Identifier
Created
Classification
Origin
08CASABLANCA207
2008-11-04 07:28:00
CONFIDENTIAL
Consulate Casablanca
Cable title:  

MOROCCO AND ALGERIA'S QUIET ECONOMIC RAPPROCHEMENT

Tags:  AG ECIN ECON ENRG MO PGOV PREL 
pdf how-to read a cable
VZCZCXRO2400
RR RUEHTRO
DE RUEHCL #0207/01 3090728
ZNY CCCCC ZZH
R 040728Z NOV 08
FM AMCONSUL CASABLANCA
TO RUEHC/SECSTATE WASHDC 8186
INFO RUEHAS/AMEMBASSY ALGIERS 3001
RUEHEG/AMEMBASSY CAIRO 0916
RUEHMD/AMEMBASSY MADRID 3825
RUEHFR/AMEMBASSY PARIS 0664
RUEHRB/AMEMBASSY RABAT 8437
RUEHTRO/AMEMBASSY TRIPOLI 0023
RUEHTU/AMEMBASSY TUNIS 2123
C O N F I D E N T I A L SECTION 01 OF 02 CASABLANCA 000207 

SIPDIS

FOR STATE NEA/MAG

E.O. 12958: DECL: 11/03/2018
TAGS: AG ECIN ECON ENRG MO PGOV PREL
SUBJECT: MOROCCO AND ALGERIA'S QUIET ECONOMIC RAPPROCHEMENT

Classified By: CG Elisabeth Millard for reasons 1.4 (b),(d).


-----------
Summary
-----------

C O N F I D E N T I A L SECTION 01 OF 02 CASABLANCA 000207

SIPDIS

FOR STATE NEA/MAG

E.O. 12958: DECL: 11/03/2018
TAGS: AG ECIN ECON ENRG MO PGOV PREL
SUBJECT: MOROCCO AND ALGERIA'S QUIET ECONOMIC RAPPROCHEMENT

Classified By: CG Elisabeth Millard for reasons 1.4 (b),(d).


--------------
Summary
--------------


1. (C) Despite their closed land border, the Moroccan and
Algerian economies have become increasingly interconnected in
sectors ranging from energy to banking. Revenues for General
Electric (GE) Morocco total 250 million USD per year in
Algeria; the CEO of the National Office of Phosphates (OCP)
and high-level Algerian officials have held a series of
low-profile meetings to explore opportunities for cooperation
in the fertilizer field; and the largest Moroccan bank,
Attijariwafa, is close to finalizing a contract that would
permit it to operate in Algeria. Moroccan business leaders
stress, however, that the longstanding political tensions
between Morocco and Algeria must be resolved before further
progress towards regional economic integration can be made.
End Summary.

--------------
Formal and Informal Integration
--------------


2. (SBU) In the energy sector, collaboration between Algeria
and Morocco occurs on both the formal and informal level. For
example, GE Morocco provides close to 70% of Algeria,s power
plants and a large number of water facilities with turbines
and compressing pumps, while providing electrical parts for
the Algerian airline fleet. GE Morocco CEO Kamal Kassis
recently told econoff that its revenues in Algeria total 250
million USD per year, explaining that business in Algeria has
grown exponentially in the last three years. He further noted
that GE Morocco had in the last year equipped two new power
plant facilities in Algeria.


3. (SBU) Moreover, the CEO of a large electrical supplies
company, Abdelmalik Kettani, tells us that he distributes a
surprising amount of products to a client in Oujda, a
Moroccan town that borders Algeria, and is convinced that the
products are being transported into Algeria illegally.
According to Kettani, a fair number of his business
colleagues also have an unusually high demand for shipments

to border towns.


4. (C) A senior official at the Moroccan National Office of
Electricity, Adnane Belachin, described to us the economic
relationship between Algeria and Morocco in his field as a
flourishing one. He highlighted the Electricity Rescue Plan
established between Algeria and Morocco, which stipulates
that if the Algerian electrical output ceases, Moroccans will
temporarily provide electricity and vice versa. Belachin also
flagged a Moroccan-led renewable energy project with Algeria
in Oujda, which he believes is a model for collaborative
projects between the two countries in the future.

