FES

Morocco
/ Michael Field. - [Electronic ed.]. - Bonn, 2000. - 20 S. = 58 Kb, Text
. - (FES-Analyse)

Electronic ed.: Bonn : FES Library, 2001

© Friedrich-Ebert-Stiftung

King Mohammad VI

Policy Changes: Western Sahara, Human Rights

Reforming the Bureaucracy

Political Reform

The Islamists

Constraints on Economic Growth

Government Economic Policies

[Essentials]

King Mohammad VI, who succeeded to the throne in July last year, has adopted a style of rule very different from his father’s. He is emphasising the need to help the poor and underprivileged in society. He is arousing great expectations among his people.

There have already been substantial changes in policy. The long serving Interior Minister, Driss Basri, has been fired, and the government appears more willing to resolve the conflict over the Western Sahara. The improvement in human rights, which began in the mid-1990s, has been continued. Opponents of the monarchy have been allowed to return from exile.

There is much talk of "administrative reform" and "eliminating corruption", but little tangible progress in these areas so far. There are not likely to be more formal constitutional reforms. Much was changed in the later years of Hassan II. What is needed now is for the democratic process to be allowed to operate. The politicians and parliament have to show themselves to be effective if they are to earn public respect. The King has to allow some of his own enormous powers over the day to day running of the country gradually to be transferred to the government and parliament.

Much was done to modernise the economy in the 1980s and 1990s - though structural reform remains incomplete. The changes so far have produced strong growth in a few small areas but overall GDP growth rates remain low - around 2/2.5 per cent. Flows of foreign investment are disappointing - companies are put off by bureaucracy and corruption, and they do not find officials very welcoming. The price of land is high. Capital transactions are complicated by exchange controls.

The economy remains dependant on agriculture. Big annual variations in the cereals harvest affect confidence throughout the country and determine the rate of GDP growth. The state’s debt is equivalent to 91 per cent of GDP. It is actively managed and is steadily being reduced, but it still constrains spending on infrastructure and education.

The government hopes that growth will be increased to 6 per cent a year by the restructuring and investment that will be forced on Moroccan industry by the removal of protective tariff barriers. This is due to begin in March this year, when the new Treaty of Association with the EU comes into force.

Further stimulus should come from the continuation and extension of the privatisation programme. In the long term the government and the World Bank agree that the country has to improve its education system.

King Mohammad VI

From the day he succeeded his father at the end of July last year, the new Moroccan monarch, Mohammad VI, has given a different tone to his rule. His father, Hassan II, who had come to the throne in 1961, was able, farsighted and lucky, but he lived in some isolation from his people. He was unforgiving to his enemies and he was much attached to his privileges and prerogatives as king.

King Mohammad, who is 36 but looks younger, is seeking to win legitimacy by being close to his people, particularly the poor and underprivileged. In a speech in August he declared: "We Mohammad VI succeed (our father) to be at your service, dear people, and at the service of Morocco." He referred to the improved human rights his people had enjoyed during (the later part of) his father’s reign - this being significant as a statement of his own intentions - and he went on to say that he wanted all his people to have lives that were dignified and decent. He stressed the need to improve the lot of the very poor in the countryside, the unemployed, women and the disabled. He did not posses a "magic wand" with which to sweep away these people’s problems, he said, but he would confront them honestly. In this respect it was essential that Morocco should improve its education system.

The King has backed his words with encouraging and much reported gestures. Within weeks of his accession he made a visit to the Rif, a wild mountainous area in the north of the country, which was utterly neglected by his father after it rose in rebellion in the late 1950s when Hassan, then crown prince, was its governor. In recent years the Rif has been famous for its cultivation of hashish, which gives the country some $2bn of exports a year. It has suffered from a lack of government infrastructure spending or effective policing. The last is a most striking feature, because other regions are very thoroughly policed, with check points on all the main roads.

In his visits to towns and villages the King has gone out of his way to meet the poor. He has been photographed kissing handicapped children. He has paid surprise visits to hospitals - and in one well publicised case found the management entirely absent. In a more elevated social milieu he surprised his entourage by insisting on paying a restaurant bill in the famous Mamounia Hotel in Marrakesh. The gesture was intended as a message to senior government officials that in future they should not stay and dine at smart hotels and have the bills sent to be paid by their ministries.

Inevitably the young King has aroused great expectations. When he returns to his palace on the outskirts of Rabat in the evenings he finds crowds waiting to hand him petitions listing grievances and requests for help. The sense of expectation is increased, to some extent, by Morocco having a new government. This is a socialist/nationalist coalition of parties, led by the Union Socialiste des Forces Populaires and the Istiqlal, which from the 1960s until the spring of 1998 were in opposition. The government, appointed in March 1998, did not achieve much during its first 16 months in power - in fact its performance was regarded as slightly disappointing. But if from now on it finds itself working with a king who has partly similar reforming ideas, it may become more effective.

