THE BARCELONA PROCESS IN MOROCCO

UNCLAS SECTION 01 OF 03 RABAT 000661

SIPDIS

C O R R E C T E D COPY - SIGNATURE

SIPDIS
SENSITIVE

STATE FOR NEA/PI AND NEA/MAG
STATE PASS TO USAID/JRAGLAND

E.O.12958: N/A
TAGS: EAID ECON PGOV SOCI MO
SUBJECT: THE BARCELONA PROCESS IN MOROCCO

RABAT 00000661 001.2 OF 003


REFTEL: RABAT 176

(U) Sensitive but unclassified - protect accordingly


1. (SBU) Summary. Currently, the European Union (EU) has
over $1.5 billion in ongoing projects in Morocco under the
Barcelona Process (BP). These projects cover issues related
to economics, social services, environmental protection and
human rights. The European Commission (EC) in Rabat
reported that Morocco is one of only two "preferred" members
of the new European Neighborhood Policy (ENP). Since its
birth in 1995, the BP has grown significantly in both size
and scope. In its current form, it includes the 25 member
states of the EU and 19 other countries encompassing North
Africa, the Middle East, Eastern Europe and Central Asia
that are members of the BP via the ENP. Established in
2004, the ENP is part of the BP and is the basis for
political, economic and social relations, as well as
dialogue and regional cooperation among its members. It
seeks to harmonize EU legislation between all its members
although they will not necessarily share institutions and
the non-European members will not have the opportunity to
eventually join the EU. End summary.

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MOROCCO
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2. (SBU) Econoff and EconFSN discussed Morocco's 10 year
involvement in the BP with Nadia Dupuis, Communication
Officer of the EC in Rabat. She noted that the country's
results were mixed over the past 10 years, but its greater
reform efforts in recent years have made it one of the
preferred member states along with Jordan, in the eyes of
the EC. Dupuis said that the EU had approximately $1.55
billion in ongoing projects in Morocco. Originally, BP
projects region-wide had concentrated on economic and
development assistance, but in recent years efforts have
refocused on social and political reform issues. Dupuis
said that Morocco had been comparatively slow in the field
of human rights, but had now caught up. She added that the
EU had only started working on human rights issues in
Morocco in 2004, with NGOs, and finally with the GOM in

2005.

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EUROPEAN NEIGHBORHOOD POLICY
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3. (U) At its inception in 1995 the BP had 24 members, the
then 15 EU members and nine Mediterranean countries. Today
the BP has 44 members, the 25 EU members and 19 ENP
members: Algeria, Armenia, Azerbaijan, Belarus, Bulgaria,
Egypt, Georgia, Israel, Jordan, Lebanon, Libya, Moldova,
Morocco, the Palestinian Authority, Romania, Syria, Tunisia,
Turkey and Ukraine. Russia was invited to join the ENP, but
declined. The ENP seeks to avoid new dividing lines between
the enlarged EU and its neighbors by increasing stability,
security and prosperity. The ENP offers members a stronger
political relationship and closer economic integration with
the EU based on common values of democracy, human rights,
rule of law, good governance, market economics and
sustainable development. The ENP seeks to harmonize laws
among its members and with the EU, but ENP members will not
share in EU institutions. This should help facilitate
closer political, economic and social relationships between
the 25 EU and 19 ENP members. The ENP does not offer the
prospect of EU membership to its non-European members.


4. (SBU) Naturally, the EU does not expect perfect
coordination of legal systems with the ENP members and that
is why this latest phase of the BP is more bilateral in
nature than earlier engagements. Dupuis noted that "Morocco
is not the same as Ukraine," each county will need to reform
its laws on an individual basis. She expects Morocco to
take many years to achieve convergence and no target date
has been set to start the process. However, the EU hopes to
have a free trade area covering the entire Mediterranean
region by 2012. Dupuis said progress on this initiative was
very slow, especially vis--vis Algeria and Syria.


5. (SBU) An important feature of the BP is multi year
development/reform plans to effect change and measure
results. Morocco was one of the first ENP members to have
its National Action Plan (NAP) approved, in July 2005.
While budgets for the ENP's various three to five year NAPs

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have not yet been determined and they will not go into
effect until 2007, they are expected to be more bilateral in
nature than the original BP's plans due to the increased
diversity caused by the expanded membership. New programs
should also be more detailed than those of the original BP
and the field of political reform will be expanded.
Currently, Morocco is still operating under the BP's
existing plan, the 2005-2006 National Indicative Program
(NIP).

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PROGRAMS
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6. (U) The 2005-2006 NIP contains a budget of $330 million
that is dominated by four major programs. Economic projects
focusing on upgrading the economic environment and trade
development will receive $120 million. Social programs to
improve the living conditions of disadvantaged groups and to
combat poverty have a budget of $156 million. Environmental
protection programs, especially for water projects will
receive $36 million. Human rights programs have a budget of
$6 million.

