Keep Us Strong WikiLeaks logo

Currently released so far... 251287 / 251,287

Articles

Browse latest releases

Browse by creation date

Browse by origin

A B C D F G H I J K L M N O P Q R S T U V W Y Z

Browse by tag

A B C D E F G H I J K L M N O P Q R S T U V W X Y Z

Browse by classification

Community resources

courage is contagious

Viewing cable 06CASABLANCA367, TAKING THE TEMPERATURE OF THE CASABLANCA BUSINESS

If you are new to these pages, please read an introduction on the structure of a cable as well as how to discuss them with others. See also the FAQs
Reference ID Created Released Classification Origin
06CASABLANCA367 2006-04-07 15:43 2011-08-30 01:44 CONFIDENTIAL Consulate Casablanca
VZCZCXYZ0030
PP RUEHWEB

DE RUEHCL #0367/01 0971543
ZNY CCCCC ZZH
P 071543Z APR 06
FM AMCONSUL CASABLANCA
TO RUEHC/SECSTATE WASHDC PRIORITY 6468
INFO RUEHAS/AMEMBASSY ALGIERS 2787
RUEHEG/AMEMBASSY CAIRO 0613
RUEHLO/AMEMBASSY LONDON 0202
RUEHMD/AMEMBASSY MADRID 3646
RUEHFR/AMEMBASSY PARIS 0471
RUEHRB/AMEMBASSY RABAT 7517
RUEHRO/AMEMBASSY ROME 0263
RUEHTU/AMEMBASSY TUNIS 1914
C O N F I D E N T I A L CASABLANCA 000367 
 
SIPDIS 
 
SIPDIS 
 
STATE FOR NEA/MAG AND NEA/PI 
 
E.O. 12958: DECL: 04/01/2017 
TAGS: ECON EFIN EIND ENIV PGOV MO
SUBJECT: TAKING THE TEMPERATURE OF THE CASABLANCA BUSINESS 
COMMUNITY 
 
REF: A. CASABLANCA 00142 
     B. CASABLANCA 00145 
     C. 05 CASABLANCA 01220 
     D. 05 RABAT 2005 01159 
 
Classified By: 
Principal Officer Doulglas Greene for reasons 1.4 (b) and (d) 
 
1.  (C)  SUMMARY:  Conversations with members of Casablanca's 
business community reveal an underlying discord between the 
economic priorities of the Government (and Palace) and the 
expectations of Casablanca's businessmen and entrepreneurs. 
While most business professionals we spoke with support the 
King and monarchy, heads of small and medium enterprises 
(SMEs) complained that "unstated" palace policies favor 
large, palace-connected "national champions" at the expense 
of smaller companies.  The business community is also 
generally dismissive of political parties, describing them as 
weak and ineffectual; however, business leaders expressed 
wariness of the increasing strength and popularity of Islamic 
parties and unofficial Islamic groups.  The Party of Justice 
and Development (PJD) was cited by many private sector 
observers who worry that Morocco does not yet have sufficient 
constitutional controls in place to "limit the harm" of a 
potential PJD parliamentary victory in the 2007 elections. 
END SUMMARY 
 
2.  (SBU)  Over the past several months we have held 
conversations with a range of businessmen, investment 
bankers, entrepreneurs and executives to discuss their views 
on Morocco's economic and political environment.  The 
business professionals we spoke with represent both large 
industrial conglomerates as well as small enterprises. The 
following is a snapshot of their views, some of which 
contrast with those of other sectors of Moroccan society. 
 
ECONOMIC POLICY AND THE PALACE 
 
3.  (C)  When asked their thoughts on the government of 
Morocco's (GOM) economic policy, Casablanca-based businessmen 
opined that policy is driven not so much by the GOM as it is 
by palace insiders.  Within Morocco this system is described 
as "the Makzhen" (literally "treasury" in Arabic), referring 
to the domination of the political and economic spheres by a 
small core of elite connected to the palace.  Observers 
contend that the Makzhen pursues a deliberate policy of 
"controlled competition" likened to the Chaebol system in 
Korea or the Keiretsu system in Japan.  Chaebol/Keiretsu 
systems are characterized by large, family-controlled 
corporate groups interlinked through share purchases and 
supplier relationships.  Businessmen argue that a similar 
dynamic is at play in Morocco and that influential palace 
insiders pursue a self-serving policy of developing "national 
champions" at the expense of SMEs. 
 
4.  (C)  According to some sources in the business and 
financial communities, the unstated policy is allegedly 
rationalized (privately) as the best means for Morocco to 
compete globally, promote economic activity and increase 
employment, much as the Chaebol/Kieretsu models played a key 
role in developing new industries, markets and export 
production in Asia.  As evidence, a financial sector contact 
referenced recent consolidation in the banking sector. 
"Normally banking sector consolidation comes last to service 
industrial consolidation," the investment banker explained. 
"Here it happened first."  Our contact argued that the recent 
merger creating Attijariwafa bank (Ref D) was motivated by 
the financial services needs of Omnium Norde Africain (ONA), 
the royally controlled conglomerate.  "That merger was driven 
by ONA- a national champion that needed a national champion 
bank to support it," he explained.  COMMENT:  ONA does in 
fact control a majority interest in Attijariwafa Bank (Ref 
C).  We have also identified an unusually intertwined 
relationship between ONA and Ynna Holdings, one of Morocco's 
largest and most successful family-controlled industrial and 
financial groups.  END COMMENT 
 
CORRUPTION 
 
5.  (C)  Business attitudes toward governmental and other 
high-level corruption suggest the corruption is concentrated 
at the very top and the very bottom of the business and 
 
governmental food chains.  At the bottom end, most commonly 
cited corruption is small in scale as practiced by minor 
government bureaucrats and local officials.  Business 
contacts insist that Morocco is not the type of country where 
one could "buy (or rent) a minister."  That being said, at 
the top end, local businessmen complain bitterly of a more 
widespread corruption, larger in scale, and defined by 
insider trading and corporate collusion among palace 
insiders.  Business contacts tell us this type of malfeasance 
is rampant, and illustrate it with colorful examples.  One 
contact recounted a complicated (and apparently well-known) 
story of a son-in-law of the royal family who, using royal 
connections to obtain inside information, illegally pocketed 
more than US $200 million in a single transaction.  Owners of 
SMEs are not immune to financial malfeasance either, (albeit 
on a smaller scale), as many are well know for keeping two 
sets of books and feel they are "practically obligated and 
morally justified" in doing so. 
 
