Cablegate: Scenesetter for Codel Johnson

DE RUEHRB #0004/01 0031621
P 031621Z JAN 08





E.O. 12958: N/A

1. (U) SUMMARY: The U.S. Mission warmly welcomes your upcoming
visit to Morocco. Your visit, the third by a congressional
delegation in the New Year, following visits by delegations headed
by Senators Martinez and Harkin, will help to underscore the
importance the United States accords to our relations with Morocco.
The depth and extent of those relations are evident in our bilateral
Free Trade Agreement, which went into effect on January 1, 2006, and
the recently signed $697 million Millennium Challenge Account (MCA)

2. (SBU) During your visit, you will find a country seeking
balance: balance between traditional Muslim values and the
permeation of Western culture; balance between increased industrial
production and protection of natural resources; and balance between
a traditional agro-based economy and urban and industrial
development. Although Morocco has recently experienced a large
increase to its tourism industry and in urbanization, much of the
country remains relatively underdeveloped with per capita GDP of
less than USD 2,500. While Morocco has demonstrated an increasing
commitment to environmental protection, it still faces major
challenges, particularly in the quality and quantity of its water
supply. Your visit will reinforce our efforts to help Morocco find
the right balance between environmental protection and development.

3. (U) FREE TRADE AGREEMENT: Since its implementation on January
1, 2006, U.S. exports to Morocco have seen a sharp increase.
According to U.S. trade figures, bilateral trade through the first
10 months of 2007 was nearly double its 2005 level. The increase
has been most pronounced for U.S. exports (up 67 percent in 2006 and
a further 41 percent through October 2007), but Moroccan exports
have also increased significantly as well. Moroccan officials have
been reluctant to sign onto this "good news" story, however, as
their statistics show an even more unbalanced picture, an issue we
are working with the U.S. Census Bureau and appropriate Moroccan
authorities to reconcile. More generally, there is widespread
concern in Moroccan economic circles about the country's
competitiveness in the global economy, as its trade deficit has
swelled over the past several years.

4. (SBU) WATER: The greatest environmental problem facing Morocco
is water. Both the quality and quantity of available water are key
concerns for a country that experiences recurring and severe
droughts. The Moroccan government has worked in recent years to
make the country's economy less dependent on the agricultural
sector, which fluctuates dramatically from year to year based on
climactic conditions (a bumper crop in 2006 was followed a year
later by a serious drought). It has achieved some success in
ensuring that non-agricultural growth remains strong even when
agriculture falters. It is also seeking to shift farmers from
water-intensive crops such as cereals to fruit trees and other crops
that are better adapted to Morocco's environment. The recently
signed MCA Compact includes a major project to aid this ambitious
government effort.

5. (SBU) Even this shift to a more environmentally appropriate crop
creates its own challenges, however. As it seeks to double the
acreage of olive farms to approximately 2.5 million by 2010, the
Kingdom faces the challenge of dealing with the by-products of the
expanding industry. Olive oil production creates wastes, called
margines, which are the remnants of squeezed skins, ground pits,
pulp, salt, and water. Although the margines can be dried into a
cake-like substance that can be burned as a low-grade fuel, more
often, the organic waste is dumped directly into waterways, where it
consumes oxygen and leaves an oily film. The problem is most
pronounced around Marrakech, Fes, and in the Sebou River watershed.
Recent U.S. Trade and Development Agency projects have targeted
solid waste management, olive oil waste and water treatment.

6. (U) WESTERN SAHARA: Bilaterally, your visit comes during the
third round of talks between Morocco and the POLISARIO under United
Nations auspices. The so-called Manhasset process represents an
opportunity for the two parties to engage in a meaningful dialogue
that will hopefully lead to a resolution of the Western Sahara

impressive political and economic strides in recent years, including
liberalization of its trade relations with the United States and
other countries. King Mohammed VI rules as well as reigns. He has
championed significant political reforms, including relative freedom
of expression, advances on human rights, and the 2004 family law (or
"moudawana"), which has significantly enhanced the rights of women.

RABAT 00000004 002 OF 003

Partly as a result of this reform record, the current form of
government retains support across the political spectrum.

