US embassy cable - 05RABAT124

UNCLAS SECTION 01 OF 02 RABAT 000124 
 
SIPDIS 
 
SENSITIVE 
 
DEPT PASS TO MILLENNIUM CHALLENGE CORPORATION 
DEPT ALSO FOR USAID SARA BORODIN 
 
E.O. 12958: N/A 
TAGS: KMCA, EAID, ECON, PREL, EINV, MO 
SUBJECT: MCC CEO APPLEGARTH MEETING WITH MOROCCAN FOREIGN 
MINISTRY 
 
REF: RABAT 2059 AND PREVIOUS 
 
1. (U) Summary:  Millennium Challenge Corporation CEO Paul 
Applegarth met with MFA Americas Director Salaheddine Tazi 
and Director for Bilateral Affairs Youssef Amrani on January 
12 to formally congratulate the Government of Morocco on its 
eligibility to apply for Millennium Challenge Account 
funding.  CEO Applegarth also discussed MCA objectives and 
Moroccan development priorities, and described in general 
terms the MCA process.  In attendance were MCA Vice President 
John Hewko and others of Mr. Applegarth's delegation, along 
with the Ambassador, DCM and Econoff notetaker. End Summary. 
 
2. (U) Americas Director Tazi, in the company of the 
Ministry's full complement of North American affairs advisors 
and Houda Marrakshi, a member of Minister-Delegate for 
Foreign Affairs Taieb Fassi-Firhi's staff, expressed his 
gratitude to CEO Applegarth for Morocco's eligibility for MCA 
funding.  Tazi explained that he and Ambassador Amrani were 
standing in for Fassi-Firhi, who had been called away by King 
Mohammed unavoidably.  Applegarth emphasized that Morocco's 
selection for MCA eligibility was in recognition of its 
successful track record of reform, as well as its proven 
commitment to economic freedom and investing in people. 
 
3. (U) Applegarth explained that in developing a compact with 
the MCC, Morocco will choose its own development priorities, 
and draw up proposals for MCA funding based on these goals. 
He said the MCC will review and select those proposals that 
are most effectively geared toward economic growth and 
poverty reduction, but emphasized that it is entirely up to 
Morocco to choose the sectors and the priorities it wishes to 
focus on. 
 
4. (SBU) Tazi commented that Morocco felt "under-scored" by 
the MCC in the area of trade policy, noting recently-signed 
free trade agreements with the United States, Turkey, and the 
Agadir Pact countries of Egypt, Tunisia and Jordan.  CEO 
Applegarth pointed out that there are time lags in the 
indicators the MCC uses to determine country eligibility, and 
said he expects that Morocco's score on trade policy will in 
the future more closely reflect the steps it is now taking 
with respect to trade liberalization.  He also warned that 
while Morocco's trade policy score may improve, "the median 
may also rise," and encouraged the GOM not to rest on its 
laurels. 
 
5. (SBU) Bilateral Affairs Director Youssef Amrani confirmed 
the "strong political will" in Morocco to work with the MCA, 
and to make the MCA work for Morocco.  He said the GOM is 
eager to serve as an example of how the MCA can work for the 
Arab world.  Applegarth noted that with the honor of being 
chosen for MCA eligibility comes a responsibility to seek the 
greatest possible return on the MCA "investment," and pointed 
out that as one of the first countries to be chosen, Morocco 
will be under the spotlight to see how the country performs. 
 
6. (SBU) The MFA team asked which sectors might be excluded 
from MCA funding, whether co-financing was allowed, and if 
the GOM could obtain an example of a finished compact. 
Applegarth replied that there are no pre-set restrictions on 
the sectors eligible for funding, although successful 
proposals will be those that generate economic growth and 
lead to poverty reduction, and that are developed by 
governments through a thorough consultative process 
involving, among others, parliamentarians, the private sector 
and civil society.  Applegarth said co-financing is 
encouraged, and that MCC is prepared to work with proposals 
that include coordinated funding components from other 
donors.  He said MCC does not yet have an example of a 
completed compact to share, but that the MCC is in advanced 
stages of developing compacts with four countries which 
qualified for FY2004 funding, and as soon as a compact is 
completed it will be posted on the MCC's website for public 
viewing.  (Note: Applegarth said Madagascar was in a 
particularly advanced stage of compact development and would 
likely be the first to complete a compact.)  Applegarth 
further explained that an MCC team would come to Morocco to 
work in more detail with the GOM to develop a compact.  He 
encouraged the GOM in the meantime to refer further questions 
to the U.S. Mission in Rabat or directly to the MCC.  He 
emphasized that Morocco's ambassador in Washington was 
another avenue of communication, and that all of those 
elements would be "part of the circle." 
 
7. (SBU) Tazi concluded by thanking Applegarth for his visit 
and conveying the GOM's eagerness to begin creating a 
compact.  He said the GOM would create a team dedicated to 
working on the MCA account. 
RILEY