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.
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Slums and Extremism
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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).
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Morocco's Approach to Eradicating Slums
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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.

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Morocco's Ghettoization?
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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.
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Comment
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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