The King has already made some changes of substance as well as style. In November he sacked Driss Basri, who had served as his father’s Interior Minister since 1973. Basri had been extremely powerful. King Hassan had depended on him. In the 1990s it had become possible for the press and politicians to criticise Basri - they could never criticise the King - and since the middle of the decade he had begun to lose a little of his power. He surrendered the Information portfolio in 1995 and when the new government was formed in 1998 he lost Rural and Urban Affairs. But he remained responsible for Morocco’s policy in the Western Sahara, he controlled the police and internal intelligence and he appointed the provincial governors. He was shrewd, often charming and efficient - he got things done - and he gave the country a degree of political stability it lacked in the early years of King Hassan’s reign. What he created, however, was a typical Middle Eastern "security state" in which the police assumed a rôle which went far beyond what was necessary for ordinary criminal investigations and the maintenance of public order. People deemed to represent a threat to the government or to be disloyal - who in recent years had not included members of the opposition parties - were pursued with cruel vindictiveness. The over-regulation of society bred corruption. Basri’s sacking was greeted with enthusiasm by the press and people.

With the departure of Basri has gone a change in the government’s policy on the Western Sahara. This long stretch of territory on the Atlantic coast was occupied by Morocco in stages, in 1975 and 1979. An independence movement, led by the Polisario Front and backed by Algeria, has been contained, and since a cease-fire in 1991 both sides have agreed there should be a referendum on the territory’s future, supervised by the United Nations. Most of the last nine years has been spent in arguments over who should be entitled to vote. This involves deciding which parts of the population are real Sahraouis and which have been sent in by the Moroccans. Similarly there are arguments over which tribes living in Morocco, Mali and Mauritania left the territory during the war, and are therefore entitled to a vote, and which were never there in the first place. Under Basri, the Moroccan government gave the appearance of being helpful, while it carefully frustrated or delayed every UN initiative.

In the last year it seems that all parties, including the Algerians, have been coming to accept that a referendum may not be the ideal solution, in that its result would be unlikely to be accepted by the losing side. The Moroccans have been shifting their thinking towards a formula which would give them sovereignty and the Sahraouis self government. Since the removal of Basri discussions on these lines have become more open, and the government has been trying to some degree to win the hearts and minds of the Sahraouis, rather than just intimidating them. At the same time, by coincidence, the Franco-German satellite television station, ARTE, which can easily be received in Morocco, last November broadcast a programme on the Sahara. For many Moroccans this was a revelation. They had not been told before that the Sahraouis did not welcome their occupation. The programme made a big impact.

The King has moved to improve human rights - though here there were important improvements in the last five years of his father’s reign. In 1994 the Ministry of the Interior released most of the country’s political prisoners. This was partly a mark of the regime’s increasing self-confidence and sense that it was accepted by most of the population, and partly a response to embarrassing international criticism of its behaviour. Many of those released were people who had been involved in two coup attempts, involving attacks on the King’s aircraft and then on his birthday party, in 1972 and 1973. The conspirators had been held in prison in a place called Tazmamart, at the extreme eastern end of the High Atlas, close to where the mountains merge into the Sahara desert. Tazmamart is not marked on any map and until the late 1980s even its name was unknown. The prisoners there were kept in solitary confinement without light, medical treatment or any means of communicating their whereabouts to their families. Half of those arrested in 1973 died and several went mad. With them in Tazmamart and other jails were various students, journalists and academics who in the 1970s and 1980s had done no more then criticise the régime, particularly the King, and sensitive areas of government policy. After these people were released, and given government stipends of a few hundred dollars a month, those left in prison were a few Islamist agitators, arrested recently, and some supporters of Polisario. Soon after the releases the government allowed back into the country some elderly politicians who had been in exile. It also created a Ministry of Human Rights and a Tribunal Administratif, to judge disputes between citizens and the authorities.

Some attempt was made to educate the police about human rights and stop them using torture. A journalist who had written articles on human rights found himself invited by the police to address officers on this subject. He told them that it was not necessary to beat up suspects when arresting them and that police in other countries obtained information by investigation. He was struck by the rather simplistic response of some in his audience. Their view was that if prisoners were not guilty the police would not be arresting them, and that if they were not going to be beaten up the arrests would be pointless. In 1996 and 1997 there was some "backsliding" on human rights. There were more frequent reports of torture and deaths in police custody. This was in spite of instruction on human rights being included in police training.

In February 1999 there was an extraordinary episode which stemmed from the Interior Ministry’s decision to ban a meeting of unemployed graduates, including a large delegation of blind graduates, in Agdal, a suburb of Rabat. When the graduates decided to ignore the ban and march to one of the ministries to demand government help in finding jobs, the police violently broke up the demonstration. In the same month, however, the government allowed a conference on Human Rights in the Arab World to be held in Rabat, and it was planned that Amnesty International would hold its annual meeting there - the first meeting it would ever have held in Africa. The meeting never took place, because the Ministry of the Interior saw a draft of Amnesty’s annual report, containing criticisms (as well as praise) of Morocco’s record on political prisoners and women’s issues. It asked the organisation to go elsewhere. The meeting was eventually held in Lisbon.

