VZCZCXYZ0009
RR RUEHWEB

DE RUEHCL #0166/01 2291422
ZNR UUUUU ZZH
R 171422Z AUG 09
FM AMCONSUL CASABLANCA
TO RUEHC/SECSTATE WASHDC 8491
INFO RUCPDOC/DEPT OF COMMERCE WASHDC
RUCNMGH/MAGHREB COLLECTIVE
RUEHFR/AMEMBASSY PARIS 0719
RUEHMD/AMEMBASSY MADRID 3883
RUEHBS/AMEMBASSY BRUSSELS 1001

UNCLAS CASABLANCA 000166 
 
SIPDIS 
SENSITIVE 
 
STATE FOR NEA/MAG 
COMMERCE FOR NATHANIEL MASON 
 
E.O. 12958: N/A 
TAGS: ECON PGOV PREL KISL MO
SUBJECT: ELIMINATING SLUMS THAT BREED EXTREMISM IN MOROCCO 
 
REF: A. 08 RABAT 400 
¶B. 08 RABAT 422 
 
¶1.  (SBU) Summary: As part of Morocco's efforts to manage the 
socio-economic conditions that indirectly contribute to the growth 
of extremism, close to 40 percent of the country's 70 urban slums 
have been eradicated over the past several years and its inhabitants 
re-housed in new government-subsidized housing.  Morocco's 
government has implemented a dual approach in eliminating the 
country's urban slums, which entails a fiscal incentive scheme for 
private real estate developers and a broadening of mortgage 
financing for first time homeowners.  This hard won success may be 
at risk, however, if the Government of Morocco does not address the 
increasing unwillingness of slum dwellers to be re-housed and the 
lack of socio-economic diversity that could risk turning the 
country's social housing units into tomorrow's ghettos.  End 
Summary. 
------------------- 
Slums and Extremism 
------------------- 
 
¶2.  (SBU) During the last decade, continuing population growth 
pressure, urbanization, and rising housing costs have fueled the 
expansion of the country's vast slum areas.  Home to 300,000 
households or about 1.2 million individuals, Morocco's estimated 70 
urban slum dwellings are overcrowded and lack infrastructure and 
basic services. (Note: One quarter of Morocco's urban slums are 
located in the Greater Casablanca region.  End Note.) 
¶3.  (SBU) This urban squalor indirectly contributes to extremism. 
Often accompanied by conditions of unemployment or underemployment, 
slum communities tend to be stigmatized, engendering social 
alienation, disconnection from the state, and a sense of 
hopelessness with respect to future prospects.  Residents of slums 
contribute a disproportionate share to the 31 percent unemployment 
rate among urban youth (those below 24).  Slums are not a direct 
cause of the rise in radical Islamic terrorism that we have seen in 
the last 15 years - poverty has always existed in Morocco.  However, 
the existence of slums tend to cause a small population, 
particularly its young males, that are attracted to the sense of 
purpose, social acceptance, and outlet for anger that adherence to 
radical ideology can provide.  The terrorists who carried out the 
2003 and 2007 Casablanca bombings and the 2004 Madrid bombing were 
from slums like Casablanca's Sidi Moumen and Tetouan's Jama'a 
Mezouaq.  (Refs A and B). 
--------------------------------------- 
Morocco's Approach to Eradicating Slums 
--------------------------------------- 
 
