MOROCCO ECONOMIC HIGHLIGHTS; FEBRUARY 2007

UNCLAS SECTION 01 OF 02 RABAT 000423

SIPDIS

SENSITIVE
SIPDIS

STATE FOR NEA/MAG, STATE PASS USTR (BELL),USPTO (ADLIN AND
ADAMS),USDOC FOR ITA/MAC/ONE (ROTH),ADVOCACY CTR (JAMES)
AND CLDP (TEJTEL)

E.O. 12958: N/A
TAGS: EAIR ECON ECPS EINT ELAB ETRD KTEX MO
SUBJECT: MOROCCO ECONOMIC HIGHLIGHTS; FEBRUARY 2007


1. (U) The following is a round-up of recent economic
developments of note in Morocco:


2. (U) Money Laundering Law Advances: Morocco's long-delayed
anti-money laundering/counter terrorism finance statute was
unanimously approved by members of the Justice, Legislation
and Human Rights Committee in the Upper Chamber of
parliament. A number of final amendments were introduced,
aimed mainly at establishing "criminal intent" as a necessary
precondition for prosecution. One final legislative step
remains: approval by the upper Chamber as a whole.
Thereafter the law will be published in the Official Gazette
and will enter into force. We estimate that full
implementation should occur before the end of April.


3. (U) New Boeings at RAM: Royal Air Maroc took delivery of a
new Boeing 737-800 at the end of February and will receive
another one in mid-March. The purchases are part of a USD 2
billion fleet upgrade covering the 2006-2013 period. RAM
also took delivery of four Boeings in 2006.


4. (U) Meanwhile, expansion among low-cost airlines serving
Morocco continues to grow. In 2006, Atlas Blue, the low-cost
subsidiary of Royal Air Maroc, reported a 27 percent rise in
revenue while carrying 902,000 passengers, double the number
from 2005. Atlas Blue is pursuing a growth strategy that
will see its current fleet of 6 aircraft grow to 24 by 2012.
Joining Atlas Blue and other low-cost carriers Ryanair and
EasyJet, Spanish low-cost airline, Spanish Clickair,
announced it would begin service to Casablanca and Marrakech
from Barcelona in April. In response to the low-cost
competition, RAM announced it would reduce its prices on many
domestic flights and continuing to offer a limited number of
discounted international tickets.


5. (U) Housing Projects Aim to Curb Skyrocketing Costs:
Housing Minister, Toufiq Hjira, revealed the Moroccan
government is planning to build 170 new urban zones in
several regions of the country in order to improve the
balance between supply and demand in the housing sector, as
part of the government's response to the skyrocketing cost of
real estate. According to Mohamed Adil Bouhaja, President of
the Association of Estate Agents in Marrakech, an insatiable
European demand for Moroccan homes has greatly increased
demand and prices. For example, an apartment purchased two
years ago in Marrakech for 300,000 dirhams, can now be sold
for up to 900,000 dirhams. This new construction, however,
will add pressure to a cement industry that is already
stressed. Cement production increased over 10 percent in
2006 to 11.3 million tons. Projections call for domestic
demand to reach 15.5 million tons by 2010. To meet this
need, major cement factories in Morocco agreed to earmark
over USD 1.18 billion in resources over the next 4 years to
increase production by 5.5 million tons.


6. (U) Moroccan Pavilion Wins Best In Show: The Moroccan
pavilion at the MAGIC Show, designed and financed by the
USAID-funded New Business Opportunities program, was awarded
the Best in Show prize in booth design by the show
organizers. The MAGIC Show is the biggest U.S.-based trade
show for textiles and apparel that occurs twice a year. The
Moroccan pavilion showcased the range of Moroccan products
and the significance of the U.S.-Moroccan Free Trade
Agreement for U.S. importers. Several of the 11 company
delegation received orders or test orders, and expectations
are for total orders to exceed the USD 10 million that
resulted from MAGIC 2006.


7. (SBU) New anti-piracy push: Abdallah Ouadghiri, head of
the Moroccan Copyright Office, announced a new national
anti-piracy strategy at the end of February. He outlined
strict penalties, increased enforcement in large cities
throughout Morocco, and plans to step up seizures of
counterfeit products. Separately, Casablanca-based
international trademark holders have formed a Brand
Protection Group to coordinate their cooperation with the
government in combating a recent epidemic of counterfeit
products. (Comment: Casablanca septel will outline the
group's strategy and activities to date. FCS Casablanca is

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also working with Moroccan Customs to prevent recurrence of a
case where a shipment of counterfeit feminine hygiene
products that violate a Proctor and Gamble trademark was
cleared into Morocco. Customs subsequently seized much of
the shipment, but we understand additional shipments are en
route. End Comment.)


8. (U) Looming Electricity Crisis?: There has been much press
play over the past week about an alarmist headline in the
"Economist" newspaper on February 22 predicting that a "grave
crisis" in electricity in coming years. The paper argued
that planned investments in generating capacity are not
keeping up with growth in demand, which has averaged 9
percent annually, with the result that power outages may
start as early as 2008. The National Electricity Office
(ONE),the ostensible source of the "Economist" report, has
yet to deny the report, and Minister of Energy Boutaleb has
confined his comment to observing that "there is not
currently a problem with electricity supply." Sectoral
experts note that the additional capacity that will come on
line in the short term is limited, but that interconnections
with Spain and Algeria should make up any shortfall that
exists. They thus predict problems beginning in 2009. We
are seeking meetings with ONE and the Energy Ministry to look
into the issue further.


9. (SBU) Crop Update: FAS recently traveled through wheat and
barley growing regions to assess the 2007 cereal crop. The
assessment confirmed media, government and contact reports
that the 2007 cereal crop will be down significantly from

2006. Although harvest will not begin until June, early,
rough estimates place wheat and barley production at 4
million to 4.5 million tons, compared to 9.2 million tons for
the previous year. In anticipation of the short crop and dry
conditions, the GOM has eliminated the import duty on a
number of feed grains and feed ingredients, and most recently
lowered the import duty on wheat from 130 percent to 60
percent.
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Riley