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DE RUEHRB #0661/01 1031632
ZNR UUUUU ZZH
R 131632Z APR 06 ZDK ZDS ZUI RUEHSD #0227W
FM AMEMBASSY RABAT
TO RUEHC/SECSTATE WASHDC 3364
INFO RUEHCL/AMCONSUL CASABLANCA 1544
RUEHBS/USEU BRUSSELS
RUEHLMC/MILLENNIUM CHALLENGE CORPORATION 0016
RUEATRS/DEPT OF TREASURY WASHDC

UNCLAS SECTION 01 OF 03 RABAT 000661 
 
SIPDIS 
 
C O R R E C T E D  COPY - SIGNATURE 
 
SIPDIS 
SENSITIVE 
 
STATE FOR NEA/PI AND NEA/MAG 
STATE PASS TO USAID/JRAGLAND 
 
E.O.12958: N/A 
TAGS: EAID ECON PGOV SOCI MO
SUBJECT:  THE BARCELONA PROCESS IN MOROCCO 
 
RABAT 00000661  001.2 OF 003 
 
 
REFTEL: RABAT 176 
 
(U)  Sensitive but unclassified - protect accordingly 
 
¶1.  (SBU) Summary.  Currently, the European Union (EU) has 
over $1.5 billion in ongoing projects in Morocco under the 
Barcelona Process (BP).  These projects cover issues related 
to economics, social services, environmental protection and 
human rights.  The European Commission (EC) in Rabat 
reported that Morocco is one of only two "preferred" members 
of the new European Neighborhood Policy (ENP).  Since its 
birth in 1995, the BP has grown significantly in both size 
and scope.  In its current form, it includes the 25 member 
states of the EU and 19 other countries encompassing North 
Africa, the Middle East, Eastern Europe and Central Asia 
that are members of the BP via the ENP.  Established in 
2004, the ENP is part of the BP and is the basis for 
political, economic and social relations, as well as 
dialogue and regional cooperation among its members.  It 
seeks to harmonize EU legislation between all its members 
although they will not necessarily share institutions and 
the non-European members will not have the opportunity to 
eventually join the EU.  End summary. 
 
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MOROCCO 
------- 
 
¶2.  (SBU) Econoff and EconFSN discussed Morocco's 10 year 
involvement in the BP with Nadia Dupuis, Communication 
Officer of the EC in Rabat.  She noted that the country's 
results were mixed over the past 10 years, but its greater 
reform efforts in recent years have made it one of the 
preferred member states along with Jordan, in the eyes of 
the EC.  Dupuis said that the EU had approximately $1.55 
billion in ongoing projects in Morocco.  Originally, BP 
projects region-wide had concentrated on economic and 
development assistance, but in recent years efforts have 
refocused on social and political reform issues.  Dupuis 
said that Morocco had been comparatively slow in the field 
of human rights, but had now caught up.  She added that the 
EU had only started working on human rights issues in 
Morocco in 2004, with NGOs, and finally with the GOM in 
¶2005. 
 
---------------------------- 
EUROPEAN NEIGHBORHOOD POLICY 
---------------------------- 
 
¶3.  (U) At its inception in 1995 the BP had 24 members, the 
then 15 EU members and nine Mediterranean countries.  Today 
the BP has 44 members, the 25 EU members and 19 ENP 
members:  Algeria, Armenia, Azerbaijan, Belarus, Bulgaria, 
Egypt, Georgia, Israel, Jordan, Lebanon, Libya, Moldova, 
Morocco, the Palestinian Authority, Romania, Syria, Tunisia, 
Turkey and Ukraine.  Russia was invited to join the ENP, but 
declined.  The ENP seeks to avoid new dividing lines between 
the enlarged EU and its neighbors by increasing stability, 
security and prosperity.  The ENP offers members a stronger 
political relationship and closer economic integration with 
the EU based on common values of democracy, human rights, 
rule of law, good governance, market economics and 
sustainable development.  The ENP seeks to harmonize laws 
among its members and with the EU, but ENP members will not 
share in EU institutions.  This should help facilitate 
closer political, economic and social relationships between 
the 25 EU and 19 ENP members. The ENP does not offer the 
prospect of EU membership to its non-European members. 
 