¶4.  (SBU) In order to meet King Mohammed VI's announced goal of 
eliminating the country's urban slums by 2012 and thereby quelling 
the growth of extremism, the Ministry of Housing launched its 
"Cities Without Slums" program in 2003.  To date, this 
inter-ministerial initiative has eradicated close to 40 percent of 
the country's 70 urban slums and re-housed its inhabitants in new 
government subsidized housing, according to Fatna Chihab, the head 
of social housing at the Ministry of Housing. 
¶5.  (SBU) The "Cities Without Slums" program relies on a two-pronged 
approach.  First, it has implemented a fiscal incentive scheme with 
private real estate developers to encourage social housing 
development.  Under this plan, the government sells public land at 
below-market prices to real estate firms who commit to build a 
minimum of 2,500 social housing units priced at no more than USD 
18,000 each.  The Ministry of Housing expects developers to 
construct 130,000 social housing units by 2012.  As an example, 
Addoha Group, the country's largest real estate development firm, 
recently acquired land valued at USD 3 billion for USD 250 million, 
according to Morocco's leading business journal L'Economiste.  In 
exchange, Addoha has committed to build 24,000 social housing units 
in the next 18 months.  Addoha has set up a one-stop shop at its 
corporate headquarters, where clients can complete all the necessary 
steps and paperwork involved in buying on of these "social" 
condominiums.  Moreover, developers who commit to build such housing 
units within a period of five years benefit from a tax exemption 
during the first five years of operation and a 15 percent corporate 
tax rate on their profits thereafter. 
¶6.  (SBU) Second, the government's broadening of mortgage financing 
for first time homeowners has been critical to diminishing Morocco's 
shantytowns.  For example, the country's slum inhabitants may borrow 
up to 100 percent of the value of a USD 25,000 apartment.  The State 
in turn guarantees 70 percent of the total mortgage payment in the 
case of a default.  The system of guaranteed funds is mainly backed 
by taxes on cement companies set at USD 12.50 per ton, generating 
USD 160 million a year.  The government guarantee has allowed banks 
to lend at a lower risk and offer low interest rate mortgage loans. 
"With no down payment required and mortgage payments of USD 100 a 
month for a USD 18,000 flat, even the country's smallest earners can 
own property", Anas Sefrioui, CEO of Addoha told us.  Demand is so 
high that the wait time to get a USD 25,000 apartment is more than 
14 months, but builders are hesitant to produce more supply without 
additional government subsidies because their profits are so low in 
these sales.  Income criteria are supposed to limit eligibility for 
purchasing social units to poorer citizens, but media reports 
indicate that Morocco's real estate boom has attracted lower middle 
class families to falsify papers or bribe officials to be able to 
purchase some of these subsidized units, further adding to the 
supply shortfall. 
 
------------------------ 
Morocco's Ghettoization? 
------------------------ 
 
¶7.  (SBU) Serious obstacles remain to this broad-based effort to 
move people out of slums, however.  Chief among them is the 
increasing reluctance of slum dwellers to relocate, Ahmed Hejira, 
Morocco's Minister of Housing told the Consul General.  In fact, a 
recent study conducted by the Ministry of Housing found that many 
people living in the new social housing units are dissatisfied with 
their accommodations, particularly the small size of living spaces. 
"The units are mainly blocks of flats that look really depressing," 
said Mohamed Jaouad, who now lives in a four-story social housing 
apartment building in Sidi Moumen.  Other critics complain about the 
high costs of re-housing.  The water supply and electricity that was 
once illegally siphoned now must be paid for.  In addition to these 
added costs, relocation also means formal registration with the 
government, an uncomfortable prospect for many slum inhabitants used 
to operating in the informal sector. 
¶8.  (SBU) Still other critics of the government's housing program, 
including sociologist Hamidi Bekouchi, warn that the subsidized 
housing units fail to encourage socio-economic diversity and risk 
turning the former sprawling shantytowns into ghettos.  "Hard won 
success is at risk", he told Econoff.  Poverty and joblessness 
remain a problem for those relocated, "but better to be idle in a 
new apartment than a slum", countered Jaouad.  Bekouchi also shared 
concerns with Econoff that Morocco's slum inhabitants continue to be 
treated as passive recipients of public aid, instead of customers of 
subsidized products who have a say in their housing purchases. 
------- 
Comment 
------- 
 
¶9.  (SBU) The government's slum eradication program is not a panacea 
for the problems of poverty or extremism, but it is a step in the 
right direction.  For the country's marginalized communities, 
"Cities Without Slums" demonstrates the government's commitment to 
change.  Nevertheless, unemployment and illiteracy continue to 
plague the country's slum inhabitants.  Although Morocco is making 
substantial financial investments in education and economic 
diversification, these strategic efforts will take months and in 
many cases years to positively impact Morocco's slum communities. 
 
MILLARD