Cablegate: Scenesetter for Codel Lewis's November 13-

DE RUEHRB #1031/01 3011716
R 271716Z OCT 08





E.O. 12958: N/A

1. (SBU) Representative Lewis, we welcome you and
your delegation to Morocco, our oldest and closest
ally in the region. You will find a country that is
"on the move," through a range of social, economic
and political reforms aimed at making government
more responsive to citizen concerns and enabling
Moroccan citizens to benefit from the global
economy. The United States is a comprehensive
partner in these reform efforts, through consistent
engagement and advocacy of reform and programs
including USAID, the Millennium Challenge Account
(MCA), and Middle East Partnership Initiative (MEPI)
assistance, as well as the 2006 Free Trade
Agreement, our first in Africa.

Government and Politics

2. (SBU) Governance: Morocco's political scene is
stable but evolving. King Mohammed VI rules as well
as reigns. The King has made significant political
reforms, including relative freedom of expression,
advances on human rights, and enhanced legal
protections for women, particularly through bold
revisions to the family law code in 2004, which are
controversial with conservative Islamists. Partly
as a result of this reform record, public support
for the King and his reform agenda is generally

3. (SBU) Parliament and Political Reform: The
September 2007 legislative elections were certified
as free and transparent by a team of international
monitors (funded by the USG). In the elections, the
Islamist-oriented Party of Justice and Development
(PJD), socially conservative but loyal to the King,
performed below expectations but obtained the
largest number of votes and became the strongest
element in the opposition as the second largest bloc
in parliament. The elections were marred by a
record low turnout, broadly seen as a reflection of
very low public confidence in the Parliament and
political parties. To address this, for the past
few years, the USG has been funding capacity-
building programs for the Parliament and political

4. (SBU) Current Government: Prime Minister Abbas
El Fassi's government, formed after the September
2007 legislative elections, is built on a minority
coalition. There has been periodic speculation that
it might not last for the full five-year mandate of
Parliament. The new political force is Fouad Ali El
Himma, an intimate of the King, and catalyst behind
a political bloc calling itself the Movement of All
Democrats (MTD), which evolved into a new Party of
Authenticity and Modernity (PAM) by grouping several
smaller parties. In alliance with another pro-
throne party it has now constituted the largest
political bloc in Parliament. We currently see no
prospect for a significant shift in Morocco's
foreign and security policies. Neither Parliament
nor the Prime Minister has much say in these issues,
which are managed by the Throne directly with
concerned ministries.

Economics, Trade and Assistance

5. (SBU) Economics and Trade: The economy is
relatively healthy, marked by a recent trend of
growing foreign investment and remittances,
increasing tourism and accelerating growth (expected
to be above 6 percent this year), but marred by
increasing disparities in wealth. Since
implementation of our Free Trade Agreement on
January 1, 2006, bilateral commerce has more than
doubled. Moroccan exports to the U.S. have
increased 38 percent, and U.S. exports to Morocco
have increased 155 percent. Partial year figures
for 2008 indicate that both U.S. and Moroccan
exports have registered 40 percent growth over the

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2007 results. U.S. firms are increasing their
investment in Morocco, seeing new markets develop as
a result of the Free Trade Agreement. The
Commercial Service counted 48 export successes
assisting U.S. companies conclude export deals to
Morocco in Fiscal Year 2008.

6. (SBU) Moroccan government and private sector
leaders have expressed some disappointment with the
first few years of experience with the FTA, having
expected higher export growth to the U.S. Europe,
however, still accounts for the lion's share of
Morocco's international trade. The Department of
Commerce's Commercial Law Development Program and
the U.S. Trade and Development Agency conduct
capacity building and technical assistance projects
to assist Morocco to create an open and transparent
trading environment and fully develop its trading
potential. However, significant export growth to
U.S. and other markets will also depend on Morocco's
ability to capture a larger share of value added in
its export products. Targeted assistance programs
from USAID and MEPI aim at improving Morocco's
ability to produce and market its exports in key

