The “Shrinking of State” and U.S. Intervention: Contextualizing the Persistence of Social

Inequalities in the Dominican Republic

Antonia Sampalean207894413

Professor Miguel GonzálezAS/SOSC 4600

The Dominican Republic’s history has been marked by hundreds of years of

contact with the West. As a result of recent trends of globalization, it has become

impossible to understand the nation’s societal realities without situating them on a global

context (McMichael xxxiii). The Dominican Republic’s current and growing levels of

poverty are much related to the fact that national sovereignty – or a strong government

that has as a critical objective the protection of its citizens – has become inexistent,

particularly as a result of U.S. interventionist policies. Atilio Borón explains that the

result of the imperial project caused “the withering away of the sovereign state” which

has explains the chronic failure to provide citizens with various rights to health,

education, housing and social security and has thus caused increasing poverty in Latin

America (217). The breaking of the social contract is a phenomenon which can therefore

be attributed to the imposition of interventionist policies from above which do no benefit

the general populace. When examining the “withered” Dominican state and its crippling

relationship with the U.S., it becomes evident that these are the cause of the growing

social inequalities in the Dominican Republic.

The Dominican Nation-state: A Historical Context

The importance of achieving state autonomy, especially before the imposition

of U.S. interventionist policies (or programs designed in American institutions like

Harvard University in order to encourage economic growth), is to ensure that

development is sustainable. In addition it is necessary to have secured an effective public

sector which guarantees a labour market and rule of law, and to have already established

protectionist strategies (subsidies for local farmers or tariffs for all imports) which will

ensure that national products will be prioritized ahead of exports (Martin and Ocampo).

Not having achieved state autonomy before the implementation of neo-liberal practices,

the Dominican Republic experienced its greatest challenge to nationalism when the U.S.

interventionist policies and practices became the governing principle.

From the dawn of colonialism in 1492 to a U.S. military government which

occupied the Dominican during the years of 1916 to 1924, the Dominican’s political

history was never one of an autonomous government (Gregory 20). In addition to these

invasions, the country’s citizens suffered under Trujillo, a severe dictator, from 1931 until

1960 (Ibid). The arrival of the Spanish colonists in the Dominican Republic during the

late 15th century changed the fate of this country in the sense that it would never again be

self-sufficient. Although the Dominican Republic was involved in slave trade, it did not

have a significantly large sugar or rum industry but was dominated by ranching

enterprises which were established by the colonists (Baud 126). As these enterprises were

not generating enough capital, Spain virtually abandoned the Dominican without granting

its independence (Ibid.). The fear of being annexed by Haiti impelled President Santana

to ask the Spanish Crown to place the Dominican Republic “once again under its colonial

authority” in 1861 because it did not have the financial or militaristic means to defend

themselves (Baud 127). Germany also had a significant role in the Dominican Republic’s

history during the late 19th century when it became one of its major trading partners and

purchased a large portion of its agricultural goods; its early industrial development was

dominated by the production of coffee, sugar, rum and salt (Schrank 95).

The next major external force to appear in the country was the United

States of America which took considerable control over the country’s budget and account.

A U.S. military government occupied the Dominican Republic between 1916 and 1924

and implemented the Land Registration Act in 1920 which allowed the American sugar

corporations to confiscate the land belonging to peasants and to radically increase the

land under its control (Gregory 21). A year before this Act was passed, the military

government “imposed a tariff system that exempted U.S.-made industrial products from

import thereby undermining both the local manufacture of goods and the export on raw

agricultural commodities” (Gregory 22). When the Dominican accepted U.S.-designed

reform programs in the late 1980s, “large family groups built close ties with the financial

sector” and assured that the implemented reforms would benefit the financial

performance of their enterprises (Sanchez 700). Throughout this period of time, the

Dominican family-owned firms were actively creating alliances with international firms,

most of which were American-owned (Ibid). It is characteristic of Latin American

societies that elite benefit from contact with the West and thus encourage such

partnerships. Consequently, they were able to benefit from the economic growth of the

U.S. in the early 1990s (Sanchez 709).

Throughout the years, the Dominican’s social and political realities have been

influenced by a wealthy minority (often direct descendants major colonizing families)

who has often collaborated with important figures from other nations in order to maintain

its wealth and control. The centuries-old paternalistic relationship between the elite and

the descendants of African slaves and Spanish colonists who constitute the nation’s racial

majority caused the formation of clientelism which is a form of social organization in

which rich patrons employ poor clients to work for their firms which were often

partnered with international firms (Gregory 19). The state, therefore, rather than creating

its own labour market, depended on the elite to provide its citizens with employment

which was many times unstable and exploitative as it was unregulated. Once the state

resolved to build the social infrastructure of the country in the early 1980s, it had to

borrow large sums from the International Financial Institutions and from the United

States who then obliged the government to implement severe reform programs (Sanchez

700). Therefore while the elite made sure to profit from the Dominican Republic’s

tumultuous history and lack of state autonomy, the rest of the country endured the effects

of international invasions and a weak national government.

