July 11, 2001

Morocco:Cool Winds Blowing from the East

Despite a U.N. brokered solution to Morocco’s disputed Western Sahara region, factional opposition to the plan and social instability in Algeria threaten Morocco’s development agenda. Despite these uncertainties, this North African state has moved forward with its ambitious expansion program.

A United Nations plan proposing autonomy to the disputed Western Sahara now stands on fragile grounds. Although the Moroccan Government has agreed to the plan as a basis for negotiations on a final settlement in the 26-year-old conflict, the state media has emphasized that the government in Rabat still does not adhere to all the terms on offer, but merely accepts the plan as a framework for discussion. Its rival in the territory, the Polisario Independence Movement, has angrily rejected the solution and has threatened to return to war.

The sharp contrast in reactions is hardly surprising given that the plan concedes much to Morocco, and gives little away to the Sahrawi nationalist movement led by the Polisario Front. Compiled by the UN Secretary-General’s special envoy to the Western Sahara, James Baker, the plan would see Morocco guaranteed sovereignty over the territory for four years, including control of internal security and the judicial system. In exchange, the Sahrawi population would be granted some leeway in controlling their own economic and social affairs. In the eyes of foreign diplomats, this solution represents a balancing act between the interests of Morocco, the Polisario Front and neighboring states Mauritania and Algeria, who are to also take part in the talks on the future status of the phosphate-rich desert territory.

Taking Algeria’s sensitivities into account is of paramount importance for Morocco, especially in light of the recent turmoil that has unfolded in the adjacent state. Fears that social unrest manifest in Algeria could spread to Morocco have been echoed by prominent leaders, since Morocco is saddled with similar economic and social problems, such as escalating unemployment and the sluggish implementation of economic reforms.

Presently, Morocco’s main challenges include cutting back on government spending, reducing trade barriers, and accelerating privatization. The government has taken several steps in the right direction in recent years, including making the dirham fully convertible for current account transactions. Such measures will continue to take on added importance as Morocco moves towards opening its market to the European Union. Recently, European Union Trade Commissioner Pascal Lamy completed a three-day visit to Morocco aimed at accelerating progress towards a planned Euro-Mediterranean free trade zone by 2010.

Upgrading the state of the country’s infrastructure also remains a top priority. Over the next 10 years, the North African state will spend $1.85 billion for the construction of 1,000 km of motorways. The state budget and foreign institutions will provide most of the necessary funds. Assistance for these projects has already arrived in the form of a $24.5 million loan from France, a $5.7 million loan from the Kuwaiti Fund for Economic Development, and a $149 million loan by the Arab Fund for Economic and Social Development.

The country’s leadership will also lean on its telecom sector as an economic catalyst. The Moroccan Telecommunication Regulation Agency (ANRT), an independent regulatory body, has recently issued an international tender for the installation of a second fixed-line telephone network. The new network, which is intended to become operational in 2002, will support the Kingdom’s Internet services and radio-phonic networks. Official statistics show that there are currently 4.5 million cellular telephone subscribers in Morocco, in addition to 1.7 million fixed-line telephones and 500,000 Internet users.

While Morocco dreams of economic prosperity and integration into the European Free Trade Area, domestic elements threaten to thwart such hopes. The recent bloody riots in Algeria, Morocco’s neighbour to the east, demonstrate that social and economic problems must be addressed at an early stage, before they evolve into a national catastrophe.

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