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RR RUEHTRO
DE RUEHRB #2170/01 3281655
ZNR UUUUU ZZH
R 241655Z NOV 06
FM AMEMBASSY RABAT
TO RUEHC/SECSTATE WASHDC 5259
INFO RUEHAS/AMEMBASSY ALGIERS 4210
RUEHMD/AMEMBASSY MADRID 5606
RUEHNK/AMEMBASSY NOUAKCHOTT 3355
RUEHFR/AMEMBASSY PARIS 4442
RUEHTRO/AMEMBASSY TRIPOLI 0112
RUEHTU/AMEMBASSY TUNIS 9113
RUEHCL/AMCONSUL CASABLANCA 2384
RUCPDOC/DEPT OF COMMERCE WASHDC
RUEHRC/DEPT OF AGRICULTURE WASHDC

UNCLAS SECTION 01 OF 03 RABAT 002170 
 
SIPDIS 
 
SENSITIVE 
SIPDIS 
 
STATE FOR NEA/MAG, STATE PASS USTR (BELL), USPTO (ADLIN AND 
ADAMS), USDOC FOR ITA/MAC/ONE (ROTH), ADVOCACY CTR (JAMES) 
AND CLDP (TEJTEL) 
 
E.O. 12958: N/A 
TAGS: EAGR EAIR ECON EIND ELAB ETRD KTEX MO
SUBJECT: MOROCCO MACROECONOMIC UPDATE AND ECONOMIC 
HIGHLIGHTS; NOVEMBER 2007 
 
REF: RABAT 02071 
 
¶1. (U) This message provides an update on Morocco's 
macroeconomic situation, together with the following other 
economic highlights: 
 
¶A. Moroccan Ports In Compliance With International Security 
Standards 
¶B. FTA Wheat Quotas Unfulfilled 
¶C. Parliament Debates Anti-Money Laundering Law 
¶D. RyanAir Postpones New Service 
¶E. Internet ADSL Subscribers Increase 294 Percent From 2005 
¶F. Moroccan Professors Upset Over Work Conditions 
¶G. U.S. and Morocco Sign Environmental and Science Agreements 
 
---------------------------- 
Morocco Macroeconomic Update 
---------------------------- 
 
¶2. (U) Economy Rebounds:  As part of its November 20 Survey, 
the International Monetary Fund praised Moroccan 
macroeconomic conditions, reform efforts, and fiscal policy. 
Noting a bumper wheat crop, together with strong activity in 
services and construction, the IMF projected real GDP growth 
of 7.3 percent in 2006.  The IMF also noted the fiscal 
deficit would be close to the 2006 budget target of 4.1 
percent, down from 5.9 percent in 2005.  Although the IMF 
characterized the inflation rate as low, the Central Bank 
reported inflation reached 3 percent in the first eight 
months of 2006, up from an average of 1.7 percent in the past 
five years.  The Central Bank attributed the increase to 
positive factors such as economic growth and an increase in 
money supply from tourism and remittances. 
 
¶3. (U) Exports Increase:  The Foreign Exchange Office (Office 
des Changes) reported Moroccan exports exceeded USD 9 billion 
in the first nine months of 2006, up 14 percent from the same 
period in 2005.  Semi-finished products increased 28.6 
percent, commodities were up 11.2 percent, and food products 
increased 3.6 percent.  U.S. Department of Commerce trade 
figures show Moroccan exports to the U.S. rose 5 percent from 
¶2005.  Despite the rise in exports, Moroccan imports nearly 
doubled the value of imports, with the trade deficit growing 
by 9.5 percent from 2005, primarily due to increased 
petroleum costs. 
 
¶4. (U) Unemployment Drops:  The High Planning Commission 
reports unemployment dropped slightly in the third quarter of 
2006 to 10 percent.  Compared to 2005, urban unemployment 
dropped 1.8 percent to 15.8 percent, while rural unemployment 
remained stagnant at 3.9 percent.  This decrease in 
unemployment was achieved as the working population increased 
by 4.7 percent to 11.4 million workers.  The Minister of 
Employment, Mustafa Mansouri said 272,000 new jobs were 
created between 2003 and 2005, compared to 147,000 between 
2000 and 2003. 
 
