2255 Rayburn House Office Building, Hon. Jeff Duncan 
(acting chairman of the subcommittee) and Hon. Matt Salmon 
(chairman of the subcommittee) presiding.
    Mr. Duncan. A quorum being present, the subcommittee will 
come to order. I will start by recognizing myself on behalf of 
the chairman, Matt Salmon, and the ranking member, to present 
our opening statements. Without objection, members of the 
subcommittee can submit their opening remarks for the record. I 
yield myself as much time as I may consume to present my 
opening remarks.
    So on behalf of Chairman Salmon:

          ``Good afternoon. Welcome to this timely hearing on 
        the relationship between the United States and the 
        Dominican Republic. I want to thank the ranking member 
        for joining me and convening this hearing, in which we 
        will look at the economic and energy opportunities the 
        U.S. Congress should consider as we move forward with 
        our priorities in the Western Hemisphere.
          ``Since the 1980s, we have been building a sound 
        economic relationship with the Dominican Republic. 
        Through the Free Trade Agreement in force since 2007, 
        we have improved our trade and investment partnership. 
        Since then, the Dominican Republic's economy has grown 
        and the United States has remained its largest trading 
        partner with trade totalling more than $11.5 billion in 
        2013. The Dominican Republic's commitment to free trade 
        is welcome, particularly during a time when several 
        regional leaders have systematically stifled economic 
        growth, expropriating private companies, while eroding 
        democratic values. I am hopeful that the government in 
        Santo Domingo will continue along this path while 
        addressing core human rights and labor issues that 
        affect many developing countries.
          ``The Dominican Republic has chosen the path to 
        prosperity by implementing principles of economic 
        freedom, entrepreneurialship, and free trade. However, 
        in order to complement these policies, the island 
        should consider increasing its percentage of 
        alternative energy sources to supply domestic demand, 
        which will gradually lower its energy prices. 
        Currently, the Dominican Republic is highly dependent 
        on Venezuelan oil to generate electricity, tying its 
        economic growth to the whims of Caracas. This 
        dependence not only affects the Dominican Republic's 
        long-term competitiveness as high energy costs deter 
        foreign and domestic investors, but it also has placed 
        the island in a vulnerable position dependent on one 
        source of energy.
          ``As we all know, companies factor in labor and 
        energy costs when deciding to invest, operate, and 
        create jobs in any given country. By diversifying its 
        energy matrix, the Dominican Republic can secure access 
        to energy at lower prices in order to maintain its 
        steady economic growth and promote international 
        competitiveness of its key industries.
          ``A big part of our decision to hold today's hearing 
        was to consider how the United States can assist the 
        Dominican Republic and other countries in the Caribbean 
        and Central America to mitigate their energy dependence 
        on Venezuela and to help spur regional economic growth. 
        As the largest economy in the Caribbean, the Dominican 
        Republic has the opportunity to develop its energy 
        independence, and potentially become a hub in the 
        region for liquified natural gas and compressed gas. 
        These are two low cost energy sources that can help 
        meet both the mid- and long-term solutions.
          ``The administration's decision to focus primarily on 
        renewable energy as a practical solution is an 
        expensive initiative. Feasibility studies have shown 
        that geothermal energy is still not viable on a large 
        scale. Moreover, due to their small size, Caribbean 
        islands face many challenges to attract and secure 
        private investment to develop a significant renewable 
        network to offset oil-generated energy. The key to 
        success is utilizing existing market trends.
          ``The Inter-American Bank of Development recently 
        conducted a feasibility study to consider the 
        introduction of natural gas in the 13 Caribbean 
        economies. Experts found that LNG is the cheapest way 
        to transport the gas and with the lowest cost of LNG 
        coming from the U.S. Gulf Coast. Clearly, this is the 
        trend that many resource-deprived countries are 
        considering as they diversify their power generation 
        and improve their energy security. Investing $30 
        million in a regasification and off-loading facility 
        sounds like a prudent investment as opposed to millions 
        of dollars in expensive solar ventures. I have 
        pressured the administration to simplify DOE's permit 
        process to streamline the exportation of U.S. natural 
        gas and will continue to do so.''

    I might add my name to that as well.

          ``I am confident that as we add more natural gas to 
        the equation, countries like the Dominican Republic 
        will reap financial benefits allowing for greater 
        economic development. I want to thank our witnesses for 
        taking time to be here today. I look forward to a very 
        informative hearing.''