What was striking was the open debate in Morocco over these issues and the very loud protests that greeted the attack on the graduates’ march in February. The press carried quite personal attacks on Driss Basri and the Prime Minister. Moroccan society as a whole has become much more prepared to complain about the police - and about corruption in the police and other parts of the bureaucracy. Whereas a few years ago it was accepted that to get minor officials to perform their duties, or deter traffic police from over-zealous harassment of drivers, little bribes had to be paid, there are now many Moroccans who are prepared to argue with officials. They demand fair treatment and professional performance of the officials’ duties.

The changes initiated by the new King, therefore, do not mark a complete reversal of government policy. They are rather an advance of policies which were already being put into effect in a tentative fashion. The most important new step, in September, was the King giving permission for the return of Ibrahim Serfati, a famous, outspoken critic of the monarchy in the 1970s. Serfati had been imprisoned and then exiled on his release in 1991. In November the King allowed the return of the family of Mehdi Ben Barka, a radical politician who had disappeared in Paris in 1966. He was found by a French court to have been kidnapped and murdered by Moroccan agents. It is now understood that the government will tell the families of others who "disappeared" or died in prison in the 1960s, ’70s and ’80s exactly what happened to their relations. Compensation will be paid.

It was difficult for the government to do this while King Hassan was alive because many of the disappeared and exiles such as Serfati had attacked the King personally and had been, or still were, committed to overthrowing him. Under a new King, who was a child when most of the arrests and killings took place, a line can be drawn under the events of the past. It is acknowledged by both the government and the families of victims that the period of confrontation in Moroccan politics is finished, that there is consensus, more or less, on the type of government the Kingdom should have, and that society can discuss the events of the early part of King Hassan’s reign with a degree of detachment. The government is determined that there should be no campaign for those responsible for past abuses, including Basri, to be put on trial. The official line is that their actions were a response to different circumstances in a different era.

Reforming the Bureaucracy

The freer atmosphere of the last six years, and of the period since July 1999 in particular, has seen more open public debate of all sorts of issues and the emergence of "civil society". Many new associations and societies have been established. Morocco now has about 17,000 non-governmental organisations - NGOs. Many are charities concerned with poverty and illness. A body that has made quite a big impact recently is AFAK, which is headed by a former minister of health. The organisation devotes itself to teaching people about the benefits of hygiene and a clean environment - something which Morocco notably lacks. It arranges school visits and has organised teams to clean beaches.

Both the individuals and the government are campaigning against corruption, which has been ingrained in the bureaucracy from the top to the bottom. Corruption has become a fashionable topic for discussion. The government hopes this will create a movement against the vice. It might make people who are asking for bribes more embarrassed about what they are doing and the rest of society more aware if its rights so that it refuses to pay. One of the independent bodies that has emerged is an institution called Transparency Maroc, a branch of Transparency International, which has fighting corruption as its sole aim. Each year it holds a "day free of corruption".

The relatively new socialist/nationalist administration of Abderrahmane Youssoufi, which came to power in March 1998, is trying to build a more human, responsive government machine. There has been much talk of it "creating a new atmosphere", of "administrative reform" and of the "consolidation of the rule of law" - but there has been tangible progress in only a few areas. When it came to power the government found there were thousands of judgements against its own agencies which had not been executed; it removed whatever obstacles had been put in place. There have been improvements in prison conditions. There have been some limited initiatives to reduce bureaucracy. Early in 1999 it was decided that in the ports the customs should check just a proportion of the containers being brought in by each importer, rather than every one. The change reduced clearance times from more than a week to one or two days. Officials said the move illustrated a change in the government’s attitude towards its citizens. Traditionally it worked on the basis that because some people were dishonest everybody had to be controlled; now it is beginning to relate the amount of control to the assumption that most people are rea-sonably honest.

The public is very aware of the general change in atmosphere in Morocco, but it feels the government is not responding fast enough to its rising expectations. People are not very impressed by the scale of administrative change under M. Youssoufi. There is likewise a concern among some of the intelligentsia that the new king may not contribute as much as they hope to changing the way the country is run. Although he has fired Basri, it is noticed that he has placed his old school friends in positions of power in the government and media. He has given prominence to the army, possibly to counterbalance the Ministry of the Interior. The suspicion is that he is consolidating his own enormous power rather than letting some of it pass to the government, which is a more or less democratic institution. It may be that this is only the natural instinct of a young man who has just inherited the throne. If, on the other hand, it indicates the conventional passion for control of Middle Eastern rulers it will set a limit on the movement towards the more open government, serving the people, that the King has said he wants. The creation of a government that responds to public sentiment, and the reduction of corruption in the bureaucracy, must depend on more power being with ministers and members of parliament, who can be attacked in the press and who will lose power in a general election if the public does not like their performance.

Political Reform

The feeling among the Moroccan intelligentsia is that it is much more important for the King and his government to change the way the country is run - change the way the government operates at all levels - than to introduce further big constitutional reforms.