THE ROLE OF THE KING 
 
6.  (C)  Despite these criticisms, conversations with 
business leaders in Casablanca reveal widespread support for 
the monarchy and for King Mohammed VI (M6) in particular. 
Contacts tell us that they respect his "energies", credit him 
with improvements to the business environment and support his 
efforts toward economic liberalization.  Even so, some are 
privately critical.  One entrepreneur suggested the 
(relatively) new king lacks the confidence "to step back a 
bit" and let his technocrats work.  "He has some good people 
in government", the businessman explained. "Jettou (the Prime 
Minister) is a businessman, he knows things.  But do you 
notice the King never lets him speak (on policy)?" 
 
7.  (C)  Most in the business community agree, however, that 
M6 is a notable improvement over his father, Hassan II and 
that Morocco today is "unrecognizable" from ten years ago. 
Even so, some remnants of the prior regime may have carried 
over.  Hassan Chami, the controversial president of CGEM, 
Morocco's largest business association (Ref B), is believed 
to have upset the palace recently and is currently under 
investigation by the Moroccan tax authorities.  Even some of 
his rivals within CGEM describe it as "retaliation." 
Nonetheless, the progressively-minded young monarch, who as 
"Commander of the Faithful" retains authority on all things 
Islamic, is viewed by many business leaders as an essential 
backstop against growing Islamist influence both domestically 
and regionally. 
 
PARLIAMENTARIANS AND POLITICAL PARTIES 
 
8.  (C)  Business professionals are almost universally 
disdainful of parliamentarians and political parties. 
Contacts described Morocco's 30-odd political parties as 
"decoration", "disorganized", "useless", "vehicles for 
self-promotion" and "corrupt," (although not always in that 
order).  "Too many parties controlled by too many 
personalities," said one contact.  Businessmen noted that no 
political parties have economic agendas and very few 
parliamentarians have any business experience.  Others 
complained that too often Parliament acts as nothing more 
than a "rubber stamp" for the king. "Look at how 
parliamentarians live," noted one local entrepreneur.  "Fancy 
villas and beach houses- these guys are scholars, civil 
servants and lawyers, where do they get the money to afford 
that?"  He went on to allege that the Palace "subsidizes" 
salaries of parliamentarians as needed.  Another commented 
cynically that that the Palace uses political parties "to 
keep the Americans off our back" about democratization. 
While most political parties are viewed by businessmen as 
weak and ineffectual, the Party of Justice and Development 
(PJD) emerges as a notable exception. 
 
CONCERN WITH THE RISE OF ISLAMISTS 
 
9.  (C) There is growing unease among Moroccan business 
leaders with the increasing strength and popularity of 
Islamic parties and other "unofficial" Islamic groups.  The 
recent election of Hamas alongside widely publicized local 
polls forecasting success of Islamic parties in Morocco's 
2007 election have reinforced concern among business 
contacts.  The PJD, Morocco's largest and most influential 
 
legal Islamist party, has not publicly advocated any specific 
economic policies or proposals.  However, local business 
leaders fear the adverse effect religious encroachment in the 
public sector will have on the business climate.  "What will 
happen if they win?" one contact asked over dinner at a 
fashionable Casablanca restaurant, "Will they close this 
place (the restaurant), ban alcohol and cover women in the 
veil?  No one knows."  In contrast to most parties which are 
seen as disorganized, weak and in the pocket of the palace, 
the PJD stands apart.  Entrepreneurs and investors worry that 
growing Islamic influence in the public sphere could 
negatively impact much needed foreign investment and frighten 
away tourists, both critical to maintaining foreign reserves 
and offsetting Morocco's negative balance of trade in goods. 
Business professionals confessed they would feel better if 
separation between religion and government were codified, but 
many do not believe Morocco has the time or political will to 
enact the constitutional controls necessary to "limit the 
harm" of a potential 2007 Islamic parliamentary victory. 
 
10.  (C)  Reflecting these apprehensions, a number of 
business contacts, despite being overwhelmingly liberal and 
pro-western, expressed  reservations about democratic 
liberalization for Morocco at this time.  Business contacts 
we spoke with were at times surprisingly monarchist in their 
views, and questioned the appropriateness and timing of some 
democratic reforms.  Many fear political results that could 
negatively effect Morocco's economic development and business 
climate. 
 
11.  (C)  COMMENT:  In general, the Casablanca-based business 
community is optimistic regarding Morocco's economic 
development, despite concerns of insider-dealing among the 
Makhzen and fears of Islamist political gains. Nonetheless 
many of these businessmen, investors and entrepreneurs work 
in Morocco by choice and should business climate conditions 
change adversely, many would be quick to relocate their 
careers and businesses elsewhere.  While the King currently 
retains the respect and support of the business sector, the 
cynical views of business leaders toward the political system 
and democratization is revealing and contrasts with the views 
of some other sectors of Moroccan society.  In addition, the 
continued dynamic between SMEs and large conglomerates points 
to another cause of concern for the business community. 
GREENE