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Cablegate: El Fassi's First 100 Days: Too Early to Tell, but Time to Act

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PP RUEHWEB

DE RUEHCL #0027/01 0361028
ZNR UUUUU ZZH
P 051028Z FEB 08
FM AMCONSUL CASABLANCA
TO RUEHC/SECSTATE WASHDC PRIORITY 7962
RUEHAS/AMEMBASSY ALGIERS 2958
RUEHBP/AMEMBASSY BAMAKO 0255
RUEHEG/AMEMBASSY CAIRO 0848
RUEHRY/AMEMBASSY CONAKRY 0030
RUEHDK/AMEMBASSY DAKAR 0275
RUEHLC/AMEMBASSY LIBREVILLE 0048
RUEHLO/AMEMBASSY LONDON 0340
RUEHMD/AMEMBASSY MADRID 3775
RUEHNK/AMEMBASSY NOUAKCHOTT 2315
RUEHRB/AMEMBASSY RABAT 8211
RUEHTU/AMEMBASSY TUNIS 2078
RUEHFR/AMEMBASSY PARIS 0624
RUEHYD/AMEMBASSY YAOUNDE 0088

UNCLAS CASABLANCA 000027

SIPDIS

SENSITIVE

SIPDIS

STATE FOR NEA/MAG AND NEA/PI

E.O. 12958
TAGS: ECON EFIN KDEM MO
SUBJECT: EL FASSI'S FIRST 100 DAYS: TOO EARLY TO TELL, BUT TIME TO ACT

REF: (A) 07 CASABLANCA 0211 (B) 07 RABAT 01810

1. (SBU) Summary: 100 days into El Fassi's tenure as Prime Minister,
many Casablancans feel they have little on which to judge the new
government, though they feel it is time for action. Citizens
expressed anger over the increase in value-added tax on cars, and a
sense of urgency about the need to revamp Morocco's educational
system. Despite such issues, the business community is confident
that the momentum of positive change in Morocco will continue,
spurred by the King, a powerful business-interest group, government
ministers and the private sector, if not by El Fassi himself. End
Summary.

-----------------
TOO EARLY TO TELL
-----------------

2. (SBU) Many Casablancans say it is too early to tell how Moroccan
Prime Minister Abbas El Fassi has fared during his first three months
in office. One businesswoman said the new government has not yet
done anything, and referenced an editorial in the January 30 issue of
the daily L'Economiste that echoed her sentiment - it is time for El
Fassi to step to the plate and pick up the pace. Others reiterated
their feelings on the government as a whole; they remain disappointed
by the selection of El Fassi as Prime Minister, but are confident in
his ministers (Ref A). As Saad Kettani, a former banker and prominent
businessman, put it, he would not have disrupted the momentum of
Morocco's transformation by replacing Jettou. He believes, as do
many others, that the current ministers are better than before, "but
their coach is not there."

-------------------------------------
ANGER OVER HIGH TAXES, POOR EDUCATION
-------------------------------------

3. (U) While many felt they have little on which to judge the new
government, some did voice complaints about tax increases instituted
by the 2008 Finance Bill. The increase from 10 to 20 percent of
value-added tax (TVA) on cars leased with the option to buy (LOA)
sent a wave of anger through the population. Many were particularly
incensed that the tax is retroactive, applying to cars purchased
before 2008 despite the fact that the law just went into effect. One
banker called the tax "horrible," while another pointed out that it
will dissuade people from buying new cars, forcing them to keep older
models and, in turn, jeopardizing road safety. Others believe the
tax will simply force buyers to the parallel market, slowing sales
for legitimate sellers.

4. (U) In an attempt to deflect ire from consumers, El Fassi scolded
companies for passing on the increase to their customers, claiming
they shirked their moral imperative not to. This defensive reaction
did nothing to appease citizens, who feel their purchasing power has
been diminished. The situation has received ample media attention,
with articles and op-eds using such words as arbitrary, stupid and
scandalous to describe the increased tax.

5. (SBU) Those commenting on the new government are also concerned
about the lack of movement on the education front. El Fassi did name
education as one of five priorities in a January 29 meeting with the
Moroccan press corps, but the sense remains that the country's
educational system is so broken as to require triage. In a meeting
with CG and econoff on February 1, Saad Kettani specifically
mentioned education as a big concern, particularly given the need for
skilled middle and lower managers in sectors key to Morocco's
economic development (including tourism, information technology,
agriculture and the budding automobile industry). Given past
failures, Kettani believes the solution is to develop a private
sector in education. Many Moroccans, however, hold El Fassi and the
Ministry of Education responsible for radically upgrading the system.
Either way, Moroccans in general agree that this initiative cannot
wait, as the problem requires decisive action before yet another
generation emerges from the classroom ill-prepared and unemployable.

----------------------
MOMENTUM WILL CONTINUE
----------------------

6. (SBU) Despite dissatisfaction with El Fassi's inaction and some of
his government's fiscal policies, many members of the business
community expressed strong optimism that Morocco's economic ascent
would continue. At a January 30 presentation sponsored by the
American Chamber of Commerce on the country's new arbitration law, a
lawyer who practices in Casablanca and Fez could barely contain his
excitement at the benefits the new law would bring. An executive at
an international cement company agreed. He also relayed several
accounts of positive experiences he had had recently with Moroccan
judges handling corporate disputes in court, perhaps indicating
improved awareness and understanding of dispute resolution in
general.

7. (SBU) An influx of international companies and investors has
pushed Morocco to embrace many reforms, such as the new arbitration
law, and the business community seems to feel that the momentum to
change will continue, new government aside. Kettani certainly echoed
this view, noting that the King and Morocco's leading business
association, the Confederation of Moroccan Enterprises (CGEM), were
doing solid work and cooperating with each other, the GOM and the
private sector to advance Morocco sector by sector.

8. (SBU) Comment: Over and over, Moroccans tout their country's
momentum. Their expectations for El Fassi may be low, but they are
confident that they can effect positive change via other means -
namely through private sector lobbying and initiatives, supported by
the King and the GOM's key ministers. End Comment.

GREENE

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