Morocco saw a number of important political reforms in the last decade of King Hassan’s reign. They began in 1991 when five parliamentary opposition parties - old fashioned, left-wing and nationalist - presented the King with a petition demanding some moderate constitutional changes. In a modified form these were put to the people in a referendum and duly approved by virtually 100 per cent of the electorate. They provided that future governments should reflect the balance of parties in the Chamber of Representatives, the parliament, and that the prime minister, who would continue to be chosen by the King, would have to submit his government’s programme, and each annual budget, to votes of confidence. The King was left with the right to dismiss a government, but the broad intention of the reform was to make governments responsible in most matters to the parliament. In future the parliament could not simply be ignored.

In June 1993 an election was held with a new electoral list and the voting age lowered from 21 to 20. The poll was by no means totally clean, but it was reckoned to be fairer than previous contests and its outcome reflected roughly the true strength of the parties. The biggest blocks of seats, though not an overall majority, were won by two of the opposition parties, the Union Socialiste des Forces Populaires (USFP) and the nationalist Istiqlal. These results applied only to the two thirds of seats that were filled by direct voting. Three months later voting took place in the professional associations, trades unions, chambers of commerce and similar bodies which filled the remaining one third of seats. Here, possibly on the initiative of Driss Basri rather than the King, there was more active manipulation, and the result was an increase in the small overall majority of the "government" parties. These "parties" were little more than collections of office seekers, conservative, loyal and happy to vote as they were told.

In spite of the manipulation, it was accepted in political circles that the USFP had won the right to form the next government - but the King would not offer it the post of Prime Minister, nor the ministries of the Interior, Foreign Affairs and Justice. It was offered 29 other less important ministries, and it refused them. The King was obliged to form a technocrat government. This lacked moral authority, and it was generally accepted that it was not in keeping with the spirit of the referendum.

In September 1996, therefore, another referendum was held, asking the people to approve the removal from the Chamber of Representatives of the deputies from the professional associations and their installation in a separate upper house, to be called the Chamber of Advisers. The new system, which was approved by a massive majority, provides for the upper house to be composed of elected members - 60 per cent from the local governments, which have been given greater independence, 20 per cent from the trades unions and 20 per cent from professional associations. The Chamber is able to delay or modify legislation, but not veto it.

The first elections under the new system were held in mid-November 1997 for the Chamber of Representatives and at the beginning of December for the Chamber of Advisers. The elections for the lower house, which were the important ones, produced three blocks of roughly equal size, representing left, right and moderates. The left had slightly more seats than the others and the USFP came out as the biggest single party, among 16 that contested the election. The USFP and its allies claimed they would have done better had not Basri’s officials tried to rig the vote. After three months of discussions, in March 1998 the King appointed the USFP leader, the 73 year old Abderrahmane Youssoufi, Prime Minister, at the head of a seven party coalition. The King continued his practice of appointing the ministers of the Interior, Foreign Affairs and Justice, but he allowed the government to create a new ministry for Defence. Previously the armed forces had reported directly to himself as commander-in-chief.

What Morocco has now is a system that is semi-democratic. It has a parliament which was reasonably fairly elected in 1997 - and may be wholly fairly elected in future. The parliament and the governing political parties carry weight - though in 1998 and 1999 the influence of the government was reduced by its parties’ members being a bit vague about their practical policies, as opposed to election slogans, and having rather little idea of what they had to do to put their ideas into effect. They were suffering from having spent 40 years in opposition. Under both Hassan II and Mohammad VI, the government has been working with kings who retain very great powers. The present King may in time surrender some of his powers - perhaps by not directly appointing ministers, or by allowing his family to be treated as if it comes under the law in Morocco, not above it. He may intervene less in government, once he feels he has established himself securely at its head. But it is not likely that he will hand over powers through any formal constitutional act or further parliamentary reform.

From now on, in the words of a Moroccan publisher and academic, the development of politics "will be a matter of the normal democratic game starting to function". Bit by bit, assuming the country remains stable, the government and parliament will take some of the powers and prerogatives of the King. And if the governments run the country effectively they will gradually win legitimacy.

At present the King certainly commands more respect and legitimacy than the politicians. This is because ordinary Moroccans traditionally have seen politicians as corrupt, selfish office seekers of little importance, and the King as the person they can trust to look after their interests. Western commentators, particularly journalists, who criticise the state of democracy in Morocco, find this difficult to understand. Hassan II worked carefully at building links with almost every part of the population - the Berbers (other than the tribes of the Rif), the Jewish community (some 30,000), different Muslim religious sects, the mainstream religious leaders, the secular minded townspeople, the small, mainly foreign Christian community - so that everybody felt he represented them. His son will do the same. The politicians, in contrast, represent mainly the intelligentsia, which is quite a small body. The present government represents a broader section of the population which wants to see change - but it is still far from having the legitimacy that the majority party in a European parliament enjoys. It will be a long time before the average Moroccan starts to trust politicians, sees them as being relevant to his own concerns and learns to use them to further his own interests.

