VZCZCXYZ0002
RR RUEHWEB

DE RUEHCL #0063/01 0931530
ZNR UUUUU ZZH
R 031530Z APR 09
FM AMCONSUL CASABLANCA
TO RUEHC/SECSTATE WASHDC 8347
INFO RUCNMGH/MAGHREB COLLECTIVE
RUEHMD/AMEMBASSY MADRID 3850
RUEHFR/AMEMBASSY PARIS 0696
RUEHRB/AMEMBASSY RABAT 8569

UNCLAS CASABLANCA 000063 
 
SENSITIVE 
SIPDIS 
 
FOR NEA/MAG 
STATE PLS PASS TO COMMERCE FOR NATHANIEL MASON 
 
E.O. 12958: N/A 
TAGS: ECON KISL MO PGOV PREL
SUBJECT: MOROCCO'S MIDDLE CLASS PART III: DISCONTENT WITH 
PROSPECTS, MIDDLE CLASS TURNS TO ISLAMISTS 
 
REF: A. CASABLANCA 36 
     ¶B. CASABLANCA 48 
     ¶C. 08 CASABLANCA 213 
 
This is the final piece in a three part series on Morocco's 
middle class. 
 
¶1. (SBU) Summary: Private and public sector efforts to 
strengthen Morocco's middle class have done little to quell 
the increasing discontent among the lower echelons of 
Morocco's middle class.  Conversations with contacts in 
academia and civic society reveal that this segment of 
society is increasingly turning to Morocco's 
Islamist-oriented Party of Justice and Development (PJD), 
perceived as more capable of facilitating middle class 
aspirations. 
 
--------------------------------------------- ----- 
Public & Private Efforts to Boost the Middle Class 
--------------------------------------------- ----- 
 
¶2. (SBU) Both the private and public sector have tried to 
raise the income level of and expand Morocco's middle class, 
even before King Mohammed VI raised the profile of the issue 
last year.  The 2009 Finance Law continued the country,s 
incremental reform and lowering of income tax levels, with 
the top rate dropping to 40 percent from 42 percent.  This 
amounts to USD 37 to 75 a month per income earner in the 
middle class.  Moreover, the percentage of income sheltered 
from taxes was increased from 20 to 23. Professor Bekouchi of 
Hassan II University told Econoff that Morocco needs exactly 
these types of fiscal measures to increase middle class 
incomes and enhance the social mobility of the poor. 
 
¶3. (SBU) Private sector initiatives have also targeted the 
middle class.  Morocco's leading business journal, 
L'Economiste, recently reported on the mechanism through 
which Moroccan financial institutions are "Courting the 
Middle Class." It noted that the country,s largest banks 
have focused recently on increasing their product lines and 
services for Small and Medium Enterprises (SMEs), primarily 
owned by middle class households.  Nevertheless, not all 
banks have been proactive. Albert Le Dirachi, the bank 
Societe General's CEO, admits his bank does not have a 
specific strategy in mind to target Morocco,s middle class. 
(Note: Morocco's Central Bank recently asked banks to 
facilitate loan approvals to increase opportunities for 
financing, in particular for SMEs. End Note.) 
 
----------------------------- 
Private & Public Partnerships 
----------------------------- 
 
¶4. (SBU) Some innovative partnerships between the private and 
public sector have also taken hold to bolster Morocco,s 
middle class.  The GOM has recently come to the conclusion 
that a collaborative multi-sector plan is the only feasible 
approach to strengthen Morocco,s middle class, asserts a 
senior official at Morocco,s largest bank Attijariwafa. 
This partnership approach is evident in efforts to increase 
the accessibility of middle class residential units. 
Attijariwafa recently signed a convention with the National 
Federation for Real Estate Promotion and the Ministry of 
Housing to offer government credit guarantees for first time 
home buyers.  To make the 25 year loans (capped at USD 
94,000) even more attractive, Attijariwafa will waive all 
closing costs until September 2009. 
 
--------------------- 
The Islamists' Appeal 
--------------------- 
 
¶5. (SBU) Despite these private and public sector efforts to 
assist Morocco's middle class, which are likely to be 
extended as the government focuses on the issue, discontent 
continues to increase among the lower echelons of this group. 
 The private think tank, the Center for Social, Economic, and 
Managerial Studies (CESEM) explains that individuals in the 
lower echelon operate in Morocco's informal economy and 
consequently do not benefit from changes in fiscal policy. 
Moreover, only about a quarter of Morocco's middle class will 
meet the income qualification criteria required for a 
government backed residential loan, notes a senior official 
at BMCE, one of Morocco's largest banks.  Another senior 
official at BMCE said that in effect, Morocco's middle class 
 
is increasingly divided into two distinct entities. The top 
one-third does business with Morocco's traditional financial 
institutions like BMCE, but the income of the other 
two-thirds is too low to permit it to access those 
institutions.  Morocco's Islamist-oriented Party of Justice 
and Development is doing a fantastic job at courting that 
lower echelon of the country's middle class via a series of 
programs that provide counseling on tax and budget issues and 
on rare occasion interest-free loans, he observed. 
 
¶6. (SBU) Conversations with contacts in academia and civil 
society suggest that the lower echelons of Morocco's middle 
class are increasingly receptive to the PJD.  With a 
reputation for rejecting corruption, a populist approach to 
both domestic and international affairs (including activism 
on the Palestinians and Gaza) and an Islamic conservative but 
flexible approach on social issues (Ref C), this Party has 
gained wide appeal with the majority of Morocco's middle 
class, who believe in the PJD's ability to harness their 
aspirations.  The PJD has increasingly talked about 
coordinating its stance on economic issues in parliament with 
the Socialist USFP, a member of the ruling coalition, 
although queasiness about such an alliance in both parties 
has so far kept this in the rhetorical realm. 
 
¶7. (SBU) Sociologist Michael Peraldi of CESEM observed that 
the PJD's leadership, drawn from Morocco,s middle class (in 
contrast to the elites who populate leadership ranks of other 
political parties), has been highly successful in its 
recruitment and mobilization of the semi-professionals and 
skilled craftsmen who make up 2/3 of Morocco's middle class. 
Fatiha Rahal, a private school teacher who identifies herself 
with Morocco's middle class, said the country's traditional 
political institutions are no longer in tune with Morocco's 
economic reality. A member of the pro-palace Authenticity and 
Modernity Party (PAM), Fatiha said she now planned on voting 
for the PJD in the upcoming municipal election not because of 
her belief in the PJD's political or religious ideology, but 
for their understanding of the economic plight of Morocco,s 
middle class. 
 
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Comment 
------- 
 
¶8. (SBU) The government's inability to reach an accepted 
definition of who is Morocco,s middle class (Ref A) will 
likely continue to impair the country,s efforts to bolster 
this stagnating segment of society (Ref B).  In part, the 
problem stems from the Government's desire to maintain a 
healthy tax revenue for its overall budget situation. 
Nevertheless, the lower echelons of Morocco,s middle class 
will likely grow more disenchanted with economic and 
political institutions if both private and public efforts to 
strengthen this segment of society prove to be unsuccessful. 
In this atmosphere, the Party of Justice and Development, 
generally respected for its probity, will likely continue to 
gain adherents, particularly in recruiting the lower echelons 
of Morocco's middle class, with possible implications for the 
upcoming municipal elections. Public and private partnerships 
may help reverse this economic slide and disenchantment, but 
real improvements in economic prospects depend on 
acceleration of the economic and political reforms that are 
at the core of our Mission efforts here in Morocco. 
MILLARD