The Dominican Republic’s national sovereignty was ultimately challenged during

the mid-1980s when economic globalization, through the emergence of neo-liberal

practices, became a leading process of internationalization. As the Dominican

government was already severely indebted to both the Bank and the IMF and was

carrying the short end of the stick in its relationship with the United States, it completely

lost its autonomy. In addition, the country lacked its own economic policies so it had no

alternative but to adopt those prepared by Glen Jenkins (and endorsed by the U.S.), an

economics graduate student at Harvard University (Sanchez 708). Martin and Ocampo

argue that “when implementing adjustment programs, the authorities should take account

of how they will affect the most vulnerable sectors of the population (164). Considering

that Jenkins was completing his Ph.D. in Economics and had prepared a reform package

(the New Economic Program) that was not designed specifically for the Dominican

Republic, it can be argued that the most vulnerable sectors were overlooked. The state

would have been able to refuse this package if it had previously formulated a method of

proving it to be disadvantageous to the poor. However, not having done so, the

Dominican Republic accepted a program which would result in an economic crisis and

restricted governmental movement and which would ultimately open up its borders to the

United States (Gregory 27). Among adopting reforms which included the privatization of

state-owned industries, the elimination of food subsidies and the reduction of already low

tariffs, the reform package stated that “state involvement in the economy should be

minimal and the regulatory policies associated with the welfare state

dismantled…” (Ibid). How could a government that plays such a minimal role in the

economic, political and social sector reduce its role even further without exposing its

citizens to vulnerabilities? It is argued that the state should always maintain control over

capital accounts in order protect the people from the instability of the market; the lack of

doing so is reflected in the economic crisis which devastated the Dominican Republic in

2001 (Martin and Ocampo 164).

In examining the Dominican Republic’s economic and social history, it

becomes apparent that the Dominican state was never completely autonomous and that its

recent, expanding relationship with the United States has rendered it less sovereign than

ever before. This is not a problem in itself but rather, the direct result of a withered state

which has severe consequences for its citizens is the dilemma. It is evident that the gap

between the poor and the rich widened with the growth of industrialization and contact

with the West. As a small country with many resources (including petroleum, minerals, a

large fishing industry, arable lands, etc.), it is not surprising that the Dominican’s past has

been marked by exploitative relationships with colonial and imperialist countries.

However, this exploitation has led to a growing disparity between the country’s citizens

in addition to a persisting poverty that is effecting the most vulnerable sectors.

Effects of the “Shrinking of State”

The neo-liberal practice of privatization and the reduction of state involvement

have created great social disparities among the Dominican people which are increasingly

evident in the new millennium. According to developmental theorists, “inequality is

defined as the differences in the capacity of individuals to follow lives of their

choosing” (Hammill 13). Interventionist policies imposed by the United States in the

Dominican included removing public services like education, power distribution,

subsidies and healthcare from the responsibilities of the state. As a result, many of the

people could no longer afford these public-turned-private services and were therefore not

given the opportunity to choose their fate (Gregory ).

For the last century, the United States has been active in the Dominican Republic’s social,

political and economic history. A strong, economic and interdependent relationship has

been established between the two countries with the United States boldly playing the

dominant role. The Dominican Republic is currently the U.S’ primary manufacturer of

footwear and apparel hence the growing number of Export Processing Zones (EPZs) in

different areas of the country. Increased remittances from the U.S. have become “a vital

component of the new development model, further expanding dependence on the

evolution of the U.S. economy” (Sanchez 694). While the poor live a life of vulnerability

and insecurity due to poor social infrastructure, lack of state intervention and

protectionist strategies, the upper class continues to reap the benefits of industrialization.

Therefore the dependency theory continues to be an appropriate analytical tool in the

attempt to understand persistent underdevelopment in the Dominican Republic because it

demonstrates the core-periphery struggle which has hindered it from moving into the

‘developed’ phase (Martin and Ocampo).

The Dominican Republic is the chief producer of footwear and apparel for the

United States and much of its economy and labour market depends on the production of

footwear in particular. According to Andrew Schrank, “the growth of third world

industry invariably necessitates the use of imported capital and intermediate goods, and

in any heretofore non-industrial country, the traditional export sector will…constitute the

principal source of foreign exchange”(95). The Dominican Republic does indeed rely on

the traditional export sector as its primary source of foreign exchange which in turn leads

to a vulnerable and dependent economy. If the U.S. market were to focus its attention on

purchasing footwear from a country where labour rates were cheaper for example, what

would happen to the Dominican’s economy? In addition, how could an underfunded

government support thousands of unemployed wage labourers?