The Islamists

The idea of Western style, party dominated democracy in Morocco, as in other Arab countries, is promoted by the educated middle classes. It is an imported idea - increasingly popular and for practical purposes the best option for political development - but it does not come out of Moroccan society itself. If Morocco were to move in some sudden and unsupervised way to a government which was truly representative of the mass of the people, and therefore wholly democratic, that government would be populist and totalitarian. It might well be Islamist. This would not be because every Moroccan is deeply religious in a fundamentalist sense, or because Moroccans are very impressed by what they have heard, and seen on television, about Islamist governments and political movements elsewhere, in Algeria, Egypt, Sudan, Iran and Afghanistan. It would be because the secular political parties do not yet have clear ideological or social labels which cause people to associate themselves with them, whereas everybody knows about Islam. Many voters would be inclined to think that a vote for an Islamic party would be morally safe and responsible.

There is some debate among the Moroccan intelligentsia and in press and government circles about how strong is the Islamist movement in the country. The debate is somewhat academic because at present the major part of the movement is illegal and operates outside the country’s normal political life. There is a moderate Islamist party, the Mouvement Populaire et Democratique, which has twelve seats in the parliament and is seen by the monarchy as a safety valve for militant sentiment. More important is the Justice and Charity movement, Al-Adl wal Ishan, which is headed by Cheikh Abdesalem Yassine. This organisation was banned in 1990 and for most of the time since the Cheikh has been under house arrest. Its leaders say they would be prepared to take part in parliamentary politics, but only if the parliament were given real power. This is a way of saying that they would want to participate in politics only if it became wholly democratic, possibly giving them the opportunity of Islamising government and society. They make no secret of their opposition to the monarchy in its present form.

Justice and Charity is active in the universities. The students’ unions swing between being dominated by the Islamists and the leftists. Between a quarter and a third of students have taken to wearing Islamic dress, though as in other Arab countries, some may have adopted the uniform out of a desire to conform to the fashion or avoid criticism by the more aggressive militants, rather than out of real conviction. There is certainly much less commitment to Islamism than there was to Gamal Abdel-Nasser’s republicanism and Arab nationalism in the 1950s and 1960s. At that time it was difficult to find a single student in any Arab university who was not republican.

Outside the universities, in the poorer parts of the towns, where there is very high unemployment, the Islamists seem to have less presence than one might expect. There are certainly some people in these quarters who dress in an Islamist fashion, but they are outnumbered by young men in baggy jeans and girls in tight jeans and T-shirts.

There are several forces in Morocco that militate against the spread of radical Islam. One is that the monarch associates himself with the religious establishment and initiates all the big Islamic feasts. He has the title "Commander of the Faithful". Another is that the development of civil society, and particularly the growth of women’s organisations is highlighting the shortcomings of Islamist ideas. And at a more popular level there are pockets of cultural resistance to the austere, orthodox, unitarian ideas of the militants. From the time of the Arab invasion in the seventh century Islam in Morocco - and to a lesser extent in the other Maghreb countries, Algeria and Tunisia - has been mixed with the remnants of earlier religious beliefs, and with local traditions and superstitions. People visit their dead relations in the cemeteries. They pray in the shrines of dead saints,

known as marabouts. These are small, domed, white buildings, which are a very attractive feature of the Moroccan countryside.

In several places there are local holy men who will say payers and in some cases perform sacrifices for visitors. The latter practice, which supports thriving local markets for sacrificial animals and birds, and for their meat and skins, is wholly outside proper Islamic doctrine. An orthodox Muslim should make a sacrifice just once a year, at the time of the Eid al Adha, the feast that accompanies the pilgrimage to Mecca. A particularly bizarre cult is found in the ruined cemetery of members of the fourteenth century Merinid dynasty in Rabat. Here, in a beautiful wild garden, among a group of marabouts and a nesting colony of storks, is a pool with sacred eels. Visitors pay the attendants a few dirhams to buy food to throw to the eels. Such strange cults provide some solace for their devotees and little incomes for a few people.

To the Islamic militants such cults are abhorrent, as they are to stricter Sunni Muslims elsewhere, particularly in Saudi Arabia. The North African militants used to be able easily to collect money from the Saudis and other Gulf Arabs, in the name of purifying Islam in their countries - but funds are now less forthcoming since the donors have realised that much of their money has been used for political purposes. In the Islamists’ campaign to extend their influence in Morocco the popular cults are an obstacle. The adherents of the cults are firmly opposed to the Islamists, and the Moroccan population as a whole, which has a strong tradition of religious tolerance, believes that the cults should be allowed to continue.

Constraints on Economic Growth

In its economic development Morocco has reached much the same stage as it has in political reform. It has initiated many changes since the early 1980s, and it has now to follow through the reforms that are currently under implementation and wait for a more liberal, more private sector dominated economy to bring higher growth.

The government was forced by debt to begin economic reform in 1983. In return for negotiating a rescheduling of its debts, the International Monetary Fund obliged the government to control its spending, mainly by freezing its salaries bill and removing subsidies on some basic foodstuffs. The state’s income was increased by making the tax system more efficient, introducing VAT and lowering the rates of personal and corporate tax, which increased citizens’ willingness to pay. The effect of these measures to-

gether was to reduce the budget deficit from 12 per cent of GDP in 1983 to around 3 per cent in the 1990s.