    I will now recognize the ranking member, Mr. Sires, for his 
opening remarks.
    Mr. Sires. Thank you, Mr. Chairman. Good afternoon. And 
thank you to our witnesses for being here today. This hearing 
comes at a time when the United States is confronting an 
increasing number of foreign policy challenges in the Middle 
East, Eastern Europe, and in particular, within its own 
hemisphere in Central America. But while Congress debates 
measures to address thousands of unaccompanied child migrants 
detained along the southern border, the extreme poverty and 
violence that continues to fuel this migration pattern in the 
region remains. Without a doubt, this humanitarian crisis will 
require a dedicated, shared responsibility and regional 
response. However, the United States cannot simply put out one 
fire to be caught off guard when other issues flare up 
elsewhere.
    As the tension focuses on Central America, the U.S. must be 
vigilant of any unintended consequences or spillover effects 
into our neighboring Caribbean region. It is with that in mind 
that we are conducting this hearing and the relationship 
between the United States and the Dominican Republic, one of 
our closest political allies and partners in terms of trade and 
security in the Caribbean.
    More recently, the United States' and the Dominican 
Republic's relationship has been centered on security 
cooperation, governance, and human rights issues, especially as 
they relate to Haiti. The current President of the Dominican 
Republic, Danilo Medina, holds congressional majority and those 
reports have indicated that the current party's electoral 
dominance is a consequence of fractured opposition. And it has 
nonetheless raised concerns of its effect on the country's 
governance and judicial independence. For its part, the United 
States is one of the largest bilateral donors to the Dominican 
Republic. The Dominican Republic has received at least $32 
million through the Caribbean Basis Security Initiative for 
which Congress appropriated $327 million since 2010.
    However, in 2013, the administration designated the 
Dominican Republic as one of the four major drug-transit 
countries in the Caribbean. According to estimates, the 
majority of the roughly 6 percent of U.S. and Euro-bound 
cocaine that transits Hispaniola passes through the Dominican 
Republic. Moreover, a U.S. State Department report asserts that 
corruption and impunity remains endemic which adversely affects 
the anti-drug efforts.
    In terms of trade, the United States is the Dominican 
Republic's main trading partner with two-way trade totalling 
more than $11 billion in 2013. Trade and investment flows have 
expanded since the Dominican Republic's Central American Free 
Trade Agreement with the U.S., which entered in March 2007.
    Today, the Dominican exports to the U.S. are shifting from 
apparel to technology-intensive goods making. The Dominican 
Republic is a leader in manufacturing and foreign direct 
investments, on par with Costa Rica. These highlights, however, 
have recently been scarred by a troublesome report issued by 
the U.S. Department of Labor, alleging that the Dominican 
Republic has violated CAFTA-Dominican Republic labor rules by 
allowing various labor abuses, including forced and child labor 
in the country's sugar cane fields. With respect to human 
rights, the U.S. State Department has cited various human 
rights problems in the Dominican Republic including violence 
against women, abuse by police, and principally the 
discrimination against Haitian migrants and their descendants.
    In September 2013, the Constitutional Court of the 
Dominican Republic issued a controversial ruling that may have 
rendered as stateless an estimated 200,000 Dominican-born 
persons, mostly of Haitian descent. The ruling was met with 
concern by the international community, including the U.S. 
State Department and Members of Congress. In response, in May 
2014, President Medina ushered a naturalization law that 
included an expedited path to citizenship. And in June 2014, 
began to implement a plan to regularize those persons affected 
by the ruling.
    While observers, including the Government of Haiti, and the 
U.N. High Commissioners of Refugees have welcomed these 
measures as positive steps; others within the international 
community feel more needs to be done to properly address the 
ruling's implications.
    Finally, in terms of energy, the Dominican Republic's 
Government received some $600 million in subsidized oil through 
Petrocaribe in 2013. Like other countries that receive support 
through Venezuela's Petrocaribe program, the Dominican Republic 
is vulnerable to excessive political influence by Venezuela. 
This dynamic became evident at the OAS during the height of the 
Venezuelan protest.
    In conclusion, the United States should continue to work 
closely with such a close ally as the Dominican Republic to 
strengthen ties and overcome these issues. And I look forward 
to the hearing and the panelists. Thank you.
    Mr. Duncan. I thank the ranking member. Pursuant to 
Committee Rule 7, the members of the subcommittee will be 
permitted to submit written statements to be included in the 
official hearing record. Without objection, the hearing record 
will remain open for 7 days to allow statements, questions, 
extraneous materials for the record subject to the length 
limitation in the rules.
    So now I would like to introduce the distinguished panel.
    We are going to strike the previous comment. If members 
have opening statements, I will recognize Mr. DeSantis. He 
doesn't have one. Mr. Meeks, you are recognized for 5 minutes.
    Mr. Meeks. Thank you, Mr. Chairman. I wanted to enter an 
opening statement because I am a strong supporter of the United 
States and the Dominican Republic relationship. And that is why 
I am pleased to have this hearing today. As I often lament, the 
United States doesn't pay enough attention to what is happening 
in our region of the world, that being the Western Hemisphere. 
And the Caribbean is a prime example of this. Caribbean nations 
like the Dominican Republic are important partners of the 
United States and deserve our attention. And it is for that 
reason I would like to thank Chairman Salmon and Ranking Member 
Sires for convening this hearing today.
    I know that the economic success of the Dominican Republic 
is linked to the economic well-being of the United States. That 
is why I continue to wholeheartedly endorse and support the 
CAFTA-DR agreement, as well as other means of supporting DR's 
advancement. And when it comes to doing business in the DR and 
examining regional issues, I know we have the experts that are 
sitting here before us, especially I will give a shout out to 
Andres from the AES who has an important perspective that I 
would love and am waiting to hear when he testifies.
    In addition to the economic relationship, I am a strong 
believer in the importance of cultural ties between our two 
countries, and I have many Dominican-American constituents that 
live in New York and especially those that live in my district 
and what they contribute to our country is invaluable. It makes 
our country a better place.
    Likewise, I represent many Haitian Americans and I was 
truly impressed by the Dominican Republic's commitment to 
humanitarian assistance and disaster relief in the wake of 
Haiti's tragic 2010 earthquake. In fact, the Dominican Republic 
was the very first country to offer assistance. And I was 
pleased to learn that trade talks took place at a recent 
bilateral discussion between Haiti and the DR and I hope this 
dialogue will continue.
    I would be disingenuous, however, not to mention the 
Dominican Republic's September 2013 ruling by the 
Constitutional Tribunal. That ruling renders an estimated 
200,000 Dominican-born persons, mostly of Haitian descent, 
vulnerable to statelessness. Legislation passed and response to 
the ruling is a step in the right direction, but I am concerned 
that it does not do enough to address the full scope of the 
issue. For example, it is concerning to me that someone born in 
the Dominican Republic to a family that has long since settled 
there can find him or herself classified as a foreigner, even 
with the new law that establishes a legalization process. So I 
hope our witnesses can shed some light on the developing 
circumstances.
    Again, let me say thank you to Chairman Salmon and Ranking 
Member Sires for holding this hearing and I am grateful we have 
witnesses that I am looking forward to hear from individuals 
like Mr. Canton from RFK Center for Justice and Human Rights 
here today to shed more light on this particular situation. I 
look forward to learning more about how we can engage the 
Dominican Republic to resolve this human rights situation so 
that we can remain focused and that is what I really ultimately 
want to do, get back to, what we were talking about before this 
issue, we need to remain focused on the many successes that our 
great two countries have shared throughout a long friendship, 
and ultimately deal with this issue. Let us get back to that 
because I think that is what is important for us and that is 
what is important for the Dominican Republic and that is what 
is important for the region. I yield back.
    Mr. Duncan. Mr. Kennedy.
    Mr. Kennedy. Thank you, Mr. Chairman. Many thanks to you, 
Chairman Salmon and obviously the ranking member, as well, for 
holding this important hearing. The policy and discussion I 
think will be elicited from your testimony is extremely 
important. I am here though because of some deeply personal 
ties to the Dominican Republic. So first to our witness, Mr. 
Canton, thank you very much for being here from the RFK Center 
for Justice and Human Rights, I am a big fan of what you do.
    And to the witnesses from the Dominican Republic, Mr. 
Ambassador, Mr. Ambassador, it is wonderful to see you both 
again. I, as you know, spent about 2\1/2\ years living in the 
Dominican Republic as a [speaking foreign language], Peace 
Corps volunteer and actually lived right next to a number of 
bateyes in the sugar cane plants between Santiago and Porto 
Plata, so a number of the issues that have been touched on so 
far in the testimony by my colleagues here is something that is 
deeply personal to me. I am grateful for the cooperation that 
your government has shown in working with our office and the 
office of other members of the House of Representatives, as we 
try to understand a bit more about some of these issues, as the 
issues referenced in the Supreme Tribunal. Also, the importance 
of economics and developing trade and business economic 
intelligence ties between the United States and the Dominican 
Republic.
    You have an extraordinary country, one of the warmest and 
most generous people I have ever met anywhere in my life. They 
accepted me as family, a bit paler, not that many red heads in 
the Dominican Republic, although I did come across one, but I 
will always look on the country very fondly and I look forward 
to the testimony today, even though I can't stay for all of it. 
So thank you very much and I thank you for your flexibility, 
Mr. Chairman.
    Mr. Duncan. I thank the gentlemen for their statements and 
now we will just introduce the witnesses and thank you, guys, 
once again for being here. It is interesting running a 
subcommittee. I have a way that I run my subcommittee on 
another committee and the way Chairman Salmon has it, so I 
appreciate the gentlemen wanting to have introductory 
statements.
    Our first witness today is Mr. Gluski. He is president and 
chief executive officer of AES Corporation, a Fortune 200 
company providing electricity and related infrastructure 
services in 20 countries around the globe. Prior to being named 
CEO, Mr. Gluski was president of AES Latin America and has also 
served as the desk economist for Colombia at the International 
Monetary Fund and the Director General of the Public Finance of 
Venezuela. Mr. Gluski received a B.A. from Wake Forest 
University, Deamon Deacons, and holds an M.A. and Ph.D. in 
economics from the University of Virginia, specializing in 
international trade and finance.
    Our second witness today is Dr. Roberto Alvarez. Mr. 
Alvarez served as an Ambassador of the Dominican Republic to 
the Organization of American States between 2005 and 2008. Mr. 
Alvarez received a master's degree in International Relations 
from the Johns Hopkins School of Advanced International 
Studies. He also holds a J.D. (Juris Doctorate) degree from the 
Universidad Autonoma de Santo Domingo.
    The next witness is Mr. Canton. Mr. Canton is the executive 
director of RFK Partners for Human Rights at the Robert F. 
Kennedy Center for Justice and Human Rights. Mr. Canton is also 
an adjutant professor at Georgetown University Law Center. He 
holds a law degree from the University of Buenos Aires and a 
master's degree in international law from Washington College of 
Law of American Universities.
    The last witness, Dr. Flavio Dario Espinal, Dr. Espinal 
served as Ambassador of the Dominican Republic to the United 
States from '04 to 2009. Before that, he served as Ambassador 
of the Dominican Republic to the Organization of American 
States. He holds an M.A. (master's degree) in political science 
from Essex University and a doctorate in government from the 
University of Virginia.
    Before I recognize you to provide your testimony, I am 
going to explain the lighting system in front of you there. 
Each of you will have 5 minutes to present your oral statement. 
When you begin, the light will turn green. When you have 1 
minute left, the light will turn yellow. And when your time is 
expired the light will turn red. I ask that you conclude your 
testimony once the red light comes on.
    After our witnesses testify, all members will have 5 
minutes to ask questions, and I urge my colleagues to stick to 
the 5-minute rule to ensure that all members get the 
opportunity to ask questions. A small subcommittee hearing, I 
think we will probably be okay with that today. I will allow a 
little bit of leniency and leeway, but we will try to keep it 
on time. And I apologize for the heat in here. Again, it is not 
my subcommittee room. We will blame Mr. Salmon on that. So Mr. 
Gluski, you are recognized for 5 minutes.

