VZCZCXRO4165
RR RUEHBC RUEHDE RUEHKUK RUEHROV
DE RUEHRB #1624/01 2921205
ZNR UUUUU ZZH
R 191205Z OCT 07
FM AMEMBASSY RABAT
TO RUEHC/SECSTATE WASHDC 7608
INFO RUEHCL/AMCONSUL CASABLANCA 3591
RUEATRS/DEPT OF TREASURY WASHDC
RUCPDOC/DEPT OF COMMERCE WASHDC
RUEHEE/ARAB LEAGUE COLLECTIVE
RUEHLO/AMEMBASSY LONDON 3421
RUEHFR/AMEMBASSY PARIS 4803
RUEHNK/AMEMBASSY NOUAKCHOTT 3591

UNCLAS SECTION 01 OF 02 RABAT 001624 
 
SIPDIS 
 
SENSITIVE 
SIPDIS 
 
DEPT FOR NEA/MAG 
TREASURY FOR OASIA 
USDOC FOR ITA/MAC/ONE ROTH 
STATE PLEASE PASS TO USTR BURKHEAD 
 
E.O. 12958: N/A 
TAGS: ECON EFIN SMIG MO
SUBJECT: MOROCCAN REMITTANCES BALANCE TRADE DEFICIT 
 
REF: RABAT 01541 
 
Sensitive but unclassified.  Please protect accordingly. 
 
¶1. (U) Summary:  Remittances from Moroccans living abroad (MRE) have 
doubled since 2000, and dwarf the sum total of all foreign aid.  MRE 
and tourism receipts match the value of all Moroccan exports at 
approximately USD 11.4 billion, and serve as a critical 
counter-weight to a spiraling trade deficit.  Despite recent 
economic prosperity and cooperation with the EU, the number of 
Moroccans migrating abroad continues to increase, reflecting a 
culture of migration that is accepted by the government.  End 
Summary. 
 
----------------------------- 
1 In 10 Moroccans Live Abroad 
----------------------------- 
 
¶2. (SBU) The latest World Bank figures estimate that over 2.7 
million Moroccans live abroad, primarily in Western Europe. 
Officials at the Ministry of Expatriate Affairs (whose existence 
highlights the importance of emigration to the Moroccan economy) 
concede that the GOM does not have an accurate estimate of Moroccan 
migration, but instead uses immigration figures from foreign 
consulates.  These figures show that 50,000 Moroccans legally 
emigrate each year, but Ministry officials concede the actual figure 
for both legal and illegal migration is much higher.  The EU 
estimates that perhaps 100,000 Moroccans emigrate each year, while 
the Office des Changes revised their official 2006 estimate of 
Moroccans living abroad from 2.8 to 3.5 million. 
 
------------------------ 
Positive Economic Impact 
------------------------ 
 
¶3. (U) Remittances are a key element in Morocco's international 
balance sheet.  Between 2000 and 2006, they increased 150 percent to 
USD 5.4 billion, or approximately 9 percent of GDP.  Our contacts at 
the Office des Changes admit the true value of remittances could be 
much greater, as government MRE figures only represent financial 
transfers reported by Morocco's commercial banks.  Recent 
international studies suggest that informal remittances, which are 
delivered via courier or community networks, could double this 
total. 
 
¶4. (U) Official Moroccan figures show the vast majority of 
remittances originate from France, comprising 43 percent of the 
total.  In the past ten years, Spain has increased substantially 
from 4 to 14 percent, while the U.S. has increased from 4 to 6 
percent. 
 
¶5. (U) Fueled by rising consumer demand, the Moroccan trade deficit 
continues to grow.  In 2006, Moroccan exports were valued at USD 
12.6 billion, while imports were USD 23.4 billion, creating a USD 
10.8 billion deficit.  Nonetheless, according to the International 
Monetary Fund (IMF), Morocco's current account is expected to record 
its seventh consecutive surplus in 2007, thanks to MRE and tourism 
receipts, which together are expected to total USD 11.3 billion. 
 
