KING MOHAMMED VI LAUNCHES MAJOR ECONOMIC GROWTH

C O N F I D E N T I A L SECTION 01 OF 03 RABAT 001070

SIPDIS

DEPT FOR NEA/MAG AND NEA/PI
PARIS FOR ZEYA
LONDON FOR GOLDRICH
ROME FOR ROSE

E.O. 12958: DECL: 05/18/2015
TAGS: ECON PGOV KMCA KMPI ELAB EAID MO
SUBJECT: KING MOHAMMED VI LAUNCHES MAJOR ECONOMIC GROWTH
AND ANTI-POVERTY PROGRAM


Classified By: Acting Deputy Chief of Mission Michael Koplovsky for Rea
sons 1. 4 B and D.


1. (C) SUMMARY: During a nationally televised address on May
18, King Mohammed VI announced a major government initiative
to combat poverty, create jobs, improve infrastructure, and
open the Moroccan economy. The speech's timing -- almost to
the day of the second anniversary of the May 16, 2003
Casablanca bombings -- was not coincidental. The King
stressed the need to prioritize the GOM's efforts and
outlined specific steps targeting the poorest rural areas and
worst urban slums. While the plan mirrors closely the broad
outlines of his reform initiatives and of the three-year old
"Jettou Plan," it was far more detailed and specific and
hinted at the King's frustration with the implementation of
his reform vision. The announcement also coincides with
ongoing efforts by key GOM ministries to develop the MCA
Compact proposal and may signal the start of the expanded
consultative dialogue within Moroccan society. END SUMMARY.


2. (C) On May 18, King Mohammed VI announced his "National
Initiative for Human Development" during a televised address
in prime time. The King stressed that the plan was intended
to consolidate social, economic, and development factors with
the overall rule of law and other political reform efforts.
Accordingly, the initiative is a recognition of the need to
address underlying poverty issues that threaten Morocco's
social harmony and thus the long-term viability of the reform
effort.

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Guiding Principles:
Comprehensive and Targeted
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3. (U) The King outlined four major principles behind the new
program:

-- A recognition, based on both macro- and microeconomic
analysis and direct observation, of the significant segment
of the population living in poverty, particularly in rural
areas and in urban slums. The King acknowledged that such
areas have inadequate access to social services and other
forms of material support.

-- A reduced reliance upon charity and ad-hoc approaches to
social problems. To address the problems and improve social
conditions, Morocco can no longer rely on charitable acts but
requires a comprehensive and systematic government program.
Only the government, he stressed, could ensure sustainable
development through integrated public policies.

-- A reaffirmation of Morocco's commitment to further opening
to the global economy. However, the King stressed that
Morocco would do so while addressing the challenges that such
an opening presents to vulnerable segments of society. In
order to ensure success, he said that all Moroccans must
participate in this effort.

-- An openness to international experience and expertise. The
King said Morocco should draw lessons from the past
successful efforts of other countries to address poverty.
Specifically, the King said a rigorous definition of
objectives and a comprehensive program were critical to
success.


4. (C) Indeed, the King also rejected sectoral or area
specific programs in favor of what he called an "integrated
development approach" (echoing MCA messages). The current
diffuse approach often led to dysfunctional outcomes
resulting from the dispersion of efforts, resources, and
players. Nevertheless, the King again stressed that his
program, recognizing limited resources, would concentrate on
the most vulnerable areas. Finally, the King tasked the
government with engaging in a dialogue with the country in
developing the initiative, and asked it to adopt an action
plan based on good governance principles.


5. (U) The King described the initiative as neither a
specific project nor a program targeting current economic
challenges, but as a perpetual, ongoing policy initiative.
Indeed, he characterized the need to improve human capital,
increase national economic competitiveness, and promote
investment as "permanent struggles." He focused much of his
speech on rural development and viewed education and training
as essential tools for increasing social and economic
mobility and citizens' participation in society.