   STATEMENT OF ANDRES R. GLUSKI, PH.D., PRESIDENT AND CHIEF 
             EXECUTIVE OFFICER, THE AES CORPORATION

    Mr. Gluski. My name is Andres Gluski. I am the President 
and Chief Executive Officer of the AES Corporation. It is a 
Fortune 200 company based here in Arlington, Virginia. AES 
provides affordable and sustainable energy in 20 countries 
around the globe, utilizing a broad range of technologies and 
fuel sources. We have businesses in nine countries in Latin 
America, as well as Puerto Rico.
    Since 1997, AES has invested more than $850 million in the 
Dominican energy sector. Today, we are the largest U.S. 
investor in the country. AES owns two gas-fired power plants 
and an LNG import terminal and co-owns a third thermal power 
plant together with the government. Our total generation 
capacity is 850 megawatts, which represents 23 percent of the 
installed capacity in the country. But we supply 40 percent of 
the electricity, due to the greater efficiency of our plants.
    Additionally, through the AES Dominicana Foundation, we 
have implemented sustainable community programs in the areas of 
education and the environment. Since 2007, more than 75,000 
people in the Dominican Republic have benefitted from these 
programs.
    The island of Hispaniola, which the Dominican Republic 
shares with Haiti, does not have significant sources of 
indigenous fuel. Until 2003, the country relied solely on 
petroleum fuels such as heavy oil, gasoline, and diesel for 
thermal generation. In 2003, our LNG regasification terminal, 
AES Andres began commercial operations. In conjunction with the 
regasification terminal, AES also built a new 319 megawatt 
combined cycle natural gas fired power plant and converted its 
existing 236 megawatt diesel fired DPP plant to natural gas. 
These plants are now two of the lowest cost plants in the 
country.
    Recently, AES began the process of closing the cycle of DPP 
to increase its output by another 114 megawatts without using 
any additional fuel. The impact of introducing natural gas into 
the Dominican Republic's power sector over the past decade is 
truly impressive. In 2000, 90 percent of the country's 
installed capacity was oil based. By 2013, oil-based capacity 
had decreased to 39 percent and natural gas represented 31 
percent. This dramatic shift translates into savings of more 
than $\1/2\ billion per year for the Dominican Republic if 
compared to importing petroleum products to generate 
electricity. These savings are largely passed on to the end 
consumer as lower electricity prices.
    Fortunately, there is still opportunities for further 
gains, both in the Dominican Republic and the rest of the 
Caribbean. In the Dominican Republic, adding a second LNG 
storage tank to our Andres facility could fuel an additional 
1,000 megawatts of natural gas generation, and allow for the 
re-export of natural gas to neighboring countries.
    As stated in the independent Castalia Strategic Advisors 
Study prepared for the Inter-American Development Bank, states, 
``the Dominican Republic may be the best option for a physical 
hub in the Caribbean, because it is centrally located and 
because AES Dominicana already has LNG facilities and 
operations in place.''
    By expanding AES' current LNG facility in the Dominican 
Republic, the country could become the center of a hub and 
spoke system where by LNG would be imported from the United 
States in large, efficient tankers and then re-exported in 
smaller volumes as LNG or compressed natural gas to other 
Caribbean islands. The results in the Caribbean could be 
similar to those seen in the Dominican Republic with other 
islands benefitting from secure and stable energy supplies and 
lower electricity prices for end consumers.
    Additionally, as discussed in the Atlantic Council's 
recently published report, ``Uncertain Energy, the Caribbean's 
Gamble with Venezuela,'' the future of Venezuela's Petrocaribe 
agreements which provide low cost, long-term financing for 
petroleum imports from that country, is increasingly uncertain. 
The financial assistance at Petrocaribe provided countries in 
the Caribbean and Central America last year amounted to almost 
$2 billion, including $470 million for the Dominican Republic, 
$370 million for Jamaica, and $220 million for Haiti.
    Providing these countries with natural gas from an 
efficient hub in the Dominican Republic could mitigate the 
risks of continued dependence on Petrocaribe. The expansion of 
our existing Andres LNG facility in the Dominican Republic 
provides the fastest and least costly way to increase the 
availability of natural gas in the Caribbean. A larger facility 
would benefit other energy sector players in that country 
besides AES by allowing them access to the terminal and storage 
capacity, as well as providing opportunities for trans-shipment 
providers to supply other countries in the region.
    AES looks forward to continuing to support the Dominican 
Republic and welcomes the opportunity to provide similar 
benefits to consumers throughout the Caribbean, alongside 
multi-lateral entities such as the Inter-American Development 
Bank and the IFC, U.S. agencies such as OPEC and USAID, as well 
as regional and local partners.
    I want to thank you all very much for the opportunity to 
testify today, and I would also like to invite you and other 
members of the subcommittee to visit our facilities in the 
Dominican Republic. Thank you very much.

    [The prepared statement of Mr. Gluski follows:]

    
    
                                  ----------                              

    Mr. Salmon [presiding]. Thank you very much.
    Mr. Alvarez.

  STATEMENT OF MR. ROBERTO ALVAREZ (FORMER AMBASSADOR OF THE 
   DOMINICAN REPUBLIC ON THE COUNCIL OF THE ORGANIZATION OF 
                        AMERICAN STATES)

    Mr. Alvarez. Thank you, Chairman Salmon, Ranking Member 
Sires, and members of the subcommittee. Thank you very much for 
the opportunity to testify and share my views with you today.
    I should disclose from the outset that a week ago I 
declared my support for a Dominican opposition politician, Luis 
Abinader, who was the vice Presidential candidate in the 2012 
election.
    There are many reasons why the relationship is important, 
and in my statement you will find a list of those reasons. But 
let me just highlight very quickly some of them. The Dominican 
Republic is the U.S.'s 38th world-wide export market, number 
one in the Caribbean. The Dominican Republic is the source of 
the fourth largest Latino population in the United States, over 
1.5 million. It is the sixth country of origin in the world of 
nationals acquiring U.S. citizenship in the last decade from 
2004 to 2013. The fourth country in the world whose citizens 
received U.S. permanent residences between 1990 and 1999, and 
the fifth between 2000 and 2013. These are just some 
highlights, quick highlights.
    Now this is again in my statement. In terms of economic, I 
want to address economic growth from the vantage point of 
inequality in the country. In a January 2014 report, the World 
Bank determined that ``despite strong growth over the past 
decade, large inequities persist in the Dominican society and 
are declining more slowly than expected. GDP per capita rose 
almost 50 percent from 2000 to 2011, yet many of the country's 
10 million people missed out on the benefits. Chronic poverty, 
in which people endure long spells of being poor remains high. 
Of greater concern, almost one third of the population is poor 
despite having the skills and assets to generate higher 
income.''
    I find, however, that the most troubling part of the report 
is the following: ``The Dominican Republic also has low 
economic mobility, with less then 2 percent of its people 
climbing to a higher income group during the decade. This 
compares to 41 percent for the rest of Latin America and the 
Caribbean during the same period.''
    When people feel that there is no way out of poverty, that 
there is no way out of a certain level of station in life, when 
social inequality abounds and when there are 680,000 youths who 
neither work nor study, you have a very combustible and 
explosive situation.
    Now in terms of trade, I want to highlight and this is not 
in my statement. I truly believe in free trade. I believe in 
the DR-CAFTA, but promotes the entry, the secure and free entry 
of trades in goods and services, promotes foreign investment, 
yet I want to point out something that is glossed over. In 
terms of trade, the DR-CAFTA was signed in 2005. It came into 
force with the Dominican Republic in March 2007, yet DR-U.S. 
trade balance until 2005 was close to even. However, beginning 
in 2006, but accelerating in 2007, the terms of trade on the 
CAFTA-DR have shifted exclusively in favor of the United 
States. There are many factors for this, the end of the 
Multifiber Agreement and so on, but anyway.
    Now there are difficult conditions that are being faced by 
the local industry, and next year, another 15 percent of 
industrial goods will be liberalized and the tariffs will be 
lifted. And the local industry is going to be facing a very 
difficult situation, a potential loss of jobs and so on. But to 
give you an example, in 2013, U.S. exported in comparison to 
2006, the exports from the U.S. went up by 33 percent. During 
that same period, Dominican exports to the United States went 
down by 6 percent. So this is just something to keep in mind 
where the Dominican Republic is, not yet as competitive as we 
should be at a point in time when more trade is being 
liberalized.
    And I am not even going to have time to go into the TPP, 
but there is an exchange of letters. There are certain concerns 
about certain liberalization of fabrics and yarns that maybe 
some TPP countries may be receiving that could negatively 
affect our industries. There is an issue of MINUSTAH. I think 
you should hold a hearing. The burden on the Dominican Republic 
is going to be considerable when MINUSTAH leaves, which the 
draw down has already started.
    And finally, in politics, it is in my statement. The 
issues, the main issues in the Dominican Republic now are the 
2016 elections, is leveling the playing field so that the 
institutions that are in charge, the Electoral Commission, the 
Electoral Court are credible. There is a certain loss of 
credibility from opposition sectors on their independence, and 
this is an issue that could have tremendous importance because 
they are going to be about 4,500 candidacies elected in the 
2016 elections, the first time that all Presidential, 
congressional, and municipal elections will be held together.
    Thank you very much.
    [The prepared statement of Mr. Alvarez follows:]
    
    
    
    
    
    
    
    
    
    
    
    
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    Mr. Salmon. Thank you, Mr. Alvarez. Mr. Canton.