A critical feature of the ‘developed’ phase or of the ‘first world’ is a high literacy

rate; this is an indicator that the country’s citizens are given equal and ample opportunity

to be educated. Given that Structural Adjustment Policies (SAPs) instituted in the late

1980s indicated that the Dominican government should withdraw funding from the

education sector and allow the private sector to invest, it is not surprising to see that

capital expenditures on education in the early 1990s were only 45 percent of what they

had been in 1980 (Gregory). The direst result of this privatization-promoting reform

program is observable in ECLAC figures which show that levels of education in the

Dominican have dropped from 74.6 percent in 1992 (after they had already dropped

significantly), to 69.3 percent in 2002 (Hammill 34). So how would a less educated

society increase inequalities and impede the process of development? It would cause a

reduction in the number of skilled workers which would further lower employment rates

and produce a society in which only a select few can afford resources. This is precisely

what occurred in the Dominican Republic (the creation of an upper-middle class

alongside a wealthy elite and a poor majority) thus proving that the privatization of

education brings into being added social disparities.

The privatization of power distribution was also a change which was induced by

the IMF-proposed reform package of the 1980s. As power distribution companies, which

are mostly American-owned were demanding large sums for electricity, the citizens had

the option of not purchasing electricity (which is the reality for more than 50 percent of

the country) or of finding illegitimate means of recovering power sources (Gregory 14).

Since the early 1990s, Dominicans have begun to use the noun poder, an interchangeable

term that can mean either electricity or power (political), to express their disdain with the

power outages and the lack of state autonomy; phrases like “Aquí, no hay poder” (Here,

there is no electricity/political power) are common in everyday life (Gregory 15). In a

country where the resources to provide its citizens with electrical power are accessible,

(Columbus’ Lighthouse alone uses electricity enough to light the entire city of Santo

Domingo) how is it possible that less than fifty percent of the population has electricity?

Citizens did indeed participate in popular movements during the 1990s which petitioned a

solution to the water and electricity problem but as the social and economic situation

worsened, “they put aside the struggle for better living standards for the sake of fighting

further deterioration of present conditions (Cassa and Roberto 84). Another explanation

for the lack of change is the fact that the country’s powerful elite have direct affiliations

with these power companies (AES Corporation, an American firm, is the leading power

distribution corporation) and consequently benefit from the privatization of this sector.

Therefore the privatization of electricity has caused greater inequalities among the

Dominican people whose livelihoods have been affected as a result of power outages and

lack of electricity.

Prior to the introduction of the reform package, the Dominican government

provided sole-parent families and farmers with subsidies in order to alleviate the stresses

that both of these predicaments usually entail. After the implementation of the structural

adjustments, the government reduced its public spending and such subsidies were

eliminated. The lack of governmental financial support in addition to the instability of the market have placed farmers at a significant disadvantage, further explicating why there has been a significant drop in farming activity (Cassa and Roberto 84). Currently, citizens rely on the importation of natural resources of which several can be grown within the country. The decline in farming activity has also lowered employment rates and brought about an influx of peasants in larger cities (Ibid). Urbanization is a movement which can eventually promote the spread slum cities, diseases, land degradation etc., if the proper social infrastructure is not in place. Subsidies were also removed from sole parents; the effects of this can be witnessed in the lowering of incomes in the sole parent quantile (Hammill 31). Income distribution is generally lower for sole parent families and without government assistance, it becomes even more difficult for such families to survive. Perhaps this can explain why child prostitution and prostitution rates in general have augmented in the last fifteen years and not only in tourist areas (Gregory 64). This might even explain why children are less likely to attend primary school; they are sent instead to work in sugar refineries or Free Trade Zones (FTZs). It is therefore unquestionable that the diminishing role of the state has severe social consequences that are not only manifesting themselves now but will continue to do until the reforms are modified. The privatization of healthcare has also been a cause of increased social disparities in the Dominican because many citizens can no longer afford to pay even a simple doctor’s visit, an actuality that has led to an increase in HIV/AIDS and other diseases. During the flu season of 2004, a virulent disease called el paquetazo (the big package) struck and killed hundreds of Dominicans even though it was highly amenable. Since the government was not ready to reconstruct its social security system, the media coverage of the virus remained fairly low during its outbreak (Ibid 194). As much as an increased Haitian immigration rate is deemed responsible for the surge and deaths caused by HIV/

AIDS, this occurrence can also be linked to the citizen’s financial incapability of acquiring medications that are used to treat or prevent the disease. In addition, the government has only recently begun its own awareness campaigns but with proper funding, this could have been initiated two decades ago when the disease became more prominent. HIV/AIDS and other diseases are more widespread among the poor for reasons that include lack of sanitation, inaccessibility to doctors and medication due to displacement or a financial deficiency, lowered education rates etc. Special government provisions should be taken to ensure that the lower class sector has access to all of these but with the privatization of health care, the government cannot take make such provisions thus the poor are subjugated to even more difficulties and an even lower standard of living.

