VZCZCXRO5599
RR RUEHBC RUEHDE RUEHKUK RUEHROV
DE RUEHRB #1860/01 3531208
ZNR UUUUU ZZH
R 191208Z DEC 07
FM AMEMBASSY RABAT
TO RUEHC/SECSTATE WASHDC 7908
INFO RUEHCL/AMCONSUL CASABLANCA 3764
RUEATRS/DEPT OF TREASURY WASHDC
RUCPDOC/DEPT OF COMMERCE WASHDC
RUEHRC/DEPT OF AGRICULTURE WASHDC
RUEHEE/ARAB LEAGUE COLLECTIVE
RUEHLO/AMEMBASSY LONDON 3471
RUEHFR/AMEMBASSY PARIS 4870
RUEHNK/AMEMBASSY NOUAKCHOTT 3620

UNCLAS SECTION 01 OF 02 RABAT 001860 
 
SIPDIS 
 
DEPT FOR NEA/MAG 
STATE PLEASE PASS TO USTR (BURKHEAD) 
 
SIPDIS 
 
E.O.12958: N/A 
TAGS: ECON ETRD EAIR EAGR MO
SUBJECT:  ECONOMIC HIGHLIGHTS NOV-DEC 2007 
 
 
¶1.  Included in this round up: Royal Air Maroc loses control of Air 
Senegal.  Moroccan trade deficit continues to grow.  Timely rains 
usher-in the planting season.  Casablanca remains plagued by 
inefficiencies.  Moroccans don't need a visa to visit TGI Friday's. 
 
--------------------------------------------- ------- 
SENEGALESE GOVERNMENT RETAKES CONTROL OF AIR SENEGAL 
--------------------------------------------- ------- 
 
¶2.  Majority ownership of Air Senegal International (ASI) by Royal 
Air Maroc (RAM) appears to have come to an end following a November 
5 Senegalese government announcement that it had retaken control of 
its national carrier.  RAM had held a 51 percent ownership in ASI 
since ASI's formation in 2001, but the relationship soured in recent 
years due to ASI financial losses.  Under the new arrangement, the 
Senegalese government will hold a 75 percent share of the Senegalese 
carrier, leaving RAM with 25 percent.  RAM officials have been 
tight-lipped about the reversal, but in a press release the company 
said it had made several attempts to restructure the Senegalese 
air-carrier, including an infusion of over USD 18 million in 2006 
that was part of an overall financial recovery plan intended to 
reduce labor and overhead costs while making the carrier compliant 
with international safety standards.  Senegalese press reports, 
however, allege bad faith management on RAM's part, including unfair 
competition for the region's most profitable routes.  Despite the 
setback, RAM insists that its African operations will remain a 
cornerstone of its ambitious expansion plans. 
 
---------------------------------- 
GOOD NEWS ABOUT THE TRADE DEFICIT? 
---------------------------------- 
 
¶3.  Government officials have sought to dampen concern over 
Morocco's widening trade deficit by arguing it results largely from 
import of capital goods and equipment that will lead to future 
Moroccan economic growth.  According to the most recent Moroccan 
figures, the country's trade deficit for Jan-Oct 2007 increased 33 
percent from 2006, reaching USD 14.0 billion.  Imports rose 19.5 
percent, to USD 26.4 billion, while exports rose 7.3 percent, to USD 
12.4 billion.  In an interview with Morocco's leading economic 
journal, Finance Minister Mezouar pointed out that imports of 
industrial equipment totaled USD 5.8 billion (22 percent of all 
imports), while semi-finished products were the largest import 
category at USD 6.1 billion (23.1 percent of all imports).  The two 
segments together comprised 85 percent of the trade deficit. 
 
¶4.  Officials also take comfort from the fact that tourism receipts 
and remittances from Moroccans abroad both increased, and continued 
to offset the bulk of the trade deficit.  Tourism receipts rose 14 
percent to USD 6.3 billion, while remittances increased 18 percent 
to USD 5.9 billion.  Together, the two nearly equaled the value of 
all exports (USD 12.2 vs 12.4 billion). 
 