--------------
Quiet Rapprochement
--------------


5. (C) Collaboration in the phosphate sector has occurred
through a series of technical meetings held between
Morocco,s state owned National Office for Phosphate (OCP)
and high-level Algerian officials. On October 9, the CEO of
OCP, Mustapha Terrab (please protect throughout) told us and
visiting EEB Desk Officer that such cooperation poses no
difficulties, provided it does not assume a public profile.


6. (C) Terrab is a strong advocate of regional economic
integration between the two largest Maghreb economies,
pointing out the strong benefits this would offer OCP. He
noted that Morocco holds about three-fourths of the world,s
phosphate reserves and is the world,s biggest phosphate
exporter. As the price of oil increased globally in recent
months, exporting raw phosphates has become expensive and
global demand for fertilizer, a highly desirable final
product of phosphate, has shot up. However, to produce this
product, OCP needs large quantities of ammonium ) a by
product of gas. Algeria,s proximity and huge gas production
make it an ideal trading partner. (Note: Morocco currently
imports ammonium from Russia.) According to Terrab, with
Algeria as a partner, Morocco could become the world leader

CASABLANCA 00000207 002 OF 002


in the production of inexpensive fertilizer.


7. (C) During the past year, Terrab has met with high-level
officials from the Algerian government on this issue in a
series of quiet meetings, which - at the demand of the
Algerian authorities - were held at a secluded beach in
Algeria. During those meetings, Terrab proposed to build an
OCP ammonium extraction plant in Algeria, which would have an
Algerian proprietor so as to conceal its Moroccan
connections. Although he received positive feedback, the
Algerians concluded that such a project must wait for
improvement in political relations between the two countries.


8. (C) Nonetheless, Terrab said that there have been four
technical exchanges in the past year to explore the
feasibility of pursing cooperation in the fertilizer sector.
The technical teams have traveled from Algeria to Morocco
with reciprocal visits from the OCP team to Algeria. Such
technical cooperation is not a problem, he said, as long as
it stays below the political and media radar screen.

--------------
Almost There
--------------


9. (SBU) The banking sector is on the verge of becoming
another area of integration. The CEO of Attijariwafa Bank,
Mohammed El Kattani, told the Consul General in Casablanca in
a recent meeting that the bank has taken concrete steps to
open branches in Algeria. Kattani added that the banks are a
pivotal component to any Maghreb integration. He has said,
&When the banks of a certain country go to another country,
the industrial and service companies of that country will
follow them.8 He further opined, &We have to overcome the
political obstacles and take advantage of all holes in order
to make progress towards desired integration8.

--------------
Stumbling Blocks
--------------


10. (C) Despite these positive developments, Moroccan
business leaders stress that only political rapprochement
between the two countries will permit further progress and
realization of the potential synergies integration could
provide. Terrab in particular has been a staunch public
advocate for a rapprochement with Algiers, and has directed
OCP to finance studies highlighting the economic benefits of
such integration. He conceded that the moment has not yet
arrived for progress on the dossier, but argued that renewal
of past U.S. efforts, as in the decade-old Eizenstat
Initiative for U.S.-North African economic partnership, might
offer an avenue for progress. Noting Morocco,s openness to
such an evolution, he suggested that any such effort focus in
the first instance on Algeria, and permit it to take the
lead. Otherwise, as a &Moroccan initiative,8 akin to the
King,s recent overture in his Throne Day speech, it might
well fall on deaf ears.

--------------
Comment
--------------


11. (SBU) The Peterson Institute study financed by OCP (among
others) demonstrates the potential synergies that economic
integration in the Maghreb would permit. Political
constraints cloud the short term picture, but clearly efforts
on a technical and practical level to advance day-to-day
contacts should continue. End Comment.
MILLARD