VZCZCXYZ0021
PP RUEHWEB

DE RUEHCL #0027/01 0361028
ZNR UUUUU ZZH
P 051028Z FEB 08
FM AMCONSUL CASABLANCA
TO RUEHC/SECSTATE WASHDC PRIORITY 7962
RUEHAS/AMEMBASSY ALGIERS 2958
RUEHBP/AMEMBASSY BAMAKO 0255
RUEHEG/AMEMBASSY CAIRO 0848
RUEHRY/AMEMBASSY CONAKRY 0030
RUEHDK/AMEMBASSY DAKAR 0275
RUEHLC/AMEMBASSY LIBREVILLE 0048
RUEHLO/AMEMBASSY LONDON 0340
RUEHMD/AMEMBASSY MADRID 3775
RUEHNK/AMEMBASSY NOUAKCHOTT 2315
RUEHRB/AMEMBASSY RABAT 8211
RUEHTU/AMEMBASSY TUNIS 2078
RUEHFR/AMEMBASSY PARIS 0624
RUEHYD/AMEMBASSY YAOUNDE 0088

UNCLAS CASABLANCA 000027 
 
SIPDIS 
 
SENSITIVE 
 
SIPDIS 
 
STATE FOR NEA/MAG AND NEA/PI 
 
E.O. 12958 
TAGS: ECON EFIN KDEM MO
SUBJECT: EL FASSI'S FIRST 100 DAYS: TOO EARLY TO TELL, BUT TIME TO ACT 
 
REF: (A) 07 CASABLANCA 0211 (B) 07 RABAT 01810 
 
¶1. (SBU) Summary: 100 days into El Fassi's tenure as Prime Minister, 
many Casablancans feel they have little on which to judge the new 
government, though they feel it is time for action.  Citizens 
expressed anger over the increase in value-added tax on cars, and a 
sense of urgency about the need to revamp Morocco's educational 
system.  Despite such issues, the business community is confident 
that the momentum of positive change in Morocco will continue, 
spurred by the King, a powerful business-interest group, government 
ministers and the private sector, if not by El Fassi himself.  End 
Summary. 
 
----------------- 
TOO EARLY TO TELL 
----------------- 
 
¶2. (SBU) Many Casablancans say it is too early to tell how Moroccan 
Prime Minister Abbas El Fassi has fared during his first three months 
in office.  One businesswoman said the new government has not yet 
done anything, and referenced an editorial in the January 30 issue of 
the daily L'Economiste that echoed her sentiment - it is time for El 
Fassi to step to the plate and pick up the pace.  Others reiterated 
their feelings on the government as a whole; they remain disappointed 
by the selection of El Fassi as Prime Minister, but are confident in 
his ministers (Ref A). As Saad Kettani, a former banker and prominent 
businessman, put it, he would not have disrupted the momentum of 
Morocco's transformation by replacing Jettou.  He believes, as do 
many others, that the current ministers are better than before, "but 
their coach is not there." 
 
------------------------------------- 
ANGER OVER HIGH TAXES, POOR EDUCATION 
------------------------------------- 
 
¶3. (U) While many felt they have little on which to judge the new 
government, some did voice complaints about tax increases instituted 
by the 2008 Finance Bill.  The increase from 10 to 20 percent of 
value-added tax (TVA) on cars leased with the option to buy (LOA) 
sent a wave of anger through the population.  Many were particularly 
incensed that the tax is retroactive, applying to cars purchased 
before 2008 despite the fact that the law just went into effect.  One 
banker called the tax "horrible," while another pointed out that it 
will dissuade people from buying new cars, forcing them to keep older 
models and, in turn, jeopardizing road safety.  Others believe the 
tax will simply force buyers to the parallel market, slowing sales 
for legitimate sellers. 
 
¶4. (U) In an attempt to deflect ire from consumers, El Fassi scolded 
companies for passing on the increase to their customers, claiming 
they shirked their moral imperative not to.  This defensive reaction 
did nothing to appease citizens, who feel their purchasing power has 
been diminished.  The situation has received ample media attention, 
with articles and op-eds using such words as arbitrary, stupid and 
scandalous to describe the increased tax. 
 
¶5. (SBU) Those commenting on the new government are also concerned 
about the lack of movement on the education front.  El Fassi did name 
education as one of five priorities in a January 29 meeting with the 
Moroccan press corps, but the sense remains that the country's 
educational system is so broken as to require triage.  In a meeting 
with CG and econoff on February 1, Saad Kettani specifically 
mentioned education as a big concern, particularly given the need for 
skilled middle and lower managers in sectors key to Morocco's 
economic development (including tourism, information technology, 
agriculture and the budding automobile industry).  Given past 
failures, Kettani believes the solution is to develop a private 
sector in education.  Many Moroccans, however, hold El Fassi and the 
Ministry of Education responsible for radically upgrading the system. 
 Either way, Moroccans in general agree that this initiative cannot 
wait, as the problem requires decisive action before yet another 
generation emerges from the classroom ill-prepared and unemployable. 
 
---------------------- 
MOMENTUM WILL CONTINUE 
---------------------- 
 
¶6. (SBU) Despite dissatisfaction with El Fassi's inaction and some of 
his government's fiscal policies, many members of the business 
community expressed strong optimism that Morocco's economic ascent 
would continue.  At a January 30 presentation sponsored by the 
American Chamber of Commerce on the country's new arbitration law, a 
lawyer who practices in Casablanca and Fez could barely contain his 
excitement at the benefits the new law would bring.  An executive at 
an international cement company agreed.  He also relayed several 
accounts of positive experiences he had had recently with Moroccan 
judges handling corporate disputes in court, perhaps indicating 
improved awareness and understanding of dispute resolution in 
general. 
 
¶7. (SBU) An influx of international companies and investors has 
pushed Morocco to embrace many reforms, such as the new arbitration 
law, and the business community seems to feel that the momentum to 
change will continue, new government aside.  Kettani certainly echoed 
this view, noting that the King and Morocco's leading business 
association, the Confederation of Moroccan Enterprises (CGEM), were 
doing solid work and cooperating with each other, the GOM and the 
private sector to advance Morocco sector by sector. 
 
¶8. (SBU) Comment: Over and over, Moroccans tout their country's 
momentum.  Their expectations for El Fassi may be low, but they are 
confident that they can effect positive change via other means - 
namely through private sector lobbying and initiatives, supported by 
the King and the GOM's key ministers.  End Comment. 
 
GREENE