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Plan of Action and Priorities
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6. (U) King Mohammed VI then described three specific areas
of emphasis to implement this initiative. First, the program
would expand access to basic social services, including
health, education, water, and power. Second, the program
focuses the need to promote job creation while simultaneously
ending child labor. He called on the government and others
to use the upcoming national meetings on labor to make
specific proposals on the child labor issue. Finally, the
King said the program would first offer assistance to people
with the greatest need. The initiative would use objective
criteria to determine such priorities. As a result of this
ranking, the King said that the initial phase would target
360 poor rural communities and 250 urban and suburban slums
and old medinas.

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Time Frame Targets for
Implementation and Evaluation
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7. (SBU) The King outlined immediate, medium, and long range
targets for implementation. In the short-term, the King
tasked Prime Minister Driss Jettou with developing the
initiative into a concrete plan of action with integrated and
specific programs within three months. In the medium term up
to the 2007 elections, the King pressed political parties to
give priority to the development of the initiative's projects
(indeed, rumor has it that the Prime Minister's annual
question and answer session before Parliament was postponed
earlier this week until next week so that he can answer all
of the MPs questions regarding the new initiative). Over the
long-term, the King's specific goal is to raise the key
socio-economic indicators of Moroccan citizens to the levels
of a developed country. Jettou was given three years to
deliver results at the end of which the GOM would evaluate
the initiative's impact.

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Budgetary Resources
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8. (U) Jettou was also charged with submitting a budget
proposal for the initiative at a special session of
Parliament. The King said the initiative will require
"substantial" and "annual" resources to be itemized in the
federal budget. He called for financing measures that were
efficient and effective. However, he promised Moroccans that
the no new personal and business taxes would be levied to
finance the program. While no specific figures were given in
the speech, Minister of Social Development Abderrahim
Harouchi has told the press the initiative would cost
approximately one billion Dirhams per year (about USD 900
million).

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Comment
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9. (C) The King's address was remarkable in both its scope
and content. While in harmony with his overall reform
efforts since taking office and with the economic reform plan
launched by Prime Minister Jettou in 2002 (particularly its
focus on health care, education, and housing),the King's
speech was very specific. In particular, the emphasis on
targeting specific slums and the calls to end child labor
revealed that the Palace had spent some time developing the
initiative. Most importantly, the speech did hint at a sense
of urgency and frustration on the part of the King,
particularly the references to the 2007 elections and the
criticism of haphazard and uncoordinated programs (an apt
description of previous Moroccan reform efforts).


10. (C) The timing of the speech -- on the anniversary of the
May 2003 Casablanca bombings and, on the Islamic calendar,
his father's death -- could not have been coincidental. The
King has now acknowledged publicly and in dramatic fashion
what GOM officials have told us regularly in private
meetings: until the government can address the underlying
socio-economic causes of extremism (particularly a lack of
jobs and education),the overall reform experiment in Morocco
could be in jeopardy. The speech had much in common with
speeches of leaders preparing their people for a long and
difficult war. Indeed, the King referred repeatedly to the
reform effort as a permanent or long-term struggle.


11. (C) Accordingly, the King appealed to a renewed sense of
patriotism and called on his citizens' sense of
responsibility and self-sacrifice. In return, he promised
them that his government would no longer rely heavily on
Moroccans' traditional value of charity to address the
challenges ahead but would instead implement a specific and
far reaching program with a robust budgetary commitment. His
rejection of charity as a solution may signal an attempt to
take back the initiative from Islamic groups, many of whom
filled the void in public services (particularly education)
in the slum areas. References to balancing the opening of
the Moroccan economy with protection of vulnerable segments
of the economy were reminiscent of the FTA negotiations may
be intended to prepare Moroccans for the imminent
implementation of the agreement. His calls for an expanded
dialogue between government and the people may also coincide
with Morocco's Millennium Challenge Account compact
negotiation process. Post believes that many of the specific
objectives and priorities enunciated in the speech will be
used in the MCA dialogue process and will figure prominently
in Morocco's eventual proposal to the MCC.
RILEY