VZCZCXRO2534
RR RUEHLMC
DE RUEHRB #0225/01 0411043
ZNR UUUUU ZZH
R 101043Z FEB 06
FM AMEMBASSY RABAT
TO RUEHC/SECSTATE WASHDC 2734
RUEHLMC/MILLENNIUM CHALLENGE CORPORATION WASHINGTON DC
INFO RUEHCL/AMCONSUL CASABLANCA 1189

UNCLAS SECTION 01 OF 03 RABAT 000225 
 
SIPDIS 
 
SIPDIS 
 
SENSITIVE 
 
STATE FOR NEA/PI AND NEA/MAG 
 
E.O. 12958 
TAGS: EAGR EAID ECON SOCI KMCA MO
SUBJECT: NEW CEO OF MILLENNIUM CHALLENGE CORPORATION VISITS 
MOROCCO 
 
REF: 05 RABAT 02151 
 
SENSITIVE BUT UNCLASSIFIED - PROTECT ACCORDINGLY 
 
¶1.  (U) Summary.  New Millennium Challenge Corporation (MCC) 
CEO, Ambassador John Danilovich, visited Morocco January 24- 
27 to review and discuss the country's progress in preparing 
its compact proposal to use MCC funds.  Danilovich and his 
staff met with Prime Minister Driss Jettou, the GOM's 
Millennium Challenge Account (MCA) team, numerous 
ministries, civil society organizations, visited several 
rural development organizations, were interviewed by a local 
business paper, and held a press conference.  The MCC team 
reinforced upon the GOM the importance of a broad 
consultative process and the need to focus on economic 
growth in developing a successful compact proposal.  They 
also articulated the necessity of conducting thorough market 
analysis to ensure the projected results of economic growth 
programs.  After initial resistance to these oft repeated 
goals, the GOM showed increased acceptance of MCC's program 
requirements and reached a compromise agreement.  The GOM 
promised a new compact proposal within 60 days that meets 
MCC's requirements.  End summary. 
 
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OPENING STATEMENTS 
------------------ 
 
¶2.  (U) The trip to Morocco, and later Benin, was 
Danilovich's first official travel overseas in his new 
capacity.  Traveling with him were his Chief of Staff, Matt 
McLean; Senior Country Director, Michael Grossman; Associate 
Country Director, Magda Ismail; Press Officer, Davy Kong; 
and Executive Assistant, Christian Vanderbrouk.  After an 
initial briefing with the Embassy's country team, 
Ambassadors Riley and Danilovich met privately with Jettou 
and the leaders of the GOM's MCA team, Economic Advisor, 
Haya Bouhia; and Director of the Agency for the Development 
of the North, Driss Benhima.  An expanded meeting followed 
which included the entire MCC team, the GOM's MCA team, 
numerous other GOM officials, as well as television and 
print reporters and cameras. 
 
¶3.  (SBU) The expanded meeting started with the Moroccans 
emphasizing important links with their proposed compact 
proposal to the King's National Initiative for Human 
Development (INDH) and the three poorest rural regions of 
Morocco.  Jettou suggested that in his opinion, all INDH 
projects should be eligible for inclusion in the compact 
proposal, but that the GOM would let the MCC team choose 
which INDH projects it wanted to support.  He also offered 
to come to the U.S. to help finalize the compact 
negotiations.  Benhima noted that the INDH remains a work in 
progress, to which Grossman responded that MCC and the GOM 
should work together to complete the parts expected to 
become part of their compact. 
 
¶4.  (SBU) Grossman continued that while the GOM was on the 
right track, MCC would like to see the consultative process 
expanded even further.  While it was evident that there was 
consultation in the three regions targeted to receive aid in 
the current proposal, MCC would like to see the consultative 
process implemented nationally, so that no region or group 
was excluded before the process began.  Grossman added that 
more market analysis was needed for portions of the current 
proposal, such as rural tourism, to determine that the GOM's 
anticipated demand for services was accurate.  He concluded 
by reminding the GOM that since the MCC must be held 
accountable to American taxpayers, it cannot just trust the 
GOM's claims that certain projects are worthwhile; 
supporting analysis was also required. 
 
¶5. (SBU) The Prime Minister suggested that "as we complete 
one part of the proposal and agree on it, that we set it 
aside, as we did with the U.S.-Morocco Free Trade 
Agreement."  He expressed that he was bothered by the fact 
that even after many months of discussion, all aspects of 
the MCA program were on the table.  Grossman then encouraged 
the GOM to keep lines of communication open. 
 
----------------------- 
ENGAGING THE MINISTRIES 
----------------------- 
 
¶6.  (SBU) On January 25, the MCC team, Ambassador Riley and 
econoff held a series of meetings with the Ministries of 
Finance, Interior, Agriculture, Land Management, and the 
 
RABAT 00000225  002 OF 003 
 
 
Agency for the Development of the North.  The MCC team 
reasserted that a broader consultative was necessary and 
Ambassador Danilovich stressed that the next two days would 
be very important to gaining an understanding of each other. 
 
