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06RABAT1011 2006-05-25 16:20:00 CONFIDENTIAL Embassy Rabat
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1. (C) Summary: During a 75-minute meeting May 22, Chinese
Ambassador Cheng Tao downplayed the significance of the April
23-25 visit to Morocco of Chinese President Hu Jintao, noting
that the Chinese leadership visits Africa annually.
Nevertheless Cheng said Morocco-China relations are good, and
have been so historically, with Morocco being the second
country in Africa to recognize the PRC. Economic cooperation
between the two countries is relatively developed, he said,
although he harped on Moroccan inefficiency and red tape as
impediments to serious Chinese investment. On the Western
Sahara, Ambassador Cheng made clear that the Moroccan media
had exaggerated the extent of the meeting between President
Hu and the head of the Royal Council for Saharan Affairs
(CORCAS) Khali Henna; while the Moroccans had lobbied hard
for a more substantive exchange, the encounter consisted of a
handshake in the lobby of the Hilton Hotel. End Summary.

Hu's Visit: Nothing Special


2. (C) Ambassador Riley called on Chinese Ambassador Cheng
Tao May 22 for a read-out of Chinese President Hu Jintao's
April 23-25 visit to Morocco and to discuss Chinese views on
the Western Sahara. Polcouns accompanied, while Ambassador
Cheng was alone. The conversation took place in French.
Cheng said there was "nothing in particular" about the visit
to Morocco (only one of three stops in Africa, following the
US and Saudi Arabia), as the Chinese leadership visits Africa
annually. That said, Cheng stressed that relations between
China and Morocco have been good from the outset, as Morocco
was the second country in Africa to recognize the PRC in
1958, two years after Morocco's independence (other African
countries, he said, had fallen in behind Morocco, among them
Guinea, Mali, and Ghana). Relations were strong even though
the two economic systems were different, Cheng said. China
does not give Morocco a lot of assistance, he stressed, as
Morocco is already relatively developed compared to China.
But there is economic cooperation, he said.

3. (C) Ambassador Cheng said a particularly active field of
cooperation between China and Morocco is the health sector.
Chinese medical teams are among the most important in Africa,
he said. They rotate every two years in the countries to
which they are assigned. Chinese doctors are in twelve
cities in Morocco, including distant places (from Rabat) such
as Agadir, Er Rachidia, Al Hoceima, and Ben Guerir, outside
of Marrakech. They serve as volunteers, somewhat like the
Peace Corps, he said, and are welcomed by the Moroccans. The
doctors get one paid trip home every year, or a chance to
invite their families to Morocco.

4. (C) Another important area of cooperation between China
and Morocco is the fishing industry. Cheng said there are
some 20 Chinese investment societies in the Moroccan fishing
industry. Chinese fishermen team up with Moroccans and spend
up to two-three months at sea at a time (five Chinese
fishermen join twenty Moroccans per boat, he said). This is
a profitable partnership, he said.

Western Sahara: Shaking off the Saharan Council



5. (C) Ambassador told Cheng there were various reports
about Hu's meeting with the president of the Royal Council
for Saharan Affairs (CORCAS), Khali Henna. Cheng chuckled
and said the Moroccans had exaggerated the contact between
the two. Cheng explained that Deputy FM Fassi Fihri had
called him, after President Hu had already arrived in Rabat,
to see whether Khali Henna could be introduced to Hu. Cheng
told Fassi Fihri that Hu's program was already full and that
a meeting was not possible. Fassi Fihri called back a few
hours later and proposed a brief meeting at the Hilton Hotel
as Hu departed. Cheng said he discussed the proposal with

President Hu, and they agreed to it. Cheng said after all we
were in Morocco, and it would be rude to refuse. So Khali
Henna greeted Hu in the lobby of the hotel, and they
exchanged niceties for a minute or two. Khali Henna made the
point that Morocco appreciated China's support on the Western
Sahara (Note: the Chinese have a contingent of some eighteen
troops in the MINURSO peacekeeping mission in the Western
Sahara) and noted that Morocco "would have an autonomy
proposal soon." Cheng said Hu told Khali Henna that a
solution needed to be found to the Western Sahara conflict
that was acceptable to all parties. Cheng said after reading
reports in some Moroccan media outlets that a "meeting" had
taken place between Hu and Khali Henna, he telephoned Fassi
Fihri to complain. Fassi Fihri told Cheng he had told the
media not to exaggerate the story. Cheng added that Algerian
Ambassador Belkheir had also telephoned him to seek
assurances that a "meeting" between Hu and CORCAS had not
taken place.

