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Dominicans' Swift Step Into Crisis

Banking Troubles Ruined Country's Envied Economy

By Kevin Sullivan
Washington Post Foreign Service
Friday, August 27, 2004; Page E01

SANTO DOMINGO, Dominican Republic -- When Sandro Batista smashed his banana truck into a tree in April, leaving him with two hideously shattered legs and a broken arm, his orthopedic surgeon sent his sister shopping.

The country's largest public hospital, Hospital Dario Contreras, didn't have painkillers or the steel pins, screws and plates needed to put Batista's bones back together, or even the blood to get him through the operation. So the surgeon gave Alicia Batista a list and sent her on her way.

Aybar Hospital in Santo Domingo is hit by a blackout. Outages last as long as 20 hours a day and keep Dominican life from operating normally. (Walter Astrada -- AP)

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"The quality of our medical care has deteriorated tremendously," said Guillermo Garcia Lorenzo, the surgeon who operated on Batista. "A year ago, we had a storeroom filled with everything we needed, but now, nothing."

Batista's ordeal, which cost his family about six times his monthly income as a truck driver, illustrates how quickly this country has been transformed from the envy of Latin American economies into a nation in the midst of its worst economic crisis in decades. Analysts here trace the fall largely to a single event: a banking scandal that last year cost the government $2.2 billion, or about 15 percent of the country's gross domestic product, which sent inflation soaring and severely devalued the peso, the national currency.

The result has been an almost overnight reversal in fortunes in this steamy Caribbean country, a top U.S. tourist destination just east of Cuba that shares the island of Hispaniola with Haiti. What was until recently a dependable bright spot in a region of economic and political uncertainty is now another vulnerable nation on the U.S. front porch.

So many Dominicans are trying to flee the desperate conditions that the U.S. Coast Guard is intercepting far more Dominicans at sea than Cubans or Haitians. Nearly 5,000 Dominicans have been picked up trying to reach the United States since October, compared with 1,748 in the entire year before that and fewer than 200 two years before. Earlier this month, 55 Dominicans died at sea trying to reach Puerto Rico in a small open boat.

After a decade of strong growth, the Dominican economy shrank in 2003 for the first time since 1990. Joblessness is soaring and inflation has averaged 56 percent in the past year, according to the central bank. The peso has lost more than half its value against the dollar, causing deep pain in a nation that imports most of what it consumes. Prices have more than doubled in the past year for food, milk, propane gas for cooking and other daily necessities. Worker strikes and fuel shortages are adding to the sense of paralysis.

The government inherited by President Leonel Fernandez, who was sworn in Aug. 16, is hobbled by nearly $6 billion in foreign debt, making it nearly impossible to provide even the most basic services, from medical supplies at public hospitals to trash pickup.

Power outages lasting up to 20 hours a day are causing growing frustration as the cash-strapped government is unable to provide $400 million in past-due payments to private energy companies. Without reliable power, families are unable to keep food refrigerated or fans running. Traffic lights are dark, babies are often delivered by flashlight at the country's largest maternity hospital, and surgeons at Dario Contreras said they often must stop in the middle of operations when the lights go out.

"The country is drowning," said Jorge Cela, a Jesuit priest who works in the poor neighborhoods of this capital city, where nearly a quarter of the country's 8.8 million people live.

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