------------------------------------- 
NOVEMBER RAINS PROMPT CEREAL PLANTING 
------------------------------------- 
 
¶5.  After a prolonged dry spell, mid-November rains ushered in the 
cereal planting season, sparking hope for an end to the 2007 drought 
that produced a harvest 66 percent below average.  Through the third 
week in November, the planted area of cereals totaled 1.1 million 
hectares, about on par with last year's pace, but 31 percent below 
the five-year average.  Although crops have benefited from cooler 
temperatures and reduced evaporation, additional rains through the 
winter months will be needed for the crops to meet their potential. 
 
 
¶6.  The drought's effects were apparent in the Jan-Oct 2007 figures 
for cereal imports.  Compared to 2006, cereal (wheat, corn, and 
barley) imports more than doubled to reach USD 1.4 billion.  Wheat 
imports increased to 2.95 million tons, compared to 1.56 million 
tons in 2006. 
 
------------------------- 
CASA PORT REMAINS SNARLED 
------------------------- 
 
¶7.  A year after implementation of a milestone port reform law, 
inefficiencies and congestion continue to plague Casablanca port. 
The 2006 law sought to increase efficiency and competitiveness by 
dividing the Ports Authority (ODEP) into two entities: a National 
Ports Agency (ANP), responsible for regulatory control and port 
 
RABAT 00001860  002 OF 002 
 
 
authority; and a Port Management Company (SODEP), a new entity 
responsible for commercial services and port handling.  From the 
beginning, the Stevedores (longshoremen) opposed the reform over 
fears of job security and government pension entitlement. 
 
¶8.  During the summer of 2007, the brewing labor issues were 
overshadowed by a congestion crisis that temporarily crippled 
Moroccan exports.  Government and port officials blamed the 
congestion on an unexpected increase of imports (container traffic 
is up 20 percent this year), aggravated by the drought, and an 
overabundance of containers left in storage within the port. 
Critics of the reform law cited other problems, including 
corruption, labor unrest, and poor infrastructure.  Whatever the 
cause, ships were delayed for up to 14 days and the port literally 
ran out of space to store additional containers.  To solve the 
crisis, offloading and transportation of containers from the port 
were increased to a 24/7 basis and additional container storage 
space was procured. 
 
¶9.  In an acknowledgement that the systemic problems at Casa port 
remain, Transport Minister Karim Ghellab recently announced a series 
of additional measures aimed at increasing efficiency.  Included in 
the measures were the installation of a new container tracking 
system and increased spending on ground infrastructure to increase 
container throughput.  To help alleviate the load at Casablanca, the 
government is also pushing for a summer 2008 opening of the domestic 
container terminal at Tangier Med, with construction already 
underway for an additional terminal. 
 
-------------------------- 
TGI FRIDAY'S SELLS AMERICA 
-------------------------- 
 
¶10.  With a slogan, "You don't need a visa to visit Friday's," the 
first TGI Friday's restaurant in Morocco will be launched in Rabat 
at the end of the month with a gala opening involving the Ambassador 
and the King's brother, Prince Moulay Rachid.  Representing a USD 3 
million investment, the Rabat restaurant will seat 600 diners, and 
will be followed by similar restaurants in Casablanca and Marrakech. 
 According to the franchise owner, Friday's marketing plan in 
Morocco is to sell America while keeping productivity at an American 
level and charging American prices.  Comparing his experience to the 
U.S., the owner notes labor costs in Morocco represent only 12 
percent of total expenses, compared to 33 percent in the U.S. 
Additionally, he said his team has been thrilled with the number of 
qualified employment applicants they have gotten-- six for each 
position, even with a requirement that applicants speak English. 
The company expects to generate USD 4-5 million annually from the 
Rabat franchise, compared to USD 1 million for the typical U.S. 
franchise. 
 
JACKSON