VZCZCXRO4069
PP RUEHJO
DE RUEHRB #0004/01 0031621
ZNR UUUUU ZZH
P 031621Z JAN 08
FM AMEMBASSY RABAT
TO RUEHC/SECSTATE WASHDC PRIORITY 7959
INFO RUEHAR/AMEMBASSY ACCRA 0180
RUEHEG/AMEMBASSY CAIRO 2255
RUEHDL/AMEMBASSY DUBLIN 0105
RUEHSA/AMEMBASSY PRETORIA 0235
RUEHTN/AMCONSUL CAPE TOWN 0117
RUEHJO/AMCONSUL JOHANNESBURG 0025
RUEHCL/AMCONSUL CASABLANCA 3796

UNCLAS SECTION 01 OF 03 RABAT 000004 
 
SIPDIS 
 
SIPDIS 
SENSITIVE 
 
STATE FOR H AND NEA/MAG 
 
E.O. 12958: N/A 
TAGS: OREP ECON EAID PGOV PREL SENV MO
SUBJECT: SCENESETTER FOR CODEL JOHNSON 
 
¶1.  (U) SUMMARY:  The U.S. Mission warmly welcomes your upcoming 
visit to Morocco.  Your visit, the third by a congressional 
delegation in the New Year, following visits by delegations headed 
by Senators Martinez and Harkin, will help to underscore the 
importance the United States accords to our relations with Morocco. 
The depth and extent of those relations are evident in our bilateral 
Free Trade Agreement, which went into effect on January 1, 2006, and 
the recently signed $697 million Millennium Challenge Account (MCA) 
Compact. 
 
¶2.  (SBU) During your visit, you will find a country seeking 
balance:  balance between traditional Muslim values and the 
permeation of Western culture; balance between increased industrial 
production and protection of natural resources; and balance between 
a traditional agro-based economy and urban and industrial 
development.  Although Morocco has recently experienced a large 
increase to its tourism industry and in urbanization, much of the 
country remains relatively underdeveloped with per capita GDP of 
less than USD 2,500.  While Morocco has demonstrated an increasing 
commitment to environmental protection, it still faces major 
challenges, particularly in the quality and quantity of its water 
supply.  Your visit will reinforce our efforts to help Morocco find 
the right balance between environmental protection and development. 
END SUMMARY. 
 
¶3.  (U) FREE TRADE AGREEMENT:  Since its implementation on January 
1, 2006, U.S. exports to Morocco have seen a sharp increase. 
According to U.S. trade figures, bilateral trade through the first 
10 months of 2007 was nearly double its 2005 level.  The increase 
has been most pronounced for U.S. exports (up 67 percent in 2006 and 
a further 41 percent through October 2007), but Moroccan exports 
have also increased significantly as well.  Moroccan officials have 
been reluctant to sign onto this "good news" story, however, as 
their statistics show an even more unbalanced picture, an issue we 
are working with the U.S. Census Bureau and appropriate Moroccan 
authorities to reconcile.  More generally, there is widespread 
concern in Moroccan economic circles about the country's 
competitiveness in the global economy, as its trade deficit has 
swelled over the past several years. 
 
¶4.  (SBU) WATER:  The greatest environmental problem facing Morocco 
is water.  Both the quality and quantity of available water are key 
concerns for a country that experiences recurring and severe 
droughts.  The Moroccan government has worked in recent years to 
make the country's economy less dependent on the agricultural 
sector, which fluctuates dramatically from year to year based on 
climactic conditions (a bumper crop in 2006 was followed a year 
later by a serious drought).  It has achieved some success in 
ensuring that non-agricultural growth remains strong even when 
agriculture falters.  It is also seeking to shift farmers from 
water-intensive crops such as cereals to fruit trees and other crops 
that are better adapted to Morocco's environment.  The recently 
signed MCA Compact includes a major project to aid this ambitious 
government effort. 
 
¶5.  (SBU) Even this shift to a more environmentally appropriate crop 
creates its own challenges, however.  As it seeks to double the 
acreage of olive farms to approximately 2.5 million by 2010, the 
Kingdom faces the challenge of dealing with the by-products of the 
expanding industry.  Olive oil production creates wastes, called 
margines, which are the remnants of squeezed skins, ground pits, 
pulp, salt, and water.  Although the margines can be dried into a 
cake-like substance that can be burned as a low-grade fuel, more 
often, the organic waste is dumped directly into waterways, where it 
consumes oxygen and leaves an oily film.  The problem is most 
pronounced around Marrakech, Fes, and in the Sebou River watershed. 
Recent U.S. Trade and Development Agency projects have targeted 
solid waste management, olive oil waste and water treatment. 
 
¶6.  (U) WESTERN SAHARA:  Bilaterally, your visit comes during the 
third round of talks between Morocco and the POLISARIO under United 
Nations auspices.  The so-called Manhasset process represents an 
opportunity for the two parties to engage in a meaningful dialogue 
that will hopefully lead to a resolution of the Western Sahara 
conflict. 
 
