SCENESETTER FOR THE VISIT OF CODEL LOWEY

UNCLAS RABAT 001234

SIPDIS

SENSITIVE
SIPDIS

DEPARTMENT FOR NEA AND H

H PLEASE PASS TO REPRESENTATIVE LOWEY AND HER DELEGATION FROM
AMBASSADOR RILEY

E.O. 12958: N/A
TAGS: PREL PGOV ECON PTER MA
SUBJECT: SCENESETTER FOR THE VISIT OF CODEL LOWEY

Ref: STATE 102141

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1. (SBU) Representative Lowey,

My staff and I are delighted to welcome you and your delegation to
Morocco. Your visit will help underscore the importance of our
relations with Morocco. Morocco is a paragon of reform in the
region and relations are good enough that it has been designated a
"major, non-NATO ally." The country is now preparing for September
parliamentary elections, the second of King Mohammed VI's eight year
reign and the first since 2002. Morocco is also engaged in
negotiations under U.N. auspices on the future of the Western
Sahara, which we support. It is also increasingly focused on the
terrorist threat in North Africa and went on maximum alert against
that threat earlier this summer.

Bilaterally, your visit comes on the eve of the signature of a
compact between Morocco and the Millennium Challenge Corporation,
which will bring a significant expansion of U.S. assistance to
Morocco, focused on key areas including agriculture, small-scale
fisheries, artisan crafts, financial services and enterprise
support. This support will build on previous USAID successes in
micro-credit and agriculture, but will also bring U.S. assistance
into new areas.

Morocco has made impressive political and economic strides in recent
years, including liberalization of its trade relations with the
United States and other countries. Our bilateral free trade
agreement entered into force in January 2006, and brought a 44
percent increase in bilateral trade in its first year. King
Mohammed VI rules as well as reigns. He has championed significant
political reforms, including relative freedom of expression,
advances on human rights, and the 2004 family law (or "moudawana"),
which has significantly enhanced the rights of women. Partly as a
result of this reform record, the current form of government retains
strong support across the political spectrum.

Nonetheless, Morocco continues to face serious challenges.
Illiteracy and joblessness remain high, and while economic growth
has accelerated (averaging 5.4 percent from 1999 to 2006),it has
not yet achieved the level needed to absorb new entrants to the
labor force or to reduce poverty. Frustration over the lack of
employment opportunities, the government's inability to respond
fully to educational and health needs, and endemic corruption, have
broadened the appeal of Islamic-oriented parties and
non-governmental organizations. The legal Party for Justice and
Development (PJD),which will vigorously contest next month's
elections, will gain seats and it is possible that it could enter--
though not dominate-- the next government.

These frustrations, combined with satellite television from the rest
of the Arab world, have strengthened a dangerous terrorist fringe,
as reflected in the April bombings in Casablanca that targeted the

U. S. Consulate and Cultural Center, among other targets. In the
face of this threat, U.S.-Moroccan counter-terrorism cooperation has
been excellent, as is reflected in the recent visits to Rabat of
APHSCT Frances Townsend, FBI Director Mueller, and CIA Director
Hayden. The U.S. finds in Morocco a capable and active partner in
the war against terror. Morocco pursues an interdisciplinary
approach in confronting the threat, seeking to address the economic
marginalization of youth and refute extremist ideology by
propagating Islamic messages of tolerance and moderation, while at
the same time pursuing vigorous law enforcement and intelligence
operations against specific terror cells. It has acknowledged over
the past year the importance of protecting human rights during the
pursuit of counterterrorism efforts.

Our mission strategic plan also adopts this holistic approach,
seeking on the one hand to sustain and expand counter-terrorism
efforts in Morocco through continued diplomatic, law enforcement and
military cooperation, while on the other supporting the country's
ongoing social, economic, and political reforms that directly
address the conditions that create extremism.

Morocco will receive over $35 million in US foreign assistance in FY
07, approximately half of which will be for activities under peace
and security with expenditures under IMET, INCLE, NADR and FMF.
$18.9 million will be spent to address Morocco's ongoing development
challenges through USAID with programs in economic growth,
education/workforce development and democracy/governance.
Additional funding from Washington of approximately $2 million
annually is made available through the Middle East Partnership
Initiative for advancing the Freedom Agenda and occasionally through
other agencies, as well.

The upcoming MCC compact, expected to be signed at a level
approaching $700 million over five years, represents a significant
increase in US assistance that will potentially have a profound
impact in Morocco's prospects for economic growth, especially in
agriculture, fisheries and traditional crafts. However, Development
Assistance (DA) and Economic Support Funds (ESF) are looked to in
order to underwrite an assistance response that is complementary to
the investment being made by the USG through the Millennium
Challenge Corporation.

That complementary assistance looks to the needs of the two-thirds
of the 30 million Moroccans who are under age 30. This population
bulge, a result of rapid population growth in the 1970s and 1980s,
has led to significant challenges. Joblessness, underemployment,
poor education, and the inability of government to meet citizens'
needs are sources of alienation, radicalization, and extremism that
underpin a continuing terrorist threat.

U.S. economic and development assistance is necessary to continue to
focus on three priorities: education, economic growth, and
democratic governance. U.S. assistance for peace and security should
include FMF at adequate levels to sustain a large stock of US-origin
equipment while continuing strong military to military partnership
with Morocco a major non-NATO ally. This will enhance the
professionalism and skills of Moroccan military personnel, improve
Morocco's ability to control its borders, and build upon the
Moroccan military's contributions to international peacekeeping
efforts and the global war on terror.
RILEY