MOROCCO: Economy being hammered into shape

There are plenty of signs that the authorities in Morocco are pushing ahead with a raft of projects aimed at reducing the country's chronic unemployment. James Badcock has the details.

Since last year's horrific terrorist attacks in Casablanca, there has been a notable increase in the amount of soulsearching by Morocco's political elite as to how the problems of widespread poverty and deprivation in the kingdom can be solved. The significance of the fact that most of the May 16 suicide bombers came from one of the dirt-poor shanty towns on the outskirts of Casablanca - Morocco's economic capital was hard to avoid. These people had nothing to lose.

Speaking in July, the social development minister, Abderrahim Harouchi, said that the belts of poverty around the country's cities were "wide open country" for the Islamists. He talked of an "urgent" and "parallel" fight against extremism and the conditions that help it to breed.

Despite the feet that official government figures released that month maintained that the poverty rate had dropped to just 14%, the minister admitted that those "in a vulnerable economic situation", which he defined as disposing of less that $500 per year, comprised around a quarter of the population.

Aside from material poverty, the existence of an official 48% rate of illiteracy nationwide must also be included in the causes for alarm among Morocco's political establishment.

If the government's figures are correct, however, things are improving, with 92% of children in primary education - up from 79% since King Mohammed Vl came to the throne in 1999.

An increasing population and a lack of opportunities in the countryside have induced a large proportion of whole generations to move to the cities in search of work.

The proportion of Morocco's 30m-plus inhabitants living in the countryside has fallen to 45% from a figure around 60% a quarter of a century ago.

It is the creation of a mass of disaffected youth in urban areas which is the driving force behind Prime Minister Driss Jettou's plans to modernise the economy in every region, spreading the benefits of increased trade and tourism which are hoped to result from the country's liberalisation drive of recent years.

This international and regional coupling was outlined by Prime Minister Jetton when he urged a reshuffled cabinet to "speed up the pace of reforms and achievements".

The government's spokesperson and communications minister, Nabil Benabdellah, said that Jetton's vision sought to create new "regional economic hubs" in order to secure geographic balances and lasting development by increasing Morocco's "openness within its regional and international environment and adapting it to the requirements of the free trade agreements that Morocco has concluded with several countries".

FULL FLOW OFTRADE AGREEMENTS

Indeed, the most striking achievement of Driss Jetton's two-yearlong stewardship of the govern-ment has been the speed at which Morocco's international trade agreements have developed.

In August, President George W. Bush signed the implementation act for a free trade agreement (FTA) agreed between the US and Morocco in June after little over a year of negotiations.

Furthermore, there is the Agadir Agreement signed in February, which connects Morocco, Egypt, Jordan and Tunisia in a free trade bloc, along with the kingdom's accord with Turkey.

Moroccan officials are also currently studying an FTA with the South American Mercosur group, comprising Brazil, Argentina, Uruguay and Paraguay.

Negotiations over open economic partnership with the European Union, however, are progressing slowly, although Prime Minister Jettou's government has achieved a deal on agriculture which allows some Moroccan produce to enter the EU market freely. The opening up of the Moroccan economy to outsiders has seen a spectacular increase in foreign direct investment (FDI). According to the administration, in 2003 Morocco received a record $3bn in FDI. This capital is flowing from all directions, not just from western corporations. Investments from Arab nations increased from $ 12.8m in 2002 to $672. Im in 2003, according to a report by the Arab Institution for Investments Guarantee, which positioned Morocco as the second-most popular destination for Arab investment after Lebanon.

EYES FIXED ON TOURISM AS GROWTH ENGINE

In order to administrate new investments, both internal and from abroad, a proliferation of new agencies have sprung up. Perhaps the sector with the highest number of such new initiatives, and the corresponding high hopes set upon it, is tourism. The Vision 2010 Plan aims to take the number of visitors to the country up to the 10m mark by 2010.

In June, the minister responsible for tourism, Adil Diouri, announced an investment plan of $10bn by 2010, including $4.4bn in hotel infrastructure to raise accommodation capacity nationwide to 230,000 beds; also included is the training of at least 70,000 professionals.

The most ambitious element of Vision 2010 Plan is the construction of six large holiday resorts to be dotted along the Moroccan coast. Known as Plan Azur, these projects will provide a large proportion of the 130,000 extra beach resort beds Vision 2010 requires. Recently, a deal was struck between the government and a consortium led by South African group Kerzner International to develop the Mazagan site near el-Jadida, on the southern coast. The $600m Mazagan project will provide accommodation for 8,072 people, a golf course, two hotels, tourist chalets, a sports complex and a conference centre. The government is committed to providing just over $9m in local infrastructure investment.