¶7.  (SBU) POLITICAL AND ECONOMIC REFORM:  Morocco has made 
impressive political and economic strides in recent years, including 
liberalization of its trade relations with the United States and 
other countries.  King Mohammed VI rules as well as reigns.  He has 
championed significant political reforms, including relative freedom 
of expression, advances on human rights, and the 2004 family law (or 
"moudawana"), which has significantly enhanced the rights of women. 
 
RABAT 00000004  002 OF 003 
 
 
Partly as a result of this reform record, the current form of 
government retains support across the political spectrum. 
 
¶8.  (SBU) CHALLENGES:  Nonetheless, Morocco continues to face 
serious challenges.  Illiteracy and joblessness remain high, and 
while economic growth has accelerated (averaging 5.4 percent from 
1999 to 2006), it has not yet achieved the level needed to absorb 
new entrants to the labor force or to reduce poverty.  Frustration 
over the lack of employment opportunities, the government's 
inability to respond fully to educational and health needs, and 
endemic corruption, have broadened the appeal of Islamic-oriented 
parties and non-governmental organizations. 
 
¶9.  (SBU) The September 7, 2007 elections, while representing 
significant progress in terms of governmental conduct of elections, 
highlighted a fundamental lack of popular confidence in the 
political system.  Sixty three percent of registered voters did not 
vote.  Among the 37 percent who did vote, approximately one fifth 
cast blank or spoiled protest ballots.  The nationalist Istiqlal 
party won less than a fifth of the votes, slightly ahead of the 
Islamist Party of Justice and Development, but emerged as the 
largest bloc in the new parliament.  The current government is made 
up of a minority coalition headed by Istiqlal Prime Minister Abbas 
El-Fassi. 
 
¶10.  (SBU) TERRORISM:  Popular frustrations, combined with satellite 
television from the rest of the Arab world, have strengthened a 
dangerous terrorist fringe, as reflected in the April bombings in 
Casablanca that targeted the U. S. Consulate and Cultural Center, 
among other targets.  In the face of this threat, U.S.-Moroccan 
counterterrorism cooperation has been excellent, as is reflected in 
the recent visits to Rabat of APHSCT Frances Townsend, and FBI 
Director Mueller.  The U.S. finds in Morocco a capable and active 
partner in the war against terror.  Morocco pursues an 
interdisciplinary approach in confronting the threat, seeking to 
address the economic marginalization of youth and refute extremist 
ideology by propagating Islamic messages of tolerance and 
moderation, while at the same time pursuing vigorous law enforcement 
and intelligence operations against specific terror cells.  It has 
acknowledged over the past year the importance of protecting human 
rights during the pursuit of counterterrorism efforts. 
 
¶11.  (SBU) Our Mission Strategic Plan also adopts this holistic 
approach, seeking on the one hand to sustain and expand 
counterterrorism efforts in Morocco through continued diplomatic, 
law enforcement and military cooperation, while on the other 
supporting the country's ongoing social, economic, and political 
reforms that directly address the conditions that create extremism. 
 
¶12.  (U) U.S. FOREIGN ASSISTANCE:  Morocco received over USD 35 
million in U.S. foreign assistance in FY07, approximately half of 
which will be for activities under peace and security with 
expenditures under IMET, INCLE, NADR and FMF.  USD 18.9 million was 
spent to address Morocco's ongoing development challenges through 
USAID with programs in economic growth, education/workforce 
development and democracy/governance.  Additional funding from 
Washington of approximately USD 2 million annually is made available 
through the Middle East Partnership Initiative for advancing the 
Freedom Agenda, and occasionally through other agencies, as well. 
 
¶13.  (U) The USD 697 million, five-year MCA Compact represents a 
significant increase in U.S. assistance that will potentially have a 
profound impact on Morocco's prospects for economic growth, 
especially in agriculture, fisheries and traditional crafts. 
However, Development Assistance (DA) and Economic Support Funds 
(ESF) are looked to in order to underwrite an assistance response 
that is complementary to the investment being made by the USG 
through the Millennium Challenge Corporation. 
 
¶14.  (U) That complementary assistance looks to the needs of the 
two-thirds of the 30 million Moroccans who are under age 30.  This 
population bulge, a result of rapid population growth in the 1970s 
and 1980s, has led to the significant challenges outlined. 
Joblessness, underemployment, poor education, and the inability of 
government to meet citizens' needs are sources of alienation, 
radicalization, and extremism that underpin a continuing terrorist 
threat. 
 
¶15.  (U) U.S. economic and development assistance is necessary to 
continue to focus on three priorities:  education, economic growth, 
and democratic governance.  U.S. assistance for peace and security 
should include FMF at adequate levels to sustain a large stock of 
U.S.-origin equipment while continuing strong military to military 
 
RABAT 00000004  003 OF 003 
 
 
partnership with Morocco, a major non-NATO ally.  This will enhance 
the professionalism and skills of Moroccan military personnel, 
improve Morocco's ability to control its borders, and build upon the 
Moroccan military's contributions to international peacekeeping 
efforts and the global war on terror. 
 
RILEY