¶5. (U) One of the principal sectors responsible for the 
decrease in unemployment was tourism, which experienced a 
25.8 percent increase in revenue in the first nine months of 
2006, in comparison to the same period in 2005.  According to 
the Ministry of Tourism, revenues reached USD 4.5 billion in 
the first nine months of 2006, and are expected to exceed USD 
6.5 billion by year's end.  Tourist numbers increased 9 
percent and are expected to reach 6.5 million by year's end, 
up from 5.8 million in 2005.  Morocco hopes to encourage 10 
million tourists by 2010, but according to Tourism Minister 
Adil Douiri, hotel rooms are not being built fast enough. 
Roughly 10,000 extra hotel beds were added in 2006, but 
15-17,000 are required to support the 10 million goal. 
 
¶6. (U) Record Level of Foreign Investment:  Tourism Minister, 
Adil Douiri said foreign investments are expected to exceed 
USD 3.86 billion in 2006, surpassing 2005's record of USD 3.2 
billion. Douiri attributed the influx of foreign investment 
to GOM policies, particularly in tourism.  The Director of 
Foreign Investments, Hassan Bernoussi, added that foreign 
investment by Gulf States had reached USD 23.2 billion, 
 
RABAT 00002170  002 OF 003 
 
 
primarily in real estate, urban transportation 
infrastructure, water management, and tourism. 
 
¶7. (U) One consequence of increased foreign investment has 
been a dramatic increase in real estate prices.  According to 
Mohamed Adil Bouhaja, President of the Association of Estate 
Agents in Marrakech, owning a second home in Morocco has 
become fashionable for Europeans, with demand sharply up in 
all markets and price ranges.  An apartment purchased two 
years ago in Marrakech for 300,000 dirhams, for example, can 
now be sold for 800,000 dirhams.  One prominent real estate 
expert predicts that prices will continue to increase until 
they approach Spanish levels. 
 
¶8. (U) Another indicator of foreign investment has been the 
Casablanca Stock Exchange.  Despite some analysts' prediction 
of a sell-off and profit-taking, the Casablanca Stock 
Exchange continues to outperform all other Arab markets, up 
over 60 percent in 2006.  In 2005, the Moroccan All Shares 
Index (MASI) achieved a 146 percent return.  Analysts points 
to the record level of foreign investment, large and popular 
public offerings (utility privatization) by the government, 
and a flourishing economy as reasons for the market's 
performance. 
 
----------------------------- 
Moroccan Ports ISPS Compliant 
----------------------------- 
 
¶9. (U) In September, a U.S. Coast Guard International Port 
Security (IPS) team found Morocco substantially compliant 
with the International Port Facility Security (ISPS) Code. 
The four-member USCG team met with senior GOM maritime 
transport officials and visited five Moroccan ports.  They 
found the National Port Security Committee dedicated to 
improving port security, adequate access and perimeter 
security measures at the ports visited, and impressive 
cooperation at the local level. 
 
------------------------ 
Unfulfilled Wheat Quotas 
------------------------ 
 
¶10. (SBU) Leading Moroccan wheat importers and millers sought 
USG support in pressing Morocco to lower high import duties 
in a meeting with Ambassador Riley last week.  They cited 
high duties of 130 percent as the principal cause of their 
inability to import U.S. wheat.  Auctions held by the 
National Cereals' Office (ONICL) earlier this month brought 
no bids.  Importers claim the message from ONICL is clear. 
"We are holding the auctions to fulfill our obligations under 
the FTA, but we are not going to import U.S. wheat."  To 
date, less than a tenth of the quota for bread wheat and less 
than a quarter of that for durum wheat has been filled.  The 
millers argue that while it was the intent of the FTA to 
liberalize trade, in practice the TRQ auction system has 
provided an additional tool for the GOM to manage wheat trade. 
 