 STATEMENT OF MR. SANTIAGO A. CANTON, EXECUTIVE DIRECTOR, RFK 
PARTNERS FOR HUMAN RIGHTS, ROBERT F. KENNEDY CENTER FOR JUSTICE 
                        AND HUMAN RIGHTS

    Mr. Canton. Chairman Salmon, Ranking Member Sires, members 
of the subcommittee. Thank you very much for this opportunity. 
Let me start by saying that the human rights based approach to 
development leads to better and more sustainable outcomes. 
There is growing recognition among governments, institutions, 
and the private sector that human rights regulations and social 
exclusion have a negative impact on economic development.
    I wish to focus my comments, therefore today, on some of 
the underlying challenges that must be taken into account by 
governments and the private sector alike in order to ensure 
that investment and economic growth benefit those who are most 
in need in the Dominican Republic.
    The Dominican Republic, like most countries, has several 
human rights issues that require urgent attention including, 
but not limited to, high levels of police brutality, 
restrictions to freedom of expression, violence against women 
and children, sexual exploitation, and trafficking in persons.
    Because of time constraints, I would like to concentrate 
today the remainder of my time on one of the most pressing 
human rights issues taking place in the Dominican Republic 
today, the arbitrary stripping of hundreds of thousands of 
Dominican nationals of their citizenship. As a result of a 
decision, as Congressman Sires said, by the Dominican 
Constitutional Court last September, individuals who were once 
citizens are today considered foreigners. The decision applies 
retroactively to 1929. This means that in some families, up to 
four generations of Dominican citizens are now forced to report 
to the government as foreigners. For your reference, had the 
U.S. Supreme Court handed down a decision like the one in the 
Dominican Republic, millions of U.S. citizens born in this 
country since the Great Depression, children, grandchildren and 
even great-grandchildren would have been retroactively stripped 
of their citizenship and converted into immigrants.
    As a result of that Constitutional Court's decision, these 
Dominican citizens who were born in the Dominican Republic, had 
been recognized as citizens, and have lived their whole lives 
as such, were suddenly prevented from engaging in economic 
activities such as working in the formal sector or opening a 
bank account. Many of these Dominicans have also been prevented 
from attending university, which of course drastically limits 
their economic opportunities. On our most recent visit to the 
Dominican Republic, the RFK Center spoke to young adults who 
had been at the top of their high school classes and due to the 
retroactive deprivation of their nationality, they were 
ineligible for college or formal-sector jobs. Thousands of 
Dominicans are now in similar positions.
    I must note that there has been a great confusion around 
this issue, as it has been intentionally been framed as an 
immigration debate instead of what it really is: The denial of 
the rights of Dominican citizens. This is not an immigration 
issue.
    The Dominican Government has passed the Naturalization Law 
billed as a humanitarian solution to the citizenship crisis. 
While the Naturalization Law provided a practical fix for 
Juliana Deguis Pierre, the subject person of the Constitutional 
Court decision, and roughly 24,000 others in a similar 
position, it failed to recognize the nationality of hundreds of 
thousands of additional Dominican citizens. These citizens are 
now supposed to self report as foreigners alongside actual 
undocumented people, immigrants.
    The citizenship crisis in the Dominican Republic has 
already started to affect its economic and trade relationships 
with neighboring countries. In particular, with the Caribbean 
community, CARICOM, which is the sub-regional organization for 
economic integration and trade and to which the Dominican 
Republic has tried to become a member for years. As a result of 
the citizenship crisis, CARICOM has suspended consideration of 
Dominican membership in the community, has threatened trade 
sanctions and has repeatedly expressed concerned about the 
discriminatory policies in the Dominican Republic.
    Just this month, the CARICOM heads of government reiterated 
that it would not be business as usual in the community's 
relationship with the Dominican Republic until the government 
recognizes the citizenship rights of all those affected by the 
ruling. As a political theorist once said, ``The right to 
nationality is so fundamental that it can be described as the 
right to have rights.'' Thank you very much, Mr. Chairman.
    [The prepared statement of Mr. Canton follows:]
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
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    Mr. Salmon. Thank you, Mr. Canton. The Chair recognizes Dr. 
Espinal.

     STATEMENT OF FLAVIO DARIO ESPINAL, PH.D., FOUNDER AND 
PRESIDENT, FLAVIO DARIO ESPINAL & ASOCIADOS (FORMER AMBASSADOR 
        OF THE DOMINICAN REPUBLIC TO THE UNITED STATES)

    Mr. Espinal. Thank you very much, Mr. Chairman, Ranking 
Member Sires, and distinguished members of the subcommittee. 
Thank you for your interest in the Dominican Republic, and 
thank you for inviting me. It is a great honor and distinction 
to be here in this institution that I analyzed so much since I 
was a student at the University of Virginia, Jefferson's 
university.
    I would like to touch on a number of issues that have been 
raised during the hearing, and I think I can provide some 
perspective on the situation in the Dominican Republic. One 
first point is that the Dominican Republic is a country with 
political stability. In over 40 years in the Dominican 
Republic, there has not been a coup d'etat, a breakdown in the 
political order. There has been civilian governments, 
democratically-elected governments and the three major parties 
have held office and power has been transferred peacefully.
    Of course, there are institutional challenges. There are 
problems and issues as in any other country, undeveloped 
countries need to face, but I think that is a major achievement 
taking into account the history of political upheaval and the 
dictatorial and authoritarian governments during the 19 century 
and great part of the 20th century.
    From economic perspectives, some of my colleagues here have 
raised, have touched on the vibrant character of the Dominican 
economy. It has had a typically average growth during the 
last--since 1991 until 2012 of 5.8 percent. The Dominican 
economy is a diverse economy. It has different sources of 
growth, and has been able to face the challenges of economic 
crisis internationally. Since it is a vibrant economy, a 
growing economy, the largest economy in the Caribbean and in 
Central America, it has provided the market for the U.S. 
especially in the context of DR-CAFTA.
    I worked very closely with Congressman Meeks during the 
process of implementation while I was here and I have fond 
memories of that time. I think it has been a great opportunity 
for the U.S. to export to the Dominican Republic and for us it 
is a challenge to increase competitiveness, but also it has 
created the opportunity for more investment and institutional 
support in the country to better the institutional practices in 
my country.
    Bilateral relations, bilateral trade has been over $11 
billion in the year 2013. We are concerned, Mr. Chairman, and 
distinguished members of a possible provision in the TPP 
regarding a farm provision that could affect the interests, the 
economic interests of the apparel industry in the Dominican 
Republic, in Central America and also in the United States. So 
it is an issue that I would like to bring to your attention.
    Of course, there is also a relationship in terms of 
tourism, remittances, investment and cooperation between the 
U.S. Government and the Dominican Government.
    With regard to the decision of the Constitutional Court, I 
would like to say that of course as it happens in the U.S., the 
Dominican Government, and the Dominican society as a whole, had 
to obey the decision of the Constitutional Court. In fact, the 
Constitution says that the decisions of the Constitutional 
Court is binding to all state organizations, state 
institutions, and all citizens. However, the Government and the 
Congress have acted appropriately and have provided the legal 
framework that has responded to the three main issues that are 
derived and are part of the whole problem regarding that 
population that is in the Dominican Republic. On the one hand, 
it has created a naturalization plan, and already in less than 
2 months, close to 100,000 people have lined up to submit their 
requests to become a regular resident in the Dominican 
Republic.
    Secondly, the law has provided the evaluation of all the 
documents that people who the Court consider that they were not 
Dominicans. However, the legislation has passed that has 
validated all the documents, so they remain as Dominicans, full 
Dominicans with full rights. And the third group, people who 
were born and can prove they were born in the Dominican 
Republic, and they have a pathway to naturalization through a 
process of regularization and naturalization of becoming 
Dominican citizens within a framework of 2 years. So it is my 
belief that even though the Constitutional Court decision 
created this situation that was conflicted, very controversial, 
both internally and abroad, I am confident that the legal 
framework that has been created is appropriate, is effective 
and it has been created, guided by principles of human dignity, 
equality, and equality before the law; also with the sense of 
equilibrium and political responsibility given the difficulty, 
political difficulty, that the government was facing as a 
result of the decision. So I believe there has been an 
effective and appropriate response on the part of the Congress 
and the President. And the great issue now is how to move 
forward with the cooperation of partners and the implementation 
of these laws by the institutions that are responsible to 
implement such laws. Thank you very much.

