Identifier
Created
Classification
Origin
08RABAT201
2008-03-04 16:08:00
CONFIDENTIAL
Embassy Rabat
Cable title:  

PRIME MINISTER'S ECONOMIC GATEKEEPER ON GOVERNMENT

Tags:  ECON EFIN PGOV ASCH MO 
pdf how-to read a cable
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RR RUEHWEB

DE RUEHRB #0201/01 0641608
ZNY CCCCC ZZH
R 041608Z MAR 08
FM AMEMBASSY RABAT
TO RUEHC/SECSTATE WASHDC 8220
INFO RUEHAS/AMEMBASSY ALGIERS 4706
RUEHAM/AMEMBASSY AMMAN 0598
RUEHEG/AMEMBASSY CAIRO 2303
RUEHTU/AMEMBASSY TUNIS 9541
RUEHCL/AMCONSUL CASABLANCA 3929
C O N F I D E N T I A L RABAT 000201 

SIPDIS

SIPDIS

E.O. 12958: DECL: 03/03/2018
TAGS: ECON EFIN PGOV ASCH MO
SUBJECT: PRIME MINISTER'S ECONOMIC GATEKEEPER ON GOVERNMENT
PRIORITIES

Classified By: Ambassador Thomas T. Riley for reasons 1.4 (b) and (d).

C O N F I D E N T I A L RABAT 000201

SIPDIS

SIPDIS

E.O. 12958: DECL: 03/03/2018
TAGS: ECON EFIN PGOV ASCH MO
SUBJECT: PRIME MINISTER'S ECONOMIC GATEKEEPER ON GOVERNMENT
PRIORITIES

Classified By: Ambassador Thomas T. Riley for reasons 1.4 (b) and (d).


1. (SBU) Summary: Minister-Delegate for Economic and General
Affairs Nizar Baraka set out an ambitious governmental
economic agenda in his first public speech at the end of
February. The government, he said, would focus on increased
and "qualitatively different" growth through increased
investment and intensification of the country's improvement
of its basic infrastructure. Separately, during a courtesy
call by the Ambassador, Baraka spoke frankly about other
challenges facing Morocco, including corruption and the
increasing cost and widespread misuse of government subsidies
for basic commodities. In response to the Ambassador's
request, Baraka also agreed to weigh in on our efforts to
secure an agreement governing the five State
Department-supported American schools in Morocco. End
Summary.


2. (U) A "New" Economic Policy: In a February 26 address,
his first since entering the cabinet, Baraka outlined a "new"
economic policy that seeks to bring increased and
"qualitatively different" economic growth, support economic
actors in Morocco, and spur job creation. Means to these
ends include a "new impulsion" to Morocco's large
infrastructure projects, a doubling of investment, and
continuation of improvements to Morocco's transportation
infrastructure. Other priorities include continued emphasis
on "social housing," increasing the public's purchasing power
through tax reform and lowering of both Morocco's high
marginal tax rates on income and its value-added tax. He
pledged that the government would continue to support the
price of basic commodities, but added that the system
requires extensive reform. Implicitly recognizing Morocco's
lack of competitiveness, Baraka argued that increasing
attention needs to be given to Moroccan exports, and not to
"internal demand." He called for commercial and tariff
reforms, as well as a more flexible exchange rate regime.


3. (C) During a courtesy call by the Ambassador earlier on

the same day, Baraka elaborated on several of these points,
stressing that Morocco is in a "take-off" period when it
needs to support small and medium-sized enterprises and build
confidence in the economy. In response to a question from
the Ambassador, Baraka also explained in detail the
government's plans to combat the widespread problem of
corruption. He conceded that corruption has "always" been a
problem in Morocco. Societal tolerance of the phenomenon, he
argued, stems both from the "sense of impunity" that exists
in the public sector, and more generally from the fact that
despite recent economic gains, "the country's social
elevator" is not working, and people see no other way to get
ahead. He likened corruption to other social ills, as when a
poor taxi driver "lets his wife prostitute herself" by
accepting money she brings into the household without asking
about its source.


