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Cablegate: Moroccan Pro Reform Stirs Opposition

VZCZCXRO3713
PP RUEHBC RUEHDE RUEHKUK RUEHROV
DE RUEHRB #2248/01 3471005
ZNR UUUUU ZZH
P 131005Z DEC 06
FM AMEMBASSY RABAT
TO RUEHC/SECSTATE WASHDC PRIORITY 5361
INFO RUEHEE/ARAB LEAGUE COLLECTIVE
RUEHLO/AMEMBASSY LONDON 3156
RUEHNK/AMEMBASSY NOUAKCHOTT 3367
RUEHFR/AMEMBASSY PARIS 4456
RUEHCL/AMCONSUL CASABLANCA 2446
RUCPDOC/DEPT OF COMMERCE WASHDC
RUEHRC/DEPT OF AGRICULTURE WASHDC
RUEHC/DEPT OF LABOR WASHDC

UNCLAS SECTION 01 OF 02 RABAT 002248

SIPDIS

SENSITIVE
SIPDIS

DEPT FOR EB/TRA/OTP AND NEA/MAG

E.O. 12958 N/A
TAGS: ECON ETRD EWWT MO
SUBJECT: MOROCCAN PRO REFORM STIRS OPPOSITION

1. (U) Summary: A new Moroccan port reform law went into effect
December 5, amidst strong opposition from stevedores (longshoremen).
The new law, designed to increase port efficiency and
competitiveness, divides the present Ports Authority (ODEP) into two
entities: a National Ports Agency (ANP), responsible for regulatory
control and port authority; and a Port Management Company (SODEP), a
new entity responsible for commercial services and port handling.
Longshoremen remain opposed to the law over fears of job security,
and have threatened to cripple port operations through a nationwide
strike. End Summary.

--------------
Reform Overdue
--------------

2. (U) Commercially, Morocco is an island, with over 95 percent of
its foreign trade coming through its 12 principal seaports. Stimulus
for the new law grew from a realization that increased Moroccan
economic activity could only be achieved through increased throughput
at its ports, which suffered from inefficiencies and non-competitive
pricing in relation to other Mediterranean ports. As Morocco's
largest and most problematic port, Casablanca remains the focus of
attention. Mohammed Abdeljalil, former Director General of ODEP and
new Director of SODEP, explained to Econoff that reform measures
would first be introduced at Casablanca, refined, and then
implemented nationwide. Approved a year before its implementation,
the new law ends ODEP's monopolistic authority, separates commercial
services from port operations, and establishes the framework for
commercial services competition.

3. (SBU) Before the new law's implementation, Moroccan ports operated
under a unique system of dual cargo handling. The unloading of
vessels was performed by stevedores, who were employed by one of five
ODEP approved stevedore companies. Once unloaded, a different set of
dock workers, under the direct employment of ODEP, performed cargo
handling and transport from the docks to storage facilities. This
duality and division of labor decreased efficiency, left liability
unclear, and increased costs. Abdelaziz Mantrach, head of Morocco's
association of ship agents and brokers, and a strong reform advocate,
told Econoff that the issue of liability created havoc among
insurance agents and drove up insurance rates, while the inefficiency
and corruption involved in dock operations drove up cargo handling
costs. In the spring of 2006, the average handling cost for a
standard container in Casablanca was over USD 220 versus USD 150 for
most other Mediterranean ports. Mantrach added that shippers also
suffered from the amount of time vessels spent in Moroccan ports,
noting that the time required for loading and unloading in Casablanca
was significantly longer than similar European ports.

4. (U) Elimination of the two-track system is a principal aspect of
the new law, as it removes the distinction between on-board and
dock-side cargo handling. The law also creates a private commercial
service company (Consoport) to compete with SODEP. Both SODEP and
Consoport will employ dock workers who will perform the entire cargo
handling process, from ship to warehouse.

------------------------------
Consoport and Stevedores Upset
------------------------------

5. (U) While almost all sides agree that reform is overdue, efforts
to divide human and physical resources among the new entities has met
opposition, primarily from the stevedores. Under the government's
plan, all 1100 stevedores at Casablanca were transferred to
Consoport, while the former ODEP dock workers merely transferred to
the new State commercial operator, SODEP. Mohammed Karia, president
of both Morocco's second largest shipping company and the stevedores'
association in Casablanca, characterized the apportionment between
Consoport and SODEP as completely unfair. "SODEP received all the
deep water docks," he said, and so will have a virtual monopoly on
handling modern container vessels, which require such facilities.
The division, he argued, will reduce competition, and leaves
Consoport with a work force that is more than three times what it
requires.

6. (U) The Stevedore labor union (UMT) has lobbied hard against the
new law since its inception. In September, Stevedores staged an
all-day strike, and union leaders continued to engage in intensive
negotiations with the Ministry of Transport. Aware of the
significance of both the shift of the Stevedores to Consoport and the
allocation of dock space, union leaders say the new plan will mean
the loss of over 700 jobs at Casablanca. To quell fears and prevent

RABAT 00002248 002 OF 002


a strike, Minister Ghellab pledged last week to guarantee the
salaries of all affected stevedores. Left unclear was the duration
of the guarantee.

7. (U) Karia indicated that as a result of the guarantee, he did not
think stevedores would strike before the end of the year. He noted,
however, that the International Transport Workers' Federation has
pledged to support its Moroccan affiliate in any subsequent work
stoppage. On December 7, stevedores were at work as normal in
Casablanca, with ships lined-up on the horizon awaiting their turn.
Karia explained that they were all being off-loaded by the
stevedores, who were preventing vessel access by SODEP dock workers.

8. (SBU) Comment: Port reform in Morocco is long overdue, and
government officials understand that improving transportation
infrastructure and operations is critical to increasing the country's
competitiveness and attracting foreign investment. Transport
Minister Ghellab has displayed courage in tackling the issue,
something his predecessors decided was too risky. His guarantee to
honor the salaries of the stevedores appears to have bought time and
quelled immediate tensions, but a protracted strike remains a
possibility that could seriously damage Morocco's economy. While
many analysts view the law's implementation to date as a tactical
victory for Ghellab, they also acknowledge that the final outcome is
still in doubt, with the next major battle coming when the GOM
enforces vessel access to SODEP dock workers. End Comment.

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