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DE RUEHRB #0201/01 0641608
ZNY CCCCC ZZH
R 041608Z MAR 08
FM AMEMBASSY RABAT
TO RUEHC/SECSTATE WASHDC 8220
INFO RUEHAS/AMEMBASSY ALGIERS 4706
RUEHAM/AMEMBASSY AMMAN 0598
RUEHEG/AMEMBASSY CAIRO 2303
RUEHTU/AMEMBASSY TUNIS 9541
RUEHCL/AMCONSUL CASABLANCA 3929

C O N F I D E N T I A L RABAT 000201 
 
SIPDIS 
 
SIPDIS 
 
E.O. 12958: DECL: 03/03/2018 
TAGS: ECON EFIN PGOV ASCH MO
SUBJECT: PRIME MINISTER'S ECONOMIC GATEKEEPER ON GOVERNMENT 
PRIORITIES 
 
Classified By: Ambassador Thomas T. Riley for reasons 1.4 (b) and (d). 
 
¶1.  (SBU) Summary: Minister-Delegate for Economic and General 
Affairs Nizar Baraka set out an ambitious governmental 
economic agenda in his first public speech at the end of 
February.  The government, he said, would focus on increased 
and "qualitatively different" growth through increased 
investment and intensification of the country's improvement 
of its basic infrastructure.  Separately, during a courtesy 
call by the Ambassador, Baraka spoke frankly about other 
challenges facing Morocco, including corruption and the 
increasing cost and widespread misuse of government subsidies 
for basic commodities.  In response to the Ambassador's 
request, Baraka also agreed to weigh in on our efforts to 
secure an agreement governing the five State 
Department-supported American schools in Morocco.  End 
Summary. 
 
¶2.  (U) A "New" Economic Policy:  In a February 26 address, 
his first since entering the cabinet, Baraka outlined a "new" 
economic policy that seeks to bring increased and 
"qualitatively different" economic growth, support economic 
actors in Morocco, and spur job creation.  Means to these 
ends include a "new impulsion" to Morocco's large 
infrastructure projects, a doubling of investment, and 
continuation of improvements to Morocco's transportation 
infrastructure.  Other priorities include continued emphasis 
on "social housing," increasing the public's purchasing power 
through tax reform and lowering of both Morocco's high 
marginal tax rates on income and its value-added tax.  He 
pledged that the government would continue to support the 
price of basic commodities, but added that the system 
requires extensive reform.  Implicitly recognizing Morocco's 
lack of competitiveness, Baraka argued that increasing 
attention needs to be given to Moroccan exports, and not to 
"internal demand."  He called for commercial and tariff 
reforms, as well as a more flexible exchange rate regime. 
 
¶3.  (C) During a courtesy call by the Ambassador earlier on 
the same day, Baraka elaborated on several of these points, 
stressing that Morocco is in a "take-off" period when it 
needs to support small and medium-sized enterprises and build 
confidence in the economy.  In response to a question from 
the Ambassador, Baraka also explained in detail the 
government's plans to combat the widespread problem of 
corruption.  He conceded that corruption has "always" been a 
problem in Morocco.  Societal tolerance of the phenomenon, he 
argued, stems both from the "sense of impunity" that exists 
in the public sector, and more generally from the fact that 
despite recent economic gains, "the country's social 
elevator" is not working, and people see no other way to get 
ahead.  He likened corruption to other social ills, as when a 
poor taxi driver "lets his wife prostitute herself" by 
accepting money she brings into the household without asking 
about its source. 
 
¶4.  (C) Baraka outlined a multi-pronged governmental approach 
to tackling the issue.  Legislation will force all Ministers 
and other high-ranking officials to set an example by 
declaring their personal assets on entering public service, 
and thereafter at two-year intervals.  These declarations 
will be followed-up through the Cour des Comptes (Morocco's 
General Accountability Office).  A new anti-corruption agency 
will be set up in the next two months, which will collect and 
pursue complaints.  The government will also simplify and 
streamline administrative procedures and reduce the 
bureaucracy's "discretionary power." Thus the new national 
identity card will be used for multiple administrative 
functions, and Moroccans will no longer need to obtain 
separate birth certificates, voting cards, or residence 
papers.  In addition, requirements will be better publicized, 
so that applicants know upfront what is required in order to 
carry out specific operations.  The final step, Baraka 
concluded, will be a shift in focus from the payer of bribes 
to the recipient, so that in future whistleblowers will no 
longer expose themselves to potential punishment. 
 