¶4.  (SBU) Naturally, the EU does not expect perfect 
coordination of legal systems with the ENP members and that 
is why this latest phase of the BP is more bilateral in 
nature than earlier engagements.  Dupuis noted that "Morocco 
is not the same as Ukraine," each county will need to reform 
its laws on an individual basis.  She expects Morocco to 
take many years to achieve convergence and no target date 
has been set to start the process.  However, the EU hopes to 
have a free trade area covering the entire Mediterranean 
region by 2012.  Dupuis said progress on this initiative was 
very slow, especially vis--vis Algeria and Syria. 
 
¶5. (SBU) An important feature of the BP is multi year 
development/reform plans to effect change and measure 
results.  Morocco was one of the first ENP members to have 
its National Action Plan (NAP) approved, in July 2005. 
While budgets for the ENP's various three to five year NAPs 
 
RABAT 00000661  002.2 OF 003 
 
 
have not yet been determined and they will not go into 
effect until 2007, they are expected to be more bilateral in 
nature than the original BP's plans due to the increased 
diversity caused by the expanded membership.  New programs 
should also be more detailed than those of the original BP 
and the field of political reform will be expanded. 
Currently, Morocco is still operating under the BP's 
existing plan, the 2005-2006 National Indicative Program 
(NIP). 
 
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PROGRAMS 
-------- 
 
¶6. (U) The 2005-2006 NIP contains a budget of $330 million 
that is dominated by four major programs.  Economic projects 
focusing on upgrading the economic environment and trade 
development will receive $120 million.  Social programs to 
improve the living conditions of disadvantaged groups and to 
combat poverty have a budget of $156 million.  Environmental 
protection programs, especially for water projects will 
receive $36 million.  Human rights programs have a budget of 
$6 million. 
 
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ECONOMICS 
--------- 
 
¶7. (SBU) Morocco's NIP seeks to establish a modern and 
consistent tax system with a broader tax base, fewer 
exemptions and efficient administration.  The plan also 
calls for establishing a general tax code, simplifying the 
income tax system, and combating fraud and tax evasion by 
addressing the informal sector.  The NIP contains a budget 
of $96 million for this work and it will be performed in 
coordination with the World Bank and the IMF.  EU officials 
believe (echoing general donor consensus) that in order to 
create the right conditions for economic growth, the GOM 
must bring its budget deficit under control and consolidate 
public finances (see reftel).  In 2000, the budget deficit 
reached nine percent and in 2005 the GOM reported a deficit 
of 4.2 percent although the World Bank estimated it to be as 
high as seven percent. 
 
¶8.  (U) Morocco has entered into a number of trade-related 
agreements in recent years, including an association 
agreement with the EU, and free trade agreements with the 
U.S., Tunisia, Egypt, Jordan and Turkey.  The NIP seeks to 
promote regional free trade and to move Moroccan legislation 
closer to that of the EU.  To do so, the GOM will need to 
liberalize capital movements and services; upgrade internal 
market regulations; accelerate reforms in the energy and 
transport sectors; and improve the legal and regulatory 
framework, customs cooperation, and implementation of the 
rules of origin. The program related to these efforts has a 
budget of $18 million. 
 
--------------- 
SOCIAL PROGRAMS 
--------------- 
 
¶9.  (U) Morocco has a critical shortage of housing and is 
rapidly undergoing a process of urbanization as the rural 
poor leave their farms in search of greater opportunities in 
cities.  The NIP plans to rehabilitate slum areas, build new 
housing units, paying particular attention to the most 
vulnerable sectors of society such as abandoned mothers and 
children.  This program that addresses these issues has a 
budget of $108 million. 
 
