NATIONWIDE ECONOMIC IMPACT OF CASABLANCA BOMBINGS

UNCLAS RABAT 000786 SIPDIS SIPDIS E.O. 12958: N/A TAGS: ECON EFIN EINV MA SUBJECT: NATIONWIDE ECONOMIC IMPACT OF CASABLANCA BOMBINGS REMAINS LIMITED REF: A. RABAT 751 ¶B. CASABLANCA 85 Sensitive but Unclassified-- entire text. Not for internet distribution. ¶1. (SBU) Summary: The series of suicide bombings in Casablanca over the last month and resultant country-wide security alert has had only a limited economic impact. Tourism, Morocco's major source of foreign exchange revenue, has remained resilient. Major destinations including Fes and Marrakech remain almost fully booked, and international carriers report few if any cancellations. Industry sources argue that with increasing understanding that terrorism is a worldwide phenomenon, investors and tourists alike have factored the heightened risks of the last month into their assessment of Morocco, and continue to view it as acceptable or "normal." While they have not sought to conceal the reality of the security threat, and indeed revealed this week that dismantled cells were planning to attack such tourist destinations as Essaouira and Marrakech, Moroccan officials will doubtless remain vigilant to signs of slippage in the sector, given its economic importance. End Summary. ¶2. (SBU) The series of suicide bombings in Casablanca over the last month has not had an immediate impact on the critical tourist sector, according to both industry and government sources. Hotel managers, travel agencies, and airlines, among others, report continued strong demand, and a lack of mass cancellations. Tourism Ministry Secretary General Hassan Kacima told us on April 27 that the Ministry has stayed in close touch with associations representing both hotels and travel agencies, and that all report little impact. "There have been no wave of cancellations," he said, and he contrasted the reaction with that which followed September 11. Travellers, he suggested, now understand that terrorism is a global phenomenon that can strike anywhere at anytime. He stressed that this resilience has occurred even as Moroccan officials have been forthright in emphasizing the existence of a potential threat, and the need for continued vigilence. The major tourist impact thus far appears to be a decision by some major cruise lines to forgo scheduled stops in Casablanca, as well as a similar decision by some American tourists (Americans make up only a very small percentage of the Moroccan tourism market-- approximately 1 percent). ¶3. (SBU) This relative calm in the face of the heightened security alert was evident at Morocco's Annual "Assises du Tourisme" on April 28 in Fes. Over two thousand industry operators, including several hundred from overseas, gathered to note the progress Morocco has registered on the road to its goal of 10 million tourists by 2010, and to launch the final phase of the program. A confident Tourism Minister Adil Douiri emphasized that Morocco is no longer speaking of a "goal" of 10 million, but rather predicts that this level will be attained with ease. The mood of the gathering was celebratory rather than tense, with applause and cheers as foreign tour operators and airlines outlined their plans to raise and in some cases double their capacity into Morocco. The reality of the country's current security alert was evident only in a few brief references to the need for continued security vigilance, and in the extensive security that surrounded the meeting venue in Fes: clearly Moroccan authorities were taking no chances with this flagship event. ¶4. (SBU) This apparent calm is also reflected in the limited number of calls post fielded from concerned American citizens and businesses in the wake of the Casablanca incidents. While some journalists have called us to ask worriedly about the potential impact on tourism and investment, no investors themselves have called. Wassin Kabbara, a Moroccan-American who is managing a tourism investment fund here, argues that businesses have internalized the risks. Even in the wake of recent incidents, he believes, they still view the situation in Morocco as "normal," and far more secure than the situation in some other countries in the region. ¶5. (SBU) That assessment is apparently not fully shared by all segments of Moroccan society. As reported Reb B, the bombings' major economic impact to date appears to be centered on upper end shopping and entertainment venues in Casablanca. Some restaurants and clubs report a drop off in business of 30-50 percent in the two weeks since the April 14 incidents. High end boutiques have seen a similar pattern. Patrons of these establishments, in informal conversations and in interviews with media outlets, including "Maroc Hebdo," profess that the bombings in front of the Consulate and Dar America brought home to them in a new way the reality of the threat, and the realization that it could extend out of the inner city slums where it was earlier concentrated. For the time being, many have opted to forgo their normal night out on the town, to avoid frequenting establishments that they perceive could potentially become terrorist targets. ¶6. (SBU) Comment: We will continue to closely monitor the situation surrounding Morocco's tourist sector, given the pivotal role it plays in the country's balance of payments. For now, however, it remains resilient, even as Moroccan officials continue to highlight the seriousness of the security situation in their public comments. ****************************************** Visit Embassy Rabat's Classified Website; http://www.state.sgov.gov/p/nea/rabat ****************************************** RILEY