7. (SBU) The Government of Morocco anticipates 6
percent GDP growth for 2008, but most analysts
expect growth to slip in 2009 in response to global
economic turmoil. Although Morocco's financial
system has not suffered the losses incurred by
financial institutions worldwide, economic slowdown
in Europe will reduce Moroccan foreign earnings from
exports, tourism, and remittances. Agriculture
remains a critical sector for GDP growth. In 2007,
drought and a small crop limited economic growth to
only 2.3 percent, but better, if still below average
rain and crops this year should allow higher growth.
Rising food prices became a principal domestic issue
for Morocco early in 2007, sparking sporadic
protests. The Government has successfully managed
this issue and will continue to do so by subsidizing
basic goods, including petroleum and food.
Moroccans remember the food price riots of the 80's
and 90's that threatened the stability of the

8. (SBU) U.S. Assistance: We are focusing our
assistance to Morocco on four priorities:
counterterrorism, economic growth, democracy and
governance, and supporting quality education. U.S.
assistance includes projects under the Millennium
Challenge Corporation, USAID, and the Middle East
Partnership Initiative.

9. (U) The Millennium Challenge Corporation signed
a five-year, USD 697.5 million Millennium Challenge
Account Compact with Morocco in 2007 to reduce
poverty and increase economic growth. The five-year
clock started ticking on September 15, 2008 with the
Entry into Force of the Compact. The MCA will
support five major projects selected for their
potential to increase productivity and improve
employment in high potential sectors of Morocco's
economy. The MCA projects include:

-- Fruit Tree Productivity Project, intended to
shift small farmers away from high-water use, low-
value cereal crops to low-water use, high-value and
drought-resistant commercial tree crops.

-- Small Scale Fisheries Project, modernizing the
means of catching, storing, and marketing fish to
both local and export markets. This project will
include establishing Marine Protected Areas and
increased monitoring to ensure sustainable
management of stocks.

-- Artisan and Fez Medina Project, an integrated
project combining reconstruction of the historic Fez
Medina and training for artisans in production
techniques and business practices to respond to
tourist and export demand.

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-- Financial Services Project, to increase the reach
and availability of financial services for micro-
enterprises in Morocco through investment in
financial institutions and support to improve
efficiency and transparency in the financial sector.

-- Enterprise Support Project, partnering with
existing Moroccan Government initiatives to reduce
unemployment among young graduates, and encourage a
more entrepreneurial culture.

10. (U) USAID continues provide assistance to
Government of Morocco agencies and the private
sector to enable them to take full advantage and
address the challenges of the U.S.-Morocco Free
Trade Agreement. Examples of achievements in the
past five years include:

-- USAID assistance has helped to reduce the number
of days needed to register a business from 60 to 11.

-- USAID developed an electronic tool to facilitate
administrative procedures for investment; several
ministries expressed strong interest to adapt it to
other sectors, such as land development.

-- USAID supported the certification of more than
20,000 hectares of rosemary according to
international export standards, thereby doubling the
value of the crop.

-- USAID supported the participation in an apparel
trade show by 10 Moroccan companies leading to
orders totaling over USD 11 million.

-- Over USD 2 million in sales of agriculture
products were generated by direct support to
farmers, cooperatives and agribusinesses, which
invested over USD 6 million in improved production

Over the next five years, USAID support to economic
growth will focus on policy reforms to further
improvement of the business environment in Morocco.
USAID also expects to continue support to strengthen
agricultural policy, to complement work funded by
the Millennium Challenge Corporation, in addition to
USAID reform assistance carried out under the
Education and Democracy and Governance objectives.

11. (U) Morocco benefits from several initiatives
carried out under the Middle East Partnership
Initiative, including country-specific projects and
inclusion in regional efforts. Some recent and
ongoing programs include breast cancer awareness
projects, support for civil society and youth
organizations, developing freedom of expression via
the Internet, supporting development of democratic
leaders, technical assistance to meet environmental
obligations under the FTA, political party training
and capacity building, and the Financial Services
Volunteer Corps. In 2007, MEPI funded the first-
ever international observation of the Moroccan
parliamentary elections. Other USG-funded projects
support anti-corruption efforts (with the American
Bar Association) and prison reform to undermine the
foundations of extremism.