¶10.  (U) The NIP includes a $7.2 million project to combat 
rural poverty in 12 communities of the Middle Atlas 
Mountains, where currently natural resources are over- 
exploited, agricultural systems are archaic and social 
services are limited.  The NIP plans to introduce a micro 
credit program, promote the role of women in society, 
increase awareness and management of natural resources, 
introduce improved agricultural systems, and bolster social 
services.  A similar $41 million project will assist the 
rural poor in northern Morocco by building roads to connect 
isolated communities, promote trade and tourism, and allow 
people to reach social services and schools. 
 
------------------------ 
ENVIRONMENTAL PROTECTION 
------------------------ 
 
RABAT 00000661  003.2 OF 003 
 
 
 
¶11. (U) Water resources are one of Morocco's primary 
environmental and agricultural concerns.  The NIP has a $36 
million plan to build wastewater treatment plants, establish 
drinking water supply systems, and complete conservation 
projects.  These measures will help improve the access of 
the rural poor to basic infrastructure and protect the 
environment.  The country has already reached the UNDP's 
threshold for water scarcity and 90 percent of its water 
resources are already currently exploited.  In addition, 
domestic, industrial and agricultural pollution degrade 
resources even further.  Only five percent of urban 
wastewater is treated. 
 
------------ 
HUMAN RIGHTS 
------------ 
 
¶12.  (U) The NIP seeks to improve human rights in Morocco 
with supporting programs totaling $6 million.  The first 
program will attempt to have a national plan on democracy 
and human rights drafted and implemented.  Both GOM 
officials and civil society representatives will be trained 
in their roles and several sectoral studies will be 
conducted.  The second program will offer technical and 
financial support for Moroccan civil society organizations. 
This program will create a civil society database, improve 
the dissemination of information about Moroccan civil 
society, and offer various forms of training. 
 
-------------------- 
NATIONAL ACTION PLAN 
-------------------- 
 
¶13.  (U) In order to achieve its objectives, the EU has 
stated it will provide substantial financial support to 
ensure the success of the ENP and the NAPs developed for its 
members.  While details and budgets of the Moroccan NAP are 
still not available, some of its key elements are as 
follows.  Under the field of political dialogue and reforms 
it will attempt to: promote decentralization and enhance the 
powers of local authorities, simplify and modernize judicial 
procedures, train judges and court staff, combat corruption, 
ensure the protection of human rights and fundamental 
freedoms according to international standards, ensure 
freedoms of association and expression, protect the rights 
of women and children, implement fundamental social rights 
and core labor standards, and strengthen political dialogue 
and cooperation on foreign and security policy and other 
subjects of common interest (including combating terrorism 
and the proliferation of weapons of mass destruction.  Other 
programs will continue the work started under the NIP and 
include such fields as improving macroeconomic performance, 
reforming the agricultural sector, improving health and 
safety standards, protecting intellectual property rights, 
improving public procurement, increasing cooperation on 
immigration issues, combating drug trafficking and money 
laundering, and improving the educational system.  While the 
details of the NAP are still unknown, it appears to 
compliment the work of other donor organizations in Morocco 
and reflect and support the GOM's liberalizing and reform 
minded policies. 
 
¶14.  (SBU) Comment.  The BP started as an ambitious plan and 
has continued to grow at a fast pace.  Although its results 
in Morocco and elsewhere have been mixed, the GOM shows 
favorable momentum in instituting reforms in a number of 
fields.  Several tenets of the new ENP sound overly 
ambitious (harmonization of EU law with 19 non-EU countries 
and a Mediterranean free trade area by 2012), but even 
partial success would be helpful and could go a long way in 
improving the lives of people living in such diverse 
countries as Morocco, Belarus and Azerbaijan.  The EU seeks 
to bolster itself in terms of political, economic and 
security issues by encouraging the 19 developing countries 
on its borders to base their public policies on the EU 
model.  Morocco has become a darling of the donor community 
and increased coordination between the USG, the EU and other 
groups should be pursued to avoid duplication and maintain 
our influence. 
Riley