CASABLANCA BUSINESS BUZZ: SEVERAL GOOD MINISTERS, FEW

C O N F I D E N T I A L CASABLANCA 000211 SIPDIS SIPDIS STATE FOR NEA/MAG AND NEA/PI E.O. 12958: DECL: 06/21/2017 TAGS: ECON EFIN KDEM MO SUBJECT: CASABLANCA BUSINESS BUZZ: SEVERAL GOOD MINISTERS, FEW EXPECTATIONS Classified By: Principal Officer Douglas Greene for reasons 1.4 (B) AND (D) REF: (A) RABAT 01617 (B) CASABLANCA 0207 ¶1. (SBU) SUMMARY: Casablanca's business community finds the selection of the government's new ministers encouraging on the whole. Many were particularly pleased with the new Finance Minister, Salaheddine Mezouar, who has a solid reputation as a capable practician. Despite finding many ministers (with the notable exception of the Prime Minister) competent and well-chosen, however, few businesspeople had concrete expectations of the new government, reflecting the general perception that the palace influences government action more than Parliament. END SUMMARY. -------------- SEVERAL WELL-CHOSEN MINISTERS -------------- ¶2. (C) Although most Moroccans expressed disappointment with the selection of Abbas El Fassi as Prime Minister, many Casablanca businesspeople are encouraged by the cadre of new ministers. According to Mohammed El Kettani, the newly appointed chairman and CEO of Attijariwafa Bank, the last government had about four very competent ministers, while this one has about 12. Mohamed Tamer, President of the Moroccan Association of Textile and Clothing Industries (AMITH),agreed, naming several well-chosen ministers off the top of his head in a recent meeting with CG and Econoff. Specifically, he cited the following key trio: Karim Ghellab, Minister of Equipment and Transport; Ahmed Toufiq Hejira, Minister of Habitat and Urban Planning; and Ahmed Chami, Minister of Industry, Commerce and New Technology. He also mentioned Abdellatif Maazouz, the Minister of Foreign Trade, as good for the textile sector. Both El Kettani and Tamer used words such as "encouraging" and "reassuring" to describe the new government, reflecting the perception that the ministers are generally a good bunch. ¶3. (SBU) Salaheddine Mezouar, former Minister of Industry and Trade, is considered a particularly solid choice for Finance Minister. An individual who works in the finance sector commented that Mezouar had "shown himself to be competent" and could push the ministry forward. He also cited Mezouar's recent comment to the press that he favored more openness as a positive sign. Others noted his experience in business as a plus for the business community. In the past, Mezouar served as President of AMITH and President of the Textile and Leather Division of the General Federation of Moroccan Enterprises (CGEM),as well as CEO of a private textile company. Given this background, AMITH's Tamer was especially pleased to see him remain a minister. ¶4. (SBU) At the same time that many are pleased with having a practician fill the Finance Minister's shoes, some expressed apprehension at Mezouar's lack of background in finance. Unlike his predecessor, Fathallah Oualalou, he is not a theoretician. In a recent article in the daily journal l'Economiste, he himself said, "I am not an expert in finance." Regardless, he has an excellent reputation. In August 2007, Telquel magazine named him one of the "hundred who move Morocco." A seasoned minister, he is getting down to business quickly and has thus impressed Casablanca business leaders by already outlining the 2008 Finance Law, which calls for capping the deficit at three percent, creating 16,000 jobs, increasing investment by 37 percent, revising fiscal policy and continuing poverty reduction and reform measures. ¶5. (SBU) Opinions were slightly more mixed regarding the selection of Ahmed Chami as Minister of Industry, Trade and New Technologies. One business professional commented that he is a young, dynamic businessman with his own export company, making him a decent choice. L'Economiste quoted Tamer as saying that Chami's appointment is reassuring, given the challenges - such as reviewing the Labor Code and reforming the justice system - that lay ahead, and he reiterated this positive view in his meeting with CG and Econoff. Some, however, question Chami's management ability and whether he has the necessary skills to push initiatives through. -------------- FEW WELL-DEFINED EXPECTATIONS -------------- ¶6. (U) Casablanca's business community does not seem to have consistent expectations for the new government, except perhaps for a few measures such as reducing taxes. The new government is expected to lower corporate taxes (IS) from 35 to 30 percent for businesses, and from 39.6 to 35.5 percent for banks. The hope is that such a change will encourage companies to be more transparent and entice those in the informal sector to become formal. ¶7. (C) In general, however, Casablanca's businesspeople offered few concrete expectations for the new government. Attijariwafa's El Kettani noted fiscal changes such as the one mentioned above, and expressed support for restructuring income tax so that someone earning less than USD 800 per month is not taxed at 42 percent. Speaking in broad terms, he said the government faced a critical period ahead and would have to combat marginalization to avoid instability. His prescription for achieving this included revamping fiscal policy and the administrative environment, aggressively using the National Initiative for Human Development (INDH) to support income-generating activities, and improving the education and justice systems. Like El Kettani, Tamer had few concrete expectations, but did say he would like to see the government explicitly articulate the promotion of Morocco as an export-oriented country in its program. Many individuals with whom Econoff spoke expressed a "wait and see" attitude regarding the new government's impact on business and the economy in Morocco. ¶8. (SBU) COMMENT: Prior to the September 2007 elections, few Casablancans expected parties to have well-defined platforms. Now that a new government is in place, they seem not to expect many specific, concrete changes, even if they are optimistic about the ministers and Morocco's prospects in general. This likely reflects the perception that the Parliament is a relatively impotent body, subject as always to palace prerogatives. END COMMENT. GREENE