¶5.  (C) In response to the Ambassador's inquiry about whether 
the government plans to increase civil service salaries, 
another widely perceived factor in corruption, Baraka 
conceded the problem.  He said, however, that the need to 
maintain macro-economic stability limits what the government 
can do, since significant progress has been registered in 
recent years in better balancing expenditures and receipts, 
and that success cannot be jeopardized.  He said that the 
government is looking at a long-term strategy that will 
permit gradual salary increases on a regular basis, so that 
it can both reduce the incentive towards corruption and avoid 
 
past cycles of no increases, followed by strikes and 
significant hikes. 
 
¶6.  (C) On other topics, Baraka confirmed that the government 
is studying the question of reform of Morocco's Compensation 
Fund, which subsidizes the price of basic commodities, 
including sugar, bread and wheat, fuel, and butane gas, given 
that the expense of the Fund has ballooned to 20 billion MAD 
in this year's budget.  Baraka argued that the key is to 
ensure that these subsidies are properly targeted, and he 
cited the example of butane gas tanks intended for poor 
households that an increasing number of industries now use, 
given the fact that the government subsidizes over half their 
cost.  Baraka contrasted the shortcomings of the system with 
the "effectiveness" of housing subsidies for low-income 
families, which hold down housing costs through a limited 
government investment.  He also stressed that this support, 
like the Compensation Fund, functions as an "indirect salary" 
support, so that those who complain that their salaries have 
not kept up with inflation are not telling the whole story. 
 
¶7.  (C) Regarding overall coordination of government economic 
policy, Baraka described a system where the Primature has 
worked with Ministries to set targets in specific program 
areas, and is now developing a monitoring and implementation 
system to ensure that those priorities are realized.  The 
Prime Minister meets monthly with all economic ministers, he 
said, for an udpate on their progress.  The goal, he said, is 
to enable Ministers to set the pace and prevent them from 
becoming hostages of their respective administrations. 
 
¶8.  (SBU) Bilateral Priorities:  During the meeting, the 
Ambassador and Baraka also reviewed two key U.S. priorities: 
conclusion of an agreement governing the status of the five 
State Department-supported American schools in Morocco, and 
implementation of the U.S.-Morocco Millennium Challenge 
Account Compact.  Baraka, who was deputy head of the Moroccan 
team that developed the Compact in his earlier incarnation at 
the Ministry of Finance, said the government is moving 
swiftly to recruit a director for its implementing agency. 
Once this is completed, he expected other actions to fall 
into place.  On the schools, he agreed to review the 
Embassy's revised proposal, and to engage with his 
ministerial colleagues to help move the dossier forward.  He 
noted the complications that have resulted from differences 
among the schools, and from a desire to avoid setting a 
precedent that would touch other schools, particularly 
private Moroccan institutions and the French and Spanish 
school systems. 
 
¶9.  (C) Comment:  Baraka is one of Istiqlal's rising 
political stars, his status helped by but not entirely 
dependent on the fact he is the Prime Minister's son-in-law 
and trusted confidant.  In the meeting, he displayed 
impressive familiarity with the range of issues confronting 
the government in the economic sphere, essentially confirming 
his role as the PM's "gatekeeper" on such matters, with 
responsibility for coordinating and monitoring the 
government's economic policy.  The challenge for him and for 
the El Fassi government is to show that it can produce before 
political pressure forces a change in government.  End 
Comment. 
 
 
***************************************** 
Visit Embassy Rabat's Classified Website; 
http://www.state.sgov.gov/p/nea/rabat 
***************************************** 
 
Riley