VZCZCXRO7217
RR RUEHBC RUEHDE RUEHKUK RUEHROV
DE RUEHCL #0198/01 2841714
ZNR UUUUU ZZH
R 111714Z OCT 07
FM AMCONSUL CASABLANCA
TO RUEHC/SECSTATE WASHDC 7856
INFO RUEHRB/AMEMBASSY RABAT 8103
RUEHLO/AMEMBASSY LONDON 0316
RUEHNK/AMEMBASSY NOUAKCHOTT 2295
RUEHFR/AMEMBASSY PARIS 0603
RUEHEE/ARAB LEAGUE COLLECTIVE

UNCLAS SECTION 01 OF 02 CASABLANCA 000198 
 
SIPDIS 
 
SENSITIVE 
SIPDIS 
 
STATE FOR NEA/MAG AND NEA/PI 
 
E.O. 12958: N/A 
TAGS: ECON EFIN KDEM MO
SUBJECT: CASABLANCANS' ANGER OVER PRICE INCREASES HAS DISSIPATED, NOT 
DISAPPEARED 
 
REF: A. 06 CASABLANCA 1233  B. RABAT 1542  C. RABAT 1525 
 
¶1. (SBU) Summary:  Anger over price increases in Morocco is not a new 
phenomenon and can be explained in part by factors such as Ramadan 
speculation and lack of government planning.  At the same time, many 
Casablancans contend that the problem is worse than in years past. 
Not only did price increases fall on the heels of disappointing 
parliamentary elections, but they were steeper as a result of high 
world commodity prices and the need for more imports due to Morocco's 
poor agricultural performance.  Many Moroccans now wonder how the GOM 
will sustain the subsidies it offers to maintain both price and 
social stability.  End Summary. 
 
----------------------------------- 
PRICE INCREASES - AN ON-GOING ISSUE 
----------------------------------- 
 
¶2. (U) Recent discontent over price increases in Morocco is hardly a 
new phenomenon.  Demonstrations against cost of living increases took 
place last year during Ramadan as they did this year, with protesters 
railing against the high price of goods such as bread, sugar and 
cooking oil (ref A).  Many Casablancans blame typical Ramadan 
speculation for driving up basic commodity prices.  For example, 
according to a teacher, speculators buy tomatoes before Ramadan at 12 
to 25 cents per kilo, then sell them for between USD 1.25 and 1.50 
during the month-long holiday, when a tomato-based soup called harira 
is a staple of every Ftour. 
 
¶3. (SBU) Others fault the government for the situation, saying it 
should plan better.  A professional from Casablanca also used 
tomatoes as an example, charging that the GOM should stop exporting 
so much of the supply to avoid the shortages that push prices upward 
during Ramadan.  Expressing a similar complaint, another individual 
pointed out that millers knew last spring that they would have to 
import wheat, and therefore raise prices, to meet demand.  The GOM 
saw the problem coming and knew that it would peak at Ramadan, but 
did nothing to head off a crisis in advance. 
 
--------------------------- 
WHY IS THIS YEAR DIFFERENT? 
--------------------------- 
 
¶4. (SBU) While anger over price increases has been an on-going issue 
for years, some contend that the problem is worse this year.  The 
violent turn that a September 23 demonstration in Sefrou took was a 
major indication that tensions were running high (ref B).  Some 
attribute the heightened sense of anger to this year's unique local 
context.  Price increases came not just on the eve of Ramadan, but 
also after parliamentary elections in which low voter turn-out 
highlighted the frustration many Moroccans feel with their country's 
democratic efforts. 
 
¶5. (SBU) Others cite the global context.  World prices of commodities 
such as milk and wheat have gone up at the same time that Morocco's 
poor agricultural output has necessitated increased imports of these 
goods, making them more expensive.  Although the Central Bank reports 
that inflation is actually down, projected at 2.1 percent in 2007 
versus 3.3 percent in 2006, citizens have the perception that prices 
have risen more dramatically this year than last. 
 
----------------------------------- 
HOW WILL THE GOM SUSTAIN SUBSIDIES? 
----------------------------------- 
 
¶6. (SBU) The GOM's decision to retract bread price increases, 
subsidize flour, and suspend duties on wholesale market goods during 
Ramadan has made Moroccans in Casablanca question how it can sustain 
this level of financial support.  Clearly, the GOM will have to find 
alternate revenue sources.  One Casablancan suggested the GOM tax 
items that would not spark widespread protest, such as cigarettes or 
alcohol.  Another advised being savvier about timing price increases. 
 If the GOM raised milk prices in three months rather than during 
Ramadan, for example, consumers may not notice as much.  Still 
another suggestion was to replace general subsidies with those aimed 
specifically at the poor.  Regardless of how the GOM pays for 
promised subsidies, many lament the need for them.  Not only would 
they rather see funds used for initiatives such as job creation and 
tourism, but they prefer a liberalized economy. 
 
¶7. (SBU) Comment:  Although anger over price increases has dissipated 
since the GOM took action to return prices to normal in late 
September, many Casablancans believe the problem remains.  One 
individual anticipated that bread subsidies would last a long time to 
maintain both price and social stability.  Another projected that the 
violence in Sefrou could happen again; if it does, he said, "You 
 
CASABLANCA 00000198  002 OF 002 
 
 
won't stop it easily."  While the GOM has quelled discontent for the 
moment, from a Casablanca perspective, the new government will be 
challenged to figure out how to do so in the future.  End Comment. 
 
GREENE