VZCZCXRO7675
RR RUEHBC RUEHDH RUEHKUK RUEHROV RUEHTRO
DE RUEHCL #0024/01 0501126
ZNY CCCCC ZZH
R 191126Z FEB 10
FM AMCONSUL CASABLANCA
TO RUEHC/SECSTATE WASHDC 8649
INFO RUEHEE/ARAB LEAGUE COLLECTIVE
RUCNIRA/IRAN COLLECTIVE
RUCNMGH/MAGHREB COLLECTIVE
RUEHMD/AMEMBASSY MADRID 3916
RUEHFR/AMEMBASSY PARIS 0736
RUCPDOC/DEPT OF COMMERCE WASHDC
RUEATRS/DEPT OF TREASURY WASHDC

C O N F I D E N T I A L SECTION 01 OF 03 CASABLANCA 000024 
 
SIPDIS 
 
STATE FOR NEA/MAG 
 
E.O. 12958: DECL: 02/18/2020 
TAGS: ECON PGOV PREL ENRG KISL MO IR
SUBJECT: OIL CONTINUES TO GREASE MOROCCO-IRAN RELATIONS, 
BUT FRICTION REMAINS 
 
REF: 09 CASABLANCA 47 
 
Classified By: Consul General Millard for reasons 1.4 b and d. 
 
¶1.  (C) SUMMARY: Although Rabat broke diplomatic relations 
with Tehran in March 2009, commercial links between the two 
countries remain important, led by Iran's provision of more 
than one quarter of Morocco's crude oil imports in 2009, 
worth nearly USD 1 billion.  At the same time, Morocco 
exported to Iran about 12 percent of its production of 
phosphoric acid, a dual-use item used to produce fertilizer 
for the country's agriculture sector and potentially as a 
secondary source of uranium.  While 99 percent of Morocco's 
exports to Iran are linked to phosphate, Iran's interest in 
Morocco is extending to other industries like the 
automotive sector.  While advantageous exchanges continue 
to boost bilateral trade, the disparate commercial 
transactions are unlikely to lead to closer official 
relations or Iranian influence in Morocco in light of 
official uneasiness about Tehran's intentions.  End 
Summary. 
 
----------------- 
Phosphate and Oil 
----------------- 
 
¶2.  (C) Morocco's official relations with Iran reached a 
new low in March 2009 when Morocco broke off diplomatic 
relations (Reftel).  Notwithstanding the political tensions 
between the two countries, trade flows continued to 
flourish in the past year.  From the Moroccan perspective, 
Iran remains a key supplier of oil.  The director of 
Morocco's Oil Refinery (SAMIR), Jamal Mohammed Ba Amer, 
issued a press statement following the diplomatic rupture 
in which he made it clear that "Morocco will continue to 
import crude oil from Iran."  Indeed in 2009, Iran supplied 
Morocco with more than a quarter of its crude oil imports, 
with Saudi Arabia, Russia, and Iraq providing the 
remainder.  According to preliminary data from SAMIR, 
Morocco's petroleum imports from Iran totaled close to USD 
1 billion last year. 
 
¶3.  (C) From the Iranian perspective, phosphate, a product 
used extensively to produce fertilizer for the country's 
agriculture sector, is a highly valued commodity.  Morocco 
exports about 12 percent of its phosphoric acid and about 5 
percent of its rock phosphate to Iran, making Tehran one of 
Morocco's largest phosphate customers.  In 2009, the value 
of Morocco's phosphate-related exports to Iran totaled 
close to 100 million.  (Note: Morocco holds about 
three-quarters of the world's reserve of phosphates and is 
the largest exporter of phosphate rock and phosphate 
derivatives, with about 38 percent of the overall world 
market in those products.  End Note.) 
 
¶4.  (SBU)The International Atomic Energy Agency places the 
theoretically obtainable uranium resources in Morocco's 
phosphate deposits at around six million tons, roughly 
twice the world's conventional uranium resources.  Although 
phosphate exported to Iran reportedly is exclusively used 
for agricultural use, it could conceivably also be a source 
of natural uranium.  Iran's Department of Atomic Energy has 
facilities that can recover uranium from phosphate rock and 
phosphoric acid, a technically mature but economically 
unfavorable method for obtaining uranium.  However, our 
Moroccan contacts in the phosphate sector told us they have 
no reason to believe that Iran is extracting or planning to 
extract uranium from Moroccan phosphate imports. 
 