The Moroccan dirham was devalued in stages by 40 per cent and in 1993 was made convertible for most current account transactions, including all sorts of trade and the repatriation of profits by foreign companies. A system of import licensing was abolished and a start made on demolishing protective tariffs. In 1983 the highest tariff level was 400 per cent and the average for industrial products 100 per cent. In 1999 the top rate for industrial products, which was also the most common rate, was 50 per cent.

Starting in 1990 the government embarked on a programme of structural reform, with a decree which made it legal for foreigners to own 100 per cent of a business in Morocco. In 1993 it began the privatisation of its commercial holdings. It listed for sale 37 hotels and stakes in 75 companies. These excluded assets such as the Office Chérifien des Phosphates and Royal Air Maroc, which were considered to have special strategic importance - though once a few sales had been completed successfully the government added the country’s two oil refineries to the list. By the time of the elections in November 1997, which brought the USFP to power, the Ministry of Privatisation had sold 18 hotels and 33 companies or stakes in companies, including the refineries.

When it began privatisation the government introduced measures to stimulate the stock market, including privatising the exchange, authorising the marketing of mutual funds and transferring the broking business from the banks to independent broking firms. It then began the modernisation of the country’s commercial law and the deregulation of the banking system.

The outcome of the reforms has been an economy which is modern and flourishing in parts. The tourist business has been growing quite fast, and many of the privatised hotels have been refurbished and are being run by more efficient and motivated staffs. The stock market and the market for debt have been transformed and there are signs of change in the banking sector - led by the fast spread of automatic teller machines. The country’s privatised gasoline stations are being refurbished; many have attached to themselves rather good restaurants. There has been an extraordinary spread of private telephone kiosks offering domestic and international calls. Some big cash and carry supermarkets have opened in the outskirts of Casablanca and Rabat. A small private airline, Regional Airlines, has been established, in the face of some resistance from Royal Air Maroc.

This is in no sense a complete list. There are changes underway in most of the companies that have been privatised and there are a few

towns, such as Berrechid south of Casablanca, that are growing fast - mostly under the stimulus of foreign companies investing in factories to produce relatively simple products for the Moroccan market. But what is striking about the areas of visible growth is that they are quite isolated. There are no very obvious links between the stock market, tourism, telephone kiosks, gasoline stations and foreign owned factories. One cannot identify broad economic sectors or big geographical regions that are expanding fast.

Overall Moroccan growth remains disappointingly low. If agriculture and closely related sectors are removed from the calculation the average figure for growth in the mid- and later 1990s is 3.5 per cent. If agriculture is included the figure falls to some 2/2.5 per cent. Meanwhile the population, about 28 million, is growing by 1.9 per cent a year. Unemployment is 19 per cent, and up to 35 per cent among urban youth aged 15 to 25. In a successful developing economy one would expect investment by the private sector to be growing by 12-15 per cent a year; in Morocco recently it has been growing by only 4 or 5 per cent. Businessmen say they have not been able to find attractive opportunities. There is a lack of confidence.

Likewise foreign direct investment has grown slowly. In 1988-90 it was in the range of $100-200m and in 1995, 1996 and 1998 it was still only $400-450m. Two years, 1997 and 1999, saw exceptional inflows of over $1bn caused by three particularly big projects/privatisations.

Companies that have invested in Morocco have mostly found the process slow and difficult. They have encountered massive bureaucracy. Moroccan law governing commercial transactions sets out more stages and demands many more documents, stamps and signatures than would be needed in the Anglo-Saxon world or in most European countries. There is a general requirement that documents and signatures be legalised. In the lower parts of the bureaucracy, and in many parts at a higher level, there is pervasive corruption. Officials demand to be paid not just to help companies take short cuts through the bureaucratic maze, but to carry out their proper duties and not put a company’s papers at the bottom of the pile on their desk.

Many companies report they have a general sense that, whatever they say, the government and bureaucracy are not very welcoming to foreign investment. Officials accept it is a necessity, but in their hearts they do not really like it. They would feel more at home in the old world of state ownership, controls and import substitution. Few seem to understand that new investment creates additional GDP and makes society as a whole richer. They do not see that in trying to encourage foreign investment Morocco is competing with two other Arab countries, Tunisia and Egypt, eastern Europe, south and east Asia and development areas within the EU. Nor do they see that if the country is to get companies to come to it, it has to make itself at least as attractive as these other places - and that this is as much a matter of attitudes, and of the system of administration, as of tax breaks and investor incentives.

Two more specific complaints concern the price of land and exchange controls. Land in industrial zones is extraordinarily expensive, and foreigners, including Moroccan registered foreign owned companies, are not allowed to buy agricultural land - which itself commands prices that are out of proportion to the yields it can give. Exchange controls are important in that they can greatly complicate international banking transactions. Foreign investors are allowed to do all the transactions they would normally expect to do, but there is a battery of controls designed to ensure that Moroccan capital does not leak out at the same time. This means that when a company finds itself doing something a little bit out of the ordinary - for example making a transfer to finance an overdraft abroad, being used because foreign banks tend to be more helpful than Moroccan institutions - it encounters difficulties.

