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05RABAT124 2005-01-14 17:40:00 UNCLASSIFIED//FOR OFFICIAL USE ONLY Embassy Rabat
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1. (U) Summary: Millennium Challenge Corporation CEO Paul
Applegarth met with MFA Americas Director Salaheddine Tazi
and Director for Bilateral Affairs Youssef Amrani on January
12 to formally congratulate the Government of Morocco on its
eligibility to apply for Millennium Challenge Account
funding. CEO Applegarth also discussed MCA objectives and
Moroccan development priorities, and described in general
terms the MCA process. In attendance were MCA Vice President
John Hewko and others of Mr. Applegarth's delegation, along
with the Ambassador, DCM and Econoff notetaker. End Summary.

2. (U) Americas Director Tazi, in the company of the
Ministry's full complement of North American affairs advisors
and Houda Marrakshi, a member of Minister-Delegate for
Foreign Affairs Taieb Fassi-Firhi's staff, expressed his
gratitude to CEO Applegarth for Morocco's eligibility for MCA
funding. Tazi explained that he and Ambassador Amrani were
standing in for Fassi-Firhi, who had been called away by King
Mohammed unavoidably. Applegarth emphasized that Morocco's
selection for MCA eligibility was in recognition of its
successful track record of reform, as well as its proven
commitment to economic freedom and investing in people.

3. (U) Applegarth explained that in developing a compact with
the MCC, Morocco will choose its own development priorities,
and draw up proposals for MCA funding based on these goals.
He said the MCC will review and select those proposals that
are most effectively geared toward economic growth and
poverty reduction, but emphasized that it is entirely up to
Morocco to choose the sectors and the priorities it wishes to
focus on.

4. (SBU) Tazi commented that Morocco felt "under-scored" by
the MCC in the area of trade policy, noting recently-signed
free trade agreements with the United States, Turkey, and the
Agadir Pact countries of Egypt, Tunisia and Jordan. CEO
Applegarth pointed out that there are time lags in the
indicators the MCC uses to determine country eligibility, and
said he expects that Morocco's score on trade policy will in
the future more closely reflect the steps it is now taking
with respect to trade liberalization. He also warned that
while Morocco's trade policy score may improve, "the median
may also rise," and encouraged the GOM not to rest on its

5. (SBU) Bilateral Affairs Director Youssef Amrani confirmed
the "strong political will" in Morocco to work with the MCA,
and to make the MCA work for Morocco. He said the GOM is
eager to serve as an example of how the MCA can work for the
Arab world. Applegarth noted that with the honor of being
chosen for MCA eligibility comes a responsibility to seek the
greatest possible return on the MCA "investment," and pointed
out that as one of the first countries to be chosen, Morocco
will be under the spotlight to see how the country performs.

6. (SBU) The MFA team asked which sectors might be excluded
from MCA funding, whether co-financing was allowed, and if
the GOM could obtain an example of a finished compact.
Applegarth replied that there are no pre-set restrictions on
the sectors eligible for funding, although successful
proposals will be those that generate economic growth and
lead to poverty reduction, and that are developed by
governments through a thorough consultative process
involving, among others, parliamentarians, the private sector
and civil society. Applegarth said co-financing is
encouraged, and that MCC is prepared to work with proposals
that include coordinated funding components from other
donors. He said MCC does not yet have an example of a
completed compact to share, but that the MCC is in advanced
stages of developing compacts with four countries which
qualified for FY2004 funding, and as soon as a compact is
completed it will be posted on the MCC's website for public
viewing. (Note: Applegarth said Madagascar was in a
particularly advanced stage of compact development and would
likely be the first to complete a compact.) Applegarth
further explained that an MCC team would come to Morocco to
work in more detail with the GOM to develop a compact. He
encouraged the GOM in the meantime to refer further questions
to the U.S. Mission in Rabat or directly to the MCC. He
emphasized that Morocco's ambassador in Washington was
another avenue of communication, and that all of those
elements would be "part of the circle."

7. (SBU) Tazi concluded by thanking Applegarth for his visit
and conveying the GOM's eagerness to begin creating a
compact. He said the GOM would create a team dedicated to
working on the MCA account.