-------------------- 
Other Areas of Trade 
-------------------- 
 
¶5.  (C) While Morocco's phosphate and Iran's oil make up a 
large percentage of bilateral commerce between the two 
countries, Iran's interest in Morocco is increasingly 
extending to other sectors.  In late 2008, Driss Houat, 
President of the Federation of Morocco's Chamber of 
Commerce, Industry, and Services, led a trade delegation to 
Iran.  During this visit, he met with the President of 
Iran's Chamber of Commerce, Industries, and Mines, the 
director of the Trade Promotion Organization, and the CEO 
of Khodro, an Iranian automobile manufacturer.  Houat told 
 
CASABLANCA 00000024  002 OF 003 
 
 
EconOff this year that in early 2009, an Iranian business 
delegation also visited Morocco and signed five commercial 
agreements with Morocco ranging from tourism to agriculture 
to fisheries.  The subsequent rupture of diplomatic 
relations in March 2009 reportedly has had no negative 
impact on these deals. 
 
¶6.  (C) Specifically, Houat explained that Iran's Khodro is 
aggressively pursuing cooperation with Morocco in the 
automotive sector.  The Iranian-engineered vehicles would 
not be imported, but manufactured in Morocco and sold to 
sub-Saharan Africa, explained Houat. (Note: Morocco's 
geographic position makes it a suitable export platform to 
engage Africa and Latin America, regions that Tehran 
reportedly is targeting for building political support for 
Iran's nuclear program.  End Note.) 
 
¶7.  (C) Agricultural products are another growing area of 
bilateral commerce.  Karim Abderrazak, General Manager of 
ACIMA, one of Morocco's largest supermarket chains, told 
EconOff that demand is high for Iranian raisins.  Morocco's 
External Trade office recorded that Morocco imported more 
than six thousand metric tons of Iranian raisins in 2008, 
and Abderrazak admits that ACIMA still has trouble 
satisfying consumer demand. 
 
----------------- 
Domestic Concerns 
----------------- 
 
¶8.  (C) Despite bilateral interest in growing commercial 
exchanges between Iran and with Morocco, an Iranian 
presence in Morocco elicits mixed sentiments and faces many 
obstacles.  On the one hand, the GOM relies heavily on Iran 
to supply its energy needs.  On the other hand, Moroccan 
government and royal officials continue to harbor grave 
concerns about Iranian influence in Moroccan society and 
religion, watchful for foreign-promoted Shia activism that 
could rock the boat of Morocco's relatively homogenous 
Malikite Sunni religious landscape.  Iran is hoping to 
cultivate the support of other Muslim nations with offers 
of oil, but in the long run that is not an appropriate 
method for cultivating relationships, said Jawad Kerdoudi, 
President of the Moroccan Institute for International 
Relations.  Morocco is very alert to Iran's geo-political 
strategy, he added. 
 
 
¶9.  (C) Despite some mutually advantageous trade, it is 
doubtful that Morocco will become too cozy with Iran.  The 
Palace is closely monitoring any rapprochement, and is 
starting to look towards Iraq as an alternative for its 
crude oil needs, confided Abdelmjid Tazlaoui, a close 
confidant of the King and a high level official in the 
royal family's financial holding group, ONA.  Although 
Palace sentiments could play a role in supply contract 
decisions, SAMIR nominally selects its suppliers and 
concludes contracts strictly on a commercial basis. 
Diversifying away from Iranian crude supplies is not an 
easy step, as SAMIR's refining capabilities are designed to 
produce the needed ratios of refined products from the type 
of crude found in Iran, some other Gulf suppliers (but not 
Iraq), and Russia.  Turning to other crude suppliers would 
require refinery design changes. 
 
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Comment 
------- 
 
¶10.  (C) The two nations' positions as heavyweight oil and 
phosphate producers, respectively, make it nearly 
inevitable that commercial ties will continue to grow, in 
spite of the severed official relations and the 
difficulties Moroccan businesses tell us they experience 
trying to work with Iranian banks.  However, official and 
royal antipathy to the Iranian government runs deep, and 
any indication that Iran is seeking to exercise any 
leverage over Morocco (for example through its prominent 
role as an oil supplier) could be met by increased exertion 
of political influence on SAMIR's contracting decisions, 
with a willingness to absorb the costs of turning to less 
ideal sources of crude oil. 
 
 
CASABLANCA 00000024  003 OF 003 
 
 
MILLARD