There are more fundamental problems facing the Moroccan economy than its difficulties in attracting foreign investment. One is its dependence on agriculture. Morocco is a greener, more fertile country than one might expect, and it receives far more rain than its Maghreb neighbours. Its problems are that the rainfall is erratic - one year in three, or recently one year in two, produces a drought - and most of its farmers are ignorant, lacking in capital, and attached to bad practices that prevent them making the best of what rain does fall in poor years.

The output of cereals, which are the most important part of the country’s farming, has varied in the last decade between a low of 1.8m tonnes in 1995 and a peak of 10.1m tonnes in 1996. The farmers’ spending affects the prosperity of the small country towns and this in turn affects business in Casablanca and the other major cities. The prospect of a good or bad crop greatly affects confidence in all parts of the economy. So although agriculture’s contribution to gross domestic product is no more than 15 to 20 per cent, depending on the year, the performance of this sector has a disproportionate effect on the growth of the economy as a whole. In 1995 the country’s GDP growth was minus 6.5 per cent; in the following year it was plus 12 per cent.

The government realises that it needs to spend much more on bringing infrastructure and basic services to poor rural areas, and that it needs to improve the country’s very weak state education system, but it is hindered by its debts. In 1999 its external debt was $19bn, and its domestic debts DH 125bn - worth $13bn. The two debts together were equivalent to 91 per cent of GDP. Debt servicing was taking between 30 and 40 per cent of the budget. Almost all the rest of the budget was being spent on salaries.

The debt is being actively managed. Where it has the opportunity the government has been buying back debt, at the market discount of around 20 per cent of face value, and refinancing it by re-borrowing in low interest currencies. It has been offering debt-equity swaps and steadily switching to internal debt. To do this it needs to maintain reasonably healthy foreign exchange reserves, currently around six months’ imports cover. It is partly because it needs the country’s foreign exchange for debt refinancing that the government has not made the dirham wholly convertible. Before it takes this step it says it wants to have six months’ imports cover for a considerable period and to have further reduced the foreign element in its debt. Its assumption is that if it were to remove controls and float the dirham, there would be an immediate fall in the currency’s parity of some 15 to 20 per cent. This would revalue the $19bn of foreign debt by the same percentage in dirham terms. This disadvantage would not be offset in the short term - over two or three years - by any increase in earnings from manufactured exports or tourism, because both these sectors need investment before they can yield higher revenues.

Government Economic Policies

The government is very aware of the need for higher economic growth. As well as needing more money for its own budget, it is concerned about unemployment, political stability and the general standard of living of its people. It has announced it will push growth to around 6 per cent by the end of 2001 - though it has given no clear analysis of how it will achieve this ambitious target. The truth is that it has no alternative but to push ahead with the liberalising policies of its predecessor, and hope these will have a stimulating effect.

By far the biggest change will come from the implementation of the Treaty of Association with the European Union, which was signed by Morocco in 1996 and now, after numerous signing and ratification delays at the European end, is due to come into effect at the beginning of March this year. The treaty is concerned mainly with Morocco’s imports of industrial goods from the EU and the European Free Trade Association; it does not alter the quota régime applying to Morocco’s exports of agricultural goods to Europe, nor the tariffs, often very high, that are levied on imports of food, livestock and other agricultural products into Morocco. Once the treaty is in force, Moroccan tariffs on industrial goods will change, and be partially dismantled in four ways:

The 2½ or 10 per cent tariff applied to equipment being brought in for investment projects will be abolished immediately.

The duties applied to raw materials, spare parts and products not manufactured locally will be removed over a period of four years. The reductions will be of 25 per cent a year.

The system of reference prices - which enables the customs authorities to set their own prices as a basis for levying duties - will be eliminated within three years.

Products that are also made by Moroccan firms will continue to be taxed at current rates for three years. Then the duties will be removed over a ten year period at a rate of 10 per cent a year.

A parallel series of tariff cuts is being introduced as a result of Morocco’s membership of WTO. This obliges it to cut duties on all equipment and raw materials imports - from all sources - to a maximum of 10 per cent by 2003.

The treaties are obviously going to have a major impact on Moroccan industry. Since the EU agreement was signed the general opinion in Morocco has been that about a third of local manufacturing companies will collapse, a third will have to adapt and a third, including some which already compete with big volumes of smuggled goods, will continue as before. The analysis is rather glib, and much the same as that given in other Arab countries which have signed new association treaties. In reality nobody knows quite what the effect will be.

The Moroccan government, and companies, are now talking of a process of mise à niveau, under which industry will be brought to a competitive level. A large number of companies, particularly medium sized firms with turnovers of $2m plus are looking for European or American partners, to give themselves some more capital, so that they can modernise their operations. They also want expertise, so that they can make themselves more competitive by improving the quality of their production and marketing. A few major state owned companies, including the car assembly business, Somaca, are going through the same process in the context of privatisation.