4. (C) Baraka outlined a multi-pronged governmental approach
to tackling the issue. Legislation will force all Ministers
and other high-ranking officials to set an example by
declaring their personal assets on entering public service,
and thereafter at two-year intervals. These declarations
will be followed-up through the Cour des Comptes (Morocco's
General Accountability Office). A new anti-corruption agency
will be set up in the next two months, which will collect and
pursue complaints. The government will also simplify and
streamline administrative procedures and reduce the
bureaucracy's "discretionary power." Thus the new national
identity card will be used for multiple administrative
functions, and Moroccans will no longer need to obtain
separate birth certificates, voting cards, or residence
papers. In addition, requirements will be better publicized,
so that applicants know upfront what is required in order to
carry out specific operations. The final step, Baraka
concluded, will be a shift in focus from the payer of bribes
to the recipient, so that in future whistleblowers will no
longer expose themselves to potential punishment.


5. (C) In response to the Ambassador's inquiry about whether
the government plans to increase civil service salaries,
another widely perceived factor in corruption, Baraka
conceded the problem. He said, however, that the need to
maintain macro-economic stability limits what the government
can do, since significant progress has been registered in
recent years in better balancing expenditures and receipts,
and that success cannot be jeopardized. He said that the
government is looking at a long-term strategy that will
permit gradual salary increases on a regular basis, so that
it can both reduce the incentive towards corruption and avoid

past cycles of no increases, followed by strikes and
significant hikes.


6. (C) On other topics, Baraka confirmed that the government
is studying the question of reform of Morocco's Compensation
Fund, which subsidizes the price of basic commodities,
including sugar, bread and wheat, fuel, and butane gas, given
that the expense of the Fund has ballooned to 20 billion MAD
in this year's budget. Baraka argued that the key is to
ensure that these subsidies are properly targeted, and he
cited the example of butane gas tanks intended for poor
households that an increasing number of industries now use,
given the fact that the government subsidizes over half their
cost. Baraka contrasted the shortcomings of the system with
the "effectiveness" of housing subsidies for low-income
families, which hold down housing costs through a limited
government investment. He also stressed that this support,
like the Compensation Fund, functions as an "indirect salary"
support, so that those who complain that their salaries have
not kept up with inflation are not telling the whole story.


7. (C) Regarding overall coordination of government economic
policy, Baraka described a system where the Primature has
worked with Ministries to set targets in specific program
areas, and is now developing a monitoring and implementation
system to ensure that those priorities are realized. The
Prime Minister meets monthly with all economic ministers, he
said, for an udpate on their progress. The goal, he said, is
to enable Ministers to set the pace and prevent them from
becoming hostages of their respective administrations.


8. (SBU) Bilateral Priorities: During the meeting, the
Ambassador and Baraka also reviewed two key U.S. priorities:
conclusion of an agreement governing the status of the five
State Department-supported American schools in Morocco, and
implementation of the U.S.-Morocco Millennium Challenge
Account Compact. Baraka, who was deputy head of the Moroccan
team that developed the Compact in his earlier incarnation at
the Ministry of Finance, said the government is moving
swiftly to recruit a director for its implementing agency.
Once this is completed, he expected other actions to fall
into place. On the schools, he agreed to review the
Embassy's revised proposal, and to engage with his
ministerial colleagues to help move the dossier forward. He
noted the complications that have resulted from differences
among the schools, and from a desire to avoid setting a
precedent that would touch other schools, particularly
private Moroccan institutions and the French and Spanish
school systems.


9. (C) Comment: Baraka is one of Istiqlal's rising
political stars, his status helped by but not entirely
dependent on the fact he is the Prime Minister's son-in-law
and trusted confidant. In the meeting, he displayed
impressive familiarity with the range of issues confronting
the government in the economic sphere, essentially confirming
his role as the PM's "gatekeeper" on such matters, with
responsibility for coordinating and monitoring the
government's economic policy. The challenge for him and for
the El Fassi government is to show that it can produce before
political pressure forces a change in government. End
Comment.


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Visit Embassy Rabat's Classified Website;
http://www.state.sgov.gov/p/nea/rabat
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Riley