    [The prepared statement of Mr. Espinal follows:]

    
    
                              ----------                              

    Mr. Salmon. Thank you very much, Dr. Espinal. I will now 
yield myself 5 minutes for questions of the panel.
    Mr. Gluski, other than the option of large scale financial 
assistance, what are some of the measures that you would 
recommend the U.S. Congress should consider to ensure a 
constructive role for the United States as we increase 
assistance to the Dominican Republic to restructure its energy 
sector? Do you believe that the U.S. can play a role as a fuel 
supplier, as a technical advisor on implementing alternative 
fuel sources and ways to improve energy delivery systems or as 
a policy advisor in the complicated areas of legal and 
regulatory policy to promote competition? What measures to help 
meet short to medium term solution can we look at?
    Mr. Gluski. Thank you, Chairman Salmon. I think there are 
many roles the U.S. Government can play. First, the U.S. is the 
natural supplier of LNG to the Dominican Republic. Now the 
thing is, it is a smaller market than some of the markets in 
Asia, so we have to make sure, I think, that we facilitate 
those export approvals for the liquifiers on the Gulf to make 
sure that they get to this market. Now that is the cheapest way 
to get the LNG there is from the U.S.
    We are bringing LNG at U.S. prices, but from Trinidad. We 
signed a 20-year agreement based on Henry Hub since we are a 
U.S. company. Now, I think there are several roles in terms of 
one is through the multi-laterals like the Inter-American 
Development Bank is now helping the Dominican Republic 
restructure the energy sector. And what is very important 
there, is there is a tremendous amount of energy losses. In 
other words, about 30 percent of the energy that is consumed is 
not paid for. And so that means that the government must 
subsidize this in their budget every year, and that is where 
Petrocaribe comes in to help subsidize the $1 billion 
shortfall.
    So part of it I think, is they do need investments in 
transmission and other sectors to get the energy, let us say 
efficiently around the country. I think in terms of the project 
such as ours, ours was done completely by the free market. We 
did not get any sort of official loans. However, I think that 
loans that, for example, support from OPEC, Ex-Im, those things 
are important, so quite frankly you buy American. If you can 
get JEXIM, you will buy Japanese. So I just put that in mind 
for a U.S. company such as us.
    I would also mention that since we talked about the 
Caribbean, and not just the Dominican Republic, we can bring in 
gas to the Dominican Republic from the U.S. as a free trade 
agreement country. But if you re-export it to some of the other 
places like Haiti or Jamaica, what would be the arrangement for 
that? So facilitating the re-export would also help.
    And I would say that finally that if we are thinking about 
Petrocaribe and it has political influence as has been 
mentioned by some members in the region, if that were to say 
end tomorrow because quite frankly the Venezuelan consumption 
is going up, their production is not. You would need some way 
to step in to help facilitate the transition. You can't 
suddenly take $2 billion of financing out of the Governments of 
the Caribbean and Central America without proposing an 
alternative. And I would suggest that the appropriate vehicle 
for that would be the IMF or the World Bank rather than the 
U.S. Government, but certainly the United States can support 
those.
    Mr. Salmon. Thank you. Dr. Espinal, are the energy 
challenges in the Dominican Republic the result of external 
factors or internal considerations? For example, are the 
inefficiencies a result of a lack of political will to change 
an inherently dysfunctional system or is the DR, and by 
extension most of the island nations of the Caribbean, at a 
fundamental disadvantage because of geography and demographics, 
or is it some of both?
    Mr. Espinal. I think it is a mix of things. We had a system 
for many, many decades that was controlled by the government. 
Then there was kind of messy privatization without a legal 
framework that could set the rules and the regulatory agencies 
that could administer the system. Eventually, there was a law 
in the second half of the '90s that transferred the state-owned 
properties in the energy sector in the electricity sector 
particularly to the private sector. There has been positive and 
negative aspects in the process. I think that legal reform 
allows investments to just AES investment in the Dominican 
Republic the leader in natural gas and producing low-cost 
energy in the Dominican Republic and I congratulate them for 
that. But we have a sector that relies so much on fusel oil, 
and we need to transform that to relying more on cheaper and 
cleaner source of energy.
    Of course, there is a need to do more in terms of reforming 
the distribution and commercialization system. There is a 
portion of the population that does not pay their bills, for 
one reason or another. Sometimes they are very poor and they 
are not reached by the companies that provide the electricity, 
so there is a gap between what the energy producers produce and 
what they end up collecting. And then how is that whole field 
by the government subsidizing close to $1.2 billion for the 
Dominican Government which is a heavy burden for the finances 
of the Dominican Republic.
    In sum, I think we have to move more in terms of some legal 
reform, some political will, of course, and also more 
investment from the private sector and I am seeing positive 
movement like the AES recent investment.
    Mr. Salmon. Thank you. One last question, Mr. Alvarez, the 
Dominican Republic and other Caribbean nations represent some 
of the United States' most vulnerable neighbors due to their 
dependence on Petrocaribe. In your opinion, does the United 
States have a strategic or even a moral responsibility to the 
region to help these countries exit the program? And do you 
believe it is most likely to step in if the U.S. does not in 
the event that Caracas decides to modify the financing terms?
    Mr. Alvarez. Well, it is a welcome interest, Mr. Chairman. 
Unfortunately, it comes a little bit late, and by that, what I 
mean is that now you have the Dominican Republic has 
accumulated a debt of $4 billion with Venezuela, but more 
importantly, it has gotten used to, over time, to this easy 
money. And what that means is that as Mr. Gluski said, this has 
been used to cover the deficits, for example, paying the 
deficit that also Ambassador Espinal alluded to, $1.2 billion 
to $1.4 billion every year in subsidizing the electric sector 
because it does not, I think, have the political will, has not 
had the political will to step up and start charging that 30 
percent of society that does not pay for electricity.
    So yes, it is welcome. I think the conjecture at the moment 
is that the United States is now reaching a point where it is 
going to--I think it is 2035, reach energy independence, so 
this is the time to start looking at ways quickly of how the 
countries such as the Dominican Republic can be weaned off this 
dependency.
    Mr. Salmon. Thank you very much. Mr. Sires.
    Mr. Sires. Thank you, Mr. Chairman. Dr. Espinal, I listened 
to your comments. Sort of interesting, 40 years of stability, 
40 years of democratic elections. Why now deal with the Haitian 
issue if you have had such stability and if you have had such 
democratic elections, why now? Why deal with this issue now? I 
have been to the Dominican. I have been to Jimani. I was there 
after the big floods of Jimani. I helped build schools there. I 
provided supplies there. So the area doesn't seem like you 
can't tell the difference which is Haiti and which is Dominican 
Republic. But why now, after so many years, do we have to deal 
with this? And the courts that dealt with this, was this court 
instituted by Leonel or was it a court over the Supreme Court? 
Who made these decisions? Mr. Canton, you can answer that, too.
    Mr. Espinal. Thank you. Thank you for your question. The 
reason why I mentioned the Dominican Republic has had political 
stability because this is a major achievement, sometimes not 
well appreciated in some parts of our region when you compare 
with other countries close to ours. I think it is significant, 
these 40 years, 45 years of stability, civilian government, 
elections, transfer peacefully of power and so on and so forth. 
That is internally.
    Now we have a neighbor that has its challenges. You take 
Haiti from 1991, when the coup d'etat against President 
Aristide took place and the military came to power, since 
practically beginning of the '90s up until now, Haiti has been 
in a very unstable situation with some periods of certain 
instability. Sometimes the possibility of having an effective 
communication, and sustained dialogue with the Haitian 
authority have been very difficult.
    Now we see for a variety of reasons we have a functioning 
government in Haiti with the good will to work with the 
Dominican Government. We also have a government that was ready 
to do that and I think that has created good atmosphere to move 
forward and address issues of commerce, security, cooperation, 
and so on and so forth.
    Mr. Sires. But this is 40 years, now you are talking the 
last few years. I just don't see the rush to all of a sudden 
deal with a problem that you have had and you have enjoyed, 
quite frankly, cheap labor from the Haitian community over so 
many years. To me, and even politically that doesn't make 
sense. You have an election coming in 2016. I mean I just don't 
see it.
    Mr. Espinal. Well, sometimes one thing is not necessarily 
connected to the other. We feel very strong and very proud of 
having achieved this politically. Of course, with all the 
challenges and problems that you can mention and others can 
mention, but that is a major achievement.
    We also have been obtaining important gains in areas such 
as protection of the environment for instance, and other areas 
as well. In Haiti, unfortunately, they have been involved in 
like a revolving door of a crisis to crisis, political 
instability, international presence through MINUSTAH, by the 
way, I agree with what Roberto Alvarez, my colleague and 
friend, mentioned. We are very concerned about the end of 
