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DE RUEHCL #0009/01 0211326
ZNY CCCCC ZZH
R 211326Z JAN 10
FM AMCONSUL CASABLANCA
TO RUEHC/SECSTATE WASHDC 8602
INFO RUEHEE/ARAB LEAGUE COLLECTIVE
RUCNMGH/MAGHREB COLLECTIVE
RUEHMD/AMEMBASSY MADRID 3914
RUEHFR/AMEMBASSY PARIS 0734
RUCPDOC/DEPT OF COMMERCE WASHDC
RUEATRS/DEPT OF TREASURY WASHDC
RUEHAAA/NSC WASHDC

C O N F I D E N T I A L CASABLANCA 000009 
 
SIPDIS 
 
STATE FOR NEA AND NEA/MAG 
 
E.O. 12958: DECL: 01/20/2020 
TAGS: EINV EFIN ECON PGOV PREL AE MO
SUBJECT: DUBAI WOES REVERBERATE IN MOROCCO 
 
REF: 09 CASABLANCA 166 (NOTAL) 
 
Classified By: Consul General Millard for reasons 1.4 (b) and (d) 
 
¶1.  (C) SUMMARY: The net value of United Arab Emirates 
(UAE) foreign direct investment in Morocco reached USD 606 
million in 2008, a staggering increase from the USD 15 
million invested in 2002.  To fuel this expansion, the UAE 
employed a calculated strategy, which entailed pursuing 
long-term investment contracts with some of Morocco's key 
institutions and forming joint ventures with influential 
and strategic partners like the King's financial holding 
group.  Nevertheless, according to the preliminary data 
from Morocco's trade office, UAE's investment in Morocco 
decreased by more than 80 percent from the previous year to 
USD 74 million.  Some Dubai and Abu Dhabi real estate 
development plans have been postponed indefinitely, while 
others have been cancelled outright.  The Emirati 
withdrawal has angered the Palace and put future 
partnerships in jeopardy, said a close confidant of the 
King.  End Summary. 
 
---------------- 
The Golden Years 
---------------- 
 
¶2.  (SBU) From 2002 to 2008, Morocco and the United Arab 
Emirates (UAE) enjoyed a robust investment partnership. 
The net value of UAE foreign direct investment (FDI) to 
Morocco totaled USD 15 million in 2002. Six years later, 
net FDI had reached USD 606 million, second only to 
France.  During this time, Emirati investment in Morocco 
was characterized by a set of high value real estate and 
tourism development projects.  Companies such as Emaar 
Properties, Dubai Holding Group, and the Abu Dhabi based Al 
Qudra, signed dozens of memoranda of understanding with 
quasi-public and private Moroccan companies to develop golf 
and ski facilities and Riviera-style residential and 
touristic resorts stretching from the Atlas mountains  to 
the Atlantic Coast.  "UAE investment was a dependable and 
long-term source of growth for Morocco, injecting capital, 
expanding market access, and contributing to mutual 
prosperity", said Driss Alaoui Mdaghri, the President of 
Morocco's Economic Intelligence Unit. 
 
-------------------- 
The Emirati Strategy 
-------------------- 
 
¶3.  (C) To fuel its expansion in Morocco, the UAE employed 
a dual strategy.  First, it pursued long-term contracts 
with some key Moroccan institutions.  For example, Dubai 
Crown Prince and UAE Defense Minister Mohammed bin Rashid 
Al Maktoum signed a 10-year agreement with the 
Tangier-Mediterranean Special Agency (TMSA) relating to the 
operations and commercialization of the Tangier 
Mediterranean Port in the north of Morocco.  In addition, 
Al Qudra entered into a five-year agreement with Addoha 
Group, the country's largest real estate development group, 
to help Addoha meet Morocco's social housing demand. 
(Reftel) 
 
¶4.  (C) Second, the UAE formed joint ventures with 
influential partners such as Omnium Nord Africaine (ONA), 
the King's financial holding company, and the Caisse de 
Depot et Gestion (CDG), which manages Morocco's pension 
fund.  The collaboration with the palace-affiliated ONA 
group, in particular, paid dividends for Emirati investors 
such as Emaar Properties and Dubai Holding.  Indeed, such 
partnerships often resulted in mutual benefits.  Ahmed 
Laaboudi of the Moroccan Center for Economic Analysis told 
EconOff that Gulf investors seek out partnerships with ONA 
as they believe such a relationship will help them 
circumvent Morocco's bureaucratic red tape and also secure 
their investment.  As for ONA, partnering with a 
world-renowned real estate development firm like Emaar 
Properties means collaborating with a highly experienced 
business partner, said Abdelmjid Tazlaoui, the Vice 
President of ONA's real estate arm and a close confidant of 
the King. 
 
¶5.  (C) Nonetheless, Emirati business ties to the Palace 
have drawn criticism.  Some complain that the relationship 
has been used unfairly to exclude competitors in Morocco's 
real estate sector.  These critics argue that the 
relationship is too close for comfort, often resulting in 
nontransparent tender processes.  Baha Eddine Shanableh, a 
successful real estate developer, cites discounted property 
rates and illegal rezoning of agricultural land as examples 
of how Emirati firms have grossly benefited from their 
proximity to the Palace. 
 
----------------- 
Tough Times Ahead 
----------------- 
 
¶6.  (C)  According to preliminary data from Morocco's trade 
office, the net value of UAE foreign direct investment in 
Morocco dropped to USD 74 million in 2009, a decrease of 83 
percent from the previous year.  During the past year, the 
partnership between Dubai companies impacted by the global 
financial crisis, such as Emaar Properties and Dubai 
Holding, with Morocco's ONA and CDG, have become strained. 
Some real estate development projects have not moved past 
the initial phase, while others have been cancelled 
outright.  For example, Sama Dubai, a subsidiary of Dubai 
Holding Group and a 50 percent stakeholder in the USD 250 
million AMWAJ development project near Rabat, recently 
announced that it could no longer finance the project. 
Dubai Holding has also withdrawn its investment from the 
Casablanca Marina development and is expected to cancel its 
plans to build Rabat's pedestrian coastline.  Moreover, 
Emaar Properties has put its plan to build a USD 10 million 
ski resort in Morocco's Atlas Mountains on hold 
indefinitely. 
 
------------------- 
A Not-So-Happy King 
------------------- 
 
¶7.  (C) As Dubai investors withdrew from a host of 
development projects slated for 2009 and 2010, Morocco's 
quasi-public and private companies were placed in an 
awkward financial predicament as they struggled to find 
alternative financing.  Tazlaoui confided that "UAE 
withdrawal will be very costly both financially and 
politically".  The King was annoyed by the abrupt manner in 
which UAE firms handled their financial capital exodus from 
Morocco, he added. 
------- 
Comment 
------- 
 
¶8.  (C) Despite these recent setbacks, which gave rise to 
speculation that the golden era of UAE investment in 
Morocco was drawing to a close, we believe Morocco's 
involvement with the UAE is likely to resume growth in the 
future.  However, partners such as ONA will become more 
vigilant in ensuring that they can get a fair deal from 
these joint ventures.  In the view of ONA and other major 
players, both Morocco and the UAE have much to gain from 
continued cooperation. 
 
MILLARD