VZCZCXYZ0000
PP RUEHWEB

DE RUEHRB #0389/01 1261218
ZNR UUUUU ZZH
P 061218Z MAY 09
FM AMEMBASSY RABAT
TO RUEHC/SECSTATE WASHDC PRIORITY 0083
INFO RUCNMGH/MAGHREB COLLECTIVE
RUEHAD/AMEMBASSY ABU DHABI 0437
RUEHTV/AMEMBASSY TEL AVIV 3575
RUEHCL/AMCONSUL CASABLANCA 4583

UNCLAS RABAT 000389 
 
SIPDIS 
SENSITIVE 
 
STATE FOR EEB/CBA, H, NEA/RA AND NEA/MAG 
 
E.O. 12958: N/A 
TAGS: ECON EAGR BEXP BTIO ETRD ENRGMO PREL MO
SUBJECT: MOROCCO: VIRGINIA GOVERNOR'S VISIT SUCCEEDS IN 
GENERATING BUSINESS IDEAS 
 
REF: RABAT 0386 
 
¶1.  (SBU) Summary:  Virginia Governor Tim Kaine explored 
opportunities for deepening the economic relationship between 
Virginia and Morocco with key Moroccan officials, focusing on 
the already important agricultural trade and port 
cooperation.  On April 23, Prime Minister El Fassi said 
Morocco was a country "on the move."  Minister-Delegate for 
Economic and General Affairs Baraka and Industry Minister 
Chami separately described Morocco as eager to attract 
foreign investment and trade but also ready to learn.  On 
April 24, Foreign Minister Fassi Fihri highlighted the 
bilateral Free Trade Agreement (FTA) and proposed to use the 
FTA as a means to expand cooperation in the North Africa 
region by opening up to other Maghreb states.  This message 
focuses on economic issues; reftel covered political issues. 
End Summary. 
 
------------------------------ 
Pitching Virginia for Business 
------------------------------ 
 
¶2.  (SBU) On April 23, Virginia Governor Tim Kaine, 
accompanied by Charge and D/PolCouns, had successive meetings 
with Prime Minister Abbas El Fassi, Minister-Delegate for 
Economic and General Affairs Nizar Baraka, and Minister of 
Industry, Commerce, and New Technologies Ahmed Reda Chami to 
discuss deepening the already strong trading relationship 
between the Commonwealth and Morocco.  Kaine noted that since 
implementation of the United States-Morocco Free Trade 
Agreement (FTA) in 2006, Virginian exports to Morocco had 
doubled, and that Morocco now ranks third as a destination 
for Virginia's agricultural products.  Kaine emphasized that 
part of the reason Virginia was a good place for investment 
was because of the diversity of the state's economy and its 
strengths in port facilities, agriculture and a burgeoning 
high technology sector.  The Port of Virginia is the second 
most active on the East Coast of the U.S.; Virginia's USD 8 
billion agricultural and forestry sector contributes 
increasingly to Moroccan imports (particularly soy beans); 
and Virginia's high technology sector is expanding from a 
traditional base in telecommunications and defense to 
biotechnology and renewable energy. 
 
¶3.  (SBU) The Governor also stressed the importance of good 
governance to the business climate, noting Virginia had 
implemented a web-based performance feedback mechanism for 
citizens to provide continuous evaluation of the State 
Government.  He said that this system helped his 
administration to focus budget cuts in areas least sensitive 
to constituent concerns, and that the public response to this 
program had been overwhelmingly positive. 
 
---------------------------------------- 
Prime Minister: "Morocco is on the Move" 
---------------------------------------- 
 
¶4.  (SBU) Prime Minister Abbas El Fassi used his time with 
Governor Kaine to showcase Morocco as America,s friend, a 
progressive and moderate Arab state, and a country on the 
move economically.  El Fassi praised the long-standing 
history of positive Moroccan-U.S. relations and a modern 
manifestation of that relationship:  the Millennium Challenge 
Account. 
 
¶5.  (SBU) El Fassi pointed out several positive trends in the 
country despite the world economic downturn's negative impact 
on Moroccan exports, particularly textiles and automobiles, 
and remittance income from Europe.  He said the unemployment 
rate had dropped from 10 to 9 percent last year; numbers of 
impoverished people were declining; and the Government was 
rolling out a program of free medical care for the 8 million 
poorest Moroccans.  The numbers of tourists visiting Morocco 
had risen from 3 to 8 million in the last three years, and 
added that record rainfall over the last year had produced 
high crop yields, which would permit Morocco,s GDP to grow 
despite the world economic crisis. 
 