MINUSTAH and the support of international communities to Haiti, 
because that could create problems in Haiti which is not good 
for Haiti and not good for us either. So in that regard, we 
created--back in 1996, we created a commission to dialogue with 
Haiti and it was practically impossible to sit down for a day 
or two to talk about a constitutional accord. It was the 
creation----
    Mr. Sires. I am running out of time, so I don't mean to 
interrupt you, but I would like Mr. Canton, if he would shed 
some light into this?
    Mr. Canton. May I distinguish between two different things? 
One thing is the issue of Haitian immigration to the Dominican 
Republic. There is a history of that. I am not going to be the 
first one to say that there has been a pattern of 
discrimination against Haitian citizens in the Dominican 
Republic. And that is one issue. That was somewhat resolved in 
2010 with the constitutional reform that clarifies, for good, 
the situation of Haitians that are born in the Dominican 
Republic. That has been resolved.
    Now in addition to that, there is the issue of Dominican 
citizens, not Haitians, Dominican citizens that have been 
stripped of their nationality. That is a different issue. I 
don't want to--there is an attempt to refer to this issue as an 
immigration issue. It is not an immigration issue. The 
immigration issue has been resolved, 2010. It is done. The 
other problem is not an immigration issue. It is a 
nationalization issue. They have stripped the nationality of 
more than 200,000 people. And in that category of 200,000, you 
have different groups. The first group, 24,000, approximately 
24,000 have some sort of document for the government is saying 
and the nationalization plan is saying you are Dominican, you 
are going to be fine. Just line up, and we are going to give 
you the citizenship.
    Unfortunately, I hope, only for practical reasons, it 
hasn't worked yet, but they are--according to the law and 
according to the constitutional accord, they are Dominican 
citizens. However, there is another group, all the rest, more 
than 200,000 people still that have to line up and they may get 
the citizenship. And there is no difference in these two 
groups. You can have one person that has a birth certificate 
and the brother or sister did not get it for whatever reason, 
and the one with birth certificate is going to be Dominican 
citizen. The one without the birth certificate is not. So there 
is again in this issue a clear pattern of discrimination 
against Dominican citizens. And it would have been very easy 
for the Government of the Dominican Republic when approving 
this law to apply the same criteria to everybody, not just to 
that group of 24,000.
    Mr. Sires. Do you have any idea why now?
    Mr. Canton. There is a history of discrimination against 
Haitian citizens in the Dominican Republic.
    Mr. Sires. My time is up. I thank you for the extra time, 
Mr. Chairman.
    Mr. Duncan. I thank the chairman, thank the gentlemen, 
interesting topic for me because I am very focused on energy 
and energy issues for the United States, so hearing the 
perspective of Dominican Republic with regard to energy is 
fascinating. Natural gas is the way to go. When I am looking at 
a barrel of oil equivalent, it is about 6,000 cubic feet of 
gas. Gas is sold at a million BTUs, so a BTU is about a 1,020 
BTUs per cubic foot. That is 6 million BTUs per barrel of oil 
equivalent. Six million times the price of gas now is about $28 
for a million BTU right now, based on the market. A barrel of 
oil is trading at $103, so you get gas, not LNG. I understand 
LNG, you got to factor in, liquefying, transportation costs, I 
get all that. Just what the open market is at 465 million BTU 
today versus $103 a barrel, so $28 versus $103. Natural gas is 
the way to go, and we have got a abundance of it here in this 
country. So why not expedite the LNG terminals in this country, 
and help our friends in the Caribbean states and nations with 
their energy needs? It just makes sense to me to help Americans 
and American companies make money selling LNG and help our 
friends in the region.
    So let me ask you this, Mr. Gluski. The focus on energy in 
the region's off-and-on power generation and the cost of 
electricity to the consumer, but the reality is that in many of 
the countries the majority of the imported fuel goes to 
transportation, bunker, and aviation fuel requirements. So what 
can governments in the private sector do to increase fuel 
efficiency or alternative fuel use in transportation? And I 
would like you to just talk about LNG aspects as well.
    Mr. Gluski. Thank you, Congressman Duncan. Actually, in the 
Dominican Republic, we are selling compressed natural gas to 50 
businesses outside of the energy sector. So we actually built a 
compressed natural gas facility and it is being used in 
transportation. So you are absolutely right, that it would make 
a lot of sense, especially like big trucks and people who have 
buses, etcetera, to change those over to natural gas. And that 
can be done.
    Now I think that what is important is that the investments 
in the regasification facilities are expensive, and quite 
frankly, a lot of the islands in the Caribbean are too small 
for it. So that is the thing to realize that it is not a 
question of bringing it in, but then somebody has to make the 
investments of having those facilities. So that is why our 
concept would be to make it a hub from the Dominican Republic, 
which would also give them more energy security by having more 
stocks of fuel.
    The other thing that to facilitate the building of the 
liquification facilities in the U.S. what you require is a 
long-term contract. For example, we signed up to a 20-year 
contract with Trinidad to bring gas to the Dominican Republic. 
There is also the credit worthiness of the off takers and that 
is why support from the multi-laterals can help to make those 
longer term agreements possible and you will need somebody to 
aggregate it to get the minimum volumes necessary to build such 
a facility.
    Mr. Duncan. I understand that. Is there a way to--you 
mentioned agreements with other island nations and I think 
about Puerto Rico and I see the former Governor Fortuno is here 
and I am glad he is with us today, former congressman as well.
    I assume that there is an opportunity for all the island 
nations to really come together in some sort of pipelines that 
might be possible and shared transportation costs, offloading X 
percentage at each nation, some sort of trade agreements like. 
Is that being talked about?
    Mr. Gluski. Well, Puerto Rico also has an LNG facility 
which they have had difficulty expanding. So actually, if you 
made a hub in the Dominican Republic, you could bring ships 
into Puerto Rico. Now what I think makes sense is, again, I 
think a multi-lateral could help aggregate the demand to make 
it efficient, especially for the smaller islands or something 
like Haiti. Quite frankly, we are supplying now about 2 percent 
of Haiti's energy needs through shipping compressed natural gas 
from the Dominican Republic. But there are very few credit 
worthy offtakers in Haiti, and that is where they need support. 
So I think it could be a win-win to have a policy here.
    Mr. Duncan. Can you shift enough volume in CNG to make it 
feasible. I mean LNG is the way to ship gas if you are going to 
ship large volumes, but is CNG feasible?
    Mr. Gluski. CNG is feasible, for example or to take it for 
example to Haiti, you are not going to build in the short term 
an LNG regasification. So you ship it by truck to Haiti if you 
had a credit-worthy offtaker.
    The other thing that you could do is, quite frankly, gas by 
wire is to produce the electricity in the Dominican Republic 
and just build a transmission line to Haiti. And the same 
problem, you would need USAID or one of the multilaterals to 
guarantee payment to get that energy there.
    After the earthquake, we sent crews over to Haiti to help 
restore electricity there, and I can tell you there is just so 
much to be done in Haiti and they could have such enormous 
social benefits from bringing electricity to that country, but 
it is not going to happen without support from the 
multilaterals and I think the U.S. could play a role there.
    Mr. Duncan. I understand. I have talked many times in the 
Foreign Affairs Committee about electrification and what that 
does to raise the standard of living and lifestyles of so many 
people around the world, from being able to keep food fresh, to 
be able to teach your children after dark with electricity and 
to cook without charcoal and all the other health things that 
comes from that. I am out of time, but I am hoping we are going 
to have another around of questioning and I yield back.
    Mr. Salmon. We will. We will have another round. Mr. Meeks.
    Mr. Meeks. Thank you, Mr. Chairman, interesting hearing 
thus far, and I am glad we are going to have another round. I 
want to make sure I understand where we are headed and I 
understand the futuristic piece that we may be looking at in 
dealing with LNG. But right now as I look at the DR and the 
entire Caribbean I just want to get your opinion. One of the 
concerns I have and given the fact that Venezuela has been 
utilizing giving oil at such rates, prices to try to help the 
economy, had Venezuela failed, what would then happen to those 
countries like the DR and those countries in the Caribbean?
    Mr. Gluski. That is a great question and one since we serve 
those markets, we pay a lot of attention to them. I think that 
what is most likely to happen is that not so overnight, but you 
could have a withdrawal from certain countries. And probably, 
you would have the politically more friendly countries be the 
last ones. Of the countries, the Dominican Republic is in the 
best shape, I would say because the economy is relatively 
healthy and as well, they are paying for it in kind. There are 
actually barter agreements where they send beans to Venezuela 
in exchange for oil, etcetera, but you know, this is something 
that is quite frankly not economically efficient. Even if 
Venezuela started to withdraw, certainly countries would be cut 
off first.
    And there the question would be some countries are more 
vulnerable than others. And again, I think the Dominican 
Republic is probably the least vulnerable of them, but you have 
Jamaica, you have other countries. That is where I think in the 