Many companies, large and small, have been turning to the government and asking what they should do. They seem more often to suppose that the government will help them than to accept that they should look after themselves. They are particularly looking for easier credit - Moroccan banks are not helpful to small and medium sized companies, whatever their publicity might say. The companies also want advice on what they should do to make themselves more efficient. The government is pinning its faith on gradually increasing competition in the banking sector - seen in falling interest rates and a search for sources of fee income - providing much of the help the companies need. But the banks too are looking to the government. As a banker said to Roula Khalaf of the Financial Times in December last year, "As to lending to small and medium sized companies and upgrading industry ... it is not up to us to find solutions. We have to sit down with the government and look for them".

The government has taken some steps to help small companies adjust - though it has not gone nearly as far as the authorities in Tunisia, which have set up a system to assist with renewing staff and equipment, with tax breaks and subsidies. The Moroccan response has included the establishment of a loan guarantee fund, in co-operation with the EU, for companies with assets of not more than $2m and a mise à niveau programme costing not more than $1m. The EU’s rôle is to provide the capital of the fund. Some small amounts of money are being provided through professional and trade associations to retrain managers and help with the modernisation of accountancy and financial controls - which will be important for companies that might be seeking bank loans for the first time. It is intended that similar help will be offered through an EU financed business centre in Casablanca.

Probably the schemes to assist companies will not come properly into operation until the EU association treaty comes into force, tariff cuts start to be made and companies find themselves forced to start making changes. Even then those companies that find themselves competing with European products will have a very generous thirteen years to adjust before their tariff protection disappears completely.

It is the government’s hope that the adjustment process will stimulate economic growth. Investment in new plant, and building, will pump money into the economy and provide employment - which should offset the loss of jobs in companies that are forced to close. When local businesses increase their investment it has been noticed in the past that this has stimulated a bigger flow of small and medium sized foreign investments, and it is assumed this link will continue to operate in the future.

A second, smaller, stimulus for change and growth will come from the government’s continuing programme of privatisation. The programme of the previous government had slowed somewhat by 1997, as the easiest prospects had been sold, and for ideological as well as practical reasons the centre left government that took office in March 1998 felt it had to review the programme. After a year it produced a list of five hotels and fourteen companies which it was keeping from the old government’s list, and it added four new major state agencies or corporations. It had already quietly sold, or was negotiating the sale of, five other hotels. All that it had taken off the old list were businesses which it had been obvious for some time were unsaleable. Some of these had already closed their operations. For all its sceptical rhetoric at the time it took office, it appeared that the USFP/Istiqlal government’s approach to privatisation was very much like that of its predecessor.

Since it published its new list the Ministry of Privatisation has sold a small farming company and its remaining shares in the fertiliser company, Fertima. The old government had floated some of the shares of Fertima on the stock exchange in 1996 but had been unable to find a foreign buyer to take a core stake in the rest. The Ministry eventually sold 51 per cent of the company to a Portuguese firm and a group of Moroccan investors.

New corporations being offered for sale by the government are the state tobacco monopoly, the state shipping company, the ports office and the state telephone company. In July 1999, in an entirely separate initiative, the government sold a GSM mobile telephone licence for nearly $1bn to a group led by Telefonica of Spain. This second GSM network will provide competition for the existing state company’s GSM business. The state company’s charges for all parts of its service are unusually high.

In the autumn of 1999 the Ministry of Privatisation was starting to think about a sale of the state airline, Royal Air Maroc. This company, in which Air France has a minor holding, had not been on any privatisation list before because it was regarded as strategically important, and it was making only a small loss. The new idea is that the Ministry might look for a foreign strategic partner, and then, six months or more later, float some shares on the stock exchange. It was looking for bids from investment banks for a valuation of the airline.

For the longer term the government knows that its country’s economic development must be assisted by improvements in its very weak education system. In many state schools the education on offer is hardly worth having. Students may leave school able to count but hardly able to do mathematical calculations, without any scientific knowledge, with little French and virtually no knowledge of geography or of countries and cultures beyond the Arab world. Eighty per cent of the country’s agricultural workforce and 40 per cent of the industrial workforce is illiterate. Thirty per cent of children never go to school.

World Bank reports have criticised Moroccan education on several occasions and the government has often said it intends to improve it. In March last year King Hassan wrote a letter to his ministers telling them they had to tackle the educational system at all levels. The World Bank is encouraging adult education groups and initiatives by individuals and independent organisations. Its hope is not just that schools run by these groups will do valuable work in them-

selves, but that their existence will help influence the government away from its rigid and centralised approach to education.

Over the last twenty years the World Bank has channelled more lending to Morocco than to most other developing countries - the Kingdom has been one of its major foreign clients. Recently the flow of lending has averaged $400m a year. Most of the money has gone to infrastructure projects. The Bank has been criticised - and is now criticising itself - for a lack of emphasis on social issues. It sees that in the poorer country areas of Morocco in the last twenty years there has been no development. It is now its policy to push the government into changing this. Happily its views are the same as those of the new King.

© Friedrich Ebert Stiftung
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fes-library | Januar 2001