Security and Terrorism

12. (SBU) Morocco suffered spates of terrorist
violence in 2003 and 2007, stemming from numerous
small "grassroots" Salafi Jihadist groups. The
attacks in 2007, which appear to have been, at best,
poorly coordinated events, contrast sharply with
more elaborate plots in 2006 that were thwarted by
the vigilance of Moroccan authorities. Throughout
2007 and 2008, the Government of Morocco continued
to dismantle terrorist cells within the Kingdom.
Morocco faces external terrorist threats including
Al Qaeda in the Lands of the Islamic Maghreb (AQIM),
Pakistan-based Al Qaeda, and jihad veterans

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returning from Iraq and Afghanistan.

13. (SBU) A key to Morocco's counterterrorism (CT)
strategy has been a comprehensive approach which not
only emphasizes neutralizing existing terrorist
threats through traditional law enforcement and
security measures, but also engages in preventative
measures to discourage terrorist recruitment through
political reform and policy measures and by taking
advantage of the Islamic "high ground" through the
King, as religious leader, and the religious
establishment. As a religious and political leader
for all Moroccans, King Mohammed VI has led this
effort by unambiguously condemning terrorism and
those who espouse or conduct terrorism.

14. (SBU) Morocco continues to implement internal
reforms aimed at addressing the socio-economic
factors that contribute to the emergence of
extremism. The National Initiative for Human
Development, launched by King Mohammed VI in 2005,
is a USD 1.2 billion program designed to generate
employment, combat poverty, and improve
infrastructure, with a special focus on rural areas.
The Embassy is chipping in with programs targeted at
vulnerable youth and we have a proposal for FY 09
funding to sponsor prison reform and
deradicalization. The Government of Morocco also
emphasized adherence to human rights standards in
the pursuit of terrorist suspects and increased law
enforcement and justice transparency as part of its
counterterrorism program. Its actions have
increasingly reflected this rhetoric and
demonstrated unprecedented frankness in presenting
to the public candid assessments of the terrorism
threat. The USG supports a wide range of
counterterrorism and counterextremism programs
involving almost every mission element.

Regional and International Issues

15. (SBU) Border Troubles with Algeria: The
Moroccan relationship with Algeria remains tense,
and the border between the two countries remains
closed. Although possessing common languages and
some ethno-cultural roots, the two countries have
had sharply divergent historical experiences.
Territorial tensions began shortly after Algerian
independence, when a dispute over the demarcation of
the border between the two countries in 1963 led to
a brief period of hostilities known as the Desert
(or Sand) War. For the last 30 years, a major bone
of contention has been the Western Sahara issue and
Algerian support for the POLISARIO Front and its
self-proclaimed Sahrawi Arab Democratic Republic.
The recent Moroccan purchase of F-16s was partially
motivated by the sense of threat from a previous
Algerian purchase of advanced aircraft from Russia.
In March, Morocco publicly proposed opening the
border between the two countries, which was quickly
rebuffed by the Government of Algeria. Morocco has
made several proposals to upgrade bilateral
dialogue, to which there has not yet been a public
response from Algeria.

16. (SBU) Western Sahara: Moroccan foreign policy
is dominated by defending and seeking political
recognition of its sovereignty claims over Western
Sahara. The issue remains the most visible source
of tension with Algeria, which has historically
supported the POLISARIO's quest for independence by
way of a UN-sponsored referendum. The issue
provoked Morocco to leave the African Union and
helped block regional integration through the Arab
Maghreb Union. In 2007, Morocco proposed a new
autonomy plan for Western Sahara, and a series of
UN-sponsored negotiations with the POLISARIO began
in Manhasset, New York. This proposal, deemed
"serious and credible" by the USG, would provide
Sahrawis -- a distinct tribal and linguistic
population whose traditional area of habitation
includes Western Sahara -- autonomy in administering

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local affairs while respecting Moroccan sovereignty
over the territory. Morocco greatly appreciated the
U.S. announcement in early 2008 that we considered
the independence option for the territory, "not
realistic." The USG favors instead an agreed
negotiated political settlement between Morocco and
the POLISARIO. The UN Secretary General will
shortly appoint a new representative to continue the
Manhasset process, and we strongly urge a fifth
round of negotiations to be held soon to maintain
the momentum of this process.


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