According to Atilio Boron, a growing gap between the rich and the poor, as well

as increasingly powerful elite is the outcome of a relationship with the core (218). In

respect to the Dominican Republic, Gregory argues that “the most pressing problems

facing the people were economic…and positional, having to do with their social location

vis-à-vis commingling and multi-scaled power arrangements, stretching from the

proximate community to the global order” (19). Thus Gregory is arguing that this social

positioning is not just a simple problem, but one of the primary obstacles that the

Dominican people face.

National sovereignty is a feature which developed countries must possess not only

in order to ensure that policies are pertinent to the economic and social realities, but also

to protect the citizens from the various vulnerabilities that the free market induces.

According to Baud, the Dominican’s national autonomy began to disintegrate during the

20th century and is now almost non-existent today (128). This is evident when we

consider that the Dominican Republic, among many of the regions of the Caribbean, does

not have an individual voice but rather must form a collective with either Latin American

countries or with other countries in the Caribbean in order to take a stance on one issue or

another. Therefore the process of development is being reversed as Dominicans are

experiencing a loss of rights for the sake of the market while their only advocate, the

state, is powerless against the financial institutions of the ‘North.’

CAFTA-DR

Conclusion

In conclusion, the implementation of American interventionist policies has been the cause of a decline in national sovereignty in addition to a series of social issues which are the result of privatization and the reduction of state involvement. According to economist Andrew Schrank, these social and economic problems are consequences of a non-competitive market sector which will remain unchanged if Dominicans continue to be undereducated and the government under-funded (110). However, a government that is both lacking in funds and autonomy cannot bring such changes thus the Dominican Republic is trapped in what is called “the impasse of development.” This impasse was recognized by the IMF in the early 1990s so it established tourism as a ‘quick fix’ to the problem. On the other hand, Gregory states that tourism makes people feel alienated in their own land, causes an increase in child prostitution, drug trafficking, crime and also poses as an environment threat (4). This position is affirmed by Alberto, a Dominican-American who states that “tourism was not helping the country because the government’s policies were preventing poor people from benefiting from it…the rich people in this country want to keep it all for themselves” (qtd. in Gregory 3). So it appears that not

only privatization and the loss of state autonomy have been beneficial to the country’s rich elite, but also tourism. Dependency theorists would argue that the only means of solving the growing social disparities would be a civil revolution while economists would argue that trade liberalization and increased production would solve such problems. A civil revolution might dispel the elite who are often blamed for the current economic crisis but would this be feasible in contemporary times when U.S. imperialism is stronger than ever? And the financial crisis that erupted in 2002 demonstrates that increased production does not necessarily indicate economic stability (Sanchez 712). A solution to the growing social disparities is crucial

To better express the core-periphery struggle, Galeano states the regions now

most underdeveloped and poverty-stricken are those which in the past had the closest

links with the metropolis and had enjoyed periods of boom (15).

Works Cited

Baud, Michael. “‘Constituionally White’”: The Forging of a National Identity in the Dominican Republic.” Ethnicity in the Caribbean: Essays in Honour of Harry Hoetink. Ed. Gert Oostindie. London: Macmillan Caribbean, 1996. 121-151. Borón, Atilio, 1999, “State Decay and Democratic Decadence in Latin America”, in Leo

Panitch, Leo and Colin Leys, eds., Socialist Registe, vol. 35, Halifax, Merlin Press.

Cassa, Roberto and Fred Murphy. “Recent Popular Movements in the Dominican Republic.” Latin American Perspectives 22.3 (1995): 80-93. Gregory, Steven. The Devil behind the Mirror: Globalization and Politics in the Dominican Republic. Los Angeles: University of California Press, 2007.

Hammill, Matthew. Income Inequality in Central America, Dominican and Mexico: Assessing the Importance of Individual and Household Characteristic. Mexico: United Nations Publications, 2005.

Martin, Juan and José Ocampo A., ed. Globalization and Development; a Latin American and Caribbean Perspective. Chile: ECLAC, 2003.

McMichael, Philip, 2000. Development and Social Change: a Global Perspective, 2nd Ed. Thousand Oaks, CA: Pine Forge Press. Preface and Part I, “The DevelopmentProject”, pp. 1 - 71.

Sanchez, Diego A. “Domestic Capital, Civil Servants and the State: Costa Rica and the Dominican Republic under Globalization.” Journal of Latin American Studies 7.4 (2005): 693-727. Schrank, Andrew. “Luring, Learning and Lobbying: The Limits to Capital Mobility in

the Dominican Republic.” Studies in Comparative International Development

37.4 (2003): 89-116.