ELIMINATING SLUMS THAT BREED EXTREMISM IN MOROCCO

UNCLAS CASABLANCA 000166 SIPDIS SENSITIVE STATE FOR NEA/MAG COMMERCE FOR NATHANIEL MASON E.O. 12958: N/A TAGS: ECON PGOV PREL KISL MO SUBJECT: ELIMINATING SLUMS THAT BREED EXTREMISM IN MOROCCO REF: A. 08 RABAT 400 ¶B. 08 RABAT 422 ¶1. (SBU) Summary: As part of Morocco's efforts to manage the socio-economic conditions that indirectly contribute to the growth of extremism, close to 40 percent of the country's 70 urban slums have been eradicated over the past several years and its inhabitants re-housed in new government-subsidized housing. Morocco's government has implemented a dual approach in eliminating the country's urban slums, which entails a fiscal incentive scheme for private real estate developers and a broadening of mortgage financing for first time homeowners. This hard won success may be at risk, however, if the Government of Morocco does not address the increasing unwillingness of slum dwellers to be re-housed and the lack of socio-economic diversity that could risk turning the country's social housing units into tomorrow's ghettos. End Summary. -------------- Slums and Extremism -------------- ¶2. (SBU) During the last decade, continuing population growth pressure, urbanization, and rising housing costs have fueled the expansion of the country's vast slum areas. Home to 300,000 households or about 1.2 million individuals, Morocco's estimated 70 urban slum dwellings are overcrowded and lack infrastructure and basic services. (Note: One quarter of Morocco's urban slums are located in the Greater Casablanca region. End Note.) ¶3. (SBU) This urban squalor indirectly contributes to extremism. Often accompanied by conditions of unemployment or underemployment, slum communities tend to be stigmatized, engendering social alienation, disconnection from the state, and a sense of hopelessness with respect to future prospects. Residents of slums contribute a disproportionate share to the 31 percent unemployment rate among urban youth (those below 24). Slums are not a direct cause of the rise in radical Islamic terrorism that we have seen in the last 15 years - poverty has always existed in Morocco. However, the existence of slums tend to cause a small population, particularly its young males, that are attracted to the sense of purpose, social acceptance, and outlet for anger that adherence to radical ideology can provide. The terrorists who carried out the 2003 and 2007 Casablanca bombings and the 2004 Madrid bombing were from slums like Casablanca's Sidi Moumen and Tetouan's Jama'a Mezouaq. (Refs A and B). -------------- Morocco's Approach to Eradicating Slums -------------- ¶4. (SBU) In order to meet King Mohammed VI's announced goal of eliminating the country's urban slums by 2012 and thereby quelling the growth of extremism, the Ministry of Housing launched its "Cities Without Slums" program in 2003. To date, this inter-ministerial initiative has eradicated close to 40 percent of the country's 70 urban slums and re-housed its inhabitants in new government subsidized housing, according to Fatna Chihab, the head of social housing at the Ministry of Housing. ¶5. (SBU) The "Cities Without Slums" program relies on a two-pronged approach. First, it has implemented a fiscal incentive scheme with private real estate developers to encourage social housing development. Under this plan, the government sells public land at below-market prices to real estate firms who commit to build a minimum of 2,500 social housing units priced at no more than USD 18,000 each. The Ministry of Housing expects developers to construct 130,000 social housing units by 2012. As an example, Addoha Group, the country's largest real estate development firm, recently acquired land valued at USD 3 billion for USD 250 million, according to Morocco's leading business journal L'Economiste. In exchange, Addoha has committed to build 24,000 social housing units in the next 18 months. Addoha has set up a one-stop shop at its corporate headquarters, where clients can complete all the necessary steps and paperwork involved in buying on of these "social" condominiums. Moreover, developers who commit to build such housing units within a period of five years benefit from a tax exemption during the first five years of operation and a 15 percent corporate tax rate on their profits thereafter. ¶6. (SBU) Second, the government's broadening of mortgage financing for first time homeowners has been critical to diminishing Morocco's shantytowns. For example, the country's slum inhabitants may borrow up to 100 percent of the value of a USD 25,000 apartment. The State in turn guarantees 70 percent of the total mortgage payment in the case of a default. The system of guaranteed funds is mainly backed by taxes on cement companies set at USD 12.50 per ton, generating USD 160 million a year. The government guarantee has allowed banks to lend at a lower risk and offer low interest rate mortgage loans. "With no down payment required and mortgage payments of USD 100 a month for a USD 18,000 flat, even the country's smallest earners can own property", Anas Sefrioui, CEO of Addoha told us. Demand is so high that the wait time to get a USD 25,000 apartment is more than 14 months, but builders are hesitant to produce more supply without additional government subsidies because their profits are so low in these sales. Income criteria are supposed to limit eligibility for purchasing social units to poorer citizens, but media reports indicate that Morocco's real estate boom has attracted lower middle class families to falsify papers or bribe officials to be able to purchase some of these subsidized units, further adding to the supply shortfall. -------------- Morocco's Ghettoization? -------------- ¶7. (SBU) Serious obstacles remain to this broad-based effort to move people out of slums, however. Chief among them is the increasing reluctance of slum dwellers to relocate, Ahmed Hejira, Morocco's Minister of Housing told the Consul General. In fact, a recent study conducted by the Ministry of Housing found that many people living in the new social housing units are dissatisfied with their accommodations, particularly the small size of living spaces. "The units are mainly blocks of flats that look really depressing," said Mohamed Jaouad, who now lives in a four-story social housing apartment building in Sidi Moumen. Other critics complain about the high costs of re-housing. The water supply and electricity that was once illegally siphoned now must be paid for. In addition to these added costs, relocation also means formal registration with the government, an uncomfortable prospect for many slum inhabitants used to operating in the informal sector. ¶8. (SBU) Still other critics of the government's housing program, including sociologist Hamidi Bekouchi, warn that the subsidized housing units fail to encourage socio-economic diversity and risk turning the former sprawling shantytowns into ghettos. "Hard won success is at risk", he told Econoff. Poverty and joblessness remain a problem for those relocated, "but better to be idle in a new apartment than a slum", countered Jaouad. Bekouchi also shared concerns with Econoff that Morocco's slum inhabitants continue to be treated as passive recipients of public aid, instead of customers of subsidized products who have a say in their housing purchases. -------------- Comment -------------- ¶9. (SBU) The government's slum eradication program is not a panacea for the problems of poverty or extremism, but it is a step in the right direction. For the country's marginalized communities, "Cities Without Slums" demonstrates the government's commitment to change. Nevertheless, unemployment and illiteracy continue to plague the country's slum inhabitants. Although Morocco is making substantial financial investments in education and economic diversification, these strategic efforts will take months and in many cases years to positively impact Morocco's slum communities. MILLARD