¶6. (U) Tourism receipts are linked to MRE remittances, as increasing 
numbers of Moroccans return home for visits each year.  According to 
official figures, Moroccans comprised 2.1 million of the 4.6 million 
tourists in 2001.  This figure jumped to 3.5 million of 7.6 million 
tourists in 2006.  External Affairs Ministry Chief of Staff Hamdi 
told us in a recent meeting that the local impact of returning MREs 
is enormous, particularly in high-migration areas such as the 
mountain districts along the Mediterranean coast, where local 
populations double during the summer months.  In 2006, the number of 
visiting (returning) Moroccans was approximately equal to the number 
of European tourists, with total tourism receipts reaching USD 5.9 
billion.  In addition, remittances play a not insignificant role in 
providing liquidity to the Moroccan financial sector, as they total 
over a quarter of deposits in Moroccan banks. 
 
¶7. (U) Economists and sociologists are divided as to the macro 
economic effect of remittances.  Some view remittances positively, 
noting their role in balancing the current account and providing 
Morocco its principal source of foreign currency.  Others consider 
remittances to be linked with Morocco's brain-drain, incompatible 
with economic growth, and masking the economic consequences of 
 
RABAT 00001624  002 OF 002 
 
 
de-industrialization.  Hamdi spoke matter of factly about Moroccan 
college graduates seeking foreign employment, remarking that the 
private economy could not absorb them all.  According to the latest 
Moroccan census, college graduates represent the largest unemployed 
sector at 20 percent.  Hamdi added that biologists, chemists, 
mathematicians, IT specialists, and health professionals were the 
most affected, noting that 98 percent of the graduates this year 
from a Rabat science and technology university were employed outside 
Morocco. 
 
¶8. (U) If this migration has acted as a safety valve, offering 
talented graduates opportunities that are not available to them in 
Morocco, critics see other significant downsides.  Some 
industrialists suggest that Morocco's ability to run a current 
account surplus, even in the face of a burgeoning trade deficit, has 
encouraged complaisance and lack of attention to Moroccan industry's 
lack of competitiveness.  De-industrialization was a significant 
issue to emerge from a summer 2007 conference of leading Moroccan 
economists and business leaders.  Critics noted that dependence on 
remittances leaves Morocco vulnerable to economic fluctuations 
elsewhere in the world.  Additional concerns related to whether 
remittances are being invested in productive activity or are playing 
a role in further overheating Morocco's real estate sector, which is 
already out of reach for many middle class Moroccans. 
 
--------------------------- 
Public Embrace of Migration 
--------------------------- 
 
¶9. (SBU) Besides helping to relieve unemployment pressure, migration 
has become a legitimate and accepted vehicle to success.  A recent 
World Bank study concludes international migrants have become role 
models, creating a culture in which migration is a status symbol. 
One recent poll by a French migration NGO found that over 54 percent 
of Moroccan high school students openly aspire to live in Europe, 
Canada, or the U.S. 
 
¶10. (SBU) Faced with unabated migration (and given the benefits it 
accrues from migration), the GOM is resolved to make things as easy 
as possible for Moroccans to return.  Hamdi explained that 1989 
marked a turning point in the GOM's approach, symbolized by the name 
change from "Moroccan Workers Abroad (TME)" to "Moroccan Residents 
Abroad (MRE)."  Along with the name change came a policy that 
encouraged dual citizenship and integration as a means of increasing 
remittances.  Today, Hamdi said his Ministry is helping to build 
Moroccan mosques and install moderate Moroccan Imams in expat 
communities, not only to counter radical Muslim ideology, but also 
to strengthen expat ties and desires to return home. 
 
¶11. (SBU) Comment:  The GOM's response to migration has been mixed, 
with a distinct difference between the level of effort devoted 
towards controlling Sub-Saharan migration, compared to that spent 
controlling Moroccan migration.  Harrowing images of thousands of 
young Africans arriving ashore in the Canary Islands have resulted 
in closer cooperation with Spain and a crack-down on Sub-Saharan 
illegal migration attempts.  However, Moroccan migration, both legal 
and illegal, continues unabated, supported by a culture that 
embraces it.  Real change in the dynamics of Moroccan migration is 
doubtful, as the government appears to have become dependent on the 
economic benefits of increasing remittances.  END COMMENT. 
 
RILEY