--------------------------------- 
Business Opportunities in Morocco 
--------------------------------- 
 
¶6.  (SBU) Ministers Baraka and Chami highlighted Morocco,s 
own effort to improve both the country's infrastructure and 
its business environment.  Baraka described a "golden 
triangle" in which Arabian Gulf investment finances Moroccan 
 
companies that take advantage of Morocco's lower costs and 
privileged access to export finished goods to Europe.  Baraka 
said that Morocco's economy is diversifying and that the 
world financial crisis had highlighted the need for even 
greater diversification.  He said that Morocco has already 
invested in renewable energy technologies, e.g., wind and 
solar, in the hopes of taking advantage of increased energy 
reduction/conservation goals in Europe.  Baraka underscored 
that under King Mohammed VI, Morocco had implemented economic 
reforms much faster than in the past.  He conceded, however, 
that Morocco could still learn a lot from Virginia in 
"cutting red tape" and in improved governance.  Baraka was 
particularly interested in Virginia's internet-based feedback 
mechanism. 
 
¶7.  (SBU) Chami said that the combination of Moroccan 
reforms, e.g., national reconciliation, the family code, and 
improved human rights, and macro-economic discipline (budget 
surpluses in the last two years, low inflation, and steady 
GDP growth -- averaging 5.2 percent in recent years) had 
afforded Morocco the opportunity to build increased capacity 
in such areas as automobiles, electronics, textiles, 
fisheries and artisanal handicrafts.  It has also led to a 
burgeoning business in "off-shoring."  Chami underscored that 
Morocco's "off-shoring" model provides businesses with access 
to the 1.3-billion-person market of the European Union 
because of Morocco's "advanced status" with the bloc. 
 
¶8.  (SBU) Morocco's improved investment climate, Chami said, 
has created a virtuous cycle in which Morocco is even seeking 
to move up the value-chain, for example, in phosphates, the 
country's largest export, to export not just the raw 
material, but phosphate derivatives like fertilizer as well. 
The country is also implementing its "Green Morocco" 
strategy, which he said had been inspired by the 
U.S.-sponsored Millennium Challenge Account, through which 
Morocco was investing (7 billion dirham -- approximately USD 
850 million last year alone) in irrigation projects and "farm 
consolidation," i.e., encouraging the replacement of many 
small farms with larger more efficient ones.  Morocco is also 
investing in niche technology areas in hopes of developing 
patents that can then be used generate domestic and 
international revenue streams.  Four of these areas include 
advanced nanotechnology, microelectronics, and 
biotechnologies in both plants and genetic technology areas. 
 
¶9.  (SBU) During a separate discussion on April 24 focused 
mostly on political issues (reftel), Foreign Minister Fassi 
Fihri praised the U.S.-Morocco FTA, without any of the 
familiar complaints about how this has mostly benefited the 
United States.  Fassi Fihri asked Governor Kaine to carry 
back to Washington the proposal that the FTA could be a 
useful mechanism to expand cooperation and economic 
integration in the North Africa/Maghreb region since the FTA 
already contained a provision allowing for re-export of 
goods, if there were a certain degree of Moroccan 
value-added.  He sought USG views on promoting this 
possibility with other members of the Arab Maghreb Union. 
Such an initiative could provide a possible practical 
incentive to break the comprehensive political and economic 
logjam with arch-rival Algeria. 
 
------- 
Comment 
------- 
 
¶10.  (SBU) Governor Kaine's visit highlighted the depth of 
the Virginia-Morocco economic relationship, and played a 
useful role in reinforcing the messages that we convey on 
investment and economic reform.  The Virginia Port Authority 
is expanding its relationship with its Moroccan counterpart, 
Tangier-Med, which itself is aggressively moving into 
Sub-Saharan Africa.  This pact is a strong link for 
agricultural commerce and the visit undoubtedly sowed the 
seeds for future business opportunities between Virginia and 
Morocco.  End Comment. 
 
 
***************************************** 
Visit Embassy Rabat's Classified Website; 
http://www.intelink.sgov.gov/wiki/Portal:Moro cco 
***************************************** 
 
Jackson