8. (SBU) CHALLENGES: Nonetheless, Morocco continues to face
serious challenges. Illiteracy and joblessness remain high, and
while economic growth has accelerated (averaging 5.4 percent from
1999 to 2006), it has not yet achieved the level needed to absorb
new entrants to the labor force or to reduce poverty. Frustration
over the lack of employment opportunities, the government's
inability to respond fully to educational and health needs, and
endemic corruption, have broadened the appeal of Islamic-oriented
parties and non-governmental organizations.

9. (SBU) The September 7, 2007 elections, while representing
significant progress in terms of governmental conduct of elections,
highlighted a fundamental lack of popular confidence in the
political system. Sixty three percent of registered voters did not
vote. Among the 37 percent who did vote, approximately one fifth
cast blank or spoiled protest ballots. The nationalist Istiqlal
party won less than a fifth of the votes, slightly ahead of the
Islamist Party of Justice and Development, but emerged as the
largest bloc in the new parliament. The current government is made
up of a minority coalition headed by Istiqlal Prime Minister Abbas

10. (SBU) TERRORISM: Popular frustrations, combined with satellite
television from the rest of the Arab world, have strengthened a
dangerous terrorist fringe, as reflected in the April bombings in
Casablanca that targeted the U. S. Consulate and Cultural Center,
among other targets. In the face of this threat, U.S.-Moroccan
counterterrorism cooperation has been excellent, as is reflected in
the recent visits to Rabat of APHSCT Frances Townsend, and FBI
Director Mueller. The U.S. finds in Morocco a capable and active
partner in the war against terror. Morocco pursues an
interdisciplinary approach in confronting the threat, seeking to
address the economic marginalization of youth and refute extremist
ideology by propagating Islamic messages of tolerance and
moderation, while at the same time pursuing vigorous law enforcement
and intelligence operations against specific terror cells. It has
acknowledged over the past year the importance of protecting human
rights during the pursuit of counterterrorism efforts.

11. (SBU) Our Mission Strategic Plan also adopts this holistic
approach, seeking on the one hand to sustain and expand
counterterrorism efforts in Morocco through continued diplomatic,
law enforcement and military cooperation, while on the other
supporting the country's ongoing social, economic, and political
reforms that directly address the conditions that create extremism.

12. (U) U.S. FOREIGN ASSISTANCE: Morocco received over USD 35
million in U.S. foreign assistance in FY07, approximately half of
which will be for activities under peace and security with
expenditures under IMET, INCLE, NADR and FMF. USD 18.9 million was
spent to address Morocco's ongoing development challenges through
USAID with programs in economic growth, education/workforce
development and democracy/governance. Additional funding from
Washington of approximately USD 2 million annually is made available
through the Middle East Partnership Initiative for advancing the
Freedom Agenda, and occasionally through other agencies, as well.

13. (U) The USD 697 million, five-year MCA Compact represents a
significant increase in U.S. assistance that will potentially have a
profound impact on Morocco's prospects for economic growth,
especially in agriculture, fisheries and traditional crafts.
However, Development Assistance (DA) and Economic Support Funds
(ESF) are looked to in order to underwrite an assistance response
that is complementary to the investment being made by the USG
through the Millennium Challenge Corporation.

14. (U) That complementary assistance looks to the needs of the
two-thirds of the 30 million Moroccans who are under age 30. This
population bulge, a result of rapid population growth in the 1970s
and 1980s, has led to the significant challenges outlined.
Joblessness, underemployment, poor education, and the inability of
government to meet citizens' needs are sources of alienation,
radicalization, and extremism that underpin a continuing terrorist

15. (U) U.S. economic and development assistance is necessary to
continue to focus on three priorities: education, economic growth,
and democratic governance. U.S. assistance for peace and security
should include FMF at adequate levels to sustain a large stock of
U.S.-origin equipment while continuing strong military to military

RABAT 00000004 003 OF 003

partnership with Morocco, a major non-NATO ally. This will enhance
the professionalism and skills of Moroccan military personnel,
improve Morocco's ability to control its borders, and build upon the
Moroccan military's contributions to international peacekeeping
efforts and the global war on terror.


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