¶7.  (SBU) After officials from the Ministry of Interior 
presented an overview of the INDH and a list of priority 
sectors for assistance, the MCC team impressed upon them 
some of their concerns.  Benhima admitted that the GOM does 
not yet have a portfolio of detailed projects it would like 
to undertake.  In addition, some of the projects exceeded 
the MCC's five-year time limit for completion.  Once again, 
Grossman reiterated MCC's need for the GOM to demonstrate 
the ideas of economic growth, a consultative process, 
measurability of results, and the proposed projects need to 
be completed in a five year time frame. 
 
¶8.  (SBU) Minister of Agriculture Mohamed Laenser offered 
the MCC team many growth projections and plans for raising 
output.  However, McLean questioned the validity of supply 
side projections without sufficient demand side analysis. 
When he asked who would buy this increased output of 
agricultural products, GOM officials did not provide a clear 
response.  McLean added that the GOM's ideas might in 
reality be very good but further analysis was necessary to 
validate them.  He added that reforming laws that affect 
farmers might have a greater impact on the agricultural 
sector than focusing on increasing production.  He suggested 
that changes in the areas of land ownership, property 
rights, subsidies and water use might be more relevant to 
help farmers; the GOM's compact proposal might require such 
changes to have the desired effect.  Ambassador Danilovich 
strongly supported the idea of legislative changes to help 
farmers. 
 
¶9.  (SBU) Ambassador Riley shared his experiences of seeing 
numerous plots of land in Morocco that were too small to be 
economically viable to farm but existing laws made selling 
them for consolidation  virtually impossible.  He continued 
that most farmers in Morocco are 60 to 70 years-old because 
young people are moving to the cities. Grossman added that 
perhaps MCC could be used to help make the needed changes by 
showing the GOM what it needed to make its proposed ideas 
succeed.  The Minister acknowledged that the GOM had 
undertaken limited land reform in the north of the country 
and a law was being drafted regarding collective lands.  He 
added that people needed to be shown the profit in change. 
The MCC team clearly made its point to the Minister that the 
GOM has other issues to consider in the field of 
agriculture. 
 
¶10.  (SBU) The Agency for the Development of the North 
presented ideas for rural tourism and economic development 
that did not pass MCC's scrutiny.  Its $153 million job 
creation project revealed a cost per job created of nearly 
$130,000 in a country with an annual per capita income of 
about $1,800. However, the Secretariat of Water followed 
with a very sound presentation on water usage and improving 
Morocco's water shortage problem.  McLean later commented 
that they had done real analysis and had developed real 
solutions.  The MCC team concluded the day by meeting with 
19 members of civil society organizations to hear their 
views on the situation in Morocco.  Some of them reported 
having been consulted by the GOM about what programs the 
INDH should pursue but were not aware if the same thing had 
happened for the MCA program.  They were uniform in their 
support for the INDH and what it meant to Morocco. 
 
------------------ 
LOCAL ASSOCIATIONS 
------------------ 
 
¶11. (U) On January 26, the MCC team and Ambassador Riley 
were joined by former U.S. Ambassador to Morocco Frederick 
Vreeland as they toured local development associations in El 
Haouz province.  The group visited several rural communities 
where local associations were working on infrastructure, 
farming, educational and numerous other types of projects to 
better their lot in life.  They were assisted with technical 
assistance from their local or regional governments and 
sometimes by USAID, Catholic Relief Services, or other donor 
organizations, but most of the work was performed by the 
local people.  Most of the projects were related to 
agriculture and included: olive oil production, bee keeping, 
introducing new breeds of livestock that were better suited 
for local conditions, crop diversification, cheese making, 
milk pasteurization, and many more.  Other programs included 
 
RABAT 00000225  003 OF 003 
 
 
drinking water and irrigation systems, educational programs, 
vocational training, and reforestation.  El Haouz had been 
ranked the poorest of 69 communities nationally just two 
years before.  However, it was said that, largely due to the 
work of the associations, it had risen to 53rd place.  The 
GOM hopes to harness this type of community spirit to make 
its plans for the MCA program a success. 
 
----------- 
THE OUTCOME 
----------- 
 
¶12.  (SBU) The tour of Morocco concluded on January 27 with 
a successful press conference in Casablanca and an interview 
with the country's leading economic journal, L'Economiste. 
Local press gave wide and favorable coverage of the MCC 
visit.  By the end of the trip, MCC and the Moroccan MCA 
team had reached a better understanding of the requirements 
on both sides for a viable proposal.  A revised compact 
proposal is expected within 60 days. 
 
RILEY