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ECONOMICS
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7. (SBU) Morocco's NIP seeks to establish a modern and
consistent tax system with a broader tax base, fewer
exemptions and efficient administration. The plan also
calls for establishing a general tax code, simplifying the
income tax system, and combating fraud and tax evasion by
addressing the informal sector. The NIP contains a budget
of $96 million for this work and it will be performed in
coordination with the World Bank and the IMF. EU officials
believe (echoing general donor consensus) that in order to
create the right conditions for economic growth, the GOM
must bring its budget deficit under control and consolidate
public finances (see reftel). In 2000, the budget deficit
reached nine percent and in 2005 the GOM reported a deficit
of 4.2 percent although the World Bank estimated it to be as
high as seven percent.


8. (U) Morocco has entered into a number of trade-related
agreements in recent years, including an association
agreement with the EU, and free trade agreements with the
U.S., Tunisia, Egypt, Jordan and Turkey. The NIP seeks to
promote regional free trade and to move Moroccan legislation
closer to that of the EU. To do so, the GOM will need to
liberalize capital movements and services; upgrade internal
market regulations; accelerate reforms in the energy and
transport sectors; and improve the legal and regulatory
framework, customs cooperation, and implementation of the
rules of origin. The program related to these efforts has a
budget of $18 million.

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SOCIAL PROGRAMS
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9. (U) Morocco has a critical shortage of housing and is
rapidly undergoing a process of urbanization as the rural
poor leave their farms in search of greater opportunities in
cities. The NIP plans to rehabilitate slum areas, build new
housing units, paying particular attention to the most
vulnerable sectors of society such as abandoned mothers and
children. This program that addresses these issues has a
budget of $108 million.


10. (U) The NIP includes a $7.2 million project to combat
rural poverty in 12 communities of the Middle Atlas
Mountains, where currently natural resources are over-
exploited, agricultural systems are archaic and social
services are limited. The NIP plans to introduce a micro
credit program, promote the role of women in society,
increase awareness and management of natural resources,
introduce improved agricultural systems, and bolster social
services. A similar $41 million project will assist the
rural poor in northern Morocco by building roads to connect
isolated communities, promote trade and tourism, and allow
people to reach social services and schools.

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ENVIRONMENTAL PROTECTION
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11. (U) Water resources are one of Morocco's primary
environmental and agricultural concerns. The NIP has a $36
million plan to build wastewater treatment plants, establish
drinking water supply systems, and complete conservation
projects. These measures will help improve the access of
the rural poor to basic infrastructure and protect the
environment. The country has already reached the UNDP's
threshold for water scarcity and 90 percent of its water
resources are already currently exploited. In addition,
domestic, industrial and agricultural pollution degrade
resources even further. Only five percent of urban
wastewater is treated.

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HUMAN RIGHTS
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12. (U) The NIP seeks to improve human rights in Morocco
with supporting programs totaling $6 million. The first
program will attempt to have a national plan on democracy
and human rights drafted and implemented. Both GOM
officials and civil society representatives will be trained
in their roles and several sectoral studies will be
conducted. The second program will offer technical and
financial support for Moroccan civil society organizations.
This program will create a civil society database, improve
the dissemination of information about Moroccan civil
society, and offer various forms of training.

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NATIONAL ACTION PLAN
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13. (U) In order to achieve its objectives, the EU has
stated it will provide substantial financial support to
ensure the success of the ENP and the NAPs developed for its
members. While details and budgets of the Moroccan NAP are
still not available, some of its key elements are as
follows. Under the field of political dialogue and reforms
it will attempt to: promote decentralization and enhance the
powers of local authorities, simplify and modernize judicial
procedures, train judges and court staff, combat corruption,
ensure the protection of human rights and fundamental
freedoms according to international standards, ensure
freedoms of association and expression, protect the rights
of women and children, implement fundamental social rights
and core labor standards, and strengthen political dialogue
and cooperation on foreign and security policy and other
subjects of common interest (including combating terrorism
and the proliferation of weapons of mass destruction. Other
programs will continue the work started under the NIP and
include such fields as improving macroeconomic performance,
reforming the agricultural sector, improving health and
safety standards, protecting intellectual property rights,
improving public procurement, increasing cooperation on
immigration issues, combating drug trafficking and money
laundering, and improving the educational system. While the
details of the NAP are still unknown, it appears to
compliment the work of other donor organizations in Morocco
and reflect and support the GOM's liberalizing and reform
minded policies.


14. (SBU) Comment. The BP started as an ambitious plan and
has continued to grow at a fast pace. Although its results
in Morocco and elsewhere have been mixed, the GOM shows
favorable momentum in instituting reforms in a number of
fields. Several tenets of the new ENP sound overly
ambitious (harmonization of EU law with 19 non-EU countries
and a Mediterranean free trade area by 2012),but even
partial success would be helpful and could go a long way in
improving the lives of people living in such diverse
countries as Morocco, Belarus and Azerbaijan. The EU seeks
to bolster itself in terms of political, economic and
security issues by encouraging the 19 developing countries
on its borders to base their public policies on the EU
model. Morocco has become a darling of the donor community
and increased coordination between the USG, the EU and other
groups should be pursued to avoid duplication and maintain
our influence.
Riley