short-term, some sort of thought process should go in now, say 
IMF or somebody would come in to subsidize because you can buy 
the fuel. Actually, the whole Caribbean buys more fuel from the 
U.S. than it does from Venezuela. The difference is that 
Venezuela subsidizes half of it, half of what they export. They 
will give you a long-term loan of 3 percent. And that is what 
it is. So it is basically a way of financing, but there is no 
problem with getting the fuel. So if you had a form of 
financing, the effects would not be so great. And I think that 
would be a way of U.S. showing leadership to friendly nations 
in the area with which we have close cultural and personal 
ties. And I think----
    Mr. Meeks. Let me ask this quickly, because you mentioned 
IMF and maybe a way of financing. I know that previously we 
were talking about the IMF. What I received from a number of 
the countries previously was that the conditionalities that 
come with an IMF loan, as well the cost for servicing the debt, 
is tremendously expensive. Would IMF have to work something 
else out in regards to changing some of their conditions?
    Mr. Gluski. Again, what I suggest here is not a typical 
structural adjustment loan where you come in and you have a lot 
of conditionality. It would have to be a short-term--something 
that could react relatively quickly, because those loans also 
take 6 months sometimes to negotiate. So you need a facility 
that could step in and say look, we will provide financing 
until you get your house in order to alleviate the shock of 
this process. I leave that to the IMF to negotiate. But you are 
right, the IMF loans do come with conditionality. The problem 
is IMF usually comes in after a crisis has happened, so it is a 
lot more fun to run up a debt and then have to pay it. So the 
IMF comes in when they have a problem and says okay, to get 
your house back in order, you have to tighten your belt.
    Mr. Meeks. Mr. Alvarez, let me jump to you because I have 
concern being a strong supporter of DR-CAFTA and you talked 
about how it is not benefitting a lot of the individuals in the 
Dominican Republic, at least the balance of trade is all in the 
United States' favor as opposed to being balanced and helping. 
Does that have anything to do with the current state of the 
economy you think and/or capacity building of a need to have 
greater capacity building so that individuals in the DR can 
better benefit from the agreement?
    Mr. Alvarez. It is all of the above. I mentioned the end of 
the Multifiber Agreement in the beginning of 2005, that had a 
terrible impact on the free zones of the DR. Many went 
bankrupt. As you look at the figures, you see how the exports 
to the United States dropped significantly. So that is one 
factor.
    But in terms internally, the competitiveness of Dominican 
industries is lacking and lagging. And that is one of the areas 
and there are many factors for that, energy being one of them, 
a very important one, but certainly not the only one. Skills of 
the workers, infrastructure in general.
    Mr. Meeks. What can we do to help?
    Mr. Alvarez. You have to innovate. I think one of the 
things the United States has been to some degree looking--has 
been reacting too slowly. You need new innovative ways of 
looking and we are talking about, as you yourself said, looking 
at the close geographical islands that are friendly or 
countries that are extremely friendly that have trade 
agreements that look favorably to the United States and that 
don't receive the type of attention that should be receiving. 
So a host of--in my statement, I have a number of issues that I 
recommend that you can take a look at so I don't take too much 
of your time.
    Mr. Meeks. I just have one more question based on this. 
Because of the preferences that Haiti has, could the DR take 
some advantage there and they can work closely together on some 
of that and that would help both with exports to the United 
States and help stabilize the economy?
    Mr. Alvarez. Absolutely. That is absolutely fundamental. 
Right now we have under the HRO, Haiti Recovery Act, which 
covers--you have binational industries. You have, for example, 
a group in the Dominican Republic that straddles the border, 
with Haitian labor, and it is a model that can be used. And 
that is particularly important because the name of the game in 
Haiti now is jobs. Jobs, jobs, jobs. In 2009, a study done by 
Paul Collier of Oxford University for the Secretary-General of 
the U.N., said that between 2009 and this year, 2014, close to 
1 million youths in Haiti were going to enter the labor market. 
Where are they going to work?
    The largest job creator so far in Haiti has been this South 
Korean free zone that has been in the north part. I think that 
ultimately, in 10 or 15 years they are going to create 20,000 
jobs. So this is one of the issues in the Dominican Republic 
and they are talking exclusively on the issue of migration, and 
going back to the issue of the withdrawal of MINUSTAH. This is 
one of the issues that is creating a lot of anxiety in the 
Dominican Republic and rightly so, I think, but where are they 
going to go? Over to the Dominican Republic, and as I mentioned 
before, have 680,000 unemployed youths today.
    So no wonder that the last barometer of the Americas 2012 
in looking at the rank of countries of people wanting to leave 
their countries to go live and work elsewhere, Haiti was number 
one, 58 percent, and the Dominican Republic was fourth, 31 
percent. Put that together.
    Mr. Salmon. Thank you, we are probably going to get buzzed 
for a vote in not a very long period of time and so maybe we 
can just each ask one more question if that is all right while 
the panel members still have a little bit of time.
    Dr. Espinal, my question is for you. As you probably know, 
the FDA is reviewing rules that will put new regulations on 
imported cigars. Could you comment on what kind of impact these 
new FDA rules would have on the Dominican economy?
    Mr. Espinal. Well, it concerns directly to me, because the 
place where cigars is made is my home town of Santiago. Those 
are where the best cigars in the world come from.
    I think it is part of a challenge. I think we have a 
thriving center of exporting the cigars. We are the largest 
exporter of hand-made cigars, premium cigars in the world and 
it generates jobs and bolsters our culture and also the 
industry. So we are watching closely and we hope our interests 
are taken into account realizing that the recent economy, in 
Honduras and Nicaragua and other countries, are relying on that 
industry to generate jobs, to generate hard income to the 
country and economic activity and trade and so on and so forth 
that if it is hurt, then we are going to be hurt economically.
    Mr. Salmon. What I am hearing you say is that depending on 
how the rules come out, it could have a real dramatic effect?
    Mr. Espinal. Definitely, you are absolutely right.
    Mr. Salmon. Thank you. Mr. Sires.
    Mr. Sires. Thank you, Mr. Chairman. You know I have been 
dealing with Dominican Republic for many years. I love the 
Dominican Republic. I love its people. I have a great number of 
Dominicans in my district. But I have some concerns. I am 
concerned about the direction which the Dominican Republic is 
headed. This issue of Haitians, I think, is a bad sign. The 
issue of supposedly creating a court above the Supreme Court, I 
am concerned about.
    I don't know exactly where the relationship between Haiti 
and the Dominican Republic is today. But one of the times I was 
in the Dominican Republic, there was talk about creating a 
wall. I hope that is dead, to build a wall between the 
Dominican Republic and Haiti. I hope that is a dead issue.
    I am quite frankly concerned, as we crack down on the drug 
dealers and the contraband in Central America, that now they 
are going to come over and increase its activity in the 
Dominican Republic. We already have got 6 percent. Already, 
there is a 6-percent of shipments to America and to Europe. So 
I am concerned. I just hope that in the next couple of years we 
are able to work together and deal with some of these issues. I 
will look forward to working with anybody that comes to my 
office to deal with this issue. This issue of taking the 
citizenship away from some of the people that were born on the 
island I think is a bad sign. It is a bad sign.
    Mr. Espinal. May I comment?
    Mr. Sires. Sure.
    Mr. Espinal. If I put the Constitutional Court in context 
of how it came about, there is a commission of 13 
constitutional experts that were appointed by then President 
Fernandez to draft the constitution that then was submitted to 
the National Assembly. I was a member of that commission. I was 
pro bono. I was not paid or anything like that and I was part 
of that committee. There was conflicting views about what to do 
with regard to having or not having a Constitutional Court. 
Myself, I was against it.
    What happened? The influence of European law, you know, in 
Europe they have Constitutional Courts. In the U.S., you have 
the Supreme Court. In the European tradition, they have a 
traditional Supreme Court, but also they have a Constitutional 
Court, it is so-called Hans Kelsen model. In Latin America, we 
are adopting that model increasingly. And the Dominican 
Republic is in that trend. And the majority of the Commission, 
and the majority of the National Assembly, adopted the European 
law. There was nothing political about that. It was just a 
model of dealing with the Constitution and constitutional 
issue.
    Secondly, and then the Constitution says for the first time 
that the rulings of the Constitutional Court are binding. So we 
have to obey what it says and the lower courts, the normal 
courts have to obey the precedence of the Constitutional Court. 
It is in that context that the Constitutional Court ruled on 
the nationality or citizenship question. It interpreted the 
Constitution in a given way. We may agree or disagree with 
that, but that was the interpretation. And as you know, the 
Supreme Court of the United States has made decisions over the 
years beginning with Plessy vs. Ferguson and ending in whatever 
you want to name it and people have difficulties or differences 
with the decision, but you obey what the Supreme Court decision 
says. And we have to obey what the Constitutional Court decides 
and the government has obeyed.