--------------------------------------------- 
Anti-Money Laundering Bill Reaches Parliament 
--------------------------------------------- 
 
¶14. (U) Morocco's long-awaited Anti-Money Laundering (AML) 
legislation was formally introduced for debate in Parliament 
on November 21.  The Ministerial Council, presided over by 
the King, had previously approved and forwarded the 
legislation to Parliament in July.  The robust legislation 
draws largely from recommendations made by the Organization 
for Economic Cooperation and Development's (OECD) Financial 
Task Force (FATF), and will permit the Central Bank to 
monitor, investigate, and prosecute all suspect financial 
activities.  The law requires the reporting of suspicious 
financial transactions by all responsible parties, public and 
private, who in the exercise of their work, carry out or 
advise on the movement of funds possibly related to drug 
trafficking, human trafficking, arms trafficking, corruption, 
terrorism, tax evasion, or forgery.  Enactment of the AML law 
is a key step in the Moroccan anti-money laundering campaign 
 
RABAT 00002170  003 OF 003 
 
 
that includes plans to create a centralized Financial 
Intelligence Unit (FIU).  Both the upper and lower chambers 
of Parliament will have the opportunity to discuss the 
legislation before voting on it.  Within thirty days of 
Parliamentary passage, the legislation will then be sent to 
the Royal Palace to receive the King's final seal.  Only then 
can the legislation be published in the official gazette and 
become law.  Given the time required to complete these next 
steps, we expect implementation of AML no earlier than spring 
¶2007. 
 
------------------------- 
RyanAir Postpones Service 
------------------------- 
 
¶15. (SBU) RyanAir, Europe's premier low-cost airline, 
announced it had been forced to indefinitely postpone the 
launch of new routes from France and Germany to Morocco. 
Although Morocco and the EU signed an Open Sky treaty in 
October and RyanAir had planned to launch greatly expanded 
service from France and Germany in December, the carrier was 
forced to indefinitely postpone its expanded service due to a 
ratification issue among EU member countries.  In open source 
reporting, French transport officials were singled-out for 
their obstruction of the new accord, citing the need for 
ratification among all the EU member countries before they 
would authorize the new routes.  In a press release, RyanAir 
noted the process could take up to 18 months.  Comment: 
Morocco was the largest French passenger growth market in 
2006, up more than 26 percent from 2005.  Many observers 
interpret France's tough stance as an attempt to protect Air 
France's dominant position in the market.  End Comment. 
 
------------------------- 
ADSL Internet Usage Soars 
------------------------- 
 
¶16. (U) According to a new report released by Arab Advisors 
Group, Morocco's ADSL market grew by 97 percent during the 
second quarter of 2006, and 294 percent in the past year.  By 
contrast, total Internet access grew by only 8.2 percent in 
the second quarter.  The large growth in the ADSL market 
reflects growing demand and sophistication by the consumer, 
according to the study.  Nonetheless, Internet access is 
still used by a small minority of Moroccans (approximately 
1.12 percent), which is comparable to many sub-Saharan 
states.  The Group predicts Morocco's Internet growth to be 
29.8 percent between 2006-2010. 
 
--------------------------------------------- ----------- 
U.S. - Morocco Sign Environmental and Science Agreements 
--------------------------------------------- ----------- 
 
¶17. (U) In two separate signing ceremonies, Assistant 
Secretary of State for Oceans, Environment and Science, 
 
SIPDIS 
Claudia McMurray, signed a U.S.- Morocco Environmental 
Cooperation Plan of Action and a Science and Technology 
Agreement in Rabat, on November 14.  The Environmental 
Cooperation Plan of Action was developed pursuant to a U.S. - 
Morocco Joint Statement on Environmental Cooperation, which 
was negotiated in conjunction with the FTA.  A number of 
cooperative activities are in progress, or have been 
completed, including training programs in the use of 
Environmental Impact Assessments and environmental 
decision-making.  The U.S. - Morocco Science and Technology 
Agreement provides the framework for collaboration on a broad 
array of science issues and parallels similar agreements with 
Algeria and Tunisia. 
****************************************** 
Visit Embassy Rabat's Classified Website; 
http://www.state.sgov.gov/p/nea/rabat 
****************************************** 
 
Riley