6. (C) Ambassador Riley asked Cheng for his views on CORCAS.
Cheng said CORCAS was a "gesture" by Morocco; it had been
around for a long time and now was being "redynamized."
Cheng said the Moroccans had made clear they were going to
present a new autonomy proposal, but "we do not know its
contents." (Note: Fassi Fihri visited China in April during
a round of diplomacy on the Western Sahara with the P-5).
Having committed itself to autonomy, Cheng said, it was
difficult for the GOM to go back. If the Moroccans do not
produce something after all the fanfare, the international
community will be disappointed. Most of the Moroccan
political parties were of one mind on the Western Sahara (ie,
in agreement on autonomy). Cheng noted that Algeria and the
Polisario already seemed to have rejected the plan, even
before its contents were revealed.

7. (C) Ambassador Riley shared his view that CORCAS seemed
to be mostly a publicity exercise to promote the Moroccan
view on the Sahara. He said there was little evidence of
genuine debate within CORCAS about the Sahara. The foreign
ministry's roll-out of CORCAS in March had been
"disappointing." CORCAS members were chosen, not elected.
He feared the reinvigoration of CORCAS might not really be a
sign of progress on the Western Sahara.

Strangled in Moroccan Red Tape


8. (C) Returning to Hu's visit and China's economic interest
in Morocco, Ambassador Riley asked whether the issue of
Morocco amending some its laws to be more attractive to
investors came up during the Hu visit. Cheng said that
two-way trade between Morocco and China amounted to about USD
1.5 billion, but it was heavily imbalanced. China sought to
lower Morocco's deficit, but Morocco had little to sell to
China. China was interested in fish meal from Morocco, but
Morocco did not produce enough. To correct the trade
disparity China was increasing imports of Moroccan
phosphates. The two countries signed contracts to raise
imports to 800 million tons per year from 2007-2111 (they
stand at 150 million tons now). China imports a lot of
fertilizer, Cheng said, much of it from the US. Moroccan
fertilizer is more expensive than US fertilizer, but the
quality is better. Cheng complained that the Moroccan
textile industry is not productive; during the month of
Ramadan, Moroccan workers show up at the factory "but don't
work." Ambassador Riley countered that, based on his visits
to numerous Moroccan factories, only about ten percent of
workers take time off during the day to pray. Cheng
explained it was due more to fatigue and lack of productivity
than absences for prayer.

9. (C) Cheng continued that the investment climate in
Morocco is problematic. In China a business partner does all
of the formalities for the investor (one-stop shopping, he
seemed to imply), whereas in Morocco one has to jump through
a variety of hoops to get established. Recently a Chinese
group had tried to visit Morocco to view medical instruments
for purchase. The group received their Moroccan visas too
late and had to cancel the trip. A Chinese plastics company

had other difficulties with the Moroccan authorities. On
another occasion seven Chinese workers wanted to come to
Morocco to replace their colleagues, but the GOM said the
incumbents needed to depart the country before the
replacements would arrive. We have a lot of pressure on us
to deal with the problem of illegal immigration, the
Moroccans said. Cheng said this particular situation had
nothing to do with illegal immigration. That's a separate
issue. "Morocco needs to change its system," Cheng said, and
"improve its investment environment." On Hu's final day in
Morocco, Cheng said, the Chinese told the Moroccans they
wanted to deal with fewer formalities on the commercial side.
Morocco is a place where some individual investors come, but
"no one wants to come and build a factory." Cheng said the
Chinese fared much better in Algeria from a commercial point
of view. At any given time, he said, there are 30,000
Chinese working in Algeria. The infrastructure is better.
There are not even very many Chinese restaurants in Morocco,
Cheng said, because it is not profitable.

10. (C) Ambassador Riley asked Cheng what the single
greatest obstacle to Chinese investment in Morocco was.
Cheng said it was hard to say, but getting vehicles into the
country was particularly difficult. In response to
Ambassador Riley's question, he said there were no problems
on the judicial end or with the court system. Ambassador
Riley said this was a problem area for some US companies.
Cheng clarified that up to this point China has not actually
started Chinese companies or even established new businesses
in partnership with Moroccans, and has so far limited its
"investment" to taking minority stakes in companies (note:
this is different from what we have read in the press).

11. (C) Cheng said the Moroccans admire the Chinese. "They
want to know what our secret is. It's hard work and
discipline." There is no firm line between capitalist and
socialist economic systems, he said. There is common ground,
and often there ends up "being a mix." The key was
cooperation. Ambassador commented he had sat next to the
Moroccan Minister of Employment recently and remarked that a
recent poll showed that creation of employment was the most
important priority for Moroccans. The Minister responded
that the issue was complicated by the fact that so many
Moroccans seek public sector jobs for the security.
Ambassador Cheng concluded by saying that, economically,
Morocco needs to open its doors and tear down the walls, and
"and we all need to be patient."

12. (SBU) For more details of the specific agreements signed
between Morocco and China during Hu's visit, see Reftel A.

Visit Embassy Rabat's Classified Website;