    What is important here and I will close my remarks, my 
comments here is that there has been a political and 
legislative response to problems and situations that were 
created as a result of the decision by the Constitutional 
Court. My belief, my honest belief, is that that response, 
legal response is effective, is the appropriate one, and is 
politically viable in the present circumstances.
    Mr. Sires. Thank you, Dr. Espinal. And by the way, I am 
sure the cigars, a lot of those seeds came from Cuba.
    Mr. Salmon. Mr. Duncan.
    Mr. Duncan. Thank you, Mr. Chairman. I was sitting here 
listening to Mr. Alvarez talk about jobs, jobs, jobs. I think 
about the tie-in there. I came to Congress to focus on three 
things, jobs, energy, and our Founding Fathers. Jobs, putting 
Americans to work, putting Dominicans who are putting Haitians 
to work, jobs. Unleashing that innovative and entrepreneurial 
spirit and nothing exemplifies that spirit more than the energy 
sector. Energy is a segue to job creation whether it is running 
new electrical transmission lines in Haiti or whether it is 
providing that power through power generation in the Dominican. 
So jobs, energy, and our Founding Fathers focuses limited 
government, free markets, individual liberties, self-
governance, and all those things that we support. If you take 
jobs, energy, and our Founding Fathers, that creates an 
acronym, JEFF, and my name being Jeff, I am all about that. I 
am all about that.
    Mr. Salmon. You should do a commercial like that.
    Mr. Duncan. It is campaign season, right, I think. But it 
is something I am passionate about. As I mentioned earlier in 
my opening comments, energy is a passion, but I understand the 
connection. We are putting Americans to work through our energy 
sector, whether it is in the gas fields off the coast of 
Louisiana and Texas or whether it is in the Eagle Ford or 
Barnett Shale or whether it is in Marcellus or whether it is up 
in North Dakota with the Bakken. People, Americans are being 
put to work. They are being put to work building tank cars to 
transfer the oil from the Bakken by rail on rail cars.
    There is tremendous opportunity in the energy sector, and 
those tentacles run far and wide. And so I see that as an 
opportunity in the Dominican Republic. I see that as an 
opportunity in Haiti. I see it as an opportunity in all the 
Caribbean nations, and I see America sitting here with the 
expertise to help make it happen.
    So I hope those relationships will continue to be forged 
and will be strengthened, because we understand the concern 
about Venezuela. We share that concern and so can America play 
a part in lessening that dependence on Venezuela, lessening 
that dependence on government that is oppressive and we see it 
happening in the Ukraine and Eastern Europe and Western 
European with their reliance on Russian gas and that pipeline 
can be shut off, that spigot can be shut off. Venezuela can do 
the same thing to the Caribbean. I get that. And that is why 
America is sitting here as a friend, and an ally, to the 
Caribbean nations with the ability to export LNG, and abundance 
gas and oil, to help you meet your energy needs and bring that 
expertise to the island nations to help you meet your 
infrastructure needs and help you become efficient and put 
Dominicans and Haitians and Puerto Ricans, all of them to work. 
Creating those jobs that Mr. Alvarez talked about. So jobs, 
energy and our Founding Fathers on our side--the same equation 
works there as well. And with that, I yield back.
    Mr. Salmon. Mr. Meeks.
    Mr. Meeks. Thank you. Dr. Espinal, let me just ask and 
first I want to subscribe to what the ranking member had 
indicated. First, sometimes I was thinking maybe it is just us 
and the United States would have concern about the tribunal 
ruling, but then I saw also that CARICOM said that the recent 
legislation ``is far from satisfactory and did not go far 
enough in addressing the grave human rights effects of the 
ruling on nationality as it restored the nationality only to a 
limited number of persons affected by, but left an overwhelming 
majority stateless.'' So it is even other countries in the 
region that are also concerned.
    Two quick things. One, just from your viewpoint is there 
anything that you think that we can work on together? It is an 
issue. It is not going to go away. It is an issue, they had the 
U.N. talking about it with the reference to statelessness. So 
it is not going to go away. And the DR is too important a 
partner and friend for us to let--we need to focus on other 
things.
    So I was wondering if there was anything that you think 
that we can do collectively to begin to fix the thorn that we 
currently have in our relationship, and apparently a thorn in 
the relationship with other countries in the Caribbean also. 
And lastly, whether or not because of the tribunal, has that 
caused any difficulty with the bilateral relations between the 
Dominican Republic and Haiti, because I know those were good 
conversations that were going on and whether or not the 
tribunal ruling has caused any conflict there?
    Mr. Espinal. Thank you, Mr. Congressman, for the question. 
I am not going to minimize how controversial the Court's 
decision, the Tribunal's decision was. And I can see there will 
be people who may disagree with the legal response that the 
Dominican Government, together with the legislation, have 
presented in response to the problems created by the Court, by 
the decision. However, there are others who have said that the 
response was the correct one.
    Vice President Joe Biden was in the Dominican Republic and 
expressed it. The Secretary General of the U.N. was recently in 
the Dominican Republic and said it. The president of the 
European Council was just 2 days ago, yesterday in the 
Dominican Republic, and said they were very pleased how the 
government responded. So these are very important people that 
have looked into the matter and have received advice, and they 
have said that they are pleased with the response. So I think 
we are accompanied as a country, as a country we are 
accompanied by very good people saying that this is the right 
way to go.
    As far as cooperation is concerned for your part, I am 
going to mention one. One of the problems that we are having, 
for instance, we have one category of people is those 
typically, exclusively migrants. Santiago Canton has referred 
to migrants only. Sorry, migrants and other categories, but 
migrants only, one of the problems they are facing is that they 
line up to get the naturalization, close to 100,000 people, and 
perhaps only 10 percent have documents from their own country 
from Haiti. They don't have a document that can say who they 
are. And the Haitian Government is charging them whereas our 
Government is not charging them one penny for doing the 
process, not even back taxes or any fees. So it is important to 
help Haiti get the resources to help their citizens to get 
documents so they can get naturalized very quickly. That is 
very important.
    And your last question was?
    Mr. Meeks. The relationship, bilateral relationship with 
Haiti.
    Mr. Espinal. Bilateral relationship with Haiti. Very, very 
important question. Last year, the Haitian Government has taken 
some decisions regarding trade relations and has unilaterally 
imposed sanctions against the exports of certain products from 
the Dominican Republic. That has created some strain in the 
relationship.
    But what I see very positive, very, very positive is this 
dialogue between the authorities of the Dominican Republic and 
Haiti, including yesterday, between the President of Haiti and 
President of the Dominican Republic. We are looking at each 
other, face to face, saying let us work together, the problems 
that we have in terms of trade, in terms of security, in terms 
of other matters and come up with solutions that can be 
practical and effective.
    One of the issues was the trade issue. That was a concern 
of the Dominican Republic and I am very optimistic that these 
trade sanctions on the part of Haiti will be eliminated and 
trade will increase in both countries. But I could say and I 
close my remarks and my comments here, I say that there is a 
very positive atmosphere, very positive atmosphere between the 
high authorities of both countries. And you have your friends 
in both countries and you can ask and you will find out that 
what I am saying now is exactly the truth. There is a momentum 
that needs to be reinforced, that needs to be helped, that 
needs to be supported. This is a sign to support that process. 
And this is a sign to help the Dominican Government to move 
forward with the solution that I repeat is rooted, I think, I 
believe, as a Dominican citizen, it is rooted in values that is 
effective legally and is politically responsible because it is 
the viable, political solution in the present circumstances.
    Mr. Meeks. Let me just conclude with this statement because 
I agree with Vice President Biden. I think what Vice President 
Biden said was that it was a step in the right direction, not 
that it was all good or that it resolved the problem. So you 
made a step in the right direction, but I believe that there 
are other steps that need to take place to make sure that we 
resolve this issue.
    Mr. Salmon. Thank you very much, gentlemen. You have been 
really more than generous with your time. I hope you understand 
from our comments and questions that we consider our bilateral 
relationship with the Dominican Republic to be one of great, 
great importance. Also, the Dominican Republic has really been 
a great example for other countries in the region in so many 
areas. And as we move forward, we just want to make the 
relationship better economically and in every other aspect. But 
I think that on the energy issues, some of the things that you 
brought up, Mr. Gluski, about maybe looking into some of the 
options on short-term financing and utilizing OPEC or the Ex-Im 
Bank or other entities to try to facilitate, I think those are 
great, productive recommendations. I want to thank the members 
on the panel for a great hearing. So thank you very much and 
with that, this hearing is adjourned.
    [Whereupon, at 4:20 p.m., the subcommittee was adjourned.]
                                     

                                     

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